x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
20-8468508
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Large Accelerated Filer ¨
|
Accelerated Filer ¨
|
Non-Accelerated Filer ¨ (Do not check if a smaller reporting company)
|
Smaller reporting company x
|
Class
of Securities
|
Shares
Outstanding
|
|
Common
Stock, $0.001 par value
|
10,508,000
|
PART
I
|
||
FINANCIAL
INFORMATION
|
||
ITEM
1.
|
FINANCIAL
STATEMENTS
|
2
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
37
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
50
|
ITEM
4(T).
|
CONTROLS
AND PROCEDURES
|
50
|
PART
II
|
||
OTHER
INFORMATION
|
||
ITEM
1.
|
LEGAL
PROCEEDINGS
|
51
|
ITEM
1A.
|
RISK
FACTORS
|
51
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
51
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
51
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
51
|
ITEM
5.
|
OTHER
INFORMATION
|
51
|
ITEM
6.
|
EXHIBITS
|
51
|
Page
|
||
Consolidated
Balance Sheets as of March 31, 2009 (Unaudited) and as of June 30, 2008
(Restated)
|
3
|
|
Consolidated
Statements of Income and Other Comprehensive Income for the Three Months
and Nine Months Ended March 31, 2009 and 2008
(Unaudited)
|
4
|
|
Consolidated
Statement of Stockholders’ Equity (Unaudited)
|
5
|
|
Consolidated
Statements of Cash Flows for the Nine Months Ended March 31, 2009 and 2008
(Unaudited)
|
6
|
|
Notes
to Consolidated Financial Statements (Unaudited)
|
7
|
ASSETS
|
||||||||
March
31, 2009
|
June
30, 2008
|
|||||||
(Unaudited)
|
RESTATED
|
|||||||
CURRENT
ASSETS:
|
||||||||
Cash
|
$ | 870,140 | $ | 1,910,495 | ||||
Restricted
cash
|
666,954 | 913,092 | ||||||
Marketable
securities
|
58,451 | 61,767 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $357,810 and
$224,924 as of March 31, 2009 and June 30, 2008,
respectively
|
14,856,208 | 9,365,486 | ||||||
Inventories
|
777,548 | 237,836 | ||||||
Short
term loan receivable
|
1,465,000 | - | ||||||
Other
receivables
|
1,008,368 | 505,968 | ||||||
Prepayment
|
3,940,771 | 3,240,394 | ||||||
Total
current assets
|
23,643,440 | 16,235,038 | ||||||
PLANT
AND EQUIPMENT, net
|
15,237,656 | 16,730,220 | ||||||
OTHER
ASSETS:
|
||||||||
Accounts
receivable (non-current), net of allowance for doubtful accounts of
$664,503 and $411,061 as of March 31, 2009 and June 30, 2008,
respectively
|
7,529,760 | 4,753,006 | ||||||
Total
assets
|
$ | 46,410,856 | $ | 37,718,264 | ||||
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Short
term loans
|
$ | 4,723,893 | $ | 4,271,222 | ||||
Accounts
payable
|
5,875,554 | 6,293,553 | ||||||
Customer
deposits
|
10,751 | 165,434 | ||||||
Other
payables
|
280,182 | 254,259 | ||||||
Other
payables - shareholder
|
763,634 | 880,302 | ||||||
Accrued
liabilities
|
411,168 | 145,207 | ||||||
Taxes
payable
|
3,468,297 | 1,073,237 | ||||||
Interest
payable
|
155,200 | - | ||||||
Total
current liabilities
|
15,688,679 | 13,083,214 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
REDEEMABLE
PREFERRED STOCK ($0.001 par value, 873,000 shares issued and outstanding
as of March 31, 2009 and 875,000 shares issued and outstanding as of June
30, 2008) net
of discount of $717,822 and $1,168,548 at March 31, 2009 and June 30,
2008, respectively, liquidation
preference of $8.00 per share and accrued dividends
|
6,266,178 | 5,831,452 | ||||||
SHAREHOLDERS'
EQUITY:
|
||||||||
Preferred
stock $0.001 par value, 1,000,000 shares authorized, 873,000 issued and
outstanding as of March 31, 2009 and 875,000 issued and outstanding as of
June 30, 2008, and classified outside shareholders' equity, liquidation
preference of $8.00 per share and accrued dividends as of March 31, 2009
and June 30, 2008
|
- | - | ||||||
Common
Stock, $0.001 par value, 74,000,000 shares authorized, 10,508,000 and
10,525,000 shares issued and outstanding, as of March 31, 2009 and June
30, 2008, respectively
|
10,508 | 10,525 | ||||||
Paid-in-capital
|
12,777,188 | 12,722,260 | ||||||
Contribution
receivable
|
(1,210,000 | ) | (1,210,000 | ) | ||||
Retained
earnings
|
8,012,151 | 3,257,276 | ||||||
Statutory
reserves
