--06-30
chhe
China Health Industries Holdings, Inc.
2015-09-30
0001309057
No
Smaller Reporting Company
No
10-Q
false
65539737
Yes
2016
Q1
0001309057
2015-11-11
0001309057
2015-07-01
2015-09-30
0001309057
2015-09-30
0001309057
2015-06-30
0001309057
2014-07-01
2014-09-30
0001309057
2014-06-30
0001309057
2014-09-30
shares
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<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 1 - ORGANIZATION AND BUSINESS BACKGROUND</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">China Health Industries Holdings, Inc. (“China Health US”) was incorporated in the State of Arizona on July 11, 1996 and was the successor of the business known as Arizona Mist, Inc. which began in 1989. On May 9, 2005, it entered into a Stock Purchase Agreement and Share Exchange (effecting a reverse merger) with Edmonds 6, Inc. (“Edmonds 6”), a Delaware corporation, and changed its name to Universal Fog, Inc. Pursuant to this agreement, Universal Fog, Inc. (which has been in continuous operation since 1996) became a wholly-owned subsidiary of Edmonds 6.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">China Health Industries Holdings Limited (“China Health HK”) was incorporated on July 20, 2007 in Hong Kong under the Companies Ordinance as a limited liability company. China Health HK was formed for the purpose of seeking and consummating a merger or acquisition with a business entity organized as a private corporation, partnership, or sole proprietorship as defined by FASB ACS Topic 915 (“Development Stage Entities”).</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Harbin Humankind Biology Technology Co., Limited (“Humankind”) was incorporated in Harbin City, Heilongjiang Province, the People’s Republic of China (the “PRC”) on December 14, 2003, as a limited liability company under the Company Law of the PRC. Humankind is engaged in the manufacturing and sale of health products.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On August 20, 2007, the sole shareholder of China Health HK entered into a share purchase agreement (the “Share Purchase Agreement”) with the owners of Humankind. Pursuant to the Share Purchase Agreement, China Health HK purchased
100% of the ownership in Humankind for a cash consideration of $60,408
(the “Share Purchase”). Subsequent to the completion of the Share Purchase, Humankind became a wholly-owned subsidiary of China Health HK. The Share Purchase was accounted for as a “reverse merger” since the owner of Humankind owned a majority of the outstanding shares of China Health HK’s common stock immediately following the execution of the Share Purchase Agreement, it was deemed to be the acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that have been reflected in the financial statements for periods prior to the Share Purchase are those of Humankind and have been recorded at the historical cost basis. After completion of the Share Purchase, China Health HK’s consolidated financial statements include the assets and liabilities of both China Health HK and Humankind, the historical operations of Humankind, and the operations of China Health HK and its subsidiaries from the closing date of the Share Purchase.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On October 14, 2008, Humankind set up a
99% owned subsidiary, Harbin Huimeijia Medicine Company (“Huimeijia”), with its primary business being manufacturing and distributing medicine. Mr. Xin Sun, the Company’s majority owner, owns
1% of Huimeijia. Huimeijia is consolidated in the consolidated financial statements of China Health HK.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On December 31, 2008, China Health HK entered into a reverse merger with Universal Fog, Inc., a U.S. publicly traded shell company (the “Transaction”). China Health HK is the acquirer in the Transaction, and the Transaction has been treated as a recapitalization of China Health US. After the Transaction and a 20:1 reverse stock split, Mr. Xin Sun owned
61,203,088
shares of common stock, representing
98.3% of the
62,234,737
total outstanding shares of common stock of China Health US. On April 7, 2009, Mr. Sun transferred
28,200,000
shares of common stock to
296
individuals, leaving him with
33,003,088
shares of common stock of China Health US, or approximately
53.03% of the total outstanding shares of common stock. Universal Fog, Inc. changed its name to China Health Industries Holdings, Inc. on February 19, 2009.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On November 22, 2013, Humankind completed the acquisition of Heilongjiang Huimeijia Pharmaceutical Co., Ltd. (“HLJ Huimeijia”) for a total purchase price of $16,339,869
(RMB100,000,000). HLJ Huimeijia was founded on October 30, 2003, and is engaged in the manufacturing and distribution of tincture, ointments, rubber paste (including hormones), topical solution, suppositories, liniment (including traditional Chinese medicine extractions), enemas and oral liquids. HLJ Huimeijia’s predecessor is Heilongjiang Xue Du Pharmaceutical Co., Ltd., which has established its brand name in the market through its supply of high quality medical products. HLJ Huimeijia is categorized as a “high and new technology” enterprise by the Science Technology Department in Heilongjiang Province. HLJ Huimeijia has
21
products which have been approved by, and have received approval numbers issued by, the China State Food and Drug Administration (the “CFDA”). In addition, HLJ Huimeijia is the holder of one patent for utility models, five patents for external design and three trademarks in China, including the Chinese brand name of “Xue Du” which has an established reputation among customers in northeastern China.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">China Health US, China Health HK, Humankind, Huimeijia and HLJ Huimeijia are collectively referred herein to as the “Company.”</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">As of September 30, 2015, the Company’s corporate structure was as follows:</p>
<p style="font-family: times new roman,times,serif; font-size: 10pt; text-align: center;">[The Image Has Been Removed for XBRL Purpose]</p>
1.00
60408
0.99
0.01
61203088
0.983
62234737
28200000
296
33003088
0.5303
16339869
100000000
21
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 2 - SIGNIFICANT ACCOUNTING POLICIES</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Basis of Presentation</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States ("US GAAP") and have been consistently applied in the preparation of the consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The accompanying unaudited consolidated financial statements have been prepared by Company without audit pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the years ended June 30, 2015 and 2014.These consolidated financial statements include all adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. The results of operations for the three months ended September 30, 2015 may not be indicative of results that may be expected for the six months ended December 31, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Principles of Consolidation</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The accompanying unaudited condensed consolidated financial statements include China Health US and its four subsidiary companies, including China Health HK, Humankind, Huimeijia, and HLJ Huimeijia. All significant intercompany balances and transactions have been eliminated in consolidation and combination.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On November 22, 2013, China Health US, through its wholly owned subsidiary Humankind, completed the acquisition of HLJ Huimeijia. HLJ Huimeijia and Humankind are under the common control of Mr. Xin Sun, the CEO of the Company before and after the date of transfer. Humankind’s accounting policy adopted the guidance in ASC 805-50-05-5 for the transfer of net assets between entities under common control to apply a method similar to the pooling-of-interests method. Under this method, the financial statements of Humankind shall report results of operations for the period in which the transfer occurs as though the transfer of net assets had occurred at the beginning of the period. Results of operations for that period will thus comprise both those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date to the end of the period. Similarly, Humankind shall present the statements of financial position and other financial information as of the beginning of the period as though the assets and liabilities had been transferred at that date. Financial statements and financial information of Humankind presented for prior years also shall be retrospectively adjusted to furnish comparative information.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Segment Reporting</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">FASB ASC Topic 280, “Segment Reporting,” established standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company's business segments. The Company has three reportable operating segments: Humankind, HLJ Huimeijia and others. The segments are grouped based on the types of products provided.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Fair Value of Financial Instruments</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The provisions of accounting guidance, FASB ASC Topic 820 that apply to the Company requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Fair Value Measurements</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Various inputs are considered when determining the fair value of the Company’s debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets;</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.);</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company had no financial assets or liabilities carried and measured on a recurring basis during the reporting periods.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Statement of Cash Flows</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In accordance with Statement FASB ASC Topic 230, “Statement of Cash Flows,” cash flow from the Company's operations is calculated based upon the local currencies and translated to the reporting currency using an average foreign exchange rate for the reporting period. As a result, amounts related to assets and liabilities reported in the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Use of Estimates and Assumptions</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The preparation of financial statements in conformity with US GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Significant estimates and assumptions by management include, among others; useful lives of long-lived assets and intangible assets, valuation of inventory, accounts receivable and notes receivable, impairment analysis of long-lived assets, construction in progress, intangible assets and deferred taxes. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Cash and Cash Equivalents</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less at the time of purchase.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
As of September 30, 2015 and June 30, 2015, the Company’s uninsured bank balance was mainly maintained at financial institutions located in the PRC and HK, totaled $20,835,323
and $21,123,027
