Delaware
|
20-8468508
|
(State
or other Jurisdiction of Incorporation or
|
(I.R.S.
Employer Identification No.)
|
Organization)
|
|
1515
Broadway 11/F
|
|
New
York, New York
|
10036
|
(Address
of Principal Executive Offices)
|
(zip
code)
|
Title
of Each Class
|
Name
of Each Exchange On Which Registered
|
|
Common Stock, Par Value
$0.001
|
NASDAQ Global
Market
|
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting
company
x
|
Page
|
||
Item
1.
|
Business
|
4
|
Item
2.
|
Properties
|
30
|
Item
3.
|
Legal
Proceedings
|
31
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
31
|
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
31
|
Item
6.
|
Selected
Financial Data
|
32
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
32
|
Item
7A.
|
Quantitative
and Qualitative Disclosure of Market Risk
|
48
|
Item
8.
|
Financial
Statements and Supplementary Data
|
48
|
Item
9.
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
|
48
|
Item
9A(T).
|
Controls
and Procedures
|
48
|
Item
9B.
|
Other
Information
|
50
|
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
50
|
Item
11.
|
Executive
Compensation
|
57
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
59
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
60
|
Item
14.
|
Principal
Accountant Fees and Services
|
61
|
Item
15.
|
Exhibits,
Financial Statements and Schedules
|
62
|
|
·
|
“China,” “Chinese” and “PRC,” are
references to the People’s Republic of
China;
|
|
·
|
“BVI” are references to the
British Virgin Islands
|
|
·
|
“China Advanced,” “China-ACM,”
“the Company,” “we,” “us,” or “our,” are references to the combined
business of China Advanced Construction Materials, Group, Inc. and its
wholly-owned subsidiaries, BVI-ACM and China-ACMH, as well as Xin Ao, but
do not include the stockholders of China
Advanced;
|
|
·
|
“BVI-ACM” are references to Xin
Ao Construction Materials,
Inc.
|
|
·
|
“China-ACMH” are references to
Beijing Ao Hang Construction Materials Technology Co.,
Ltd.;
|
|
·
|
“Xin Ao” are references to
Beijing Xin Ao Concrete
Group;
|
|
·
|
“RMB” are references to the
Renminbi, the legal currency of China;
and
|
|
·
|
“U.S. dollars,” “dollars” and “$”
refer to the legal currency of the United
States.
|
|
·
|
our expectations regarding the
market for our concrete products and
services;
|
|
·
|
our expectations regarding the
continued growth of the concrete
industry;
|
|
·
|
our beliefs regarding the
competitiveness of our
products;
|
|
·
|
our expectations regarding the
expansion of our manufacturing
capacity;
|
|
·
|
our expectations with respect to
increased revenue growth and our ability to achieve profitability
resulting from increases in our production
volumes;
|
|
·
|
our future business development,
results of operations and financial
condition;
|
|
·
|
competition from other
manufacturers of concrete
products;
|
|
·
|
the loss of any member of our
management team;
|
|
·
|
our ability to integrate acquired
subsidiaries and operations into existing
operations;
|
|
·
|
market conditions affecting our
equity capital;
|
|
·
|
our ability to successfully
implement our selective acquisition
strategy;
|
|
·
|
changes in general economic
conditions; and
|
|
·
|
changes in accounting rules or
the application of such
rules.
|
|
·
|
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 year ended
June 30, 2010, the Company did not have any customer account for over 10%
of sales. For the year ended June 30, 2010, two customers accounted for
approximately 8.4% of the Company’s sales and 3.8% of the Company’s
account receivables as of June 30,
2010.
|
|
·
|
Experienced
Management. We
believe that our management’s technological knowledge and business
relationships gives us the ability to secure major infrastructure
projects, which provides us with leverage to potentially acquire less
sophisticated operators, increase production volumes, and implement
quality standards and environmentally sensitive
policies.
|
|
·
|
Innovation
Efforts. We strive
to produce the most technically and scientifically advanced products to
our customers and maintain close relationships with Tsinghua University,
Xi’an University of Architecture and Technology and Beijing Dongfangjianyu
Institute of Concrete Science & Technology which assist us with our
research and development activities. As a result of our relationships with
these universities and institute, we believe that we have realized an
advantage over many of our competitors by gaining access to a wide array
of resources and
knowledge.
|
|
·
|
Capacity
Expansion via Building New Plants. We added seven portable
stations during the fiscal year 2010 in order to meet the requirements of
existing contracts and anticipated demand. We plan to add more portable
stations in 2011 and 2012 as part of our long-term expansion plans due to
very attractive margins and high return on
investment.
|
|
·
|
Mergers
and Acquisitions. We
intend to capitalize on the challenges that smaller companies are
encountering in our industry by acquiring complementary companies at
favorable prices. We believe that buying rather than building capacity is
an option that may be attractive to us if replacement costs are higher
than purchase prices. We are currently looking into acquiring smaller
concrete manufacturers in China as part of our expansion plans; further
information will be reported when key details have been confirmed. No
Letters-of-Intent have been entered into or specific targets identified at
this time.
|
|
·
|
Vertical
Integration. We plan
to acquire smaller companies within the construction industry, develop
more material recycling centers, and hire additional highly qualified
employees. In order to accomplish this, we may be required to offer
additional equity or debt securities. Certain of the companies we may seek
to acquire are suppliers of the raw materials we purchase to manufacture
our products. If we do acquire such companies we will have greater control
over our raw material costs.
|
|
·
|
Supply
Chain Efficiencies and Scale. We intend to streamline our
supply chain process and leverage our economies of
scale.
|
|
·
|
New
Product Offering. We
plan to produce a lightweight aggregate concrete for use in projects and
to expand product offerings to include pre-cast
concrete.
|
Common Industry Mixtures
(Customized to Project)
|
Industry Leading Mixtures
Highly Technical Blends
|
|||
·
|
Ready-mixed
Concrete Blends: C10 to C100
|
|
·
|
Compound
Admixture Concrete
|
|
|
|
|
|
·
|
Controlled
Low-Strength Material (CLSM)
|
|
·
|
Lightweight
Aggregate Concrete
|
|
|
|
|
|
·
|
High-Strength
Concrete with Customized Fibers
|
|
·
|
Energy-saving
Phase change thermostat concrete
|
|
|
|
|
|
·
|
Soil
Cement, Unique Foundation Concrete
|
|
·
|
C100
High Performance Concrete
|
|
·
|
Specification For Mix Proportion
Design of Ordinary Concrete
JGJ55-2000
|
|
·
|
Code for Acceptance of
Constructional Quality Of Concrete Structures GB
50204-2002
|
|
·
|
Applied Technical Specification
of Mineral Admixtures In Concrete
DBJ/T01-64-2002
|
|
·
|
Ready-Mixed Concrete GB/T
14902-2003
|
|
·
|
Practice Code for Application of
Ready-Mixed Mortar DBJ
01-99-2005
|
|
·
|
Management Specification of
Quality for Ready-Mixed
Concrete
|
|
·
|
Technical Requirement for
Environmental Labeling Products Ready-Mixed Concrete
HJ/T412-2007
|
|
·
|
Research on Compound Admixture
HPC; 3rd Class Award for China Building Materials Science & Technology
Progress.
|
|
·
|
Research and Application of C100
HPC; 3rd Class Award for Beijing Science & Technology
Progress.
|
|
·
|
Research on pumping Light
Aggregate Concrete; Innovation Award for China Building Materials Science
& Technology.
|
|
·
|
Research and Application of Green
(nontoxic) HPC; First Prize for Beijing Science & Technology
Progress.