|
2,172,163 | 1,452,779 | ||||||
Accumulated
other comprehensive income
|
2,693,989 | 2,598,466 | ||||||
Deferred
compensation
|
- | (27,708 | ) | |||||
Total
shareholders' equity
|
24,455,999 | 18,803,598 | ||||||
Total
liabilities, redeemable preferred stock, and shareholders'
equity
|
$ | 46,410,856 | $ | 37,718,264 |
CHINA
ADVANCED CONSTRUCTION MATERIALS GROUP, INC AND
SUBSIDIARIES
|
|||||||||
CONSOLIDATED
STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
|
|||||||||
FOR
THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2009 AND
2008
(UNAUDITED)
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
March
31,
|
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
REVENUE:
|
||||||||||||||||
Sales
of concrete
|
$ | 6,544,484 | $ | 6,790,646 | $ | 16,382,049 | $ | 19,841,164 | ||||||||
Manufacturing
services
|
1,304,615 | - | 5,301,154 | - | ||||||||||||
Technical
services
|
431,456 | - | 1,471,583 | - | ||||||||||||
Mixer
rental
|
995,939 | - | 1,992,520 | - | ||||||||||||
Marketing
cooperation
|
32 | - | 94,167 | - | ||||||||||||
Total
revenue
|
9,276,526 | 6,790,646 | 25,241,473 | 19,841,164 | ||||||||||||
COST
OF REVENUE:
|
||||||||||||||||
Concrete
|
4,592,863 | 4,988,211 | 12,147,067 | 15,538,513 | ||||||||||||
Manufacturing
services
|
510,268 | - | 1,803,356 | - | ||||||||||||
Technical
services
|
22,059 | - | 119,742 | - | ||||||||||||
Mixer
rental
|
265,442 | - | 602,485 | - | ||||||||||||
Marketing
cooperation
|
13 | - | 38,720 | - | ||||||||||||
Total
cost of revenue
|
5,390,645 | 4,988,211 | 14,711,370 | 15,538,513 | ||||||||||||
GROSS
PROFIT
|
3,885,881 | 1,802,435 | 10,530,103 | 4,302,651 | ||||||||||||
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES
|
809,777 | 404,692 | 2,079,257 | 1,033,958 | ||||||||||||
INCOME
FROM OPERATIONS
|
3,076,104 | 1,397,743 | 8,450,846 | 3,268,693 | ||||||||||||
OTHER
(EXPENSE) INCOME, NET
|
||||||||||||||||
Other
subsidy income
|
470,971 | 407,434 | 1,300,992 | 1,190,159 | ||||||||||||
Non-operating
expense, net
|
(118,343 | ) | (9,264 | ) | (201,531 | ) | (36,655 | ) | ||||||||
Interest
income
|
937 | - | 4,777 | - | ||||||||||||
Interest
expense
|
(194,200 | ) | (67,963 | ) | (640,544 | ) | (215,532 | ) | ||||||||
Total
other income, net
|
159,365 | 330,207 | 463,694 | 937,972 | ||||||||||||
INCOME
BEFORE PROVISION FOR INCOME TAXES
|
3,235,469 | 1,727,950 | 8,914,540 | 4,206,665 | ||||||||||||
PROVISION
FOR INCOME TAXES
|
941,477 | 422,521 | 2,516,707 | 422,521 | ||||||||||||
NET
INCOME
|
2,293,992 | 1,305,429 | 6,397,833 | 3,784,144 | ||||||||||||
Dividends
and accretion on redeemable preferred stock
|
305,443 | - | 923,575 | - | ||||||||||||
Net
income available to common shareholders
|
1,988,549 | 1,305,429 | 5,474,258 | 3,784,144 | ||||||||||||
RECONCILIATION
OF COMPREHENSIVE INCOME:
|
||||||||||||||||
Net
income
|
2,293,992 | 1,305,429 | 6,397,833 | 3,784,144 | ||||||||||||
Unrealized
(loss) gain from marketable securities
|
15,901 | (18,220 | ) | (3,316 | ) | 5,223 | ||||||||||
Foreign
currency translation adjustment
|
(39,340 | ) | 644,374 | 98,839 | 1,539,290 | |||||||||||
COMPREHENSIVE
INCOME
|
$ | 2,270,553 | $ | 1,931,583 | $ | 6,493,356 | $ | 5,328,657 | ||||||||
EARNING
PER SHARE:
|
||||||||||||||||
Basic
|
$ | 0.19 | $ | 0.15 | $ | 0.52 | $ | 0.43 | ||||||||
Diluted
|
$ | 0.16 | $ | 0.15 | $ | 0.46 | $ | 0.43 | ||||||||
WEIGHTED
AVERAGE NUMBER OF SHARES:
|
||||||||||||||||
Basic
|
10,525,200 | 8,809,583 | 10,525,066 | 8,809,583 | ||||||||||||
Diluted
|
14,021,832 | 8,809,583 | 14,024,081 | 8,809,583 |
Common
stock
|
Additional
|
Retained
earnings
|
Accumulated
|
|||||||||||||||||||||||||||||||||
Number
of
shares
|
Par
value
|
Paid-in
capital
|
Contribution
receivable
|
Deferred
Compensation
|
Unrestricted
|
Statutory
reserves
|
other
comprehensive
income
|
Total
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
BALANCE,
June 30, 2007
|
8,809,583 | $ | 8,810 | $ | 12,091,290 | $ | (13,470,100 | ) | $ | - | $ | 6,309,675 | $ | 896,634 | $ | 659,922 | $ | 6,496,231 | ||||||||||||||||||
Net
income
|