respectively. The Company has no insured bank balance as of September 30, 2015 and June 30, 2015, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Accounts Receivable</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on management’s assessment of known requirements, aging of receivables, payment and bad debt history, the customer’s current credit worthiness, changes in customer payment patterns and the economic environment. From November 1, 2013, the Company changed its credit policy by offering ninety (90) day payment terms for sales, whereas the payment terms for sales before November 1, 2013 were thirty (30) day. As a result, as of September 30, 2015 and June 30, 2015, the balances of accounts receivable were $1,344,965
and $1,431,298, respectively. The Company determines the allowance based on aging data, historical collection experience, customer specific facts and economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company evaluated the nature of all accounts receivable then provided allowance for doubtful accounts. As of September 30, 2015 and June 30, 2015, the balances of allowance for doubtful accounts were $47,118
and $45,453, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Advance to Suppliers</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The Company periodically makes advances to certain vendors for purchases of raw materials, and records these purchases as advance to suppliers. As of September 30, 2015 and June 30, 2015, advance to suppliers amounted to $28,455
and $69,120, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Inventory</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Inventory consists of raw materials, work in progress and finished goods of manufactured products.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Inventory is stated at lower of cost or market and consists of materials, labor and overhead. HLJ Huimeijia uses the weighted average method for inventory valuation. The other entities of the Company use the first-in, first-out (“FIFO”) method for inventory valuation. Overhead costs included in finished goods include direct labor cost and other costs directly applicable to the manufacturing process. The Company evaluates inventory for excess, slow moving, and obsolete inventory as well as inventory the value of which is in excess of its net realizable value. This evaluation includes analysis of sales levels by product and projections of future demand. If future demand or market conditions are less favorable than the Company’s projections, a write-down of inventory may be required, and would be reflected in cost of goods sold in the period the revision is made. There was no inventory allowance provided for the three months ended September 30, 2015 and 2014, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Impairment of Long-Lived Assets</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company’s long-lived assets and other assets are reviewed for impairment in accordance with the guidance of the FASB ASC Topic 360-10, “Property, Plant, and Equipment,” and FASB ASC Topic 205, “Presentation of Financial Statements.” The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on the Company’s reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. As of September 30, 2015 and June 30, 2015, the Company has not experienced impairment losses on its long-lived assets. However, there can be no assurances that demand for the Company’s products or services will continue, which could result in an impairment of long-lived assets in the future.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Property, Plant and Equipment</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Property, plant and equipment are carried at the lower of cost or fair value. Maintenance, repairs and minor renewals are expensed as incurred, major renewals and improvements that extend the lives or increase the capacity of plant assets are capitalized.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the results of operations in the reporting period of disposition.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Depreciation is calculated on a straight-line basis over the estimated useful life of the assets. The depreciable lives applied are:</p>
<div align="center">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%">
<tr valign="top">
<td align="left" bgcolor="#e6efff">Building, Warehouse and Improvements</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
20
to
30
years
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Office Equipment</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
3
to
7
years
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Vehicles</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
5
to
15
years
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Machinery and Equipment</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
7
to
15
years
</td>
<td align="left" width="2%"> </td>
</tr>
</table>
</div>
<div align="center"> </div>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Intangible Assets</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company evaluates intangible assets in accordance with FASB ASC Topic 350, “Intangibles — Goodwill and Other.” Intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment tests. If the assumptions and estimates used to allocate the purchase price are not correct, or if business conditions change, purchase price adjustments or future asset impairment charges could be required. The value of the Company’s intangible assets could be impacted by future adverse changes such as: (i) any future declines in the Company’s operating results, (ii) a decline in the valuation of technology, including the valuation of the Company’s common stock, (iii) a significant slowdown in the worldwide economy or (iv) any failure to meet the performance projections included in the Company’s forecasts of future operating results. In accordance with FASB ASC Topic 350, the Company tests intangible assets for impairment on an annual basis or more frequently if the Company believes indicators of impairment exist. Impairment evaluations involve management estimates of asset useful lives and future cash flows. Significant management judgment is required in the forecasts of future operating results that are used in the evaluations. It is possible, however, that the plans and estimates used may be incorrect. If the Company’s actual results, or the plans and estimates used in future impairment analysis, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges in a future period. Based on such evaluations, there was no impairment recorded for intangible assets for the three months ended September 30, 2015 and 2014, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Construction in Progress</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Construction in progress represents the costs incurred in connection with the construction of buildings or new additions to the Company’s plant facilities. Costs classified as construction in progress include all costs of obtaining the asset and bringing it to the location and condition necessary for its intended use. No depreciation is provided for construction in progress until such time as the assets are completed and are placed into service.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company reviews the carrying value of construction in progress for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value of the assets, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment, there was no impairment recorded for construction in progress for the three months ended September 30, 2015 and 2014, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Translation of Foreign Currencies</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Humankind, Huimeijia and HLJ Huimeijia maintain their books and accounting records in PRC currency “Renminbi” (“RMB”), which has been determined as the functional currency. Transactions denominated in currencies other than RMB are translated into RMB at the exchange rates prevailing on the date of the transactions, as quoted by the Federal Reserve Board. Foreign currency exchange gains and losses resulting from these transactions are included in operations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Humankind, Huimeijia and HLJ Huimeijia’s financial statements are translated into the reporting currency, the United States Dollar (“USD”). Assets and liabilities of the above entities are translated at the prevailing exchange rate at each reporting period end date. Contributed capital accounts are translated using the historical rate of exchange when capital is injected. Income and expense accounts are translated at the average rate of exchange during the reporting period. Translation adjustments resulting from the translation of these financial statements are reflected as accumulated other comprehensive income in shareholders’ equity and non-controlling interests.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Revenue Recognition</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company recognizes revenue when it is both earned and realized or realizable. The Company’s policy is to recognize revenue when title to the product, ownership and risk of loss have transferred to the customer, persuasive evidence of an arrangement exits and collection of the sales proceeds is reasonably assured, all of which generally occur upon shipment of goods to customers. The majority of the Company’s revenue relates to the sale of inventory to customers, and revenue is recognized when title and the risks and rewards of ownership pass to the customer. Given the nature of the Company’s business and the applicable rules guiding revenue recognition, the Company’s revenue recognition practices do not contain estimates that materially affect the results of operations. The Company records revenue at the discounted selling price and allows its customers to return products for exchange or credit subject to certain limitations. A provision for such returns is recorded based upon historical experience. There has been no provision recorded for returns based upon historical experience for the three months ended September 30, 2015 and 2014, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Cost of Goods Sold</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Cost of goods sold consists primarily of the costs of raw materials, freight charges, direct labor, depreciation of plants and machinery, warehousing and overhead costs associated with the manufacturing process and commission expenses.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Income Taxes</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company adopts FASB ASC Topic 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In July 2006 the FASB issued FIN 48(ASC 740-10), “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109 (ASC 740),” which requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under FIN 48(ASC 740-10), tax positions that previously failed to meet the more-likely-than-not threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">As a result of the implementation of FIN 48 (ASC 740-10), the Company undertook a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by FIN 48 (ASC 740-10). The Company recognized no material adjustments to liabilities or stockholders’ equity as a result of the implementation. The adoption of FIN 48 did not have a material impact on the Company’s financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from the Company’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or deferred tax asset valuation allowance.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Enterprise Income Tax</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Under the Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC (the “EIT Law”), income tax is payable by enterprises at a rate of
