Form 20-F Huitao Technology Co., por: 30 de junio

Nuestra
los cinco principales proveedores proporcionan aproximadamente el 34.9% del abastecimiento de las materias primas para nuestro negocio de producción de concreto para
año terminado el 30 de junio de 2019. Como resultado de esta concentración en nuestra cadena de suministro, nuestros negocios y operaciones serían negativamente
afectado si alguno de nuestros proveedores clave experimentara una interrupción significativa que afecte el precio, la calidad, la disponibilidad o el tiempo
entrega de sus productos. La pérdida parcial o completa de uno de estos proveedores, o un cambio adverso significativo en nuestra relación
con cualquiera de estos proveedores, podría resultar en la pérdida de ingresos, costos adicionales y demoras en la distribución que podrían dañar nuestro negocio y
relaciones del cliente. Además, la concentración en nuestra cadena de suministro puede exacerbar nuestra exposición a los riesgos asociados con el
terminación por parte de proveedores clave de nuestros acuerdos de distribución o cualquier cambio adverso en los términos de dichos acuerdos, que podría
tener un impacto adverso en nuestros ingresos y rentabilidad.

Nosotros
puede experimentar accidentes graves en el curso de nuestras operaciones, lo que puede causar daños materiales importantes y lesiones personales.

Significativo
Los accidentes y desastres naturales relacionados con la industria pueden causar interrupciones en varias partes de nuestras operaciones, o pueden resultar en
daños a la propiedad o al medio ambiente, aumento de los gastos operativos o pérdida de ingresos. La ocurrencia de tales accidentes y la
las consecuencias resultantes pueden no estar cubiertas adecuadamente, o en absoluto, por las pólizas de seguro que tenemos. De acuerdo con la costumbre
En China, no contamos con ningún seguro de interrupción comercial o seguro de responsabilidad civil por daños personales
o daños ambientales derivados de accidentes en nuestra propiedad o relacionados con nuestras operaciones que no sean nuestros automóviles. Pérdidas
o los pagos incurridos pueden tener un efecto adverso importante en nuestro desempeño operativo si tales pérdidas o pagos no son totalmente
asegurado.

Nuestra
La expansión planificada y los proyectos de mejora técnica podrían retrasarse o verse afectados negativamente, entre otras cosas, por fallas en
recibir aprobaciones regulatorias, dificultades para obtener financiamiento suficiente, dificultades técnicas o recursos humanos u otros
restricciones

Nosotros
pretenden expandir nuevas instalaciones de producción durante los próximos años. Los costos proyectados para nuestra expansión planificada y técnica
Los proyectos de mejora y expansión pueden exceder los contemplados originalmente. Ahorro de costos y otros beneficios económicos esperados
de estos proyectos no puede materializarse como resultado de dichos retrasos, sobrecostos o cambios en las circunstancias del mercado.

A
Para realizar mejoras en nuestra planta actual, no es necesario que solicitemos la aprobación reglamentaria. Sin embargo, para construir
una nueva planta de concreto, necesitaremos (i) solicitar una licencia comercial de la Administración local de Industria y Comercio,
(ii) solicite un Certificado de Calificación de la Industria del Comité de Construcción Municipal local y (iii) reciba
aprobación de la Oficina de Protección Ambiental local en el área del distrito correspondiente. No hay garantía de que podamos
para obtener estas aprobaciones regulatorias de manera oportuna o en absoluto.

Nosotros
No podemos asegurarle que nuestra estrategia de crecimiento tendrá éxito.

Uno
Una de nuestras estrategias es crecer aumentando la distribución y las ventas de nuestros productos penetrando en los mercados existentes en
China y entrando en nuevos mercados geográficos en China. Sin embargo, existen muchos obstáculos para ingresar a estos nuevos mercados, incluidos, pero
no se limita a la competencia de compañías establecidas en tales mercados existentes en China. Por lo tanto, no podemos asegurarle que
podremos superar con éxito tales obstáculos y establecer nuestros productos en cualquier mercado adicional. Nuestra incapacidad para
implementar esta estrategia de crecimiento con éxito puede tener un impacto negativo en nuestro crecimiento, condición financiera futura, resultados de operaciones
o flujos de efectivo.

Si
fallamos en administrar efectivamente nuestro crecimiento y expandimos nuestras operaciones, nuestro negocio, condición financiera, resultados de operaciones y
Las perspectivas podrían verse negativamente afectadas.

Nuestra
El éxito futuro depende de nuestra capacidad de expandir nuestro negocio para abordar el crecimiento de la demanda de nuestros productos y servicios. En orden
Para maximizar el crecimiento potencial en nuestros mercados actuales y potenciales, creemos que debemos expandir nuestra fabricación y comercialización
operaciones Nuestra capacidad para lograr estos objetivos está sujeta a riesgos e incertidumbres importantes, que incluyen:

A
Para dar cabida a nuestro crecimiento, necesitaremos implementar una variedad de sistemas operativos y financieros nuevos y mejorados, procedimientos,
y controles, incluidas las mejoras en nuestros sistemas de contabilidad y otros sistemas de gestión interna, al dedicar recursos adicionales
a nuestra función de informes y contabilidad, y mejoras a nuestro sistema de mantenimiento de registros y seguimiento de contratos. También necesitaremos
para reclutar más personal y capacitar y administrar nuestra creciente base de empleados. Además, nuestra gerencia deberá mantener
y expandir nuestras relaciones con nuestros clientes existentes y encontrar nuevos clientes para nuestros servicios. No hay garantía de que nuestro
la gerencia puede tener éxito en mantener y expandir estas relaciones.

Si
nos encontramos con cualquiera de los riesgos descritos anteriormente, o si de otra manera no podemos establecer u operar con éxito capacidad adicional
o aumentar nuestra producción, es posible que no podamos hacer crecer nuestro negocio e ingresos, reducir nuestros costos operativos, mantener nuestra competitividad
o mejorar nuestra rentabilidad y, en consecuencia, nuestro negocio, condición financiera, resultados de operaciones y perspectivas serán
afectado negativamente.

Si
no podemos estimar con precisión los riesgos o costos generales asociados con un proyecto en el que estamos haciendo una oferta, podemos lograr
una ganancia menor a la anticipada o incluso incurrir en una pérdida en el contrato.

Sustancialmente
Todos nuestros ingresos y cartera de contratos se derivan típicamente de contratos de precio unitario fijo. Los contratos de precio unitario fijo requieren
nosotros para realizar el contrato por un precio unitario fijo independientemente de nuestros costos reales. Como resultado, obtenemos una ganancia en estos
solo se contrae si estimamos con éxito nuestros costos y luego controlamos con éxito los costos reales y evitamos sobrecostos. Si nuestro
los estimados de costos para un contrato son inexactos, o si no ejecutamos el contrato dentro de nuestros estimados de costos, entonces los sobrecostos
puede hacer que el contrato no sea tan rentable como esperábamos, o puede causarnos pérdidas. Esto, a su vez, podría negativamente
afectar nuestro flujo de efectivo, ganancias y posición financiera.

los
los costos incurridos y las ganancias brutas realizadas en esos contratos pueden variar, a veces sustancialmente, de las proyecciones originales debidas
a una variedad de factores, que incluyen, entre otros:

Económico
Las bajas o reducciones en el financiamiento gubernamental de proyectos de infraestructura podrían reducir significativamente nuestros ingresos.

Nuestra
el negocio depende en gran medida de la cantidad de trabajo de infraestructura financiado por varias entidades gubernamentales, que, a su vez, depende
sobre la condición general de la economía, la necesidad de infraestructura nueva o de reemplazo, las prioridades asignadas a varios proyectos
financiado por entidades gubernamentales y niveles de gasto del gobierno nacional o local. Disminución de la financiación gubernamental de la infraestructura.
los proyectos podrían disminuir el número de contratos de construcción civil disponibles y limitar nuestra capacidad de obtener nuevos contratos, que
podría reducir nuestros ingresos y ganancias.

Nuestra
la planta de producción de concreto en Beijing puede estar sujeta a un plan general de rezonificación de la ciudad que, si se implementa en el futuro, puede requerir
nosotros para reubicar o posiblemente cerrar permanentemente parte de esta planta.

Nuestra
la planta de producción de concreto en Beijing puede estar sujeta a un plan general de rezonificación de la ciudad que ha sido preparado por el municipio de Beijing
gobierno. Según el plan de rezonificación, se pretende que las propiedades donde se ubica esta planta se rezonifiquen de la industria
para uso comercial. Si y cuando se implementa con respecto a esas propiedades, el plan de rezonificación puede requerir que desocupemos estas propiedades
y reubicar la planta. En caso de que tengamos que desalojar la planta, implementaríamos ciertas estrategias para minimizar
pérdida de capacidad de producción durante la reubicación. No puede garantizarse que nuestras estrategias para hacer frente a la reubicación del
las instalaciones pueden implementarse, o que tales estrategias pueden implementarse antes de que se nos requiera desocupar la planta debido a la
plan general propuesto de rezonificación de la ciudad. Si se nos exige reubicar la planta, nuestros resultados de operación y condición financiera
puede verse afectada material y negativamente.

Nuestra
La exposición a clientes o proveedores con problemas financieros podría dañar nuestro negocio, nuestra situación financiera y nuestros resultados operativos.