3,784,144 | 3,784,144 | ||||||||||||||||||||||||||||||||||
Adjustment
to statutory reserve
|
(378,432 | ) | 378,432 | - | ||||||||||||||||||||||||||||||||
Distribution
to offset contribution receivable
|
7,260,000 | (7,627,051 | ) | 367,051 | - | |||||||||||||||||||||||||||||||
Capital
contribution received
|
750,100 | 750,100 | ||||||||||||||||||||||||||||||||||
Unrealized
gain from marketable securities
|
5,223 | 5,223 | ||||||||||||||||||||||||||||||||||
Foreign
currency translation gain
|
1,185,656 | 1,185,656 | ||||||||||||||||||||||||||||||||||
BALANCE,
March 31, 2008 (unaudited)
|
8,809,583 | $ | 8,810 | $ | 12,091,290 | $ | (5,460,000 | ) | $ | - | $ | 2,088,336 | $ | 1,275,066 | $ | 2,217,852 | $ | 12,221,354 | ||||||||||||||||||
Shares
issued due to reorganization
|
1,690,417 | 1,690 | (1,690 | ) | - | |||||||||||||||||||||||||||||||
Shares
issued for services
|
25,000 | 25 | 33,225 | (27,708 | ) | 5,542 | ||||||||||||||||||||||||||||||
Warrants
issued to placement agent on issuance
|
||||||||||||||||||||||||||||||||||||
of
redeemable preferred stock
|
169,345 | 169,345 | ||||||||||||||||||||||||||||||||||
Capital
contribution received
|
4,250,000 | 4,250,000 | ||||||||||||||||||||||||||||||||||
Fair
value of warrants issued with preferred stock
|
1,201,935 | 1,201,935 | ||||||||||||||||||||||||||||||||||
Offering
costs related to issuance of redeemable preferred stock
|
(771,845 | ) | (771,845 | ) | ||||||||||||||||||||||||||||||||
Accretion
of discount on redeemable preferred stock
|
(33,387 | ) | (33,387 | ) | ||||||||||||||||||||||||||||||||
Net
income
|
1,380,040 | 1,380,040 | ||||||||||||||||||||||||||||||||||
Adjustment
to statutory reserve
|
(177,713 | ) | 177,713 | - | ||||||||||||||||||||||||||||||||
Unrealized
loss on marketable securities
|
(16,620 | ) | (16,620 | ) | ||||||||||||||||||||||||||||||||
Foreign
currency translation gain
|
397,234 | 397,234 | ||||||||||||||||||||||||||||||||||
BALANCE,
June 30, 2008 - Restated
|
10,525,000 | $ | 10,525 | $ | 12,722,260 | $ | (1,210,000 | ) | $ | (27,708 | ) | $ | 3,257,276 | $ | 1,452,779 | $ | 2,598,466 | $ | 18,803,598 | |||||||||||||||||
Dividends
on redeemable preferred stock
|
(472,850 | ) | (472,850 | ) | ||||||||||||||||||||||||||||||||
Accretion
of discount on redeemable preferred stock
|
(450,724 | ) | (450,724 | ) | ||||||||||||||||||||||||||||||||
Stock
based compensation
|
66,619 | 66,619 | ||||||||||||||||||||||||||||||||||
Forfeited
stock compensation
|
(25,000 | ) | (25 | ) | (27,683 | ) | 27,708 | - | ||||||||||||||||||||||||||||
Preferred
stock converted to common stock
|
8,000 | 8 | 15,992 | 16,000 | ||||||||||||||||||||||||||||||||
Net
income
|
6,397,833 | 6,397,833 | ||||||||||||||||||||||||||||||||||
Adjustment
to statutory reserve
|
(719,384 | ) | 719,384 | - | ||||||||||||||||||||||||||||||||
Unrealized
loss on marketable securities
|
(3,316 | ) | (3,316 | ) | ||||||||||||||||||||||||||||||||
Foreign
currency translation gain
|
98,839 | 98,839 | ||||||||||||||||||||||||||||||||||
BALANCE,
March 31, 2009 (unaudited)
|
10,508,000 | $ | 10,508 | $ | 12,777,188 | $ | (1,210,000 | ) | $ | - | $ | 8,012,151 | $ | 2,172,163 | $ | 2,693,989 | $ | 24,455,999 | ||||||||||||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income
|
$ | 6,397,833 | $ | 3,784,144 | ||||
Adjustments
to reconcile net income to net cash
|
||||||||
(used
in) provided by operating activities:
|
||||||||
Depreciation
|
1,611,255 | 815,689 | ||||||
Stock-based
compensation expense
|
66,619 | - | ||||||
Bad
debt expense
|
383,581 | 3,136 | ||||||
Changes
in operating assets and liabilities
|
||||||||
Accounts
receivable
|
(14,505,340 | ) | 7,298,441 | |||||
Inventories
|
(538,551 | ) | 32,838 | |||||
Other
receivables
|
(998,078 | ) | 703,888 | |||||
Other
receivables - related parties
|
- | (218 | ) | |||||
Prepayment
|
(83,374 | ) | (328,836 | ) | ||||
Accounts
payable
|
5,365,721 | (9,139,259 | ) | |||||
Other
payables
|
25,142 | 363,910 | ||||||
Accrued
liabilities
|
265,272 | (94,066 | ) | |||||
Customer
deposits
|
(155,310 | ) | - | |||||
Taxes