25% of their taxable income.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Value Added Tax</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Provisional Regulations of PRC Concerning Value Added Tax promulgated by the State Council came into effect on January 1, 1994. Under these regulations and the Implementing Rules of the Provisional Regulations of the PRC Concerning Value Added Tax, value added tax (“VAT”) is imposed on goods sold in, or imported into, the PRC and on processing, repair and replacement services provided within the PRC.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
VAT payable in the PRC is charged on an aggregated basis at a rate of
13% or
17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of
17% on the charges for the taxable services provided, but excluding, in respect of both goods and services, any amount paid in respect of VAT included in the price or charges, and less any deductible VAT already paid by the taxpayer on purchases of goods and services in the same financial year. As of September 30, 2015 and June 30, 2015, VAT payables were $248,908
and $219,553, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Sales-Related Taxes</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Pursuant to the tax law and regulations of the PRC, the Company is obligated to pay
7% and
5% of the annual VAT paid as taxes on maintaining and building cities and education additional fees, both of which belong to sales-related taxes. Sales-related taxes are recorded when sales revenue is recognized. Sales-related taxes for the three months ended September 30, 2015 and 2014 were $33,901
and $55,318, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Concentrations of Business and Credit Risks</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">All of the Company’s manufacturing is located in the PRC. There can be no assurance that the Company will be able to successfully continue to manufacture its products and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. Also, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic conditions, prices of raw materials, competition, governmental and political conditions, and changes in regulations. Since the Company is dependent on trade in the PRC, the Company is subject to various additional political, economic and other uncertainties. Among other risks, the Company’s operations will be subject to the risks of restrictions on transfer of funds, domestic customs, changing taxation policies, foreign exchange restrictions, and political and governmental regulations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company operates in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between U.S. dollars and the Chinese currency RMB. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting periods.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Earnings Per Share</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Basic earnings per common share is computed by dividing net earnings applicable to common shareholders by the weighted-average number of common shares outstanding during the period. When applicable, diluted earnings per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options and warrants. For the three months ended September 30, 2015 and 2014, the Company had no potential dilutive common stock equivalents outstanding.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Potential common shares issued are calculated using the treasury stock method, which recognizes the use of proceeds that could be obtained upon the exercise of options and warrants in computing diluted earnings per share. It assumes that any proceeds would be used to purchase common stock at the average market price of the common stock during the period.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">FASB ASC Topic 260, “Earnings Per Share,” requires a reconciliation of the numerator and denominator of the basic and diluted earnings per share (EPS) computations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Recent Accounting Pronouncements</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On January 9, 2015, the Financial Accounting Standards Board (FASB) published ASU 2015-01, “Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” The ASU applies to all entities and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company's consolidated financial statement.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In February 2015, FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. This ASU will be effective for periods beginning after December 15, 2015 for public companies. Management is evaluating the potential impact, if any, on the Company’s financial position and results of operations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In April 2015, the FASB issued ASU No. 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2015, and is to be applied retrospectively. Early adoption is permitted. The Company does not expect the adoption of this guidance will have a material effect on the Company’s consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In July 2015, the FASB issued “Accounting Standard Update 2015-11: Simplifying the Measurement of Inventory.” This update requires inventory to be measured at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. This update will be effective for the Company for all annual and interim periods beginning after December 15, 2016. The amendments in this update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company does not expect this update will have a material impact on the presentation of the Company's consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In August 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting.” This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company does not expect this update will have a material impact on the presentation of the Company's consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments,” which eliminates the requirement to retrospectively account for changes to provisional amounts initially recorded in a business acquisition opening balance sheet. Prior to the issuance of ASU 2015-16, an acquirer was required to restate prior period financial statements as of the acquisition date for adjustments to provisional amounts. This guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within fiscal years. The Company does not expect this update will have a material impact on the presentation of the Company's condensed consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Basis of Presentation</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States ("US GAAP") and have been consistently applied in the preparation of the consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The accompanying unaudited consolidated financial statements have been prepared by Company without audit pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the years ended June 30, 2015 and 2014.These consolidated financial statements include all adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. The results of operations for the three months ended September 30, 2015 may not be indicative of results that may be expected for the six months ended December 31, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Principles of Consolidation</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The accompanying unaudited condensed consolidated financial statements include China Health US and its four subsidiary companies, including China Health HK, Humankind, Huimeijia, and HLJ Huimeijia. All significant intercompany balances and transactions have been eliminated in consolidation and combination.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On November 22, 2013, China Health US, through its wholly owned subsidiary Humankind, completed the acquisition of HLJ Huimeijia. HLJ Huimeijia and Humankind are under the common control of Mr. Xin Sun, the CEO of the Company before and after the date of transfer. Humankind’s accounting policy adopted the guidance in ASC 805-50-05-5 for the transfer of net assets between entities under common control to apply a method similar to the pooling-of-interests method. Under this method, the financial statements of Humankind shall report results of operations for the period in which the transfer occurs as though the transfer of net assets had occurred at the beginning of the period. Results of operations for that period will thus comprise both those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date to the end of the period. Similarly, Humankind shall present the statements of financial position and other financial information as of the beginning of the period as though the assets and liabilities had been transferred at that date. Financial statements and financial information of Humankind presented for prior years also shall be retrospectively adjusted to furnish comparative information.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Segment Reporting</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">FASB ASC Topic 280, “Segment Reporting,” established standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company's business segments. The Company has three reportable operating segments: Humankind, HLJ Huimeijia and others. The segments are grouped based on the types of products provided.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Fair Value of Financial Instruments</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The provisions of accounting guidance, FASB ASC Topic 820 that apply to the Company requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Fair Value Measurements</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Various inputs are considered when determining the fair value of the Company’s debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets;</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.);</p>
<p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;">Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company had no financial assets or liabilities carried and measured on a recurring basis during the reporting periods.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Statement of Cash Flows</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In accordance with Statement FASB ASC Topic 230, “Statement of Cash Flows,” cash flow from the Company's operations is calculated based upon the local currencies and translated to the reporting currency using an average foreign exchange rate for the reporting period. As a result, amounts related to assets and liabilities reported in the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Use of Estimates and Assumptions</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The preparation of financial statements in conformity with US GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Significant estimates and assumptions by management include, among others; useful lives of long-lived assets and intangible assets, valuation of inventory, accounts receivable and notes receivable, impairment analysis of long-lived assets, construction in progress, intangible assets and deferred taxes. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Cash and Cash Equivalents</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less at the time of purchase.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
As of September 30, 2015 and June 30, 2015, the Company’s uninsured bank balance was mainly maintained at financial institutions located in the PRC and HK, totaled $20,835,323
and $21,123,027