|
|
·
|
Construction Technology of HPC
for the Capital International
Airport
|
|
·
|
Research on Production and
Construction Technology of Phase Change Energy-saving Thermostat Concrete
and Mortar
|
|
·
|
Polycarboxylate Series High
Performance Water Reducing Agent Compositing
Technique
|
|
·
|
State Swimming Center for
Concrete Cracking Control
Technology
|
Employees/Independent
Contractors and their Functions
|
As
of
June
30, 2010
|
|||||||
Management
& Administrative Staff
|
252
|
21
|
%
|
|||||
Sales
|
24
|
2
|
%
|
|||||
Technical
& Engineering Staff
|
47
|
4
|
%
|
|||||
Production
Staff
|
354
|
29
|
%
|
|||||
Equipment
& Maintenance
|
44
|
4
|
%
|
|||||
Drivers
& Heavy Equipment Operators
|
13
|
1
|
%
|
|||||
SubTotal
|
734
|
61
|
%
|
|||||
Independent
Contractors
|
482
|
39
|
%
|
|||||
Total
|
1,216
|
100
|
%
|
|
·
|
the need for additional funding
to construct additional manufacturing facilities, which we may be unable
to obtain on reasonable terms or at
all;
|
|
·
|
delays and cost overruns as a
result of a number of factors, many of which may be beyond our control,
such as problems with equipment vendors and manufacturing services
provided by third-party manufacturers or
subcontractors;
|
|
·
|
our receipt of any necessary
government approvals or permits that may be required to expand our
operations in a timely manner or at
all;
|
|
·
|
diversion of significant
management attention and other resources;
and
|
|
·
|
failure to execute our expansion
plan effectively.
|
|
·
|
onsite conditions that differ
from those assumed in the original
bid;
|
|
·
|
delays caused by weather
conditions;
|
|
·
|
later contract start dates than
expected when we bid the
contract;
|
|
·
|
contract modifications creating
unanticipated costs not covered by change
orders;
|
|
·
|
changes in availability,
proximity and costs of materials, including steel, concrete, aggregate and
other construction materials (such as stone, gravel and sand), as well as
fuel and lubricants for our
equipment;
|
|
·
|
availability and skill level of
workers in the geographic location of a
project;
|
|
·
|
our suppliers’ or subcontractors’
failure to perform;
|
|
·
|
fraud or theft committed by our
employees;
|
|
·
|
mechanical problems with our
machinery or equipment;
|
|
·
|
citations issued by governmental
authorities
|
|
·
|
difficulties in obtaining
required governmental permits or
approvals;
|
|
·
|
changes in applicable laws and
regulations; and
|
|
·
|
claims or demands from third
parties alleging damages arising from our work or from the project of
which our work is part.
|
|
·
|
investors’ perception of, and
demand for, securities of Chinese-based companies involved in construction
supply or concrete
industries;
|
|
·
|
conditions of the U.S. and other
capital markets in which we may seek to raise
funds;
|
|
·
|
our future results of operations,
financial condition and cash flows;
and
|
|
·
|
economic, political and other
conditions in China.
|
|
·
|
the higher level of government
involvement;
|
|
·
|
the early stage of development of
the market-oriented sector of the
economy;
|
|
·
|
the rapid growth
rate;
|
|
·
|
the higher level of control over
foreign exchange; and
|
|
·
|
the allocation of
resources.
|
Year
|
Quarter Ending
|
High
|
Low
|
|||||||
2010
|
September
30 (as of September 24)
|
$
|
4.15
|
$
|
3.03
|
|||||
June
30
|
$
|
5.62
|
$
|
3.25
|
||||||
March
31
|
$
|
7.48
|
$
|
4.45
|
||||||
2009
|
December
31
|
$
|
7.90
|
$
|
4.36
|
|||||
September
30
|
$
|
6.90
|
$
|
2.50
|
||||||
June
30
|
$
|
3.90
|
$
|
1.71
|
||||||
March
31
|
$
|
2.75
|
$
|
1.01
|
||||||
2008
|
December
31
|
$
|
2.75
|
$
|
2.74
|
|||||
|
September
30
|
$
|
2.60
|
$
|
2.60
|
|||||
|
June
30 (from May 19)
|
$
|
2.30
|
$
|
0.30
|
Year Ended June 30,
|
||||||||||||
2010
|
2009
|
Increase
(Decrease)
|
||||||||||
Net Income -GAAP
|
$ | 13,006,395 | $ | 12,068,489 | $ | 937,906 | ||||||
Subtract:
|
||||||||||||
Dividends
and accretion on redeemable convertible preferred stock
|
$ | (955,557 | ) | $ | (1,229,473 | ) | $ | (273,916 | ) | |||
Net
Income available to Common shareholders -GAAP
|
$ | 12,050,838 | $ | 10,839,016 | $ | 1,211,822 | ||||||
Add
Back:
|
||||||||||||
Change
in fair value of warrants
|
$ | 2,488,959 | $ | - | $ | 2,488,959 | ||||||
Add
Back:
|
||||||||||||
Change
in Option and Equity Based Compensation
|
$ | 595,888 | $ | 107,477 | $ | 488,411 | ||||||
Add
Back:
|
||||||||||||
Accretion
of Discount on Redeemable Preferred Stock
|
$ | 567,580 | $ | 600,968 | $ | (33,388 | ) | |||||
Adjusted
Net Income available to Common shareholders -non-GAAP
|
$ | 15,703,265 | $ | 11,547,461 | $ | 4,155,804 | ||||||
Basic
earnings per share - GAAP
|
$ | 0.90 | $ | 1.03 | $ | (0.13 | ) | |||||
Add
back:
|
||||||||||||
Change
in fair value of warrant
|
$ | 0.18 | $ | - | $ | 0.18 | ||||||
Add
back:
|
||||||||||||
Change
in Option and Equity-Based Compensation
|
$ | 0.04 | $ | 0.01 | $ | 0.03 | ||||||
Add
back:
|
||||||||||||
Accretion
of Discount on Redeemable Preferred Stock
|
$ | 0.04 | $ | 0.06 | $ | (0.02 | ) | |||||
Adjusted
basic earnings per share Non-GAAP
|
$ | 1.16 | $ | 1.10 | $ | 0.06 | ||||||
Diluted
earnings per share-GAAP
|
$ | 0.79 | $ | 0.86 | $ | (0.07 | ) | |||||
Add
back:
|
||||||||||||
Change
in fair value of warrant
|
$ | 0.15 | (a) | $ | - | $ | 0.15 | |||||
Add
back:
|
||||||||||||
Change
in Option and Equity-Based Compensation
|
$ | 0.04 | (b) | $ | 0.01 | $ | 0.03 | |||||
Adjusted diluted earnings per share - Non-GAAP | $ | 0.98 | $ | 0.87 | $ | 0.11 | ||||||
Subtract:
|
||||||||||||
Cash
Dividends Paid on Redeemable Preferred Stock
|
$ | 0.03 | $ | 0.05 | $ | (0.02 | ) | |||||
Adjusted
diluted earnings per share available to common - Non-GAAP
|
$ | 0.95 | $ | 0.82 | $ | 0.13 | ||||||
Weighted
average number of shares
|
||||||||||||
Basic
|
13,456,134 | 10,526,719 | ||||||||||
Diluted
|
16,521,296 | 14,032,479 |
|
·
|
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 year ended June 30, 2010, the Company did not have any
customer account for over 10% of sales. For the year ended June 30, 2010,
two customers accounted for approximately 8.4% of the Company’s sales and
3.8% of the Company’s account receivables as of June 30, 2010,
respectively.
|
|
·
|
Experienced Management.
Management’s technical knowledge and business relationships gives 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.
|
|
·
|
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
Dongfangjianyu Institute of Concrete Science & Technology which assist
us with our research and development activities. During our 5 year
agreement with the parties, we have realized an advantage over many of our
competitors by gaining access to a wide array of resources and knowledge.