payable
|
2,389,830 | 385,422 | ||||||
Net
cash provided by operating activities
|
224,600 | 3,825,089 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Advances
- short term loan receivable
|
(1,464,500 | ) | - | |||||
Purchase
of equipment
|
(50,423 | ) | (15,665 | ) | ||||
Net
cash used in investing activities
|
(1,514,923 | ) | (15,665 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Principal
payments of short term loan
|
(6,961,984 | ) | (5,679,400 | ) | ||||
Proceeds
from short term loan
|
7,398,231 | 3,404,168 | ||||||
Other
payables - shareholders
|
(117,160 | ) | - | |||||
Preferred
dividends paid
|
(317,649 | ) | - | |||||
Restricted
cash
|
246,138 | 751,000 | ||||||
Net
cash provided by (used in) financing activities
|
247,576 | (1,524,232 | ) | |||||
EFFECTS
OF EXCHANGE RATE CHANGE IN CASH
|
2,392 | 125,468 | ||||||
(DECREASE)
INCREASE IN CASH
|
(1,040,355 | ) | 2,410,660 | |||||
CASH,
beginning
|
1,910,495 | 1,424,883 | ||||||
CASH,
ending
|
$ | 870,140 | $ | 3,835,543 |
·
|
Exclusive
Technical Consulting and Services Agreement, through which China-ACMH will
provide exclusive technical consulting and services to Xin Ao for an
annual fee in the amount of Xin Ao’s yearly net income after
tax.
|
·
|
Equity
Pledge Agreement, through which Xin Ao’s shareholders pledged their
rights, title and equity interest in Xin Ao as security for China-ACMH to
collect technical consulting and services fees provided to
China-ACMH.
|
·
|
Operating
Agreement, through which China-ACMH has exclusive authority of all
decision-making of ongoing major operations, including establishing
compensation levels and hiring and termination of key personnel. In order
to ensure Xin Ao’s normal operations, China-ACMH agreed to act as the
guarantor and provide full guarantee for Xin Ao in entering and performing
contracts, agreements or transactions in association with Xin Ao’s
operations between Xin Ao and any other third parties. As a counter
guarantee, Xin Ao agreed to mortgage all of its assets including
receivables which have not been mortgaged to any third parties at the
execution date of this agreement to
China-ACMH.
|
·
|
Power
of Attorney, signed by Xin Ao’s 100% shareholders Mr. Han Xianfu and Mr.
He Weili, which authorized the individuals appointed by China-ACMH to
exercise all of their respective voting rights as a shareholder at Xin
Ao’s shareholder meetings.
|
·
|
Option
Agreement, through which Xin Ao’s shareholders granted China-ACMH the
exclusive right and option to acquire all of their equity interests in Xin
Ao. Further, the shareholders of Xin Ao pledged their shares in Xin Ao as
collateral for the annual fees due to the
Company.
|
·
|
Persuasive
evidence of an arrangement exists (the Company considers its sales
contracts and technical service agreements to be pervasive evidence of an
arrangement);
|
·
|
Delivery
has occurred or services have been
rendered;
|
·
|
The
seller’s price to the buyer is fixed or determinable;
and
|
·
|
Collectability
of payment is reasonably assured.
|
·
|
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, substantially the full
term of the financial instrument.
|
·
|
Level
3 inputs
to the valuation methodology are unobservable and significant to the fair
value measurement.
|
·
|
Cash
- Cash includes cash on hand and demand deposits in accounts maintained
with state owned banks within the PRC. The Company considers all highly
liquid instruments purchased with original maturities of three months or
less, and money market accounts, to be cash equivalents. Total cash in
these banks at March 31, 2009 and June 30, 2008 amounted to $630,174 and
$1,795,388, respectively, of which no deposits were covered by insurance.
Also, as of March 31, 2009, the Company held $666,954 in restricted cash
in a corporate legal counsel’s trust account, in accordance with an
agreement with investors for the restricted use of preferred stock
dividend and investor relation related expenses. Nonperformance by these
institutions could expose the Company to losses not covered by insurance.