respectively. The Company has no insured bank balance as of September 30, 2015 and June 30, 2015, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Accounts Receivable</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on management’s assessment of known requirements, aging of receivables, payment and bad debt history, the customer’s current credit worthiness, changes in customer payment patterns and the economic environment. From November 1, 2013, the Company changed its credit policy by offering ninety (90) day payment terms for sales, whereas the payment terms for sales before November 1, 2013 were thirty (30) day. As a result, as of September 30, 2015 and June 30, 2015, the balances of accounts receivable were $1,344,965
and $1,431,298, respectively. The Company determines the allowance based on aging data, historical collection experience, customer specific facts and economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company evaluated the nature of all accounts receivable then provided allowance for doubtful accounts. As of September 30, 2015 and June 30, 2015, the balances of allowance for doubtful accounts were $47,118
and $45,453, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Advance to Suppliers</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The Company periodically makes advances to certain vendors for purchases of raw materials, and records these purchases as advance to suppliers. As of September 30, 2015 and June 30, 2015, advance to suppliers amounted to $28,455
and $69,120, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Inventory</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Inventory consists of raw materials, work in progress and finished goods of manufactured products.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Inventory is stated at lower of cost or market and consists of materials, labor and overhead. HLJ Huimeijia uses the weighted average method for inventory valuation. The other entities of the Company use the first-in, first-out (“FIFO”) method for inventory valuation. Overhead costs included in finished goods include direct labor cost and other costs directly applicable to the manufacturing process. The Company evaluates inventory for excess, slow moving, and obsolete inventory as well as inventory the value of which is in excess of its net realizable value. This evaluation includes analysis of sales levels by product and projections of future demand. If future demand or market conditions are less favorable than the Company’s projections, a write-down of inventory may be required, and would be reflected in cost of goods sold in the period the revision is made. There was no inventory allowance provided for the three months ended September 30, 2015 and 2014, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Impairment of Long-Lived Assets</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company’s long-lived assets and other assets are reviewed for impairment in accordance with the guidance of the FASB ASC Topic 360-10, “Property, Plant, and Equipment,” and FASB ASC Topic 205, “Presentation of Financial Statements.” The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on the Company’s reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. As of September 30, 2015 and June 30, 2015, the Company has not experienced impairment losses on its long-lived assets. However, there can be no assurances that demand for the Company’s products or services will continue, which could result in an impairment of long-lived assets in the future.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Property, Plant and Equipment</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Property, plant and equipment are carried at the lower of cost or fair value. Maintenance, repairs and minor renewals are expensed as incurred, major renewals and improvements that extend the lives or increase the capacity of plant assets are capitalized.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the results of operations in the reporting period of disposition.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Depreciation is calculated on a straight-line basis over the estimated useful life of the assets. The depreciable lives applied are:</p>
<div align="center">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%">
<tr valign="top">
<td align="left" bgcolor="#e6efff">Building, Warehouse and Improvements</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
20
to
30
years
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Office Equipment</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
3
to
7
years
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Vehicles</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
5
to
15
years
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Machinery and Equipment</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
7
to
15
years
</td>
<td align="left" width="2%"> </td>
</tr>
</table>
</div>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Intangible Assets</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company evaluates intangible assets in accordance with FASB ASC Topic 350, “Intangibles — Goodwill and Other.” Intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment tests. If the assumptions and estimates used to allocate the purchase price are not correct, or if business conditions change, purchase price adjustments or future asset impairment charges could be required. The value of the Company’s intangible assets could be impacted by future adverse changes such as: (i) any future declines in the Company’s operating results, (ii) a decline in the valuation of technology, including the valuation of the Company’s common stock, (iii) a significant slowdown in the worldwide economy or (iv) any failure to meet the performance projections included in the Company’s forecasts of future operating results. In accordance with FASB ASC Topic 350, the Company tests intangible assets for impairment on an annual basis or more frequently if the Company believes indicators of impairment exist. Impairment evaluations involve management estimates of asset useful lives and future cash flows. Significant management judgment is required in the forecasts of future operating results that are used in the evaluations. It is possible, however, that the plans and estimates used may be incorrect. If the Company’s actual results, or the plans and estimates used in future impairment analysis, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges in a future period. Based on such evaluations, there was no impairment recorded for intangible assets for the three months ended September 30, 2015 and 2014, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Construction in Progress</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Construction in progress represents the costs incurred in connection with the construction of buildings or new additions to the Company’s plant facilities. Costs classified as construction in progress include all costs of obtaining the asset and bringing it to the location and condition necessary for its intended use. No depreciation is provided for construction in progress until such time as the assets are completed and are placed into service.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company reviews the carrying value of construction in progress for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value of the assets, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment, there was no impairment recorded for construction in progress for the three months ended September 30, 2015 and 2014, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Translation of Foreign Currencies</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Humankind, Huimeijia and HLJ Huimeijia maintain their books and accounting records in PRC currency “Renminbi” (“RMB”), which has been determined as the functional currency. Transactions denominated in currencies other than RMB are translated into RMB at the exchange rates prevailing on the date of the transactions, as quoted by the Federal Reserve Board. Foreign currency exchange gains and losses resulting from these transactions are included in operations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Humankind, Huimeijia and HLJ Huimeijia’s financial statements are translated into the reporting currency, the United States Dollar (“USD”). Assets and liabilities of the above entities are translated at the prevailing exchange rate at each reporting period end date. Contributed capital accounts are translated using the historical rate of exchange when capital is injected. Income and expense accounts are translated at the average rate of exchange during the reporting period. Translation adjustments resulting from the translation of these financial statements are reflected as accumulated other comprehensive income in shareholders’ equity and non-controlling interests.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Revenue Recognition</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company recognizes revenue when it is both earned and realized or realizable. The Company’s policy is to recognize revenue when title to the product, ownership and risk of loss have transferred to the customer, persuasive evidence of an arrangement exits and collection of the sales proceeds is reasonably assured, all of which generally occur upon shipment of goods to customers. The majority of the Company’s revenue relates to the sale of inventory to customers, and revenue is recognized when title and the risks and rewards of ownership pass to the customer. Given the nature of the Company’s business and the applicable rules guiding revenue recognition, the Company’s revenue recognition practices do not contain estimates that materially affect the results of operations. The Company records revenue at the discounted selling price and allows its customers to return products for exchange or credit subject to certain limitations. A provision for such returns is recorded based upon historical experience. There has been no provision recorded for returns based upon historical experience for the three months ended September 30, 2015 and 2014, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Cost of Goods Sold</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Cost of goods sold consists primarily of the costs of raw materials, freight charges, direct labor, depreciation of plants and machinery, warehousing and overhead costs associated with the manufacturing process and commission expenses.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Income Taxes</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company adopts FASB ASC Topic 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In July 2006 the FASB issued FIN 48(ASC 740-10), “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109 (ASC 740),” which requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under FIN 48(ASC 740-10), tax positions that previously failed to meet the more-likely-than-not threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">As a result of the implementation of FIN 48 (ASC 740-10), the Company undertook a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by FIN 48 (ASC 740-10). The Company recognized no material adjustments to liabilities or stockholders’ equity as a result of the implementation. The adoption of FIN 48 did not have a material impact on the Company’s financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from the Company’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or deferred tax asset valuation allowance.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Enterprise Income Tax</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Under the Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC (the “EIT Law”), income tax is payable by enterprises at a rate of