At present, no payments have been made by us under the
agreement.
|
Sales of
concrete
|
Manufacturing
services
|
Technical
services
|
Others
|
Corporate
|
Total
|
|||||||||||||||||||
June 30, 2010
|
||||||||||||||||||||||||
Net
sales
|
$ | 70,579,631 | $ | 15,654,659 | $ | 4,889,460 | $ | 1,917,097 | $ | - | $ | 93,040,847 | ||||||||||||
Depreciation
|
(1,032,221 | ) | (1,693,581 | ) | (5,232 | ) | (151,456 | ) | (42,126 | ) | (2,924,616 | ) | ||||||||||||
Segment
Profit
|
5,686,379 | 7,311,730 | 4,543,163 | 1,408,789 | (5,053,494 | ) | 13,896,567 | |||||||||||||||||
Other
income (expenses)
|
3,942,679 | 939,472 | - | - | (2,582,939 | ) | 2,299,212 | |||||||||||||||||
Interest
income
|
- | - | - | - | 9,001 | 9,001 | ||||||||||||||||||
Interest
expenses
|
- | - | - | - | (23,834 | ) | (23,834 | ) | ||||||||||||||||
Capital
expenditure
|
(409,564 | ) | (6,727,104 | ) | - | - | (41,061 | ) | (7,177,729 | ) | ||||||||||||||
Total assets as of June 30, 2010 | $ | 69,101,360 | $ | 15,326,776 | $ | - | $ | 1,183,304 | $ | - | $ | 85,611,440 | ||||||||||||
June
30, 2009
|
||||||||||||||||||||||||
Net
sales
|
$ |
28,118,492
|
$ |
7,053,728
|
$ |
1,924,089
|
$ |
2,618,493
|
$ | - | $ |
39,714,802
|
||||||||||||
Depreciation
|
(1,537,366
|
) |
(404,449
|
) |
(5,084
|
) |
(237,563
|
) | - |
(2,184,462
|
) | |||||||||||||
Segment Profit |
7,249,594
|
4,232,395
|
1,762,193
|
1,653,732
|
(1,418,948
|
) |
13,478,966
|
|||||||||||||||||
Other
income (expenses)
|
1,686,066 | 423,224 | - | - | (602,020 |
)
|
1,507,270 | |||||||||||||||||
Interest
income
|
- | - | - | - | - |
|
- | |||||||||||||||||
Interest
expenses
|
- | - | - | - | (802,650 |
)
|
(802,650 |
)
|
||||||||||||||||
Capital
expenditure
|
(4,219 |
)
|
(7,381,443 |
)
|
- | - | (53,000 |
)
|
(7,438,622 |
)
|
||||||||||||||
Total
assets as of June 30, 2009
|
$ | 41,905,192 | $ | 10,512,222 | $ | - | $ | 3,902,359 | $ | - |
|
$ | 56,319,733 |
|
Years Ended
|
||||||||||||||||
June 30,
|
||||||||||||||||
2010
|
2009
|
|||||||||||||||
Increase
|
Percentage
Increase
|
|||||||||||||||
Total
revenue
|
$
|
93,040,847
|
$
|
39,714,802
|
$
|
53,326,045
|
134
|
%
|
||||||||
Total
cost of revenue
|
73,704,701
|
24,518,042
|
49,186,659
|
201
|
%
|
|||||||||||
Gross
profit
|
19,336,146
|
15,196,760
|
4,139,386
|
27
|
%
|
|||||||||||
Selling,
general and administrative expenses
|
5,439,579
|
1,717,794
|
3,721,785
|
217
|
%
|
|||||||||||
Other
income, net
|
2,284,379
|
704,620
|
1,579,759
|
224
|
%
|
|||||||||||
Income
before provision for income taxes
|
16,180,946
|
14,183,586
|
1,997,360
|
14
|
%
|
|||||||||||
Income
taxes expense
|
3,174,551
|
2,115,097
|
1,059,454
|
50
|
%
|
|||||||||||
Net
income
|
13,006,395
|
12,068,489
|
937,906
|
8
|
%
|
|||||||||||
Dividends
and accretion on redeemable preferred
|
955,557
|
1,229,473
|
(273,916)
|
(22)
|
%
|
|||||||||||
Net
income available to Common shareholders
|
$
|
12,050,838
|
$
|
10,839,016
|
$
|
1,211,822
|
11
|
%
|
Summary of Cash Flow Statements
|
||||||||
For the years ended
|
||||||||
June 30,
|
||||||||
2010
|
2009
|
|||||||
Net
cash (used in) provided by operating activities
|
$
|
(192,516)
|
$
|
3,361,128
|
||||
Net
cash used in investing activities
|
(7,099,316
|
)
|
(1,771,915
|
)
|
||||
Net
cash provided by financing activities
|
6,936,571
|
136,572
|
||||||
Effect
of foreign currency translation on cash and cash
equivalents
|
21,276
|
(1,475
|
)
|
|||||
Net
(decrease) increase in cash and cash equivalent
|
$
|
(333,985)
|
$
|
1,724,310
|
June 30, 2010
|
June 30, 2009
|
|||||||
$ | $ |
4,395,000
|
||||||
Loan
from various employees, effective interest rate of 20% per annum, due upon
demand, unsecured.
|
117,200
|
|||||||
$
|
0
|
$
|
4,512,200
|
Payment due in year ended June 30,
|
||||||||||||||||||||||||||||
Total
|
2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
||||||||||||||||||||||
Long
term debt obligations
|
||||||||||||||||||||||||||||
Capital
commitment
|
||||||||||||||||||||||||||||
Operating
lease obligations
|
$
|
2,889,254
|
$
|
601,442
|
$
|
934,972
|
$
|
934,972
|
$
|
417,868
|
$
|
-
|
$
|
-
|
||||||||||||||
Purchase
obligations
|
||||||||||||||||||||||||||||
Total
|
$
|
2,889,254
|
$
|
601,442
|
$
|
934,972
|
$
|
934,972
|
$
|
417,868
|
$
|
-
|
|
$
|
-
|
|
·
|
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.
|
|
·
|
Pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the
Company;
|
|
·
|
Provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in
the United States of America, and that our receipts and expenditures are
being made only in accordance with authorizations of our management and
directors; and;
|
|
·
|
Provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use
or disposition of our assets that could have a material effect on our
financial statements.
|
Name
|
Age
|
Position
|
||
Xianfu
Han
|
50
|
Chairman,
Chief Executive Officer and Director
|
||
Weili
He
|
52
|
Chief
Operating Officer, Vice Chairman and Director
|
||
Jeremy
Goodwin
|
36
|
President,
Chief Financial Officer, Director
|
||
Denis
Slavich
|
69
|
Director
|
||
Shaojian
(Sean) Wang
|
45
|
Director
|
||
Larry
Goldman
|
53
|
Director
|
||
Jing
Liu
|
37
|
Director
|
|
·
|
The
Audit Committee oversees risks related to the Company’s financial
statements, the financial reporting process, accounting and legal matters.
The Audit Committee oversees the internal audit function and the Company’s
ethics programs, including the Codes of Business Conduct. The Audit
Committee members meet separately with representatives of the independent
auditing firm; and
|
|
·
|
The
Compensation Committee evaluates the risks and rewards associated with the
Company’s compensation philosophy and programs. The Compensation Committee
reviews and approves compensation programs with features that mitigate
risk without diminishing the incentive nature of the compensation.
Management discusses with the Compensation Committee the procedures that
have been put in place to identify and mitigate potential risks in
compensation.
|
|
•
|
selecting our independent
auditors and pre-approving all auditing and non-auditing services
permitted to be performed by our independent
auditors;
|
|
•
|
reviewing with our independent
auditors any audit problems or difficulties and management’s
response;
|
|
•
|
reviewing and approving all
proposed related-party transactions, as defined in Item 404 of Regulation
S-K under the Securities Act of 1933, as
amended;
|
|
•
|
discussing the annual audited
financial statements with management and our independent
auditors;
|
|
•
|
reviewing major issues as to the
adequacy of our internal controls and any special audit steps adopted in
light of significant internal control
deficiencies;
|
|
•
|
annually reviewing and
reassessing the adequacy of our audit committee
charter;
|
|
•
|
meeting separately and
periodically with management and our internal and independent auditors;
and
|
|
•
|
reporting to the full board of
directors; and
|
|
•
|
such other matters that are
specifically delegated to our audit committee by our board of directors
from time to time.
|
|
•
|
approving and overseeing the
compensation package for our executive
officers;
|
|
•
|
reviewing and making
recommendations to the board with respect to the compensation of our
directors;
|
|
•
|
reviewing and approving corporate
goals and objectives relevant to the compensation of our chief executive
officer, evaluating the performance of our chief executive officer in
light of those goals and objectives, and setting the compensation level of
our chief executive officer based on this evaluation;
and
|
|
•
|
reviewing periodically and making
recommendations to the board regarding any long-term incentive
compensation or equity plans, programs or similar arrangements, annual
bonuses, employee pension and welfare benefit
plans.
|
•
|
identifying and recommending to
the board nominees for election or re-election to the board, or for
appointment to fill any
vacancy;
|
•
|
reviewing annually with the board
the current composition of the board in light of the characteristics of
independence, age, skills, experience and availability of service to
us;
|
•
|
identifying and recommending to
the board the directors to serve as members of the board’s committees;
and
|
•
|
monitoring compliance with our
code of business conduct and
ethics.
|
Name and
Principal
Position (1)
|
Year
Ended
June 30
|
Salary
($)
|
Bonus ($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
Earnings
($)
|
Non-
Qualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||
Xianfu
Han
|
2009
|
140,000
|
-
|
-
|
-
|
-
|
-
|
-
|
140,000
|
|||||||||||||||
Chairman
and CEO (2)
|
2010
|
140,000
|
-
|
-
|
-
|
-
|
-
|
-
|
140,000
|
|||||||||||||||
Weili
He,
|
2009
|
109,342
|
-
|
-
|
-
|
-
|
-
|
-
|
109,342
|
|||||||||||||||
Vice
Chairman and COO
|
2010
|
109,342
|
-
|
-
|
-
|
-
|
-
|
-
|
109,342
|
(1)
|
While
our president and chief financial officer, Jeremy Goodwin has an
employment agreements which provide for compensation in excess of
$100,000, his actual paid salary through the fiscal years ended June 30,
2009 or 2010 respectively were not in excess of
$100,000.
|
(2)
|
In
connection with the reverse acquisition of BVI-ACM on April 29, 2008, Mr.