Nosotros
Produzca, venda y entregue concreto premezclado, y confíe en proveedores, que en el pasado y en el futuro puedan tener experiencia financiera
dificultades, particularmente a la luz de las condiciones recientes en los mercados de crédito y la economía general que afectaron el acceso a
capital y liquidez. Como resultado, dedicamos recursos significativos para monitorear las cuentas por cobrar y los saldos de inventario con ciertas
de nuestros clientes Si nuestros clientes experimentan dificultades financieras, podríamos tener dificultades para recuperar las cantidades que nos deben
estos clientes, o la demanda de nuestros servicios por parte de estos clientes podría disminuir. Además, el gobierno endureció monetaria
política para regular la inflación, lo que a su vez llevó a retrasos en el pago de nuestros proyectos de construcción de viviendas. Por preocupación
sobre la inflación, el gobierno chino comenzó a endurecer su política monetaria a partir de octubre de 2010, lo que afectó a los bienes raíces.
y las industrias de construcción negativamente. Como resultado, nuestras cuentas por cobrar aumentaron y la provisión para cuentas incobrables
También aumentó. Algunos de nuestros clientes parecían sufrir una disminución de los negocios y la escasez de efectivo. El subsidio para dudosos
las cuentas aumentaron a aproximadamente $ 21.2 millones al 30 de junio de 2019, en comparación con aproximadamente $ 19.3 millones al 30 de junio,
2018. De hecho, nuestra provisión para cuentas incobrables, como un porcentaje de nuestras cuentas por cobrar totales, ha aumentado de aproximadamente
31% al 30 de junio de 2018, a aproximadamente 36.5% al ​​30 de junio de 2019. La imposibilidad de cobrar nuestras cuentas por cobrar pendientes
could adversely affect our operating cash flows and reduce our working capital. As a result, we may suffer material write-offs
on our accounts receivable. The inability of our suppliers to supply us with needed raw materials could adversely affect our production
process and therefore, we may not be able to fulfill our contract arrangements with customers.

We
rely on internal models to manage risk, to provide accounting estimates and to make other business decisions. Our results could
be adversely affected if those models do not provide reliable estimates or predictions of future activity.

We
rely heavily on internal models in making a variety of decisions crucial to the successful operation of our business, including
the allowance for doubtful accounts and other accounting estimates. It is therefore important that our models are accurate, and
any failure in this regard could have a material adverse effect on our results. Models are inherently imperfect predictors of
actual results because they are based on historical data available to us and our assumptions about factors such as credit demand,
payment rates, default rates, delinquency rates and other factors that may overstate or understate future experience. Our models
could produce unreliable results for a number of reasons, including the limitations of historical data to predict results due
to unprecedented events or circumstances, invalid or incorrect assumptions underlying the models, the need for manual adjustments
in response to rapid changes in economic conditions, incorrect coding of the models, incorrect data being used by the models or
inappropriate application of a model to products or events outside of the model’s intended use. In particular, models are
less dependable when the economic environment is outside of historical experience, as has been the case recently. Due to the factors
described above and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”,
we may, among other things, experience actual write-offs that exceed our estimates and which are possibly greater than our allowance
for doubtful accounts, or which require material adjustments to the allowance. Unanticipated and excessive default and write-off
experience can adversely affect our profitability and financial condition and adversely affect our ability to finance our business.

Our
business will be damaged if project contracts with the Chinese government, for which we may act as a subcontractor are cancelled.

We
do not enter into any contracts directly with the Chinese government. For contracts that are funded by the Chinese government,
we place bids and enter into subcontracts with the private entity prime contractor. A sudden cancellation of a prime contract,
and in turn our subcontract, could cause our equipment and work crews to remain idle for a significant period of time until other
comparable work becomes available. This idle time could have a material adverse effect on our business and results of operations.

Our
industry is highly competitive, with numerous larger companies with greater resources competing with us, and our failure to compete
effectively could reduce the number of new contracts awarded to us or adversely affect our margins on contracts awarded.

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

We
could face increased competition in our principal market.

Our
principal market, Beijing, has enjoyed stronger economic growth and a higher demand for construction than other regions of China.
As a result, we believe that competitors will try to expand their sales and build up their distribution networks in our principal
market. We anticipate that this trend will continue and likely accelerate. Increased competition may have a material adverse effect
on our financial condition and results of operations.

Our
dependence on subcontractors and suppliers of materials could increase our costs and impair our ability to compete on contracts
on a timely basis or at all, which would adversely affect our profits and cash flow.

We
rely on third-party subcontractors to perform some of the work on many of our contracts. We do not bid on contracts unless we
have the necessary subcontractors committed for the anticipated scope of the contract and at prices that we have included in our
bid. Therefore, to the extent that we cannot obtain third-party subcontractors, our profits and cash flow will suffer.

We
may have inadvertently violated Section 13(k) of the Exchange Act and may be subject to sanctions as a result.

Section
13(k) of the Securities Exchange Act of 1934 (Section 402 of the Sarbanes-Oxley Act of 2002, (“Sarbanes-Oxley”) provides
that it is unlawful for a company that has a class of securities registered under Section 12 of the Exchange Act to, directly
or indirectly, including through any subsidiary, extend or maintain credit in the form of a personal loan to or for any director
or executive officer of the company. We overlooked this prohibition and Xin Ao, our VIE, inadvertently made certain advances and
provided a guarantee to Beijing Lianlv Technology Group Co. Ltd., an entity controlled by Mr. Han and Mr. He our former chief
executive and former chief financial officers. Such advance and guarantee may have violated Section 13(k). Issuers who are found
to have violated Section 13(k) may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well
as criminal sanctions. The imposition of any of such sanctions on the Company could have a material adverse effect on our business,
financial position, results of operations or cash flows.

We
have identified material weaknesses in our internal control over financial reporting, and we cannot provide assurances that these
weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future. If our internal
control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately
report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose
confidence in our reported financial information and which may lead to a decline in our stock price.

En
October 6, 2018, the Audit Committee of the Board of Directors, after consultation with the Company’s then independent registered
public accounting firm, Friedman LLP (“Friedman”) concluded, that the Company’s audited financial statements
at and for the year ended June 30, 2017 contained in the Company’s Annual Report on Form 10-K originally filed with the
SEC on as well the unaudited financial statements at and for the periods ended March 31, 2018, December 31, 2017 and September
30, 2017 contained in the Company’s Quarterly Reports on Form 10-Q originally filed on November 15, 2017, February 13, 2018
and May 15, 2018, respectively, should no longer be relied upon. The Company’s review of the above-mentioned filings revealed
that the financial statements in such filings contained errors primarily as a result of omission of certain contingencies. Como
a result of such review, the Company has decided to make certain corrections to include certain contingencies disclosure in the
aforementioned consolidated financial statements and notes thereto. The Company also evaluated whether any of the contingencies’
losses should be recorded in the aforementioned consolidated financial statements and recorded $1.2 million of contingent liabilities
for the year ended June 30, 2018. As a result of the errors described above, management has concluded that the Company’s
internal control over financial reporting and its disclosure controls and procedures were not effective as of the ends of each
of the applicable restatement periods.

Furthermore, as discussed in “Part II, Item 15. Controls and Procedures,” our management has
identified material weaknesses in our internal control over financial reporting, which were not remediated as of June 30, 2019.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there
is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will
not be prevented or detected on a timely basis.

We
did not maintain an effective control environment as there was an insufficient complement of personnel with appropriate accounting
knowledge, experience and competence, resulting in incorrect application of accounting principles generally accepted in the United
States of America (“U.S. GAAP”). This material weakness contributed to the following material weaknesses. We did not
maintain effective controls over our financial close process. Also, we did not design and maintain effective controls over the
review of supporting information to determine the completeness and accuracy of the accounting for complex transactions, specifically
related to the business combination that occurred on September 9, 2016, which resulted in an incorrect application of U.S. GAAP
that resulted in material misstatements and a restatement of our unaudited condensed consolidated financial statements for the
three and nine months ended September 30, 2016.

Como
of the date of this Annual Report, we are re-assessing the design of our controls and modifying processes related to the identification
and reporting for contingencies. However, there can be no assurance that we will be able to fully remediate our existing material
weaknesses or that our internal control over financial reporting will not suffer in the future from other material weaknesses,
thus making us unable to prevent or detect on a timely basis material misstatements in our periodic reports with the SEC. If we
fail to remediate these material weaknesses or otherwise maintain effective internal control over financial reporting in the future,
the existence of one or more internal control deficiencies could result in errors in our financial statements, and substantial
costs and resources may be required to rectify internal control deficiencies.   If we cannot produce reliable financial
reports, we may have difficulty in filing timely periodic reports with the SEC, investors could lose confidence in our reported
financial information, the market price of our stock could decline significantly, we may be unable to obtain additional financing
to operate and expand our business, and our business and financial condition could be materially harmed. In addition, any failure
to remediate the existing material weaknesses or a failure to maintain effective internal control over financial reporting could
negatively impact our results of operations, cash flows and financial condition, subject us to potential litigation and regulatory
inquiry and cause us to incur additional costs in future periods relating to the implementation of remedial measures.

Matters
relating to or arising from the restatements, Audit Committee investigation and the associated material weaknesses identified
in our internal control over financial reporting, including adverse publicity, have caused us to incur significant legal, accounting
and other professional fees and other costs, have exposed us to greater risks associated with other civil litigation, regulatory
proceedings and government enforcement actions, have diverted resources and attention that would otherwise be directed toward
our operations and implementation of our business strategy and may impact our ability to attract and retain customers, employees
and vendors, any of which could have a material adverse effect on our business, financial condition and results of operations.

We
may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt
Practices Act or Chinese anti-corruption law could have a material adverse effect on our business.