25% of their taxable income.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Value Added Tax</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Provisional Regulations of PRC Concerning Value Added Tax promulgated by the State Council came into effect on January 1, 1994. Under these regulations and the Implementing Rules of the Provisional Regulations of the PRC Concerning Value Added Tax, value added tax (“VAT”) is imposed on goods sold in, or imported into, the PRC and on processing, repair and replacement services provided within the PRC.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
VAT payable in the PRC is charged on an aggregated basis at a rate of
13% or
17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of
17% on the charges for the taxable services provided, but excluding, in respect of both goods and services, any amount paid in respect of VAT included in the price or charges, and less any deductible VAT already paid by the taxpayer on purchases of goods and services in the same financial year. As of September 30, 2015 and June 30, 2015, VAT payables were $248,908
and $219,553, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Sales-Related Taxes</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Pursuant to the tax law and regulations of the PRC, the Company is obligated to pay
7% and
5% of the annual VAT paid as taxes on maintaining and building cities and education additional fees, both of which belong to sales-related taxes. Sales-related taxes are recorded when sales revenue is recognized. Sales-related taxes for the three months ended September 30, 2015 and 2014 were $33,901
and $55,318, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Concentrations of Business and Credit Risks</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">All of the Company’s manufacturing is located in the PRC. There can be no assurance that the Company will be able to successfully continue to manufacture its products and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. Also, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic conditions, prices of raw materials, competition, governmental and political conditions, and changes in regulations. Since the Company is dependent on trade in the PRC, the Company is subject to various additional political, economic and other uncertainties. Among other risks, the Company’s operations will be subject to the risks of restrictions on transfer of funds, domestic customs, changing taxation policies, foreign exchange restrictions, and political and governmental regulations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company operates in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between U.S. dollars and the Chinese currency RMB. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting periods.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Earnings Per Share</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Basic earnings per common share is computed by dividing net earnings applicable to common shareholders by the weighted-average number of common shares outstanding during the period. When applicable, diluted earnings per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options and warrants. For the three months ended September 30, 2015 and 2014, the Company had no potential dilutive common stock equivalents outstanding.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Potential common shares issued are calculated using the treasury stock method, which recognizes the use of proceeds that could be obtained upon the exercise of options and warrants in computing diluted earnings per share. It assumes that any proceeds would be used to purchase common stock at the average market price of the common stock during the period.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">FASB ASC Topic 260, “Earnings Per Share,” requires a reconciliation of the numerator and denominator of the basic and diluted earnings per share (EPS) computations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Recent Accounting Pronouncements</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On January 9, 2015, the Financial Accounting Standards Board (FASB) published ASU 2015-01, “Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” The ASU applies to all entities and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company's consolidated financial statement.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In February 2015, FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. This ASU will be effective for periods beginning after December 15, 2015 for public companies. Management is evaluating the potential impact, if any, on the Company’s financial position and results of operations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In April 2015, the FASB issued ASU No. 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2015, and is to be applied retrospectively. Early adoption is permitted. The Company does not expect the adoption of this guidance will have a material effect on the Company’s consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In July 2015, the FASB issued “Accounting Standard Update 2015-11: Simplifying the Measurement of Inventory.” This update requires inventory to be measured at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. This update will be effective for the Company for all annual and interim periods beginning after December 15, 2016. The amendments in this update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company does not expect this update will have a material impact on the presentation of the Company's consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In August 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting.” This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company does not expect this update will have a material impact on the presentation of the Company's consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments,” which eliminates the requirement to retrospectively account for changes to provisional amounts initially recorded in a business acquisition opening balance sheet. Prior to the issuance of ASU 2015-16, an acquirer was required to restate prior period financial statements as of the acquisition date for adjustments to provisional amounts. This guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within fiscal years. The Company does not expect this update will have a material impact on the presentation of the Company's condensed consolidated financial statements.</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%">
<tr valign="top">
<td align="left" bgcolor="#e6efff">Building, Warehouse and Improvements</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
20
to
30
years
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Office Equipment</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
3
to
7
years
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Vehicles</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
5
to
15
years
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Machinery and Equipment</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
7
to
15
years
</td>
<td align="left" width="2%"> </td>
</tr>
</table>
20
30
3
7
5
15
7
15
20835323
21123027
1344965
1431298
47118
45453
28455
69120
0.25
0.13
0.17
0.17
248908
219553
0.07
0.05
33901
55318
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 3 – ACQUISITION</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On November 22, 2013, Humankind completed the acquisition of HLJ Huimeijia for a total purchase price of $16,339,869
(RMB100,000,000). HLJ Huimeijia was founded on October 30, 2003. HLJ Huimeijia is engaged in the manufacturing and distribution of tincture, ointments, rubber paste (including hormones), solution (topical), suppositories, liniment (including traditional Chinese medicine extraction), enemas and oral liquid. HLJ Huimeijia’s predecessor is Heilongjiang Xue Du Pharmaceutical Co., Ltd., which had established its brand name in the market by its medical products. HLJ Huimeijia is categorized as a “high and new technology” enterprise by the Science Technology Department in Heilongjiang Province. HLJ Huimeijia has
21
products which have been approved by, and have received approval numbers issued by, the China State Food and Drug Administration (“CFDA”). In addition, HLJ Huimeijia is a holder of one patent for utility models, five patents for external design and three trademarks in China, including the Chinese brand name of “Xue Du” that has an established reputation among customers in northeastern China.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">HLJ Huimeijia and Humankind are under the common control of Mr. Xin Sun, the CEO of the Company before and after the date of the completion of the acquisition, or the transfer. Humankind’s accounting policy adopted the guidance in ASC 805-50-05-5 for the transfer of net assets between entities under common control to apply a method similar to the pooling-of-interests method. Under this method, the financial statements of Humankind shall report results of operations for the period in which the transfer occurs as though the transfer of net assets had occurred at the beginning of the period. Results of operations for that period will thus comprise those of the previously separate entities combined from the beginning of the period to the date the transfer is completed and those of the combined operations from that date to the end of the period. Similarly, Humankind shall present the statements of financial position and other financial information as of the beginning of the period as though the assets and liabilities had been transferred at that date. Financial statements and financial information of Humankind presented for prior years also shall be retrospectively adjusted to furnish comparative information.</p>
16339869
100000000
21
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 4 - ASSETS SALE</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On December 24, 2014, Humankind entered into a stock transfer agreement (the “Agreement”) with Xiuzheng Pharmaceutical Group Co., Ltd. a company incorporated under the laws of the People’s Republic of China and located in Jilin province (“Xiuzheng Pharmacy” or the “Buyer”), Mr. Xin Sun, the CEO of the Company, and Huimeijia, pursuant to which, Humankind and Mr. Xin Sun (the “Equity Holders”), shall sell their respective equity interests in Huimeijia to Xiuzheng Pharmacy. The transfer of the
100% equity interests of Huimeijia to the Buyer was for a total cash consideration of RMB8,000,000
(approximately $1,306,186) to the Equity Holders.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On February 9, 2015, the four parties entered into a supplementary agreement (the “Supplementary Agreement”) to modify the terms of the Agreement, pursuant to which, the Equity Holders and Huimeijia (collectively the “Assets Transferors”) shall only sell the
19
drug approval numbers (including the tablet, capsule, powder, mixture, oral liquid, syrup and oral solution under the
19
approval numbers; licenses including the original copies of Business License, Organization Code Certificate, Tax Registration Certificate, Drug Production Permit and GMP Certificate, and other documents and original copies related to the production and operation of the
19
drugs) (the “Assets”) to Xiuzheng Pharmacy. The Equity Holders will retain the equity interests in Huimeijia, but will have the equity interests pledged to Xiuzheng Pharmacy until the Assets are transferred, at which time all the cash consideration shall be paid by the Buyer. The total cash consideration remains to be the same as under the Agreement, i.e., RMB8,000,000