Han was elected as our Chairman and Chief Executive Officer effective
immediately.
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
Name & Address of
|
Office, If Any
|
Amount and Nature of
|
Percent of
|
|||||||
Beneficial Owner
|
Beneficial Ownership
|
Class (1) (2)
|
||||||||
Officers and Directors
|
||||||||||
Xianfu
Han (3)
|
Chairman
and CEO
|
5,285,750 | 30.1 | % | ||||||
Weile
He (4)
|
Vice
Chairman
and
COO
|
3,523,833 | 20.1 | % | ||||||
Jeremy
Goodwin*
|
President
and CFO
|
12,500 | - | |||||||
Sean
Wang*
|
Director
|
7,500 | - | |||||||
Denis
Slavich*
|
Director
|
7,500 | - | |||||||
Larry
Goldman*
|
Director
|
7,500 | - | |||||||
Jing
Liu*
|
Director
|
2,500 | - | |||||||
All
officers and directors as a group (7 persons named above)
|
8,847,083 | 50.2 | % | |||||||
5%
Security Holders
|
||||||||||
Xianfu
Han (3)
|
Chairman
and CEO
|
5,285,750 | 30.1 | % | ||||||
Weile
He (4)
|
Vice
Chairman
and
COO
|
3,523,833 | 20.1 | % | ||||||
*Less
than 1%
|
(1)
|
As
of the close of business on September 24, 2010, there were 17,572,104
shares of our common stock
outstanding.
|
(2)
|
In
determining beneficial ownership of the common stock, the number of shares
shown includes shares which the beneficial owner may acquire within 60
days of August 20, 2010 upon exercise of convertible securities, warrants
or options. In accordance with Rule 13d-3 in determining the percentage of
common stock owned by a person on August 20, 2010 (a) the numerator is the
number of shares of the class beneficially owned by such person, including
shares which the beneficial owner may acquire within 60 days upon
conversion or exercise of the warrants and other convertible securities,
and (b) the denominator is the sum of (i) the total shares of that class
outstanding on August 20, 2010, and (ii) the total number of shares that
the beneficial owner may acquire upon conversion or exercise of other
securities. Unless otherwise stated, each beneficial owner has sole power
to vote and dispose of the shares.
|
(3)
|
On
June 11, 2008, Mr. Han entered into a Securities Escrow Agreement by and
among the investors to the private placement that closed on June 11, 2008
and American Stock Transfer & Trust Company, or AST, whereby 3,000,000
shares of the Company’s common stock owned by Mr. Han were placed into
escrow, with AST appointed as the escrow agent. The 3,000,000 shares were
thereafter transferred into the name of AST and are to be held in escrow
and released to Mr. Han if the Company does, or to the investors if the
Company does not, meet certain performance milestones described in the
Securities Escrow Agreement. Mr. Han maintains voting power over all
3,000,000 shares until such time as any such shares are transferred to the
investors, at which time, such transferred shares will be beneficially
owned by such investors.
|
(4)
|
On
June 11, 2008, Mr. He entered into a Securities Escrow Agreement by and
among the investors to the private placement that closed on June 11, 2008
and American Stock Transfer & Trust Company, or AST, whereby 2,000,000
shares of the Company’s common stock owned by Mr. He were placed into
escrow, with AST appointed as the escrow agent. The 2,000,000 shares were
thereafter transferred into the name of AST and are to be held in escrow
and released to Mr. He if the Company does, or to the investors if the
Company does not, meet certain performance milestones described in the
Securities Escrow Agreement. Mr. He maintains voting power over all
2,000,000 shares until such time as any such shares are transferred to the
investors, at which time, such transferred shares will be beneficially
owned by such investors.
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
|
·
|
the risks, costs and benefits to
us;
|
|
·
|
the impact on a director’s
independence in the event the related person is a director, immediate
family member of a director or an entity with which a director is
affiliated;
|
|
·
|
the terms of the
transaction;
|
|
·
|
the availability of other sources
for comparable services or products;
and
|
|
·
|
the terms available to or from,
as the case may be, unrelated third parties or to or from our employees
generally.
|
Item
14.
|
Principal
Accounting Fees and Services
|
Years Ended
|
||||||||
June 30, 2010
|
June 30, 2009
|
|||||||
Audit
Fees
|
$
|
100,000
|
$
|
100,000
|
||||
Interim
Financial Review Fees
|
60,000
|
60,000
|
||||||
Tax
Fees
|
11,000
|
-
|
||||||
All
Other Fees
|
61,090
|
14,835
|
||||||
Total
|
$
|
232,090
|
$
|
174,835
|
Item
15.
|
Exhibits,
Financial Statement Schedules
|
(a)
|
Financial
Statements
|
(1)
|
Financial
statements for our company are listed in the index under Item 8 of this
document
|
(2)
|
All
financial statement schedules are omitted because they are not applicable,
not material or the required information is shown in the financial
statements or notes thereto.
|
(b)
|
Exhibits
|
Exhibit
|
Filed
|
|||||
Index
|
Description
of Document
|
Herewith
|
Incorporated
by Reference To:
|
|||
3.1
|
Articles
of Incorporation of the Registrant as filed with the Secretary of State of
Delaware on
February 13, 2007, as amended to date.
|
Exhibits
3.1 and 3.1a to the Registrant’s Registration Statement on Form SB-2 filed
on March 26, 2007.
|
||||
3.2
|
Amended
and Restated Bylaws of the registrant.
|
Exhibit
3.2 to the Registrant’s Registration Statement on Form SB-2 filed on March
26, 2007.
|
||||
4.1
|
Certificate
of Designation for Series A Convertible Preferred Stock
|
Exhibit
4.1 to the Registrant’s Current Report on Form 8-K filed on June 13,
2008.
|
||||
4.2
|
Lock-Up
Agreement amongst Registrant, Xianfu Han and Weili He dated June 11,
2008
|
Exhibit
4.2 to the Registrant’s Current Report on Form 8-K filed on June 13,
2008.
|
||||
10.1
|
Employment
Agreement with Xiangsheng Xu
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed on May 5,
2008.
|
||||
10.2
|
Employment
Agreement with Weili He
|
Exhibit
10.2 to the Registrant’s Current Report on Form 8-K filed on May 5,
2008.
|
||||
10.3
|
Employment
Agreement with Xianfu Han
|
Exhibit
10.3 to the Registrant’s Current Report on Form 8-K filed on May 5,
2008.
|
10.4
|
Employment
Agreement with Alex Yao
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed on May 7,
2008.
|
||||
10.5
|
Subscription
Escrow Agreement between the Registrant, Maxim Group, LLC and American
Stock Transfer & Trust Company as Escrow Agent dated June 11,
2008.