Management reviews the financial condition of these institutions on a
periodic basis and does not believe the concentration of cash results in a
high level of risk.
|
·
|
Major
customers – As of and for the nine months ended March 31, 2009, three
customers accounted for approximately 12.2% of the Company’s accounts
receivable and approximately 39.9 % of the Company's sales. As of and for
the nine months ended March 31, 2008, three customers accounted for
approximately 28% of the Company’s accounts receivable and approximately
38% of the Company's sales.
|
·
|
Major
suppliers – As of and for the nine months ended March 31, 2009, three
suppliers accounted for approximately 21% of the Company’s accounts
payable and approximately 35% of the Company’s purchases. As of
and for the nine months ended March 31, 2008, three suppliers accounted
for approximately 28% of the Company’s accounts payable and approximately
43% of the Company’s purchases.
|
·
|
Political
and economic risks - The Company's operations are carried out in the PRC.
Accordingly, the Company's business, financial condition, and results of
operations may be influenced by the political, economic, and legal
environments in the PRC, and by the general state of the PRC's economy.
The Company's operations in the PRC are subject to specific considerations
and significant risks not typically associated with companies in North
America and Western Europe. These include risks associated with, among
others, the political, economic, and legal environments, and foreign
currency exchange. The Company's results may be adversely affected by
changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and
rates and methods of taxation, among
others.
|
Useful
Life
|
|
Transportation
equipment
|
10
years
|
Plant
machinery
|
10
years
|
Office
equipment
|
5
years
|
March
31, 2009
(Unaudited)
|
June
30, 2008
|
|||||||
Accounts
receivable, current
|
$ | 15,214,018 | $ | 9,590,410 | ||||
Less: allowance
for doubtful accounts, current
|
(357,810 | ) | (224,924 | ) | ||||
Net
accounts receivable, current
|
14,856,208 | 9,365,486 | ||||||
Accounts
receivable, non-current
|
8,194,263 | 5,164,067 | ||||||
Less: allowance
for doubtful accounts, non-current
|
(664,503 | ) | (411,061 | ) | ||||
Net
accounts receivable, non-current
|
7,529,760 | 4,753,006 | ||||||
Total
accounts receivable, net
|
$ | 22,385,968 | $ | 14,118,492 |
March
31, 2009
(Unaudited)
|
June
30, 2008
|
|||||||
Raw
material purchase
|
$ | 3,309,771 | $ | 3,195,394 | ||||
Rent
|
586,000 | - | ||||||
Service
|
45,000 | 45,000 | ||||||
Total
|
$ | 3,940,771 | $ | 3,240,394 |
March
31, 2009
(Unaudited)
|
June
30,2008
|
|||||||
Transportation
equipment
|
$ | 20,370,293 | $ | 20,286,866 | ||||
Plant
machinery
|
2,236,456 | 1,894,585 | ||||||
Office
equipment
|
55,841 | 43,057 | ||||||
Construction-
in-progress
|
- | 295,033 | ||||||
Total
|
22,662,590 | 22,519,541 | ||||||
Less:
accumulated depreciation
|
(7,424,934 | ) | (5,789,321 | ) | ||||
Plant
and equipment, net
|
$ | 15,237,656 | $ | 16,730,220 |
March
31,
|
June
30,
|
|||||||
2009
(Unaudited)
|
2008
|
|||||||
Loan
from Huaxia Bank, effective interest rate of 7.56% per annum, due November
16, 2008, guaranteed by the Company’s shareholder, Mr. Han Xianfu, fully
paid as of December 31, 2008.
|
$ | - | $ | 2,918,000 | ||||
Loan
from Beijing International Trust Co, Ltd. interest rate of 15% per annum,
due July 15, 2009, guaranteed by Rayland Credit Guarantee Co.
Ltd.
|
4,395,000 | - | ||||||
Loan
from Beijing Hengxin Huaxing Auto Accessories Company, unrelated entity,
non-interest bearing, fully paid as of December 31, 2008.
|
- | 379,340 | ||||||
Loan
from Beijing Hongda Huaxin Wujinjidian Company, unrelated company,
non-interest bearing, fully paid as of December 31, 2008.
|
- | 204,260 | ||||||
Loan
from Beijing Sigi Qingbaosan Cement Company, unrelated company,
non-interest bearing, fully paid as of December 31, 2008.
|
- | 116,720 | ||||||
Loan
from Xia Hua Qing, unrelated individual, non-interest bearing, fully paid
as of December 31, 2008.
|
- | 128,392 | ||||||
Loan
from various employees, effective interest rate of 20% per annum, due upon
demand, unsecured.
|
328,893 | 524,510 | ||||||
Total
short term loans
|
$ | 4,723,893 | $ | 4,271,222 |
March
31, 2009
(Unaudited)
|
June
30, 2008
|
|||||||
Han
Xianfu, shareholder
|
$ | 450,550 | $ | 450,550 | ||||
He
Weili, shareholder
|
313,084 | 429,752 | ||||||
Total
other payable – shareholder
|
$ | 763,634 | $ | 880,302 |
2009
|
2008
|
|||||||
U.S.
statutory rates
|
34 | % | 34 | % | ||||
Foreign
income not recognized in the U.S.