We
are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments
to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the
purpose of obtaining or retaining business. Chinese anti-corruption law also strictly prohibits bribery of government officials.
We have operations, agreements with third parties and make sales in China, where corruption may occur. Our activities in China
create the risk of unauthorized payments or offers of payments by one of the employees, consultants, sales agents or distributors
of our Company, even though these parties are not always subject to our control. It is our policy to implement safeguards to prevent
these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective,
and the employees, consultants, sales agents or distributors of our Company may engage in conduct for which we might be held responsible.

Violations
of the FCPA or other anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities,
which could negatively affect our business, operating results and financial condition. In addition, the United States government
may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that
we acquire.

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relative lack of public company experience of our management team may put us at a competitive disadvantage.

Our
management team lacks U.S. public company experience, which could impair our ability to comply with legal and regulatory requirements
such as those imposed by the Sarbanes-Oxley Act. Our senior management does not have experience managing a U.S. publicly traded
company and lacks knowledge about the Sarbanes-Oxley Act. Such responsibilities include complying with federal securities laws
and making required disclosures on a timely basis. Our senior management are unable to implement programs and policies in an effective
and timely manner or that adequately respond to the increased legal, regulatory and reporting requirements associated with being
a U.S. publicly traded company. Our failure to comply with all applicable requirements could lead to the imposition of fines and
penalties, distract our management from attending to the management and growth of our business, result in a loss of investor confidence
in our financial reports and have an adverse effect on our business and stock price.

We
depend heavily on key personnel, and turnover of key employees and senior management could harm our business.

Our
future business and results of operations depend in significant part upon the continued contributions of our key technical and
senior management personnel, including Yang (Sean) Liu, our Chairman and Chief Executive Officer and Lili Jiang, our director
and Chief Financial Officer. They also depend in significant part upon our ability to attract and retain additional qualified
management, technical, operational and support personnel for our operations. If we lose a key employee, if a key employee fails
to perform in his or her current position, or if we are not able to attract and retain skilled employees as needed, our business
could suffer. Significant turnover in our senior management could significantly deplete the institutional knowledge held by our
existing senior management team. We depend on the skills and abilities of these key employees in managing the reclamation, technical,
and marketing aspects of our business, any part of which could be harmed by turnover in the future.

Certain
of our existing stockholders have substantial influence over our company, and their interests may not be aligned with the interests
of our other stockholders.

Our Chief Executive Officer, Yang (Sean)
Liu, owns approximately 1.6% of our outstanding voting securities and our Chief Financial Officer, Lili Jiang, owns approximately
1.6% of our outstanding voting securities as of the date of this annual report, in a fully-diluted share base.  As a result,
each have significant influence over our business, including decisions regarding mergers, consolidations, liquidations and the
sale of all or substantially all of our assets, election of directors and other significant corporate actions. This concentration
of ownership may also have the effect of discouraging, delaying or preventing a future change of control, which could deprive
our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company and might reduce the
price of our shares.

We will require additional capital and
we may not be able to obtain it on acceptable terms or at all.

We will require additional cash resources due
to current and any changed business conditions or other future developments, including any investments or acquisitions we may decide
to pursue. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities
or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders.
The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and
financing covenants that would restrict our operations. Our ability to obtain additional capital on acceptable terms is subject
to a variety of uncertainties, including:

Financing
may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms
favorable to us, or at all, could have a material adverse effect on our business, financial condition and results of operations.

We
may be exposed to potential risks relating to our internal controls over financial reporting.

Como
directed by Section 404 of the Sarbanes-Oxley Act of 2002 or SOX 404, the SEC adopted rules requiring public companies to include
a report of management on the company’s internal controls over financial reporting in their annual reports. Under current
law, the auditor attestation will not be required as long as our filing status remains as a smaller reporting company, but we
may cease to be a smaller reporting company in future years, in which case we will be subject to the auditor attestation requirement.
We were subject to management report for the fiscal year ended June 30, 2019, and a report of our management for the 2019 fiscal
year is included under Item 15 of this annual report concluding that, as of June 30, 2019, our internal controls over financial
reporting were not effective. If we cannot remediate the material weakness identified in a timely manner or, if and when we are
subject to the auditor attestation report requirement, we are unable to receive a positive attestation from our independent auditors
with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements,
which could adversely affect the price of our ordinary shares.

We
have limited insurance coverage for our operations in China.

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insurance industry in China is still at an early stage of development. Insurance companies in China offer limited insurance products.
We have determined that the risks of disruption or liability from our business, the loss or damage to our property, including
our facilities, equipment and office furniture, the cost of insuring for these risks, and the difficulties associated with acquiring
such insurance on commercially reasonable terms make it impractical for us to have such insurance. As a result, we do not have
any business liability, disruption, litigation or property insurance coverage for our operations in China except for insurance
on some company owned vehicles. Any uninsured occurrence of loss or damage to property, or litigation or business disruption may
result in the incurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating
results.

We
may not be current in our payment of social insurance and housing accumulation fund for our employees and such shortfall may expose
us to relevant administrative penalties.

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PRC laws and regulations require all employers in China to fully contribute their own portion of the social insurance premium
and housing accumulation fund for their employees within a certain period of time. Failure to do so may expose the employers to
make rectification for the accrued premium and fund by the relevant labor authority. Also, an administrative fine may be imposed
on the employers as well as the key management members. As of June 30, 2019, Xin Ao has fully contributed the social insurance
premium and housing accumulation fund according to PRC laws and regulations.

Our
operations may incur substantial liabilities to comply with environmental laws and regulations.

Our
concrete manufacturing operations are subject to laws and regulations relating to the release or disposal of materials into the
environment or otherwise relating to environmental protection. Applicable law required that we obtain an environmental impact
report and environmental approval from the environmental protection administration prior to obtaining the business license and
construction enterprise qualification certificate for Xin Ao. However, the local administration of industry and commerce and the
Beijing Municipal Construction Commission did not require Xin Ao to provide the environmental impact report and environmental
approval, and Xin Ao has not received any notice of non-compliance nor has any fine or other penalty been assessed. However, the
environmental protection administration may in the future require that Xin Ao provide the applicable report and apply for the
required environment approval. Our failure to have complied with the applicable laws regarding delivery of the report may result
in the assessment of administrative, civil and criminal penalties, the incurrence of investigatory or remedial obligations and
the imposition of injunctive relief. Resolution of these matters may require considerable management time and expense. In addition,
changes in environmental laws and regulations occur frequently and any changes that result in more stringent or costly manufacturing,
storage, transport, disposal or cleanup requirements could require us to make significant expenditures to reach and maintain compliance
and may otherwise have a material adverse effect on our industry in general and on our own results of operations, competitive
position or financial condition.

If
we are unable to realize the current assets within the normal operating cycle, the Company may not have sufficient funds to meet
our working capital requirements and debt obligations as they become due.

Our
business is capital intensive and highly leveraged. Debt financing in the form of short term bank loans, loans from related parties
and bank acceptance notes, have been utilized to finance the working capital requirements and the capital expenditures of the
Company. We are currently in default of our bank loan agreement and the bank has demanded repayment in accordance with a court
order. There are a number of factors, such as the demand for the Company’s products, economic conditions, the competitive
pricing in the concrete-mix industry, the Company’s operating results not continuing to deteriorate and the Company’s
bank and shareholders being able to provide continued support, might result in insufficient funds to meet our working capital
requirements, operating expenses and capital expenditure obligations. Due to recurring losses, the Company’s working deficit
was approximately $1.1 million as of June 30, 2019 as compared to a working capital of $7.0 million as of June 30, 2018. As of
June 30, 2019, cash on-hand balance of approximately $0.3 million with the remaining current assets are mainly composed of accounts
receivables and prepayments and advances. If we fail to realize the current assets within the normal operating cycle, or if we
are otherwise unable to establish other available funds, we may not have sufficient funds to meet our working capital requirements
and debt obligations, grow our business and revenues, reduce our operating costs and, consequently, our business, financial condition,
results of operations, and prospects will be adversely affected.

Risks
Related to Doing Business in China

En
order to comply with PRC regulatory requirements, we operate our businesses through companies with which we have contractual relationships
but in which we do not have controlling ownership. If the PRC government determines that our agreements with these companies are
not in compliance with applicable regulations, our business in the PRC could be materially adversely affected.

We
do not have direct or indirect equity ownership of our variable interest entity, or VIE, Xin Ao, which operates all our businesses
in China. At the same time, however, we have entered into contractual arrangements with Xin Ao and its individual owners pursuant
to which we received an economic interest in, and exert a controlling influence over Xin Ao, in a manner substantially similar
to a controlling equity interest.

A pesar de que
we believe that our current business operations are in compliance with the current laws in China, we cannot be sure that the PRC
government would view our operating arrangements to be in compliance with PRC regulations that may be adopted in the future. There
have been recent reports of potential PRC government efforts to regulate or perhaps limit the use of VIE structures for new foreign
investment, particularly in the internet and other telecommunications industries. We are monitoring developments in this area
and do not believe any adverse impact on our operations is likely.

If
we are determined not to be in compliance with future PRC regulations, the PRC government could levy fines, revoke our business
and operating licenses, require us to discontinue or restrict our operations, restrict our right to collect revenues, require
us to restructure our business, corporate structure or operations, impose additional conditions or requirements with which we
may not be able to comply, impose restrictions on our business operations or on our customers, or take other regulatory or enforcement
actions against us that could be harmful to our business. As a result, our business in the PRC could be materially adversely affected.

A
slowdown or other adverse developments in the PRC economy may materially and adversely affect our customers, demand for our services
and our business.

We
are a holding company. All of our operations are conducted in the PRC and all of our revenues are generated from sales in the
PRC.