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed on June 13,
2008.
|
||||
10.6
|
Make
Good Escrow Agreement by and among the Registrant, the Investors, the
Investor Representative, Xianfu Han and Weili He, and American Stock
Transfer & Trust Company as Escrow Agent, dated June 11,
2008
|
Exhibit
10.2 to the Registrant’s Current Report on Form 8-K filed on June 13,
2008.
|
||||
10.7
|
Form
of Common Stock Purchase Warrant
|
Exhibit
10.3 to the Registrant’s Current Report on Form 8-K filed on June 13,
2008.
|
||||
10.8
|
Form
of Placement Agent Stock Purchase Warrant
|
Exhibit
10.4 to the Registrant’s Current Report on Form 8-K filed on June 13,
2008.
|
||||
10.9
|
Escrow
Agreement for IR and Dividends by and among the Registrant, the Investor
Representative, Maxim Group, LLC and Anslow + Jaclin, LLP as Escrow
Agent
|
Exhibit
10.5 to the Registrant’s Current Report on Form 8-K filed on June 13,
2008.
|
||||
10.10
|
2009
Equity Incentive Plan
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed on June 25,
2009.
|
||||
10.11
|
Form
of Subscription Agreement with Chinese Investors
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed on August 3,
2009.
|
||||
10.12
|
Director
Agreement, dated August 15, 2009, between the Company and Denis
Slavich.
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed on August 17,
2009.
|
||||
10.13
|
Director
Agreement, dated August 15, 2009, between the Company and Sean
Wang.
|
Exhibit
10.2 to the Registrant’s Current Report on Form 8-K filed on August 17,
2009.
|
||||
10.14
|
Director
Agreement, dated August 15, 2009, between the Company and Larry
Goldman.
|
Exhibit
10.3 to the Registrant’s Current Report on Form 8-K filed on August 17,
2009.
|
||||
23.1 | Consent of Frazer Frost, LLP |
31.1
|
Rule
13a-14(a)/15d-14(a) Certification — Principal Executive
Officer
|
ü
|
||||
31.2
|
Rule
13a-14(a)/15d-14(a) Certification — Principal Financial
Officer
|
ü
|
||||
32.1
|
Certification
of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
ü
|
||||
32.2
|
Certification
of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
ü
|
||||
Page
|
||
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated
Balance Sheets
|
F-3
|
|
Consolidated
Statements of Income and Other Comprehensive Income
|
F-4
|
|
Consolidated
Statement of Shareholder’s Equity
|
F-5
|
|
Consolidated
Statements of Cash Flows
|
F-6
|
|
Notes
to Consolidated Financial Statements
|
F-7
|
2010
|
2009
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
|
$ | 3,300,820 | $ | 3,634,805 | ||||
Restricted
cash
|
57,580 | 453,192 | ||||||
Marketable
securities
|
- | 71,880 | ||||||
Notes
receivable
|
- | 10,799 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $456,085 and
$120,986, respectively
|
36,072,691 | 11,815,402 | ||||||
Inventories
|
2,164,769 | 1,216,014 | ||||||
Other
receivables
|
1,416,653 | 3,845,186 | ||||||
Prepayments
|
2,821,687 | 4,255,326 | ||||||
Total
current assets
|
45,834,200 | 25,302,604 | ||||||
PLANT
AND EQUIPMENT, net
|
26,488,354 | 22,089,717 | ||||||
OTHER
ASSETS:
|
||||||||
Accounts
receivable (non-current), net of allowance for doubtful accounts of $4,607
and $328,563 respectively
|
364,371 | 4,132,706 | ||||||
Deferred
tax assets
|
127,741 | - | ||||||
Advances
on equipment purchases
|
8,382,383 | - | ||||||
Long
term prepayments
|
4,414,391 | 4,794,746 | ||||||
Total
other assets
|
13,288,886 | 8,927,452 | ||||||
Total
assets
|
$ | 85,611,440 | $ | 56,319,773 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Short
term loans
|
$ | - | $ | 4,512,200 | ||||
Accounts
payable
|
16,473,080 | 10,722,741 | ||||||
Customer
deposits
|
711,219 | - | ||||||
Other
payables
|
329,136 | 352,880 | ||||||
Other
payables - shareholders
|
772,644 | 806,946 | ||||||
Accrued
liabilities
|
1,652,751 | 593,057 | ||||||
Taxes
payable
|
1,569,914 | 3,048,179 | ||||||
Total
current liabilities
|
21,508,744 | 20,036,003 | ||||||
OTHER
LIABILITIES
|
||||||||
Warrants
liabilities
|
2,920,520 | - | ||||||
Total
liabilities
|
24,429,264 | 20,036,003 | ||||||
COMMITMENTS
AND CONTINGENCIES (Note 19)
|
||||||||
REDEEMABLE
CONVERTIBLE PREFERRED STOCK ($0.001 par value, no share outstanding as of
June 30, 2010 and 851,125 shares issued and outstanding as of June 30,
2009), net of discount for the amount of $0 and $567,581 as of June 30,
2010 and 2009, respectively
|
- | 6,241,419 | ||||||
SHAREHOLDERS'
EQUITY:
|
||||||||
Preferred
stock $0.001 par value, 1,000,000 shares authorized, no
share
|
||||||||
outstanding
as of June 30, 2010 and 851,125 issued and outstanding
|
||||||||
as
of June 30, 2009, and classified outside shareholders' equity (see
above),
|
||||||||
liquidation
preference of $8.00 per share and accrued dividends as of
|
||||||||
June
30, 2010 and 2009
|
- | - | ||||||
Common
stock, $0.001 par value, 74,000,000 shares authorized, 17,467,104 and
10,595,500 shares issued and outstanding as of June 30, 2010 and 2009,
respectively
|
17,467 | 10,596 | ||||||
Paid-in-capital
|
33,720,762 | 12,987,417 | ||||||
Contribution
receivable
|
- | (1,210,000 | ) | |||||
Retained
earnings
|
19,912,444 | 12,783,892 | ||||||
Statutory
reserves
|
4,511,520 | 2,765,179 | ||||||
Accumulated
other comprehensive income
|
3,019,983 | 2,705,267 | ||||||
Total
shareholders' equity
|
61,182,176 | 30,042,351 | ||||||
Total
liabilities, redeemable preferred stock and shareholders'
equity
|
$ | 85,611,440 | $ | 56,319,773 |
2010
|
2009
|
|||||||
REVENUE
|
||||||||
Sales
of concrete
|
$ | 70,579,631 | $ | 28,118,492 | ||||
Manufacturing
services
|
15,654,659 | 7,053,728 | ||||||
Technical
services
|
4,889,460 | 1,924,089 | ||||||
Mixer
rental
|
1,208,618 | 2,618,493 | ||||||
Others
|
708,479 | - | ||||||
Total
revenue
|
93,040,847 | 39,714,802 | ||||||
COST
OF REVENUE
|
||||||||
Concrete
|
64,624,134 | 20,657,312 | ||||||
Manufacturing
services
|
8,261,407 | 2,768,255 | ||||||
Technical
services
|
320,835 | 147,418 | ||||||
Mixer
rental
|
151,456 | 945,057 | ||||||
Others
|
346,869 | - | ||||||
Total
cost of revenue
|
73,704,701 | 24,518,042 | ||||||
GROSS
PROFIT
|
19,336,146 | 15,196,760 | ||||||
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES
|
5,439,579 | 1,717,794 | ||||||
INCOME
FROM OPERATIONS
|
13,896,567 | 13,478,966 | ||||||
OTHER
(EXPENSE) INCOME, NET
|
||||||||
Other
subsidy income
|
4,881,152 | 2,109,290 | ||||||
Realized
gain from sales of marketable securities
|
27,079 | - | ||||||
Non-operating
(expense) income, net
|
(120,060 | ) | (602,020 | ) | ||||
Change
in fair value of warrant liability
|
(2,488,959 | ) | - | |||||
Interest
income
|
9,001 | - | ||||||
Interest
expense
|
(23,834 | ) | (802,650 | ) | ||||
TOTAL
OTHER INCOME, NET
|
2,284,379 | 704,620 | ||||||
INCOME
BEFORE PROVISION FOR INCOME TAXES
|
16,180,946 | 14,183,586 | ||||||
PROVISION
FOR INCOME TAXES
|
3,174,551 | 2,115,097 | ||||||
NET
INCOME
|
13,006,395 | 12,068,489 | ||||||
DIVIDENDS
AND ACCRETION ON REDEEMABLE CONVERTIBLE PREFERRED STOCK
|
(955,557 | ) | (1,229,473 | ) | ||||
NET
INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
12,050,838 | 10,839,016 | ||||||
RECONCILIATION
OF COMPREHENSIVE INCOME:
|
||||||||
Net
Income
|
13,006,395 | 12,068,489 | ||||||
Unrealized
loss from marketable securities
|
- | 20,605 | ||||||
Foreign
currency translation adjustment
|
335,321 | 86,196 | ||||||
COMPREHENSIVE
INCOME
|
$ | 13,341,716 | $ | 12,175,290 | ||||
EARNINGS
PER COMMON SHARE ALLOCATED TO COMMON SHAREHOLDERS
|
||||||||
Weighted