(approximately $1,306,186) to the Assets Transferors. In the event that the Assets are failed to be transferred to the Buyer due to the fault of the Assets Transferors, the paid consideration shall be returned to the Buyer with interests accrued. If the failure of the transfer of the Assets is a result of the government policy changes or force majeure, the paid cash consideration shall be returned to the Buyer but without any interests.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">As of September 30, 2015, the transfer of the Assets had not been completed. The Company is striving to accelerate the process of the transfer.</p>
1.00
8000000
1306186
19
8000000
1306186
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 5 - ACCOUNTS RECEIVABLE</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The Company’s accounts receivable amounted to $1,344,965
and $1,431,298, respectively, net of allowance for doubtful accounts amounting to $47,118
and $45,453
as of September 30, 2015 and June 30, 2015, respectively.
</p>
1344965
1431298
47118
45453
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 6 - INVENTORIES</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Inventory consists of following:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Raw Materials</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
233,553
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
189,004
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Supplies and Packing Materials</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
142,453
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
19,565
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Work-in-Progress</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
246,337
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
261,019
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Finished Goods</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
239,346
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
371,651
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
861,689
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
841,239
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">For the three months ended September 30, 2015 and 2014, the Company has not made provision for inventory in regards to excessive, slow moving or obsolete items.</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Raw Materials</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
233,553
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
189,004
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Supplies and Packing Materials</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
142,453
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
19,565
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Work-in-Progress</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
246,337
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
261,019
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Finished Goods</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
239,346
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
371,651
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
861,689
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
841,239
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
233553
189004
142453
19565
246337
261019
239346
371651
861689
841239
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 7 - CONSTRUCTION IN PROGRESS</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Construction in progress consisted of the following:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Plant - HLJ Huimeijia</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
701,740
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
605,542
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Plant and Production Lines - Huimeijia</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
1,888
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
1,935
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
703,628
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
607,477
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On April 6, 2012, HLJ Huimeijia entered into an agreement with a contractor for the plant, the estimated total cost of construction was approximately $2.09
million (RMB12,800,000), anticipated to be completed within
720
construction working days from April 20, 2012 to December 30, 2015. The construction did not start until August 16, 2014. As of September 30, 2015,
35% of construction had been completed and $701,740
(RMB4,459,980) had been recorded as a cost of construction in progress.
</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Plant - HLJ Huimeijia</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
701,740
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
605,542
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Plant and Production Lines - Huimeijia</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
1,888
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
1,935
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
703,628
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
607,477
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
701740
605542
1888
1935
703628
607477
2090000
12800000
720
0.35
701740
4459980
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 8 - PROPERTY, PLANT AND EQUIPMENT</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Property, plant and equipment consisted of the following:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Building, Warehouses and Improvements</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
4,535,745
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
4,673,771
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Machinery and Equipment</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
1,204,177
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
1,226,433
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Office Equipment</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
124,309
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
134,932
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Vehicles</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
226,819
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
232,511
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Other</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
23,601
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Less Accumulated Depreciation</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(1,989,973
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(1,952,553
</td>
<td align="left" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
4,124,678
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
4,315,094
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Depreciation expense was $85,930
and $91,012
for the three months ended September 30, 2015 and 2014, respectively. Depreciation expense charged to operations was $34,706
and $38,665
for the three months ended September 30, 2015 and 2014, respectively. Depreciation expense charged to cost of goods sold was $51,224
and $52,347
for the three months ended September 30, 2015 and 2014, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
As of September 30, 2015, the building of HLJ Huimeijia with the book value of $1,753,209
has been mortgaged for the working capital loan in the principal amount of $1,573,416
(RMB10,000,000). As of June 30, 2015, the building of HLJ Huimeijia in the book value of $1,797,209
has been mortgaged for the working capital loan in the principal amount of $1,612,903
(RMB10,000,000).
</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Building, Warehouses and Improvements</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
4,535,745
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
4,673,771
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Machinery and Equipment</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
1,204,177
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
1,226,433
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Office Equipment</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
124,309
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
134,932
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Vehicles</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
226,819
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
232,511
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Other</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
23,601
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Less Accumulated Depreciation</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(1,989,973
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(1,952,553
</td>
<td align="left" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
4,124,678
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
4,315,094
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
4535745
4673771
1204177
1226433
124309
134932
226819
232511
23601
0
-1989973
-1952553
4124678
4315094
85930
91012
34706
38665
51224
52347
1753209
1573416
10000000
1797209
1612903
10000000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 9 - INTANGIBLE ASSETS</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The following is a summary of intangible assets:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Land Use Rights – Humankind</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
997,228
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,022,255
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Health Supplement Product Patents – Humankind</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
4,720,247
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
4,838,709
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Pharmaceutical Patents - HLJ Huimeijia</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
140,975
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
144,514
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Land Use Rights - HLJ Huimeijia</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
682,089
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
699,208
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Less: Accumulated Amortization</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(1,797,191
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(1,692,389
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Total</td>
<td align="left" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
4,743,348
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
5,012,297
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
All land in the PRC belongs to the State. Enterprises and individuals can pay the State a fee to obtain the right to use a piece of land for commercial purposes or residential purposes for an initial period of
50
years or
70
years, respectively. The land use right can be sold, purchased, and exchanged in the market. The successor owner of the land use right will have the right to use the land for the time remaining on the initial period.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Amortization expense charged to operations was $147,450
and $150,779
for the three months ended September 30, 2015 and 2014, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
As of September 30, 2015, land use rights of HLJ Huimeijia with the book value of $682,089
have been mortgaged for a working capital loan in the principal amount of $1,573,416
(RMB10,000,000). As of June 30, 2015, land use rights of HLJ Huimeijia with a book value of $699,208
have been mortgaged for a working capital loan in the principal amount of $1,612,903
(RMB10,000,000).