According
to several articles published by the Wall Street Journal, The New York Times, and BBC News in September and October 2019, China’s
economic slowdown worsened in the July-to-September period as the trade war with the United States and a host of other problems
leave China struggling to meet its goals. Value-added industrial output in China rose 4.4% in August 2019 compared to August 2018,
which was far below economists’ expectation of 5.2% growth and also slower than the 4.8% increase in July, according to
the National Bureau of Statistics. Fixed-asset investment outside Chinese rural households climbed 5.5% in the January-August
period in 2019 compared to the same period in 2018, which was also slightly below expectations. Retail sales in China rose 7.5%
in August 2019 from a year earlier, which was lower than the 7.6% gain in July 2019 and below expectations for a 7.9% rise. If
China’s economy continues to slow down, it may negatively affect our business operation and financial results.

We
rely on contractual arrangements with our VIEs for our operations, which may not be as effective in providing control over these
entities as direct ownership.

Our
operations and financial results are dependent on our VIEs, Xin Ao and its subsidiaries, in which we have no equity ownership
interest and must rely on contractual arrangements to control and operate the businesses of our VIEs. These contractual arrangements
are not as effective in providing control over the VIEs as direct ownership. For example, the VIEs may be unwilling or unable
to perform its contractual obligations under our commercial agreements. Consequently, we would not be able to conduct our operations
in the manner currently planned. In addition, the VIEs may seek to renew their agreements on terms that are disadvantageous to
us. Although we have entered into a series of agreements that provide us with substantial ability to control the VIEs, we may
not succeed in enforcing our rights under them insofar as our contractual rights and legal remedies under PRC law are inadequate.
In addition, if we are unable to renew these agreements on favorable terms when these agreements expire or enter into similar
agreements with other parties, our business may not be able to operate or expand, and our operating expenses may significantly
increase.

En
addition, the VIE structure is subject to uncertainty amid the PRC’s changing legislative practice. In January 2015, China’s
Ministry of Commerce unveiled a draft legislation that could change how the government is regulating corporate structures, especially
for VIEs controlled by foreign investments. Instead of looking at “ownership”, the draft law focused on the entities
or individuals hold control of a VIE. If a VIE is deemed to be controlled by foreign investors, it may be barred from operating
in restricted sectors or the prohibited sectors listed on a “negative list”, where only companies controlled by Chinese
nationals could operate, even if structured as VIEs.

En
the event that the draft law is implemented in any form, and that the Company’s business is characterized as one of the
“restricted” or “prohibited” sectors, Xin Ao and its subsidiaries may be barred from operation which will
materially adversely affect our business.

If
we become directly subject to the recent scrutiny, criticism and negative publicity involving certain U.S.-listed Chinese companies,
we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock
price and reputation and could result in a loss of your investment in our stock, especially if such matter cannot be addressed
and resolved quickly.

Recently,
U.S. public companies that have substantially all of their operations in China, particularly companies like us which have completed
so-called reverse merger transactions, have been the subject of intense scrutiny, criticism and negative publicity by investors,
short sellers, financial commentators and regulatory agencies, such as the United States Securities and Exchange Commission. Much
of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities and mistakes, a
lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence
thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly
traded stock of many U.S. listed Chinese companies has sharply decreased in value and, in some cases, has become virtually worthless.
Many of these companies are now subject to shareholder lawsuits, SEC enforcement actions and are conducting internal and external
investigations into the allegations. It is not clear what affect this sector-wide scrutiny, criticism and negative publicity will
have on our company, our business and our stock price. If we become the subject of any unfavorable allegations, whether such allegations
are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our
company. This situation could be costly and time consuming and distract our management from growing our company. If such allegations
are not proven to be groundless, our company and business operations will be severely impacted and your investment in our stock
could be rendered worthless.

Adverse
changes in political and economic policies of the PRC government could impede the overall economic growth of China, which could
reduce the demand for our products and damage our business.

We
conduct all of our operations and generate all of our revenue in China. Accordingly, our business, financial condition, results
of operations and prospects are affected significantly by economic, political and legal developments in China. The PRC economy
differs from the economies of most developed countries in many respects, including:

Como
the PRC economy has been transitioning from a planned economy to a more market-oriented economy, the PRC government has implemented
various measures to encourage economic growth and guide the allocation of resources. While these measures may benefit the overall
PRC economy, they may also have a negative effect on us.

A pesar de que
the PRC government has in recent years implemented measures emphasizing the utilization of market forces for economic reform,
the PRC government continues to exercise significant control over economic growth in China through the allocation of resources,
controlling payment of foreign currency-denominated obligations, setting monetary policy and imposing policies that impact particular
industries or companies in different ways.

Alguna
adverse change in the economic conditions or government policies in China could have a material adverse effect on the overall
economic growth and the level of new construction investments and expenditures in China, which in turn could lead to a reduction
in demand for our services and consequently have a material adverse effect on our business and prospects.

Uncertainties
with respect to the PRC legal system could limit the legal protections available to you and us.

We
conduct substantially all of our business through our operating subsidiary in the PRC. Our operating subsidiaries are generally
subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to foreign-invested
enterprises. The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have
limited precedential value. Since 1979, a series of new PRC laws and regulations have significantly enhanced the protections afforded
to various forms of foreign investments in China. However, since the PRC legal system continues to rapidly evolve, the interpretations
of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties,
which may limit legal protections available to you and us. In addition, any litigation in China may be protracted and result in
substantial costs and diversion of resources and management attention. In addition, all of our executive officers and almost all
of our directors are residents of China and not of the United States, and substantially all the assets of these persons are located
outside the United States. As a result, it could be difficult for investors to affect service of process in the United States
or to enforce a judgment obtained in the United States against our Chinese operations and subsidiaries.

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PRC government exerts substantial influence over the manner in which we must conduct our business activities.

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PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy
through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations,
including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other
matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements.
However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations
of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such
regulations or interpretations.

Accordingly,
government actions in the future, including any decision not to continue to support recent economic reforms and to return to a
more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant
effect on economic conditions in China or particular regions thereof and could require us to divest ourselves of any interest
we then hold in Chinese properties or joint ventures.

Restrictions
on currency exchange may limit our ability to receive and use our sales revenue effectively.

Most
of our sales revenue and expenses are denominated in RMB. Under PRC law, the RMB is currently convertible under the “current
account,” which includes dividends and trade and service-related foreign exchange transactions, but not under the “capital
account,” which includes foreign direct investment and loans. Currently, our PRC operating subsidiary may purchase foreign
currencies for settlement of current account transactions, including payments of dividends to us, without the approval of the
State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. However, the relevant PRC
government authorities may limit or eliminate our ability to purchase foreign currencies in the future. Since a significant amount
of our future revenue will be denominated in RMB, any existing and future restrictions on currency exchange may limit our ability
to utilize revenue generated in RMB to fund our business activities outside China that are denominated in foreign currencies.

Foreign
exchange transactions by PRC operating subsidiaries under the capital account continue to be subject to significant foreign exchange
controls and require the approval of or need to register with PRC government authorities, including SAFE. In particular, if our
PRC operating subsidiaries borrow foreign currency through loans from us or other foreign lenders, these loans must be registered
with SAFE, and if we finance the subsidiaries by means of additional capital contributions, these capital contributions must be
approved by certain government authorities, including the Ministry of Commerce, or MOFCOM, or their respective local counterparts.
These limitations could affect their ability to obtain foreign exchange through debt or equity financing.

We
may be unable to complete a business combination transaction efficiently or on favorable terms due to complicated merger and acquisition
regulations implemented on September 8, 2006.

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recent PRC Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors also governs the approval process
by which a PRC company may participate in an acquisition of its assets or its equity interests. Depending on the structure of
the transaction, the new regulation will require the Chinese parties to make a series of applications and supplemental applications
to the government agencies. In some instances, the application process may require the presentation of economic data concerning
a transaction, including appraisals of the target business and evaluations of the acquirer, which are designed to allow the government
to assess the transaction. Government approvals will have expiration dates by which a transaction must be completed and reported
to the government agencies. Compliance with the new regulations is likely to be more time consuming and expensive than in the
past and the government can now exert more control over the combination of two businesses. Accordingly, due to the new regulation,
our ability to engage in business combination transactions has become significantly more complicated, time consuming and expensive,
and we may not be able to negotiate a transaction that is acceptable to our stockholders or sufficiently protect their interests
in a transaction.

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new regulation allows PRC government agencies to assess the economic terms of a business combination transaction. Parties to a
business combination transaction may have to submit to MOFCOM and the other government agencies an appraisal report, an evaluation
report and the acquisition agreement, all of which form part of the application for approval, depending on the structure of the
transaction. The regulations also prohibit a transaction at an acquisition price obviously lower than the appraised value of the
Chinese business or assets and in certain transaction structures, require that consideration must be paid within defined periods,
generally not in excess of a year. The regulation also limits our ability to negotiate various terms of the acquisition, including
aspects of the initial consideration, contingent consideration, holdback provisions, indemnification provisions and provisions
relating to the assumption and allocation of assets and liabilities. Transaction structures involving trusts, nominees and similar
entities are prohibited. Therefore, such regulation may impede our ability to negotiate and complete a business combination transaction
on financial terms that satisfy our investors and protect our stockholders’ economic interests.