average number of shares:
|
||||||||
Basic
|
13,456,134 | 10,526,719 | ||||||
Diluted
|
16,521,296 | 14,032,479 | ||||||
Earnings
per share:
|
||||||||
Basic
|
$ | 0.90 | $ | 1.03 | ||||
Diluted
|
$ | 0.79 | $ | 0.86 |
Common stock
|
Additional
|
Retained earnings
|
Accumulated
|
|||||||||||||||||||||||||||||||||
Number
|
Par
|
Paid-in
|
Contribution
|
Deferred
|
Statutory
|
other
comprehensive
|
||||||||||||||||||||||||||||||
of shares
|
amount
|
capital
|
receivable
|
Compensation
|
Unrestricted
|
reserves
|
income
|
Total
|
||||||||||||||||||||||||||||
BALANCE,
June 30, 2008
|
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
|
(628,505 | ) | (628,505 | ) | ||||||||||||||||||||||||||||||||
Accretion
of discount on redeemable preferred stock
|
(600,968 | ) | (600,968 | ) | ||||||||||||||||||||||||||||||||
Stock
based compensation
|
107,477 | 107,477 | ||||||||||||||||||||||||||||||||||
Forfeited
stock compensation
|
(25,000 | ) | (25 | ) | (33,225 | ) | 27,708 | (5,542 | ) | |||||||||||||||||||||||||||
Preferred
stock converted to common stock
|
95,500 | 96 | 190,905 | 191,001 | ||||||||||||||||||||||||||||||||
Net
income
|
12,068,489 | 12,068,489 | ||||||||||||||||||||||||||||||||||
Adjustment
to statutory reserve
|
(1,312,400 | ) | 1,312,400 | - | ||||||||||||||||||||||||||||||||
Unrealized
gain on marketable securities
|
20,605 | 20,605 | ||||||||||||||||||||||||||||||||||
Foreign
currency translation gain
|
86,196 | 86,196 | ||||||||||||||||||||||||||||||||||
BALANCE,
June 30, 2009
|
10,595,500 | $ | 10,596 | $ | 12,987,417 | $ | (1,210,000 | ) | $ | - | $ | 12,783,892 | $ | 2,765,179 | $ | 2,705,267 | $ | 30,042,351 | ||||||||||||||||||
Cumulative
effect of reclassification of warrants
|
(1,371,280 | ) | (1,965,945 | ) | (3,337,225 | ) | ||||||||||||||||||||||||||||||
BALANCE,
June 30, 2009, as adjusted
|
10,595,500 | $ | 10,596 | $ | 11,616,137 | $ | (1,210,000 | ) | $ | - | $ | 10,817,947 | $ | 2,765,179 | $ | 2,705,267 | $ | 26,705,126 | ||||||||||||||||||
Dividends
on redeemable preferred stock
|
(387,977 | ) | (387,977 | ) | ||||||||||||||||||||||||||||||||
Accretion
of discount on redeemable preferred stock
|
(567,580 | ) | (567,580 | ) | ||||||||||||||||||||||||||||||||
Stock
based compensation
|
595,888 | 595,888 | ||||||||||||||||||||||||||||||||||
Issuance
of Common Stock for cash at $2.3, net of offering cost
|
650,988 | 651 | 1,496,591 | 1,497,242 | ||||||||||||||||||||||||||||||||
Issuance
of Common Stock for cash at $4.6, net of offering cost
|
2,300,000 | 2,300 | 9,617,552 | 9,619,852 | ||||||||||||||||||||||||||||||||
Conversion
of redeemable preferred stock into common stock
|
3,367,000 | 3,367 | 6,730,632 | 6,733,999 | ||||||||||||||||||||||||||||||||
Conversion
of warrants into common stock
|
480,286 | 480 | 3,476,535 | 3,477,015 | ||||||||||||||||||||||||||||||||
Option
exercised
|
73,330 | 73 | 187,427 | 187,500 | ||||||||||||||||||||||||||||||||
Dividends
paid to shareholders and contributed as share capital
|
1,210,000 | (1,210,000 | ) | - | ||||||||||||||||||||||||||||||||
Net
income
|
13,006,395 | 13,006,395 | ||||||||||||||||||||||||||||||||||
Adjustment
to statutory reserve
|
(1,746,341 | ) | 1,746,341 | - | ||||||||||||||||||||||||||||||||
Gain
realized on marketable securities
|
(20,605 | ) | (20,605 | ) | ||||||||||||||||||||||||||||||||
Foreign
currency translation gain
|
335,321 | 335,321 | ||||||||||||||||||||||||||||||||||
BALANCE,
June 30, 2010
|
17,467,104 | $ | 17,467 | $ | 33,720,762 | $ | - | $ | - | $ | 19,912,444 | $ | 4,511,520 | $ | 3,019,983 | $ | 61,182,176 |
2010
|
2009
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income
|
$ | 13,006,395 | 12,068,489 | |||||
Adjustments
to reconcile net income to cash provided by (used in) operating
activities:
|
||||||||
Depreciation
|
2,924,616 | 2,184,462 | ||||||
Stock-based
compensation expense
|
595,888 | 107,477 | ||||||
Bad
debt expense
|
8,651 | (189,052 | ) | |||||
Change
in fair value of warrants
|
2,488,959 | - | ||||||
Realized
gain on sale of marketable securities
|
(27,079 | ) | - | |||||
Changes
in operating assets and liabilities
|
||||||||
Note
receivable
|
10,811 | - | ||||||
Accounts
receivable
|
(28,605,681 | ) | (13,681,007 | ) | ||||
Inventories
|
(938,086 | ) | (977,200 | ) | ||||
Other
receivables
|
2,439,020 | (3,347,936 | ) | |||||
Prepayments
|
1,450,571 | 419,258 | ||||||
Deferred
tax assets
|
(127,194 | ) | - | |||||
Long
term prepayments
|
370,275 | 179,463 | ||||||
Accounts
payable
|
5,633,766 | 4,403,314 | ||||||
Customer
deposits
|
708,177 | (166,114 | ) | |||||
Other
payables
|
148,264 | 97,849 | ||||||
Accrued
liabilities
|
1,208,647 | 291,597 | ||||||
Taxes
payable
|
(1,488,516 | ) | 1,970,528 | |||||
Net
cash (used in) provided by operating activities
|
(192,516 | ) | 3,361,128 | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds
from sale of marketable securities
|
78,413 | - | ||||||
Advanced
for equipment purchase
|
(4,495,436 | ) | - | |||||
Purchase
of property, plant and equipment
|
(2,682,293 | ) | (1,771,915 | ) | ||||
Net
cash used in investing activities
|
(7,099,316 | ) | (1,771,915 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from short term loan
|
190,670 | 8,247,950 | ||||||
Payments
of short term loan
|
(4,699,119 | ) | (8,024,538 | ) | ||||
Payment
to shareholder for rent
|
(207,906 | ) | (73,889 | ) | ||||
Restricted
cash
|
395,612 | 459,900 | ||||||
Payment
to redeem preferred stock
|
(75,000 | ) | - | |||||
Proceeds
from issuance of options
|
187,500 | - | ||||||
Proceeds
from issuance of warrants
|
571,351 | - | ||||||
Proceeds
from issuance of common stock, net of offering costs
|
11,117,094 | - | ||||||
Preferred
dividends paid
|
(543,631 | ) | (472,851 | ) | ||||
Net
cash provided by financing activities
|
6,936,571 | 136,572 | ||||||
EFFECTS
OF EXCHANGE RATE CHANGE IN CASH
|
21,276 | (1,475 | ) | |||||
NET
(DECREASE) INCREASE IN CASH
|
(333,985 | ) | 1,724,310 | |||||
CASH,
beginning of year
|
3,634,805 | 1,910,495 | ||||||
CASH,
end of year
|
$ | 3,300,820 | 3,634,805 | |||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH TRANSACTIONS
|
||||||||
Advances
on equipment purchase offset by Accounts Payable
|
$ | (628,946 | ) | $ | - | |||
Advances
on equipment purchase paid by transferring of Accounts
Receivable
|
$ | (4,113,869 | ) | $ | - | |||
Fixed
assets additions paid by transferring of Accounts
Receivable
|
$ | (4,168,188 | ) | $ | (5,703,245 | ) | ||
Accretion
of discount on redeemable preferred stock
|
$ | 567,580 | $ | 600,968 |
Place incorporated
|
Ownership
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 |
June 30, 2010
|
June 30, 2009
|
|||||||
Current
assets
|
$ | 44,161,471 | $ | 24,769,527 | ||||
Property,
plant and equipment
|
25,891,066 | 22,089,717 | ||||||
Other
noncurrent assets
|
9,029,763 | 8,927,452 | ||||||
Total
assets
|
79,082,300 | 55,786,696 | ||||||
Liabilities
|
(20,486,646 | ) | (19,062,845 | ) | ||||
Intercompany
payables*
|
(39,124,318 | ) | (20,554,895 | ) | ||||
Total
liabilities
|
(59,610,964 | ) | (39,617,740 | ) | ||||
Net
assets
|
$ | 19,471,336 | $ | 16,168,956 |
Ÿ
|
Persuasive
evidence of an arrangement exists (the Company considers its sales
contracts and technical service agreements to be pervasive evidence of an
arrangement);
|
Ÿ
|
Delivery
has occurred or services have been
rendered;
|
Ÿ
|
The
seller’s price to the buyer is fixed or determinable;
and
|
Ÿ
|
Collectability
of payment is reasonably
assured.