|
-34 | % | -34 | % | ||||
China
income taxes
|
25 | % | 25 | % | ||||
China
income tax exemption
|
- | (15 | %) | |||||
Other
item (a)
|
3 | % | - | |||||
Effective
income tax rates
|
28 | % | 10 | % |
March
31, 2009
(Unaudited)
|
June
30, 2008
|
|||||||
Income
taxes payable
|
$ | 3,448,588 | $ | 1,072,747 | ||||
Other
|
19,709 | 490 | ||||||
Total
taxes payable
|
$ | 3,468,297 | $ | 1,073,237 |
Outstanding Warrants | ||||||
Exercise
Price
|
Number
|
Average
Remaining
Contractual
Life
|
||||
$
2.40
|
1,750,000 |
4.32
years
|
||||
$
2.40
|
245,000 |
4.32
years
|
||||
Total
|
1,995,000 |
Outstanding
as of June 30, 2007
|
- | |||
Granted
|
1,995,000 | |||
Forfeited
|
- | |||
Exercised
|
- | |||
Outstanding
as of June 30, 2008
|
1,995,000 | |||
Granted
|
- | |||
Forfeited
|
- | |||
Exercised
|
- | |||
Outstanding
as of March 31, 2009
|
1,995,000 |
Expected
|
Expected
|
Dividend
|
Risk Free
|
Grant Date
|
|||||||||||||
Term
(years)
|
Volatility
|
Yield
|
Interest Rate
|
Fair
Value
|
|||||||||||||
Chief
Financial Officer
|
6.25
|
75
|
%
|
0
|
%
|
1.16
|
%
|
$
|
3.00
|
||||||||
Director
|
5.31
|
years |
75
|
%
|
0
|
%
|
1.41
|
%
|
$
|
2.90
|
Number
of options
|
||||
Outstanding
as of June 30, 2007
|
- | |||
Granted
|
- | |||
Forfeited
|
- | |||
Exercised
|
- | |||
Outstanding
as of June 30, 2008
|
- | |||
Granted
|
250,000 | |||
Forfeited
|
- | |||
Exercised
|
- | |||
Outstanding
as of March 31, 2009
|
250,000 |
Outstanding options
|
Exercisable options
|
||||||||||
Average
Exercise price
|
Number
|
Average
remaining
contractual life
(years)
|
Average
Exercise
price
|
Number
|
Weighted
average
exercise
price
|
||||||
$
|
2.90
|
50,000
|
9.52
|
$
|
2.90
|
12,500
|
$
|
-
|
|||
3.00
|
50,000
|
9.67
|
-
|
-
|
-
|
||||||
3.50
|
50,000
|
9.67
|
-
|
-
|
-
|
||||||
4.00 | 50,000 | 9.67 | - | - | - | ||||||
4.50
|
50,000
|
9.67
|
-
|
-
|
-
|
||||||
$
|
3.58
|
250,000
|
$
|
2.90
|
12,500
|
$
|
-
|
Xin
Ao
|
CHINA-ACMH
|
BVI-ACM
|
Total
|
|||||||||||||
Balance,
June 30, 2007
|
$ | 8,470,000 | $ | 5,000,000 | $ | 100 | $ | 13,470,100 | ||||||||
Less:
contribution received
|
- | (750,000 | ) | (100 | ) | (750,100 | ) | |||||||||
Less:
distribution to offset contribution receivable
|
(7,260,000 | ) | - | - | (7,260,000 | ) | ||||||||||
Balance,
March 31, 2008 (unaudited)
|
1,210,000 | 4,250,000 | - | 5,460,000 | ||||||||||||
Less:
contribution received
|
- | (4,250,000 | ) | - | (4,250,000 | ) | ||||||||||
Balance,
June 30, 2008 - restated
|
1,210,000 | - | - | 1,210,000 | ||||||||||||
Less:
contribution received
|
- | - | - | - | ||||||||||||
Balance,
March 31, 2009 (unaudited)
|
$ | 1,210,000 | $ | - | $ | - | $ | 1,210,000 |
Basic
earning per share
|
2009
|
2008
|
||||||
Net
income available to common shareholders
|
$ | 1,988,549 | $ | 1,305,429 | ||||
Weighted
average shares outstanding-Basic
|
10,525,200 | 8,809,583 | ||||||
Earnings
per share-Basic
|
$ | 0.19 | $ | 0.15 | ||||
Diluted
earning per share
|
||||||||
Net
income available to common shareholders
|
$ | 1,988,549 | $ | 1,305,429 | ||||
Add:
Dividends on preferred stock
|
155,200 | - | ||||||
Add:
Accretion on preferred stock
|
150,241 | - | ||||||
Net
income for diluted EPS
|
$ | 2,293,990 | $ | 1,305,429 | ||||
Weighted
average shares outstanding-Basic
|
10,525,200 | 8,809,583 | ||||||
Preferred
stock
|
3,496,632 | - | ||||||
Weighted
shares outstanding-Diluted
|
14,021,832 | 8,809,583 | ||||||
Earning
per share-Diluted
|
$ | 0.16 | $ | 0.15 |
Basic
earning per share
|
2009
|
2008
|
||||||
Net
income available to common shareholders
|
$ | 5,474,258 | $ | 3,784,144 | ||||
Weighted
average shares outstanding-Basic
|
10,525,066 | 8,809,583 | ||||||
Earnings
per share-Basic
|
$ | 0.52 | $ | 0.43 | ||||
Diluted
earning per share
|
||||||||
Net
income available to common shareholders
|