Fluctuations
in exchange rates could adversely affect our business and the value of our securities.

los
value of our ordinary shares will be indirectly affected by the foreign exchange rate between U.S. dollars and RMB and between
those currencies and other currencies in which our sales may be denominated. Because substantially all of our earnings and cash
assets are denominated in RMB, fluctuations in the exchange rate between the U.S. dollar and the RMB will affect our balance sheet
and our earnings per share in U.S. dollars. In addition, appreciation or depreciation in the value of the RMB relative to the
U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in
our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we
issue that will be exchanged into U.S. dollars and earnings from, and the value of, any U.S. dollar-denominated investments we
make in the future. From June 30, 2018 to June 30, 2019, the PRC Government increased the value of its currency by approximately
4.9%. China strengthened the value of RMB currency by 3.7% to 6.87 against the US dollar on June 30, 2019 from 6.62 against the
US dollar on June 30, 2018. Concerns remain that China’s slowing economy, and in particular its exports, will need a stimulus
that can only come from further cuts in the exchange rate.

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

Currently,
some of our raw materials and major equipment are imported. In the event that the U.S. dollars appreciate against RMB, our costs
will increase. If we cannot pass the resulting costs on to our customers, our profitability and operating results will suffer.

Under
the Current Enterprise Income Tax, or EIT, Law, we may be classified as a “resident enterprise” of China. Such classification
will likely result in unfavorable tax consequences to us and our non-PRC stockholders.

We
are a holding company incorporated under the laws of the Cayman Islands. We conduct substantially all of our business through
our wholly-owned and other consolidated entities in China, and we derive all of our income from these entities. Prior to January
1, 2008, dividends derived by foreign enterprises from business operations in China were not subject to the Chinese enterprise
income tax. However, such tax exemption ceased as of January 1, 2008 and thereafter with the effectiveness of the new Enterprise
Income Tax Law, or EIT Law.

Under
the EIT Law, if we are not deemed to be a “resident enterprise” for Chinese tax purposes, a withholding tax at the
rate of 10% would be applicable to any dividends paid by our Chinese subsidiaries to us. However, if we are deemed to be a “resident
enterprise” established outside of China whose “place of effective management” is located in China, we would
be classified as a resident enterprise for Chinese tax purposes and thus would be subject to an enterprise income tax rate of
25% on all of our income, including interest income on the proceeds from this offering on a worldwide basis.

los
regulations promulgated pursuant to the EIT Law define the term “place of effective management” as “establishments
that carry out substantial and overall management and control over the manufacturing and business operations, personnel, accounting,
properties, etc. of an enterprise.” The State Administration of Taxation issued a SAT Circular 82 on April 22, 2009, which
provides that the “place of effective management” of a Chinese-controlled overseas-incorporated enterprise is located
in China if the following requirements are satisfied: (i) the senior management and core management departments in charge of its
daily operations function are mainly located in the PRC; (ii) its financial and human resources decisions are subject to determination
or approval by persons or bodies located in the PRC; (iii) its major assets, accounting books, company seals, and minutes and
files of its board and shareholders’ meetings are located or kept in the PRC; and (iv) no less than half of the enterprise’s
directors or senior management with voting rights reside in the PRC. SAT Circular 82 applies only to overseas registered enterprises
controlled by PRC enterprises, not to those controlled by PRC individuals. If the Company’s non-PRC incorporated entities
are deemed PRC tax residents, such entities would be subject to PRC tax under the EIT Law. The Company has analyzed the applicability
of the EIT Law and related regulations, and for each of the applicable periods presented, the Company has not accrued for PRC
tax on such basis. In addition, although under the EIT Law and the related regulations dividends paid to us by our PRC subsidiaries
would qualify as “tax-exempted income,” we cannot assure you that such dividends will not be subject to a 10% withholding
tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect
to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes.
As a result of such changes, our historical operating results will not be indicative of our operating results for future periods
and the value of our ordinary shares may be adversely affected. We are actively monitoring the possibility of “resident
enterprise” treatment and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible.

We
may be subject to fines and legal sanctions if we or our Chinese employees fail to comply with PRC regulations relating to employee
stock options granted by overseas listed companies to PRC citizens.

En
December 25, 2006, the People’s Bank of China issued the Administration Measures on Individual Foreign Exchange Control,
and its Implementation Rules were issued by the State Administration of Foreign Exchange (“SAFE”) on January 5, 2007.
Both took effect on February 1, 2007. Under these regulations, all foreign exchange matters involved in an employee stock holding
plan, stock option plan or similar plan in which PRC citizens’ participation requires approval from the SAFE or its authorized
branch. On March 28, 2007, the SAFE issued the Application Procedure for Foreign Exchange Administration for Domestic Individuals
Participating in Employee Stock Holding Plans or Stock Option Plans of Overseas Listed Companies, or Notice 78. Under Notice 78,
PRC individuals who participate in an employee stock option holding plan or a stock option plan of an overseas listed company
are required, through a PRC domestic agent or PRC subsidiary of the overseas listed company, to register with the SAFE and complete
certain other procedures. We and our Chinese employees who have been granted shares or stock options pursuant to our share incentive
plan are subject to Notice 78. However, in practice, there are significant uncertainties with regard to the interpretation and
implementation of Notice 78. We are committed to complying with the requirements of Notice 78. However, we cannot provide any
assurance that we or our Chinese employees will be able to qualify for or obtain any registration required by Notice 78. In particular,
if we and/or our Chinese employees fail to comply with the provisions of Notice 78, we and/or our Chinese employees may be subject
to fines and legal sanctions imposed by the SAFE or other PRC government authorities, as a result of which our business operations
and employee option plans could be materially and adversely affected.

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discontinuation, reduction or delay of any of the preferential tax treatments currently available to us in the PRC could materially
and adversely affect our business, financial condition and results of operations.

Prior
to January 1, 2008, under the old enterprises income tax law, Xin Ao was subject to a 33% income tax rate, which was subject to
certain tax holidays and preferential tax rates. Under the new enterprise income tax law effective January 1, 2008, or the EIT
Law, both foreign-invested enterprises and domestic enterprises are subject to a unified 25% income tax rate. Under the EIT Law,
preferential tax treatments will be granted to enterprises that conduct business in certain encouraged sectors and to enterprises
that qualify as “high and new technology enterprises”, a status reassessed every three years. In addition, an enterprise
is entitled to a 0% value-added tax rate if it uses recycled raw materials to manufacture its products. Xin Ao was recognized
as a high and new technology enterprise in January 2012 and was entitled to a 15% preferential income tax rate for the three-year
period ended December 2014. In addition, Xin Ao uses recycled raw materials to manufacture its products and was entitled to a
0% value-added tax (the “VAT tax”) rate from June 2013. The favored treatment of being exempted from the VAT tax expired
in June 2015, therefore, we will be subject to the 3% industry-standard rate and our value-added tax expenses increase, which
could have a material adverse effect on our net income and results of operations.

Risks
Related to Our Ordinary Shares

If
we fail to comply with the continued listing requirements of NASDAQ, we would face possible delisting, which would result in a
limited public market for our shares and make obtaining future debt or equity financing more difficult for us.

We
were delinquent in the filing of our periodic reports with the SEC as a result of which we are not in compliance with listing
requirements of The Nasdaq Stock Market LLC (“Nasdaq”) Listing Rule 5250(c)(1), which requires timely filing of periodic
financial reports with the SEC. Under Nasdaq’s listing rules, we were permitted to submit to Nasdaq a plan to regain compliance
with the Nasdaq listing rules. We have submitted such a plan to the Nasdaq Staff, and on January 11, 2019, Nasdaq notified us
that the Company has regained compliance with Listing Rule 5250(c)(1).

En
July 5, 2018, we received a notification letter from the Nasdaq Listing Qualifications Staff indicating that, since the Company
has not yet held an annual meeting of stockholders within twelve months of the end of the Company’s fiscal year ended June
30, 2017, the Company no longer complies with Nasdaq Listing Rules 5620(a) and 5810(c)(2)(G).

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notification received had no immediate effect on the listing of the Company’s ordinary shares on Nasdaq. Under the Nasdaq
Listing Rules, the Company had until August 20, 2018 to submit a plan to regain compliance. If the Company’s plan was accepted,
Nasdaq would grant an extension of up to 180 calendar days from June 30, 2018, or December 27, 2018, to regain compliance.

En
January 11, 2019, Nasdaq notified us that the Company has regained compliance with Listing Rule 5620, and this matter is now closed.

If
we fail to comply with the requirements for continued listing on The NASDAQ Capital Market again in the future, we cannot assure
you that we will be able to regain compliance. If our securities lose their status on The NASDAQ Capital Market, our securities
would likely trade in the over-the-counter market. If our securities were to trade on the over-the-counter market, selling our
securities could be more difficult because smaller quantities of securities would likely be bought and sold, transactions could
be delayed, and security analysts’ coverage of us may be reduced. In addition, in the event our securities are delisted,
broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions
in our securities, further limiting the liquidity of our securities. These factors could result in lower prices and larger spreads
in the bid and ask prices for our securities. Such delisting from The NASDAQ Capital Market and continued or further declines
in our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing,
and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions.

los
delayed filing of some of our periodic reports has made us currently ineligible to use a registration statement on Form F-3 to
register the offer and sale of securities, which could adversely affect our ability to raise future capital or complete acquisitions.

Como
a result of the delayed filing of some of our periodic reports with the SEC, we will not be eligible to register the offer and
sale of our securities using a registration statement on Form F-3 until 12 months after the delinquent filings have been made.
Should we wish to register the offer and sale of our securities to the public prior to the time we are eligible to use Form F-3,
both our transaction costs and the amount of time required to complete the transaction could increase, making it more difficult
to execute any such transaction successfully and potentially harming our financial condition.

Our
ordinary shares are very thinly traded, and there can be no assurance that there will be an active market for our ordinary shares
in the future.