</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Land Use Rights – Humankind</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
997,228
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,022,255
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Health Supplement Product Patents – Humankind</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
4,720,247
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
4,838,709
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Pharmaceutical Patents - HLJ Huimeijia</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
140,975
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
144,514
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Land Use Rights - HLJ Huimeijia</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
682,089
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
699,208
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Less: Accumulated Amortization</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(1,797,191
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(1,692,389
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Total</td>
<td align="left" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
4,743,348
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
5,012,297
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
</table>
997228
1022255
4720247
4838709
140975
144514
682089
699208
-1797191
-1692389
4743348
5012297
50
70
147450
150779
682089
1573416
10000000
699208
1612903
10000000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 10 - SHORT-TERM LOAN</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On November 20, 2014, HLJ Huimeijia entered into a short-term loan agreement with a bank for a working capital loan in the principal amount of RMB10,000,000, at an interest rate of
7.8% from November 20, 2014 to November 19, 2015. The loan was secured by the land use right and the building of HLJ Huimeijia, with a maturity date of November 19, 2015. As of September 30, 2015 and June 30, 2015, the Company’s short-term loan was $1,573,416
and $1,612,903, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Interest expenses were $31,624
and $29,958
for the three months ended September 30, 2015 and 2014, respectively.
</p>
10000000
0.078
1573416
1612903
31624
29958
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 11 - RELATED PARTY DEBTS</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Related party debts, which represent temporary short-term loans from Mr. Xin Sun and Mr. Kai Sun consisted of the following:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>S</b>
<b>
eptember
30, 2015
</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Mr. Xin Sun</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,907,273
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,872,830
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Mr. Kai Sun</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
36,793
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
37,716
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
1,944,066
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
1,910,546
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">These loans are unsecured and non-interest bearing and have no fixed terms of repayment; therefore, they are deemed payable on demand. Mr. Kai Sun is PRC citizen and family member of Mr. Xin Sun, the CEO of the Company.</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>S</b>
<b>
eptember
30, 2015
</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Mr. Xin Sun</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,907,273
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,872,830
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Mr. Kai Sun</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
36,793
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
37,716
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
1,944,066
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
1,910,546
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
30
1907273
1872830
36793
37716
1944066
1910546
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 12 - INCOME TAXES</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>(a) Corporate income taxes</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>United States</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
China Health US was organized in the United States. China Health US had no taxable income for US income tax purposes for the years ended June 30, 2015 and 2014, respectively. As of September 30, 2015, China Health US has a net operating loss carry forward for United States income taxes. Net operating loss carry forwards are available to reduce future years’ taxable income. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s operating history and the continued losses of the US entity. Accordingly, the Company has provided a
100% valuation allowance on the deferred tax asset to reduce the asset to zero. There were no changes in the valuation allowance for the three months ended September 30, 2015 and 2014. Management reviews this valuation allowance periodically and makes adjustments accordingly.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Hong Kong</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">China Health HK was incorporated in Hong Kong and is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. No provision for income taxes have been made as China Health HK has no taxable income in Hong Kong.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>People’s Republic of China</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Under the EIT Law, the standard EIT rate is
25%. The PRC subsidiaries of the Company are subject to PRC income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which they operate.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The provision for income taxes on income consists of the following for the three months ended September 30, 2015 and 2014:</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Provision for income taxes consisted of:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" colspan="4" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="27%">
<b>For the Three Months Ended September 30,</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>2014</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Current provision :</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">USA</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
 
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
 
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">China</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
32,406
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
102,179
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Total current provision</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
32,406
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
102,179
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Deferred provision:</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">USA</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">China</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Total deferred provision</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total provision for income taxes</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
32,406
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
102,179
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Significant components of deferred tax assets were as follows:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Deferred tax assets</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Net operating loss carry forward</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
332,913
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
141,735
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Allowance for doubtful accounts</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Valuation allowance</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(332,913
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(141,735
</td>
<td align="left" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Deferred tax assets, net</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
As of September 30, 2015 and June 30, 2015, the Company accrued a
100% valuation allowance on its deferred tax assets based on the assessment on the probability of future reversion.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>(b) Uncertain tax positions</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">There were no unrecognized tax benefits as of September 30 and June 30, 2015, respectively. Management does not anticipate any potential future adjustments in the next twelve months which would result in a material change to its tax positions. For the three month ended September 30, 2015 and 2014, the Company did not incur any interest and penalties arising from its tax payments.</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" colspan="4" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="27%">
<b>For the Three Months Ended September 30,</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>2014</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Current provision :</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">USA</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
 
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
 
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">China</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
32,406
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
102,179
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Total current provision</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
32,406
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
102,179
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Deferred provision:</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">USA</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="12%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">China</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Total deferred provision</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total provision for income taxes</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
32,406
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
102,179
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
0
0
32406
102179
32406
102179
0
0
0
0
0
0
32406
102179
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
<b>June 30, 2015</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Deferred tax assets</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="12%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Net operating loss carry forward</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
332,913
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="12%">
141,735
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Allowance for doubtful accounts</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Valuation allowance</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(332,913
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%">
(141,735
</td>
<td align="left" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Deferred tax assets, net</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double" valign="bottom" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
332913
141735
0
0
-332913
-141735
0
0
1.00
0.25
1.00
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 13 - COMMITMENTS AND CONTINGENCIES</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company’s assets are located in the PRC and revenues are derived from operations in the PRC.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In terms of industry regulations and policies, the economy of the PRC has been transitioning from a planned economy to market oriented economy. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reforms, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in the PRC is still owned by the Chinese government. For example, all land is state owned and leased to business entities or individuals through the government’s granting of Land Use Rights. The granting process is typically based on government policies at the time of granting and can be lengthy and complex. This process may adversely affect the Company’s future manufacturing expansions. The Chinese government also exercises significant control over the PRC’s economic growth through the allocation of resources and providing preferential treatment to particular industries or companies. Uncertainties may arise with changing of governmental policies and measures.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company faces a number of risks and challenges not typically associated with companies in North America and Western Europe, since its assets exist solely in the PRC, and its revenues are derived from its operations therein. The PRC is a developing country with an early stage market economic system, overshadowed by the state. Its political and economic systems are very different from the more developed countries and are in a state of change. The PRC also faces many social, economic and political challenges that may produce major shocks, instabilities and even crises, in both its domestic arena and in its relationships with other countries, including the United States. Such shocks, instabilities and crises may in turn significantly and negatively affect the Company’s performance.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Since the Company terminated its rental agreement on January 9, 2013, it had no rental commitment as of September 30, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 14 - MAJOR SUPPLIERS AND CUSTOMERS</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The Company had one supplier that in the aggregate accounted for
75% of the Company’s purchases for the three months ended September 30, 2015.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The Company had one supplier that in the aggregate accounted for
74% of the Company’s purchases for the three months ended September 30, 2014.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The Company had four customers that in the aggregate accounted for
42% of the Company’s total sales for the three months ended September 30, 2015, with each customer accounting for
11%,
11%,
10% and
10%, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The Company had three customers that in the aggregate accounted for
38% of the Company’s total sales for the three months ended September 30, 2014, with each customer accounting for
11%,
11% and
10%, respectively.