$ | 5,474,258 | $ | 3,784,144 | ||||
Add:
Dividends on preferred stock
|
472,850 | - | ||||||
Add:
Accretion on preferred stock
|
450,723 | - | ||||||
Net
income for diluted EPS
|
$ | 6,397,831 | $ | 3,784,144 | ||||
Weighted
average shares outstanding-Basic
|
10,525,066 | 8,809,583 | ||||||
Preferred
stock
|
3,499,015 | - | ||||||
Weighted
shares outstanding-Diluted
|
14,024,081 | 8,809,583 | ||||||
Earning
per share-Diluted
|
$ | 0.46 | $ | 0.43 |
Years
ending June 30,
|
Amount
|
|
2009
|
|
$275,785
|
2010
|
929,894
|
|
2011
|
732,500
|
|
2012
|
732,500
|
|
2013
|
732,500
|
|
Thereafter
|
366,250
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
March 31,
|
March 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Revenue
|
|
|
|
|
||||||||||||
Sales
of concrete
|
$ | 6,544,484 | $ | 6,790,646 | $ | 16,382,049 | $ | 19,841,164 | ||||||||
Manufacturing
services
|
1,304,615 | - | 5,301,154 | - | ||||||||||||
Technical
services
|
431,456 | - | 1,471,583 | - | ||||||||||||
Mixer
rental
|
995,939 | - | 1,992,520 | - | ||||||||||||
Marketing
cooperation
|
32 | - | 94,167 | - | ||||||||||||
Total
revenue
|
9,276,526 | 6,790,646 | 25,241,473 | 19,841,164 | ||||||||||||
Cost of revenue
|
||||||||||||||||
Cost
of concrete sales
|
4,592,863 | 4,988,211 | 12,147,067 | 15,538,513 | ||||||||||||
Manufacturing
services
|
510,268 | - | 1,803,356 | - | ||||||||||||
Technical
services
|
22,059 | - | 119,742 | - | ||||||||||||
Mixer
rental
|
265,442 | - | 602,485 | - | ||||||||||||
Marketing
cooperation
|
13 | - | 38,720 | - | ||||||||||||
Total
cost of revenue
|
5,390,645 | 4,988,211 | 14,711,370 | 15,538,513 | ||||||||||||
Gross profit
|
3,885,881 | 1,802,435 | 10,530,103 | 4,302,651 | ||||||||||||
Selling,
general and administrative expenses
|
809,777 | 404,692 | 2,079,257 | 1,033,958 | ||||||||||||
Other
income, net
|
159,365 | 330,207 | 463,694 | 937,972 | ||||||||||||
Income before provision for
income taxes
|
3,235,469 | 1,727,950 | 8,914,540 | 4,206,665 | ||||||||||||
Income
taxes
|
941,477 | 422,521 | 2,516,707 | 422,521 | ||||||||||||
Net income
|
2,293,992 | 1,305,429 | 6,397,833 | 3,784,144 | ||||||||||||
Dividends
and accretion on redeemable preferred
|
305,443 | - | 923,575 | - | ||||||||||||
Net income available to Common
shareholders
|
$ | 1,988,549 | $ | 1,305,429 | $ | 5,474,258 | $ | 3,784,144 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
March 31,
|
March 31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||||
Revenue
|
|
|
|
|
||||||||||||
Sales
of concrete
|
70.5 | % | 100.0 | % | 64.9 | % | 100.0 | % | ||||||||
Manufacturing
services
|
14.1 | % | - | 21.0 | % | - | ||||||||||
Technical
services
|
4.7 | % | - | 5.8 | % | - | ||||||||||
Mixer
rental
|
10.7 | % | - | 7.9 | % | - | ||||||||||
Marketing
cooperation
|
0.0 | % | - | 0.4 | % | - | ||||||||||
Total
revenue
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of revenue
|
||||||||||||||||
Cost
of sales
|
49.5 | % | 73.5 | % | 48.1 | % | 78.3 | % | ||||||||
Manufacturing
services
|
5.5 | % | - | 7.1 | % | - | ||||||||||
Technical
services
|
0.2 | % | - | 0.5 | % | - | ||||||||||
Mixer
rental
|
2.9 | % | - | 2.4 | % | - | ||||||||||
Marketing
cooperation
|
0.0 | % | - | 0.2 | % | - | ||||||||||
Total
cost of revenue
|
58.1 | % | 73.5 | % | 58.3 | % | 78.3 | % | ||||||||
Gross profit
|
41.9 | % | 26.5 | % | 41.7 | % | 21.7 | % | ||||||||
Selling,
general and administrative expenses
|
8.7 | % | 6.0 | % | 8.2 | % | 5.2 | % | ||||||||
Other
(expense) income, net
|
1.7 | % | 4.9 | % | 1.8 | % | 4.7 | % | ||||||||
Income before provision for
income taxes
|
34.9 | % | 25.4 | % | 35.3 | % | 21.2 | % | ||||||||
Income
taxes
|
10.2 | % | 6.2 | % | 10.0 | % | 2.1 | % | ||||||||
Net income
|
24.7 | % | 19.2 | % | 25.3 | % | 19.1 | % | ||||||||
Dividends
and accretion on redeemable preferred