Our
ordinary shares are very thinly traded, and the price if traded may not reflect our value. There can be no assurance that there
will be an active market for our ordinary shares in the future. The market liquidity will be dependent on the perception of our
operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance
given that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment or liquidate
it at a price that reflects the value of the business. If a more active market should develop, the price may be highly volatile.
Because there may be a low price for our ordinary shares, many brokerage firms may not be willing to effect transactions in the
securities. Even if an investor finds a broker willing to effect a transaction in our ordinary shares, the combination of brokerage
commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions
will not permit the use of such ordinary shares as collateral for any loans.

We
do not intend to pay dividends on our ordinary shares for the foreseeable future, but if we intend to do so our holding company
structure may limit the payment of dividends to our stockholders.

We
have no direct business operations, other than our ownership of our subsidiaries. While we have no current intention of paying
dividends, should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations
depends upon the receipt of dividends or other payments from our operating subsidiaries and other holdings and investments. En
addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions
to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into
U.S. dollars or other hard currency and other regulatory restrictions as discussed below. If future dividends are paid in RMB,
fluctuations in the exchange rate for the conversion of RMB into U.S. dollars may reduce the amount received by U.S. stockholders
upon conversion of the dividend payment into U.S. dollars.

Chinese
regulations currently permit the payment of dividends only out of accumulated profits as determined in accordance with Chinese
accounting standards and regulations. Our subsidiaries in China are also required to set aside a portion of their after tax profits
according to Chinese accounting standards and regulations to fund certain reserve funds. Currently, our subsidiaries in China
are the only sources of revenues or investment holdings for the payment of dividends. If they do not accumulate sufficient profits
under Chinese accounting standards and regulations to first fund certain reserve funds as required by Chinese accounting standards,
we will be unable to pay any dividends.

We
may be subject to penny stock regulations and restrictions and you may have difficulty selling our ordinary shares.

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SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market
price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. If our ordinary
shares becomes a “penny stock”, we may become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock
Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other
than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000
or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer
must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the
transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect
the ability of purchasers to sell any of our securities in the secondary market.

por
any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock,
of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about
sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stock.

There
can be no assurance that our ordinary shares will qualify for exemption from the Penny Stock Rule. In any event, even if our ordinary
shares were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the
SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction
would be in the public interest.

Historia
and Development of the Company

China
Advanced Construction Materials Group, Inc. was founded as an unincorporated business on September 1, 2005, under the name TJS
Wood Flooring, Inc., and became a C corporation in the State of Delaware on February 15, 2007. On April 29, 2008, we changed our
name to China Advanced Construction Materials Group, Inc. in response to a reverse acquisition transaction with BVI-ACM described
abajo.

En
April 29, 2008, we completed a reverse acquisition transaction with BVI-ACM whereby we issued to the stockholders of BVI-ACM 8,809,583
shares of our common stock in exchange for all of the issued and outstanding capital stock of BVI-ACM. BVI-ACM thereby became
our wholly owned subsidiary and the former stockholders of BVI-ACM became our controlling stockholders.

En
August 1, 2013, we consummated a reincorporation merger pursuant to which we merged with and into our wholly-owned subsidiary,
China Advanced Construction Materials Group, Inc., a newly formed Nevada corporation and the surviving entity in the merger, pursuant
to the terms and conditions of an Agreement and Plan of Merger entered into as of August 1, 2013. As a result of the reincorporation,
the Company became governed by the laws of the state of Nevada.

On August 20, 2018, CACM Group NY, Inc.
(“CACM”) was incorporated in the State of New York and is wholly owned by Huitao Technology Co., Ltd. The establishment
of CACM is to expand the Company’s construction material business in the New York. As of the date of the report, CACM has
not commenced any operations.

En
December 31, 2018, we consummated a second reincorporation merger pursuant to which we merged with and into our whole-owned subsidiary,
China Advanced Construction Materials Group, Inc., a newly formed Cayman Islands company and the surviving entity in the merger,
pursuant to the terms and conditions of an Agreement and Plan of Merger adopted in July 2018. As a result of the reincorporation,
the Company is now governed by the laws of the Cayman Islands.

En
June 27, 2019, the Company’s amendment and restatement of the Company’s memorandum and articles of association to
change the Company’s name from China Advanced Construction Materials Group, Inc. to Huitao Technology Co., Ltd. was approved
during the Company’s annual meeting of shareholders.

Antecedentes
and History of BVI-ACM and China-ACMH

BVI-ACM
was established on October 9, 2007, under the laws of British Virgin Islands. The majority shareholders of BVI-ACM are Chinese
citizens who own 100% of Xin Ao, a limited liability company formed under laws of China. BVI-ACM was established as a “special
purpose vehicle” for foreign fund raising for Xin Ao. China State Administration of Foreign Exchange, or SAFE, requires
the owners of any Chinese companies to obtain SAFE’s approval before establishing any offshore holding company structure
for foreign financing as well as subsequent acquisition matters. On September 29, 2007, BVI-ACM was approved by local Chinese
SAFE as a “special purpose vehicle” offshore company.

En
November 23, 2007, BVI-ACM established a subsidiary, China-ACMH, in China as a wholly owned foreign limited liability company
with registered capital of $5 million. Through China-ACMH and its variable interest entity Xin Ao, we are engaged in producing
general ready-mixed concrete, customized mechanical refining concrete, and some other concrete-related products which are mainly
sold in China. On September 20, 2010, China ACMH established a 100% owned subsidiary, Advanced Investment Holdings Co., Inc.,
or AIH, in the State of Nevada. AIH never engaged in operations and the Company subsequently dissolved AIH on August 30, 2011.

En
March and April 2010, Xin Ao established five 100% owned subsidiaries in China: Beijing Heng Yuan ZhengKe Technical Consulting
Co., Ltd (“Heng Yuan ZhengKe”), Beijing Hong Sheng An Construction Materials Co., Ltd (“Hong Sheng An”),
Beijing Heng Tai Hong Sheng Construction Materials Co., Ltd (“Heng Tai”), Da Tong Ao Hang Wei Ye Machinery and Equipment
Rental Co., Ltd (“Da Tong”) and Luan Xian HengXin Technology Co., Ltd (“Luan Xian HengXin”). Total registered
capital for these five subsidiaries was approximately $2.1 million (RMB 14 million) and none of these Xin Ao subsidiaries had
actual operation. In February 2017 and prior, all five subsidiaries were dissolved.

Capital
Expenditures

We
incurred capital expenditures of approximately $0.1 million, $0.1 million and $0.2 million for the years ended June 30, 2019,
2018 and 2017, respectively, primarily in connection with purchases of equipment. These capital expenditures were financed by
cash provided by investing activities.

We
expect that our capital expenditures in fiscal year 2020 will be incurred primarily in connection with purchases of equipment.

Negocio
Overview

Our
concrete sales business is comprised of the formulation, production and delivery of the Company’s line of C10-C100 concrete
mixtures primarily through our current fixed plant, a ready mix concrete batching plant in Beijing. The ready-mixed concrete sales
business engages principally in the formulation, preparation and delivery of ready-mixed concrete to the worksites of our customers.
We procure raw materials, mix them according to our measured mixing formula, ship the final products in mounted transit mixers
to the destination work site, and, for more sophisticated structures, pump the mixture and set it into structural frame molds
as per structural design parameters. The process of delivering and setting the ready mix concrete mixture cannot exceed 90 minutes
because the chemistry of concrete mixture hardens thereafter. The deliverable radius of a concrete mixture from our ready mix
plant in Beijing is approximately 25 kilometers. Traffic conditions would affect the timing and shipment of our concrete mixtures.
Since the 2008 Olympics, there are alternating license plate traffic restrictions on many traffic routes in Beijing to ease traffic
congestion and associated exhaust pollution. Due to the large amounts of working capital required for the acquisition of raw materials,
a supply shortage or degradation of supplier accounts payable credit terms would pose a potential risk to our business.

Our
principal market, Beijing, has enjoyed stronger economic growth and a higher demand for construction than other regions of China.
As a result, we have witnessed that competitors expanding their sales and build up their distribution networks in our principal
market. We anticipate that this trend will continue and likely accelerate. Increased competition may have a material adverse effect
on our financial condition and operation results.

Our
Industry

China
is already among the world’s largest construction materials producers, ranking first in the world’s annual output
of cement, flat glass, building ceramic and ceramic sanitary ware. The construction materials market includes all manufacturers
of sand, gravel, aggregates, cement, concrete and bricks. The market does not include other finished or semi-finished building
materials.

Our
Industry was influenced by the decline in the macro economy in recent periods. The concrete products industry experienced a slowdown
in industry production and economic growth since September 2011. In 2014, the slowdown in the industry became more obvious month
by month, with profit generally being squeezed by the greater pressure to maintain stable level of production and operation. 
In 2017, the pressure on small concrete companies has further increased and many have been shut down.

Demand
for Ready-Mixed Concrete

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demand for ready-mixed concrete is substantially effected by the economy scale, number of ongoing infrastructure projects as well
as the environmental policies in China. Recently, the fixed asset investment has been slowed down in China and it actually causes
a negative growth in the real estate investment industry. Therefore, the demand of ready-mixed concrete in China may have a tendency
to decrease in near future.

Our
Competitive Strengths

Ready-mixed
concrete is a highly versatile construction material that results from combining coarse and fine aggregates, such as gravel, crushed
stone and sand, with water, various chemical admixtures and cement. We manufacture ready-mixed concrete in variations, which in
each instance may reflect a specific design use. We generally maintain inventory of raw materials for a short period of time to
coordinate our daily material purchases with the time-sensitive delivery requirements of our customers.

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quality of ready-mixed concrete is time-sensitive as it becomes difficult to place within hours after mixing. Consequently, the
market for a permanently installed ready-mixed concrete plant is usually limited to an area within a certain radius of such plant’s
location. We produce ready-mixed concrete in batches at our plant and use mixer and other trucks to complete the production process,
then distribute and deliver the concrete to the worksites of our customers.