</p>
0.75
0.74
0.42
0.11
0.11
0.10
0.10
0.38
0.11
0.11
0.10
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 15 - SEGMENT REPORTING</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company was organized into three main business segments based on the types of products being provided to customers: HLJ Huimeijia, Humankind and others. Each of the three operating segments referenced above has separate and distinct general ledgers. The chief operating decision maker (“CODM”) receives financial information, including revenue, gross margin, operating income, and net income produced from the various general ledger systems to make decisions about allocating resources and assessing performance; however, the principal measure of segment profitability or loss used by the CODM is net loss by segment.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The following tables present summary information by segment for the three months ended September 30, 2015 and 2014, respectively:</p>
<div>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" colspan="10" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="33%">
<b>For the Three Months Ended September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" colspan="10" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="33%">
<b>For the Three Months Ended September 30, 2014</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%">
<b>HLJ</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%">
<b>HLJ</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Huimeijia</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Humankind</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Others</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Consolidated</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Huimeijia</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Humankind</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Others</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Consolidated</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Revenues</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
293,756
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
1,662,312
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
1,956,068
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
407,874
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$ </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
2,752,343
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
3,160,217
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Cost of revenues</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
250,346
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
1,168,618
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
1,418,964
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
290,077
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
1,923,886
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
2,213,963
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Gross profit</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
43,410
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
493,694
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
537,104
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
117,797
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
828,457
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
946,254
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Interest expense</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
31,624
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
31,624
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
29,958
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
29,958
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Depreciation and amortization</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
18,792
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
163,169
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
196
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
182,157
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
22,987
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
166,457
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
189,444
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Income tax</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
32,406
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
32,406
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
102,179
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
102,179
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Net income (loss)</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
(127,282
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
97,216
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
270
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
(30,336
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
(83,025
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">) </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
306,540
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
(71
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
223,444
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Total capital expenditures</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
454
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
454
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
2,440
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
2,440
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total assets</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
3,282,095
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
37,205,127
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
62,572
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
40,549,794
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
3,640,804
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$ </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
38,366,768
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
27,897
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
42,035,469
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
</div>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" colspan="10" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="33%">
<b>For the Three Months Ended September 30, 2015</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" colspan="10" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="33%">
<b>For the Three Months Ended September 30, 2014</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%">
<b>HLJ</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%">
<b>HLJ</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" valign="bottom" width="6%"> </td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" nowrap="nowrap" valign="bottom"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Huimeijia</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Humankind</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Others</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Consolidated</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Huimeijia</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Humankind</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Others</b>
</td>
<td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="6%">
<b>Consolidated</b>
</td>
<td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Revenues</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
293,756
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
1,662,312
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
1,956,068
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
407,874
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$ </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
2,752,343
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
3,160,217
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Cost of revenues</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
250,346
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
1,168,618
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
1,418,964
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
290,077
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
1,923,886
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
2,213,963
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Gross profit</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
43,410
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
493,694
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
537,104
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
117,797
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
828,457
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
946,254
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Interest expense</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
31,624
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
31,624
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
29,958
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
29,958
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Depreciation and amortization</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
18,792
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
163,169
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
196
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
182,157
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
22,987
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
166,457
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
189,444
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Income tax</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
32,406
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
32,406
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
102,179
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
102,179
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Net income (loss)</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
(127,282
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
97,216
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
270
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
(30,336
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
(83,025
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">) </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
306,540
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
(71
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
223,444
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" valign="bottom">Total capital expenditures</td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
454
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
454
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
2,440
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
-
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%"> </td>
<td align="right" valign="bottom" width="6%">
2,440
</td>
<td align="left" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff" valign="bottom">Total assets</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
3,282,095
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
37,205,127
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
62,572
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
40,549,794
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
3,640,804
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$ </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
38,366,768
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
27,897
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="6%">
42,035,469
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
293756
1662312
0
1956068
407874
2752343
0
3160217
250346
1168618
0
1418964
290077
1923886
0
2213963
43410
493694
0
537104
117797
828457
0
946254
31624
0
0
31624
29958
0
0
29958
18792
163169
196
182157
22987
166457
0
189444
0
32406
0
32406
0
102179
0
102179
-127282
97216
270
-30336
-83025
306540
-71
223444
0
454
0
454
2440
0
0
2440
3282095
37205127
62572
40549794
3640804
38366768
27897
42035469
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>NOTE 16 - STOCK BASED COMPENSATION</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On March 27, 2015 the Board of Directors (the “Board”) adopted the Company’s 2015 Equity Incentive Plan (the “Plan”), which became effective as of such date. The Plan is intended to be construed as an employee benefit plan that satisfies the requirements for exemption from the restrictions of Section 16(b) of the Exchange Act. A summary of the principal provisions of the Plan is set forth below.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The aggregate number of shares of common stock that may be issued under the Plan is
6,000,000
shares. In the event that the Board determines that any dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, or other corporate transaction or event affects the common stock such that an adjustment is determined by the Board, in its sole discretion, to be necessary or appropriate in order to prevent dilution or enlargement of benefits or potential benefits intended to be made available under the Plan, the Board may, in such manner as it in good faith deems equitable, adjust any or all of (i) the number of shares of common stock or other securities of the Company (or number and kind of other securities or property) with respect to which awards may be granted, (ii) the number of shares of common stock or other securities of the Company (or number and kind of other securities or property) subject to outstanding awards, and (iii) the exercise price with respect to any stock option, or make provision for an immediate cash payment to the holder of an outstanding award in consideration for the cancellation of such award.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Individuals eligible for awards under the Plan shall consist of employees (including officers), directors and consultants, or those who will become employees (including officers), directors and consultants, of the Company and/or its subsidiaries whose performance or contribution, in the sole discretion of the Committee, benefits or will benefit the Company or any subsidiary.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Plan was effective upon its approval by the Board and adoption by the Company. The Plan shall terminate on March 27, 2025, except with respect to awards then outstanding. After such date no further awards shall be granted under the Plan.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On March 30, 2015, the Company granted
3,000,000
and
300,000
restricted shares to Mr. Xin Sun, Chief Executive Officer and Chief Financial Officer of the Company and an employee, respectively. The vesting periods of the restricted shares under the Plan were determined based on individual stock award agreements and would be recognized as equity compensation for the fiscal years ended June 30, 2015 and 2016. The grant was pursuant to the Plan and a Restricted Stock Award Agreement, and was based on the exemption afforded by Regulation S under the Securities Act of 1933, as amended.
</p>
6000000
3000000
300000