|
Ÿ
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active
markets.
|
Ÿ
|
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.
|
Ÿ
|
Level
3 inputs to the valuation methodology are unobservable and significant to
the fair value measurement.
|
Carrying Value at
June 30, 2010
|
Fair Value Measurement at
June 30, 2010
|
|||||||||||||||
|
Level
1
|
Level
2
|
Level
3
|
|||||||||||||
Derivative
liability - warrants
|
$ | 2,920,520 | $ | - | $ | 2,920,520 | $ | - |
Useful Life
|
||
Transportation
equipment
|
10
years
|
|
Plant
and machinery
|
10
years
|
|
Office
equipment
|
5
years
|
China
ACM
|
||||
Deferred
tax assets, July 1, 2008
|
$ | - | ||
NOL
|
244,467 | |||
Income
tax rate
|
34 | % | ||
Deferred
tax assets
|
83,119 | |||
Allowance
|
(83,119 | ) | ||
Deferred
tax assets, June 30, 2009
|
- | |||
NOL
|
742,000 | |||
Income
tax rate
|
34 | % | ||
Deferred
tax assets
|
252,280 | |||
Allowance
|
(252,280 | ) | ||
Deferred
tax assets, June 30, 2010
|
$ | - | ||
XinAo
|
||||
Deferred
tax assets, July 1, 2008
|
$ | - | ||
NOL
|
- | |||
Deferred
tax assets, June 30, 2009
|
- | |||
NOL
acquired from Xin Ao’s station through rental agreement
|
2,671,644 | |||
Current
year’s net income from the station
|
(2,160,680 | ) | ||
NOL
as of June 30, 2010
|
510,964 | |||
Tax
rate for such station
|
25 | % | ||
Deferred
tax assets, June 30, 2010
|
$ | 127,741 |
2010
|
2009
|
|||||||
Accounts
receivable, current
|
$ | 36,528,776 | $ | 11,936,388 | ||||
Less:
allowance for doubtful accounts, current
|
(456,085 | ) | (120,986 | ) | ||||
Net
accounts receivable, current
|
36,072,691 | 11,815,402 | ||||||
Accounts
receivable, non-current
|
368,978 | 4,461,269 | ||||||
Less:
allowance for doubtful accounts, non-current
|
(4,607 | ) | (328,563 | ) | ||||
Net
accounts receivable, non-current
|
364,371 | 4,132,706 | ||||||
|
|
|||||||
Total
accounts receivable, net
|
$ | 36,437,062 | $ | 15,948,108 |
Allowance
for bad debts, current as July1, 2008
|
$ | 224,924 | ||
Recovery
of accounts receivable
|
(104,863 | ) | ||
Effect
of foreign currency translation
|
925 | |||
Allowance
for bad debt, current as June 30, 2009
|
120,986 | |||
Reclassified
from non-current
|
325,222 | |||
Bad
debt expense
|
7,786 | |||
Effect
of foreign currency translation
|
2,091 | |||
Allowance
for bad debt, current as June 30, 2010
|
$ | 456,085 |
Allowance
for bad debts, non-current as July 1, 2008
|
$ | 411,061 | ||
Recovery
of accounts receivable
|
(84,189 | ) | ||
Effect
of foreign currency translation
|
1,691 | |||
Allowance
for bad debt, non-current as June 30, 2009
|
328,563 | |||
Reclassified
to current
|
(325,222 | ) | ||
Bad
debt expense
|
865 | |||
Effect
of foreign currency translation
|
401 | |||
Allowance
for bad debt, non-current as June 30, 2010
|
$ | 4,607 |
2010
|
2009
|
|||||||
Transportation
equipment
|
$ | 20,502,987 | $ | 20,375,873 | ||||
Plant
and machinery
|
13,615,455 | 6,246,380 | ||||||
Buildings
|
123,702 | - | ||||||
Office
equipment
|
125,550 | 95,556 | ||||||
Construction-in-progress
|
3,089,785 | 3,369,500 | ||||||
Total
|
37,457,479 | 30,087,309 | ||||||
Less:
accumulated depreciation
|
(10,969,125 | ) | (7,997,592 | ) | ||||
Plant
and equipment, net
|
$ | 26,488,354 | $ | 22,089,717 |
2010
|
2009
|
|||||||
Advances
on inventory purchases
|
$ | 691,364 | $ | 2,431,401 | ||||
Current
portion of rent prepayments
|
2,112,823 | 1,823,925 | ||||||
Others
|
17,500 | - | ||||||
Total
short-term prepayments
|
$ | 2,821,687 | $ | 4,255,326 |
2010
|
2009
|
|||||||
Loan
from Beijing International Trust Co, Ltd. interest rate of 15% per annum,
due July 15, 2009, guaranteed by Rayland Credit Guarantee Co. Ltd., paid
off in July 2009
|
$ | - | $ | 4,395,000 | ||||
Loan
from anemployee, effective interest rate of 20% per annum, due upon
demand, unsecured.