Concrete
has many attributes that make it a highly versatile construction material. In recent years, industry participants have developed
various uses for concrete products.

We
generally obtain contracts through local sales and marketing efforts directed at concrete subcontractors, general contractors,
property owners and developers, governmental agencies and home builders.

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

We
believe that the following competitive strengths enable us to compete effectively and to capitalize on the remaining market for
construction materials in China:

Our
Growth Strategy

We
are committed to enhancing profitability and cash flows through the following strategies:

Our
Operaciones

We
provide materials through our ready-mixed concrete plant in Beijing. We own one concrete plant and its related equipment.

Products

Como
architectural designs become more complex, challenging, and modern in scope, the need for technology driven companies to provide
high-end specialty concrete mixtures has rapidly accelerated. Increasing demand for state-of-the-art cement mixtures has spurred
our technological innovation and our ability to provide advanced mixtures of building materials that meet project specific engineering
and environmental specifications. We produce a range of C10 to C100 concrete materials and specialize in an array of specialized
ready-mixed concretes tailored to each project’s technical specifications and environmental standards.

We
specialize in “ready-mixed concrete”, a concrete mixture made at our facility with complete computerized operating
systems. Such concrete accounts for nearly three-fourths of all concrete produced. Ready-mixed concrete is mixed on demand and
is shipped to worksites by concrete mixer trucks.

Our
ready-mixed concrete products consist of proportioned mixes we prepare and deliver in an unhardened plastic state for placement
and shaping into designed forms at the worksite. Selecting the optimum mix for a worksite entails determining not only the ingredients
with the desired permeability, strength, appearance and other properties after it hardened, but also the ingredients necessary
to achieve a workable consistency considering the weather and other conditions at the worksite. We believe we can achieve product
differentiation for the mixes we offer because of the variety of mixes we produce, our volume production capacity and our scheduling,
delivery and placement reliability.

We
produce ready-mixed concrete by combining the desired type of cement, other cementitious materials and gravel and crushed stone
with water and, typically, one or more admixtures. These admixtures, such as chemicals, minerals and fibers, determine the usefulness
of the product for particular applications.

We
use a variety of chemical admixtures to relieve internal pressure, increase resistance to crack in subfreezing weather, retard
the hardening process to make concrete more workable in hot weather, strengthen concrete by reducing its water content, accelerate
the hardening process, reduce the time required for curing, and facilitate the placement of concrete acquiring low water content.

We
frequently use various mineral admixtures as supplements to cement, which we refer to as cementitious materials, to alter the
permeability, strength and other properties of concrete.

los
ready-mixed concrete sector in the market is growing at a fast rate, largely due to the Chinese government’s implementation
of Decree #341 in 2004. This law bans on-site concrete production in over 200 cities across China, with the goal of reducing environmental
damages from onsite concrete mixing and improving the quality of concrete used in construction. The use of ready-mix concrete
minimizes worksite noise, dirt and congestion, and most additives used in ready-mix concrete are environmentally safe. Our goal
is to continue the use of at least 30% recyclable components in our concrete mixtures.

We
are building a comprehensive product portfolio that serves the diverse needs of our developing customer base and all unique construction
and infrastructure projects. While we mainly specialize in ready-mix concrete formulations from controlled low-strength material
to high-strength concrete, each of them is specifically formulated to meet the needs of each project. We provide both industry
standard and highly innovative products, including:

Our
Customers

por
the fiscal year ended June 30, 2019, we had two customers, whose sales accounted for more than 10% of our total sales. For the
fiscal year ended June 30, 2018, we had one customer, whose sales accounted for more than 10% of our total sales. Five customers
accounted for approximately 52.1% and 39.9% of the Company’s sales for the years ended June 30, 2019 and 2018, respectively.
The total accounts receivable from these customers amounted to approximately $13.4 million and $10.2 million as of June 30, 2019
and 2018, respectively.

Developing
New Relationships

Our
business will be damaged if project contracts with the Chinese government, for which we may act as a sub-contractor, are cancelled.
Our sales strategy balances these risks by focusing on building new long-term cooperative relationships with some of China’s
top construction companies in order to enhance our reputation and to enter new markets. Our sales representatives are actively
building relationships with the Chinese government, general contractors, architects, engineers, and other potential sources of
new business in target markets. Our sales efforts are further supported by our executive officers and engineering personnel, who
have substantial experience in the design, formulation and implementation of advanced construction and concrete materials projects.

Our
Suppliers

We
rely on third party suppliers of the raw materials to manufacture our products. Our top five suppliers accounted for approximately
34.9% and 36% of the Company’s purchases for the years ended June 30, 2019 and 2018, respectively. The total accounts payable
to these suppliers amounted to approximately $1.5 million and $0.7 million as of June 30, 2019 and 2018, respectively.

Sales
and Marketing

General
contractors typically select their suppliers of ready-mixed concrete and precast concrete. In large, complex projects, an engineering
firm or division within a state transportation or public works department, may influence the purchasing decision, particularly
if the concrete has complicated design specifications. In connection with large, complex projects and government-funded projects,
the general contractor or project engineer usually awards supply orders on the basis of either direct negotiation or a competitive
bidding process. Our marketing efforts target on general contractors, developers, design engineers, architects and homebuilders
whose focus extends beyond the price of our products to quality, consistency and reducing the in-place cost.

Our
marketing efforts are geared toward advancing China-ACMH as the supplier to build China’s most modern and challenging projects.
The Company is constantly seeking ways to raise its profile and leverage additional publicity. To this end, the Company plans
to expand its presence at leading construction industry events and in periodicals to build up successful reputation. El primario
goal is to reinforce the sales efforts by promoting positive testimonials and successful stories from the Company’s high
profile clients and projects. Our marketing and sales strategies emphasizes on the sale of value-added products and solutions to
customers.

Research
and Development

Construction
materials companies are under extreme pressure to respond quickly to industrial demands with new designs and product innovations
that support rapidly changing technical demand and regulatory requirements. We devote a substantial amount of attention to the
research and development of advanced construction materials that meet the specific needs of projects while striving to lead the
industry in value, materials and processes. We have sophisticated in-house R&D and testing facilities, a highly technical
onsite team, in cooperation with a leading research institution, experienced management and advisory experts. Our research and
development expenses were approximately $0.2 million for the year ended June 30, 2019, as compared to $1.2 million for the year
ended June 30, 2018.

Beijing
Concrete Institute Partnership

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Beijing Dongfang Jianyu Institute of Concrete Science & Technology, or Beijing Concrete Institute, has 40 employees, with
five senior research fellows, and 15 mid-level researchers. The Institute and its staff have frequently participated and collaborated
with national and local government agencies to establish the following industry standards:

We
have a close association with the Beijing Concrete Institute and have been able to incorporate many of these research findings
into our operations, products, and procedures.  We work closely with the institute and, in return for our sponsorships to
multiple research initiatives, we have been granted exclusive works for the development of the materials used for our existing
plant’ regional projects.

We
are able to use the Research Findings and Technical Publication and Procedures of the Beijing Concrete Institute, University of
Science and Technology Beijing, Beijing University of Technology, China Academy of Building Research, China Building Materials
Academy in our business, which provides us with an advantage over many of our competitors. Because of our contracts with the institutes,
our competitors are unable to commercially utilize the findings. Some of these findings include:

En
addition, we collaborate closely with the institute and its executives who play a strong role in recommending industry standards,
advising on major infrastructure developments, and creating and maintaining strong connections with leading developers, construction
companies, and governmental officials.

Successful
Innovations

Some
of our advanced products and processes are developed through our relationships with research institutes and universities, including:

C100
High Performance Concrete

High
Strength Concrete is often defined as concrete with a compressive strength greater than 6000 psi (41 MPa). The primary difference
between high-strength concrete and normal-strength concrete is the compressive strength that represent the maximum resistance
of a concrete sample to applied pressure. Manufacturing high-strength concrete involves making optimal use of the basic ingredients
that constitute normal-strength concrete.

Through
our collaborative efforts, we have developed a high performance concrete which can be produced at an impermeable grade above P35,
and can be used as self-waterproofing concrete for structural engineering, as the water-cement (W/C) ratio and carbonized shrinking
is minimal and the structure is close-grained.

Only
a limited number of corporations in the Beijing are equipped with the expertise to produce C100 High Performance Concrete.

Compound
Admixture Concrete

Esta
compound mineral mixture is a composite of coal powder, mineral powder and mineral activators blended to specific proportions.
This mixture improves activity, filling, and super-additive effects of the concrete and also improves the compatibility between
cement and aggregate.

Lightweight
Aggregate Concrete & Innovative Pumping Technology

Esta
procedure involves a pumping technology of lightweight aggregate. It is a pretreatment method of lightweight aggregate. Setting
appropriate times and pressure, lightweight aggregate will reach an appropriate saturation state under pressure once it is put
into a custom designed sealed pressure vessel. Lightweight aggregate concrete was prepared through the above pretreatment method,
and would dry quicker under pumping pressure without losing consistency. Accordingly, lightweight aggregate concrete will be easily
pumped when applied which shortens the construction time.

Energy-saving
Technologies of Phase Change Thermostat Concrete

Energy
conservation concrete may adjust and reflect process temperature, which would solve cracking problem brought about by cement heat
of hydration in large-scale concrete pours.