|
3.3 | % | - | 3.7 | % | - | ||||||||||
Net income available to common
shareholders
|
$ | 21.4 | % | $ | 19.2 | % | $ | 21.7 | % | $ | 19.1 | % |
Summary
of Cash Flow Statements
|
||||||||
Nine
Months Ended
|
||||||||
March 31,
|
||||||||
(Unaudited)
|
(Unaudited)
|
|||||||
2009
|
2008
|
|||||||
Net
cash provided by operating activities
|
$
|
224,600
|
$
|
3,825,089
|
||||
Net
cash used in investing activities
|
(1,514,923
|
)
|
(15,665
|
)
|
||||
Net
cash provided by (used in) financing activities
|
247,576
|
(1,524,232
|
)
|
|||||
Effect
of foreign currency translation on cash and cash
equivalents
|
2,392
|
125,468
|
||||||
Net
(decrease) increase in cash and cash equivalent
|
$
|
(1,040,355
|
)
|
$
|
2,410,660
|
|
March
31,
|
June
30,
|
||||||
|
2009
|
2008
|
||||||
|
(Unaudited)
|
|||||||
Loan
from Huaxia Bank, with effective annual interest rate of 7.5555%, due
November 16, 2008, guaranteed by the Company’s shareholder, Mr. Han Xianfu
|
$ | - | $ | 2,918,000 | ||||
Loan
from Beijing International Trust Co, Ltd. with effective annual interest
rate of 15%, due July 15, 2009, guaranteed by Rayland Credit Guarantee Co.
Ltd
|
4,395,000 | - | ||||||
Loan
from unrelated company Beijing Hengxin Huaxing Auto Accessories Company,
with no interest, fully paid.
|
- | 379,340 | ||||||
Loan
from unrelated company Beijing Hongda Huaxin Wujinjidian Company, with no
interest, fully paid.
|
- | 204,260 | ||||||
Loan
from unrelated company, Beijing Sigi Qingbaosan Cement Company, with no
interest, fully paid.
|
- | 116,720 | ||||||
Loan
from unrelated individual Xia Hua Qing, with no interest, fully paid.
|
- | 128,392 | ||||||
Loan
from various employees, with effective annual interest rate of 20%, due
upon demand, unsecured.
|
328,893 | 524,510 | ||||||
Total
short term loans
|
$ | 4,723,893 | $ | 4,271,222 |
Payment due in
year ended June 30,
|
||||||||||||||||||||
Total
|
2009
|
2010
|
2011
|
Thereafter
|
||||||||||||||||
Long
term debt obligations
|
- | - | - | - | - | |||||||||||||||
Capital
commitment
|
- | - | - | - | - | |||||||||||||||
Operating
lease obligations
|
$ | 3,769,429 | $ | 275,785 | $ | 929,894 | $ | 732,500 | $ | 1,831,250 | ||||||||||
Purchase
obligations
|
- | - | - | - | - | |||||||||||||||
Total
|
$ | 3,769,429 | $ | 275,785 | $ | 929,894 | $ | 732,500 | $ | 1,831,250 |
·
|
Persuasive
evidence of an arrangement exists (the Company considers its sales
contracts and technical service agreements to be pervasive evidence of an
arrangement);
|
·
|
Delivery
has occurred or services have been
rendered;
|
·
|
The
seller’s price to the buyer is fixed or determinable;
and
|
·
|
Collectability
of payment is reasonably assured.
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
ITEM
4(T).
|
CONTROLS
AND PROCEDURES.
|
ITEM
1.
|
LEGAL
PROCEEDINGS.
|
ITEM
1A.
|
RISK
FACTORS.
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES.
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|
ITEM
5.
|
OTHER
INFORMATION.
|
ITEM
6.
|
EXHIBITS.
|
Exhibit No.
|
Description
|
||
31.1
|
Certifications
of Principal Executive Officer filed pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
||
31.2
|
Certifications
of Principal Financial Officer filed pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
||
32.1
|
Certifications
of Principal Executive Officer furnished pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
||
32.2
|
Certifications
of Principal Financial Officer furnished pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
Date:
May 15, 2009
|
CHINA
ADVANCED CONSTRUCTION
MATERIALS
GROUP, INC.
|
|
By:
|
/s/ Xianfu Han
|
|
Xianfu
Han, Chief Executive Officer
|
||
(Principal
Executive Officer)
|
||
By:
|
/s/ Chin
Hsiao
|
|
Chin
Hsiao, Chief Financial Officer
|
||
(Principal
Financial Officer and Principal
Accounting
Officer)
|