|
- | 117,200 | ||||||
Total
short term loans
|
$ | - | $ | 4,512,200 |
June 30, 2010
|
July 1, 2009
|
|||||||
Annual
dividend yield
|
- | - | ||||||
Expected
life (years)
|
3.00 | 4.00 | ||||||
Risk-free
interest rate
|
0.98 | % | 2.07 | % | ||||
Expected
volatility
|
80 | % | 75 | % |
2010
|
2009
|
|||||||
Han
Xianfu, shareholder
|
$ | 450,540 | $ | 450,550 | ||||
He
Weili, shareholder
|
322,104 | 356,396 | ||||||
Total
other payable – shareholders
|
$ | 772,644 | $ | 806,946 |
2010
|
2009
|
||||||||
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
|
(10 | )% | (10 | )% | |||||
Other
|
4 | % |
(a)
|
- | |||||
Effective
income tax rates
|
19 | % | 15 | % |
Taxes
payable consisted of the following:
|
||||||||
2010
|
2009
|
|||||||
Income
taxes payable
|
$ | 1,536,610 | $ | 3,039,905 | ||||
Other
taxes payables
|
33,304 | 8,274 | ||||||
Total
taxes payable
|
$ | 1,569,914 | $ | 3,048,179 |
2010
|
2009
|
|||||||
Numbers
of Redeemable Convertible Preferred shares outstanding in the beginning of
the fiscal year
|
851,125 | 875,000 | ||||||
Redeemable
Convertible Preferred shares converted to Common share and redeemed during
the fiscal year
|
(851,125 | ) | (23,875 | ) | ||||
Current
Redeemable Convertible Preferred shares outstanding
|
- | 851,125 | ||||||
Per
share conversion price from Redeemable Convertible Preferred shares to
Common share
|
$ | 8 | $ | 8 | ||||
Current
Redeemable Convertible Preferred Stock outstanding before
discount
|
$ | - | $ | 6,809,000 | ||||
Discount
on Redeemable Convertible Preferred shares outstanding
|
$ | - | $ | (567,581 | ) | |||
Total
Current Redeemable Convertible Preferred stocks net of
discount
|
$ | - | $ | 6,241,419 |
Outstanding Common Stocks Underlying Warrants
|
|||||
Number
|
Average Remaining
Contractual Life
|
||||
US$2.40
|
678,875
|
2.94
years
|
Number of Common
stock underlying
Warrants
|
||||
Outstanding
as of June 30, 2008
|
1,995,000 | |||
Granted
|
- | |||
Forfeited
|
- | |||
Exercised
|
- | |||
Outstanding
as of June 30, 2009
|
1,995,000 | |||
Granted
|
- | |||
Forfeited
|
- | |||
Exercised
|
(637,250 | ) | ||
Outstanding
as of June 30, 2010 (unaudited)
|
1,357,750 |
Expected
|
Expected
|
Dividend
|
Risk Free
|
Grant Date
|
||||||||||||||||
Term
|
Volatility
|
Yield
|
Interest Rate
|
Fair Value
|
||||||||||||||||
Director
|
5.31 | 75 | % | 0 | % | 1.41 | % | $ | 2.90 | |||||||||||
CFO
and president
|
5.50 | 44 | % | 0 | % | 1.70 | % | $ | 5.95 |
Number of
options
|
Intrinsic Value
|
||||||
Outstanding
as of June 30, 2008
|
- | ||||||
Granted
|
250,000 | ||||||
Forfeited
|
- | ||||||
Exercised
|
- | ||||||
Outstanding
as of June 30, 2009
|
250,000 | ||||||
Granted
|
112,500 | ||||||
Forfeited
|
(165,000 | ) | |||||
Exercised
|
(100,000 | ) | |||||
Outstanding
as of June 30, 2010
|
97,500 |
$
|
-
|
Outstanding options
|
Exercisable options
|
||||||||||||||||||||
Average
|
Weighted
|
||||||||||||||||||||
remaining
|
Average
|
average
|
|||||||||||||||||||
Average
|
contractual life
|
Exercise
|
exercise
|
||||||||||||||||||
Exercise price
|
Number
|
(years)
|
price
|
Number
|
price
|
||||||||||||||||
$
|
2.90 | 50,000 | 8.27 | $ | 2.90 | 50,000 | $ | 2.90 | |||||||||||||
$
|
4.64 | 12,500 | 9.76 | 4.64 | 12,500 | 4.64 | |||||||||||||||
$
|
5.38 | 35,000 | 9.76 | 5.38 | 35,000 | 5.38 |
Nonvested
as of June 30, 2009
|
- | |||
Granted
|
100,000 | |||
Vested
|
37,500 | |||
Nonvested
as of June 30, 2010
|
62,500 |
2010
|
2009
|
|||||||
Basic
earnings per share
|
||||||||
Net
income available to common shareholders
|
$ | 12,050,838 | $ | 10,839,016 | ||||
Weighted
average shares outstanding-Basic
|
13,456,134 | 10,526,719 | ||||||
Earnings
per share-Basic
|
$ | 0.90 | $ | 1.03 | ||||
Diluted
earnings per share
|
||||||||
Net
income available to common shareholders
|
$ | 12,050,838 | $ | 10,839,016 | ||||
Add:
Dividends on preferred stock
|
387,977 | 628,505 | ||||||
Add:
Accretion on preferred stock
|
567,580 | 600,968 | ||||||
Net
income for diluted EPS
|
$ | 13,006,395 | $ | 12,068,489 | ||||
Weighted
average shares outstanding-Basic
|
13,456,134 | 10,526,719 | ||||||
Restricted
stock
|
37,500 | - | ||||||
Warrants
and options
|
854,190 | 14,671 | ||||||
Preferred
stock
|
2,173,472 | 3,491,089 | ||||||
Weighted
shares outstanding-Diluted
|
16,521,296 | 14,032,479 | ||||||
Earnings
per share-Diluted
|
$ | 0.79 | $ | 0.86 |
Years ending June 30,
|
Amount
|
|||
2011
|
$ | 601,442 | ||
2012
|
934,972 | |||
2013
|
934,972 | |||
2014
|
417,868 | |||
2015
|
- | |||
Thereafter,
|
- |
Sales of
concrete
|
Manufacturing
services
|
Technical
services
|
Mixer
rental
|
Others
|
Corporate
|
Total
|
||||||||||||||||||||||
Net
sales
|
$ | 70,579,631 | $ | 15,654,659 | $ | 4,889,460 | $ | 1,208,618 | $ | 708,479 | $ | - | $ | 93,040,847 | ||||||||||||||
Depreciation
|
(1,032,221 | ) | (1,693,581 | ) | (5,232 | ) | (151,456 | ) | - | (42,126 | ) | (2,924,616 | ) | |||||||||||||||
Segment
profit
|
5,686,379 | 7,311,730 | 4,543,163 | 1,050,880 | 357,909 | (5,053,494 | ) | 13,896,567 | ||||||||||||||||||||
Other
income (expenses)
|
3,942,679 | 939,472 | - | - | - | (2,582,939 | ) | 2,299,212 | ||||||||||||||||||||
Interest
income
|
- | - | - | - | - | 9,001 | 9,001 | |||||||||||||||||||||
Interest
expenses
|
- | - | - | - | - | (23,834 | ) | (23,834 | ) | |||||||||||||||||||
Capital
expenditure
|
(409,564 | ) | (6,727,104 | ) | - | - | - | (41,061 | ) | (7,177,729 | ) | |||||||||||||||||
Total
assets as of June 30, 2010
|
$ | 69,101,360 | $ | 15,326,776 | $ | - | $ | 1,183,304 | $ | - | $ | - | $ | 85,611,440 |
Sales of
concrete
|
Manufacturing
services
|
Technical
services
|
Mixer
rental
|
Others
|
Corporate
|
Total
|
|||||||||||||||||||||
Net
sales
|
$ | 28,118,492 | $ | 7,053,728 | $ | 1,924,089 | $ | 2,618,493 | $ | - | $ | - | $ | 39,714,802 | |||||||||||||
Depreciation
|
(1,537,366 | ) | (404,449 | ) | (5,084 | ) | (237,563 | ) | - | - | (2,184,462 | ) | |||||||||||||||
Segment
profit
|
7,249,594 | 4,232,395 | 1,762,193 | 1,653,732 | - | (1,418,948 | ) | 13,478,966 | |||||||||||||||||||
Other
income (expenses)
|
1,686,066 | 423,224 | - | - | - | (602,020 | ) | 1,507,270 | |||||||||||||||||||
Interest
income
|
- | - | - | - | - | - | - | ||||||||||||||||||||
Interest
expenses
|
- | - | - | - | - | (802,650 | ) | (802,650 | ) | ||||||||||||||||||
Capital
expenditure
|
(4,219 | ) | (7,381,443 | ) | - | - | - | (53,000 | ) | (7,438,662 | ) | ||||||||||||||||
Total
assets as of June 30, 2009
|
$ | 41,905,192 | $ | 10,512,222 | $ | - | $ | 3,902,359 | $ | - | $ | - | $ | 56,319,773 |
By:
|
/s/
Xianfu Han
|
Xianfu
Han
Prinicipal
Executive Officer
|
|
By:
|
/s/
Jeremy Goodwin
|
Jeremy
Goodwin
Principal
Financial and
Accounting
Officer
|
Signature
|
Title
|
Date
|
||
/s/
Xianfu Han
|
Chief
Executive Officer and Chairman of
|
September 28, 2010
|
||
Xianfu
Han
|
the
Board
|
|||
/s/Weili
He
|
Vice
Chairman and Chief Operating Officer
|
September 28, 2010
|
||
Weili
He
|
||||
/s/Jeremy
Goodwin
|
President,
Chief Financial Officer and Director
|
September 28, 2010
|
||
Jeremy
Goodwin
|
||||
/s/Jing
Liu
|
Director
|
September 28, 2010
|
||
Jing
Liu
|
||||
/s/Denis
Slavich
|
Director
|
September 28, 2010
|
||
Denis
Slavich
|
||||
/s/Sean
Wang
|
Director
|
September 28, 2010
|
||
Sean
Wang
|
||||
/s/Larry
Goldman
|
Director
|
September 28, 2010
|
||
Larry
Goldman
|