Polycarboxylate
Series High Performance Water Reducing Agent Compositing Technique

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research and production of water reducing admixture would improve performance while lowering pollution and the environmental impact.
Super plasticizer Polycarboxylate series which reduces water requirements is an attractive additive in that it enables high strength
concrete, super-strength concrete, high fluidity and super plasticizer concrete, and self-defense concrete. The water reduction
of Polycarboxylate may reach 20% to 25%, higher than the current industry standard — the Naphthaline water reducing agent. los
cost of the water reducing agent is highly competitive, as it may replace Naphthaline to be used for high strength and high performance
concrete production.

Application
of Reused Water in Concrete

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re-use of waste water of a concrete plant to mix concrete is significant as it can reduce production costs, minimize fresh water
usage and introduce an efficient approach to address industrial waste. The practical application of this effort is a further step
towards the goal of minimal pollution and emissions.

Our
Competition

Our
principal market, Beijing, has enjoyed stronger economic growth and a higher demand for construction than other regions of China.
As a result, we believe that competitors will try to expand their sales and build up their distribution networks in Beijing. Our
future success depends on our ability to establish and maintain a competitive position in the marketplace.

We compete primarily on the basis of quality, technological innovation and price. Our main competitors
include Beijing Construction Engineering Group, BBMG Group Co., LTD, Beijing Uni-Construction Group., and Jidong Concrete Group.
Essentially all of the contracts we bid on are awarded through a competitive bid process with awards generally made to the lowest
bidder, though other factors such as shorter completion time or prior experience are often just as important. Within our markets,
we compete with many national, regional and local construction corporations. Some of these competitors have achieved greater market
penetration or have greater financial and other resources than us. In addition, we compete with a number of state-owned enterprises,
which have significantly greater financial resources and competitive advantage than us.

There
are approximately 98 concrete mixture stations in the Beijing area. The concrete production industry is highly segmented, with
no single supplier having greater than a 3% market share.

Intellectual
Property

We
currently own the following intellectual property rights:

Environmental
Matters

We
are obligated to comply with environmental protection laws and regulations promulgated by the Ministry of Construction and the
State Environmental Protection Administration. Some specific environmental regulations require sealed transportation of dust materials
and final products, closed storage of sand and gravel, as well as reduction of noise and dust pollution on worksites and encouragement
of the use of waste materials. The governmental regulatory authorities conduct periodic inspections. We have met all the requirements
in the past inspections.   We are one of the 10 companies in the industry that have been awarded the honor of “Green
Concrete Producer” by the PRC government.

Our
Labor Force

Como
of June 30, 2019, we employed 233 full-time employees. The following table sets forth the number of our full-time employees by
function as of June 30, 2019.

Employees/Independent
Contractors and their Functions

Como
required by applicable PRC law, we have entered into employment contracts with all our officers, managers and employees. We believe
that we maintain a satisfactory working relationship with our employees and we have not experienced any significant labor disputes
or any difficulty in recruiting staff.

En
addition, we are required by PRC law to cover employees in China with various types of social insurance and believe that we are
in material compliance with the relevant laws.

Insurance

We
believe our insurance coverage is customary and standard for companies of comparable size in comparable industries in China.

Re-domicile

En
September 26, 2018, we filed a definitive proxy statement to change our place of incorporation from Nevada to the Cayman Islands.
The re-domicile involved the Company’s merger with a newly formed subsidiary, as a result of which we became a wholly owned
subsidiary of a Cayman Islands holding company (“CADC Cayman”). Each outstanding share of common stock of the Company
was converted into the right to receive one ordinary share of CADC Cayman, which was issued by CADC Cayman in connection with
the merger pursuant to a registered offering. Following the merger, CADC Cayman, together with its subsidiaries, own and continue
to conduct the Company’s business in substantially the same manner as it was previously being conducted by the Company and
its subsidiaries. While CADC Cayman will be taxed as a United States corporation, it qualifies as a foreign private issuer for
purposes of its reporting obligations with the SEC, which has reduced our compliance operating costs. The ordinary shares of CADC
Cayman are listed on the NASDAQ Stock Market under the symbol “HHT.”

Restatement
and Independent Investigation

En
October 6, 2018, the Audit Committee of the Board of Directors of the Company, after consultation with the Company’s then
independent registered public accounting firm, Friedman LLP (“Friedman”) concluded, that the Company’s audited
financial statements at and for the period ended June 30, 2017 contained in the Company’s Annual Report on Form 10-K originally
filed with the SEC on September 28, 2018 as well as the unaudited financial statements at and for the periods ended March 31,
2018, December 31, 2017 and September 30, 2017 contained in the Company’s Quarterly Reports on Form 10-Q originally filed
on November 15, 2017, February 13, 2018 and May 15, 2018, respectively, should no longer be relied upon. The Company’s review
of the above mentioned filings revealed that the financial statements in such filings contained errors primarily as a result of
omission of certain contingencies.

Como
a result of such review, the Company has restated the financial statements for the fiscal year ended June 30, 2017 as well as
those for the fiscal quarters ended March 31, 2018, December 31, 2017 and September 30, 2017.

Como
a result of the errors described above, management has concluded that the Company’s internal control over financial reporting
and its disclosure controls and procedures were not effective as of the ends of each of the applicable restatement periods.

En
connection with above finding, the Audit Committee commenced an independent investigation into the reasons that led to the Company’s
conclusion that the previously filed financials should no longer be relied upon. Specially, the Audit Committee engaged an independent
investigation team to investigate the circumstances surrounding errors in Company’s financial statements, which primarily
resulted from the omission of certain actual and contingent legal liabilities. The investigation concluded in mid-November 2018.
The investigation team found several reasons that appear to have caused, or contributed to, the failures to promptly identify
and disclose the legal proceedings and contingencies, including, 1) the Head of the Legal Department’s significant lack
of understanding of the important of timely disclosure of legal proceedings and the Legal Department’s problematic decision-making
process with regard to reporting of legal proceedings; 2) the Company’s lack of accounting personnel trained in U.S. GAAP;
3) the Company’s need for a full-time CFO; 4) the ongoing lack of communication and coordination between executive management
and the various departments within the Company; and 5) the Company’s failures to timely address significant deficiencies
and material weaknesses in the Company’s internal control over financial reporting.

Como
of the date of this Annual Report, the Company has completed its process of conducting a comprehensive review of the issues
identified by the investigation team and has taken all remedial measures recommended by the Audit Committee within its
resources to cure the majority of its material weaknesses in its internal and disclosure control
procedures.

Matters
relating to or arising from the Audit Committee investigation and the associated material weaknesses identified in our internal
control over financial reporting, including adverse publicity, have caused us to incur significant legal, accounting and other
professional fees and other costs, have exposed us to greater risks associated with other civil litigation, regulatory proceedings
and government enforcement actions, have diverted resources and attention that would otherwise be directed toward our operations
and implementation of our business strategy and may have impacted our ability to attract and retain customers, employees and vendors.

Regulations

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Company has been in compliance with all registrations and requirements for the issuance and maintenance of all licenses and certificates
required by the applicable governing authorities, including the Ministry of Construction and the Beijing Administration of Industry
& Commerce. The Ministry of Construction awards Level II and Level III qualifications to concrete producers in the PRC construction
industry, based on criteria such as production capacity, technical qualifications, registered capital and capital equipment, as
well as performance on their past projects. Level II companies are licensed to produce concrete of all strength levels as well
as special concretes, and Level III producers are licensed to produce concrete with strength level C60 and below. We are currently
a Level II concrete producer.

Adicionalmente,
to make improvements at our currently existing plant, we do not need to apply for regulatory approval. However, should we build
new concrete plants, we will need to (i) apply for a business license from the local Administration of Industry and Commerce,
(ii) receive environmental approval from the local Environmental Protection Bureau in the relevant district area, and (iii) apply
for an Industry Qualification Certificate from the local Municipal Construction Committee. The time estimated to receive each
of these approvals is approximately one month. In the past, we have not been rejected by any of these three regulators for approval.

Organizational
Structure

We
own all of the issued and outstanding capital stock of Xin Ao Construction Materials, Inc., or “BVI-ACM”, a British
Virgin Islands corporation, which in turn owns 100% of the outstanding capital stock of Beijing Ao Hang Construction Materials
Technology Co., Ltd., or “China-ACMH”, a company incorporated under the laws of China. On November 28, 2007, China-ACMH
entered into a series of contractual agreements with Beijing Xin Ao Concrete Group Co., Ltd., or “Xin Ao”, a company
incorporated under the laws of China, and its two shareholders, in which China-ACMH effectively took over management of the business
activities of Xin Ao and has the right to appoint all executives and senior management and the members of the board of directors
of Xin Ao. The contractual arrangements are comprised of a series of agreements, including an Exclusive Technical Consulting and
Services Agreement and an Operating Agreement, through which China-ACMH has the right to advise, consult, manage and operate Xin
Ao for an annual fee in the amount of Xin Ao’s yearly net profits after tax. Additionally, Xin Ao’s shareholders have
pledged their rights, titles and equity interest in Xin Ao as security for China-ACMH to collect technical consulting and services
fees provided to China-ACMH through an Equity Pledge Agreement. In order to further reinforce China-ACMH’s rights to control
and operate Xin Ao, Xin Ao’s shareholders have granted China-ACMH the exclusive right and option to acquire all of their
equity interests in Xin Ao through an Option Agreement.

On August 20, 2018, CACM Group NY, Inc.
(“CACM”) was incorporated in the State of New York and is wholly owned by Huitao Technology Co., Ltd. The establishment
of CACM is to expand the Company’s construction material business in New York. As of the date of the report, CACM has not
commenced any operations.

En
December 31, 2018, we consummated a second reincorporation merger pursuant to which we merged with and into our whole-owned subsidiary,
China Advanced Construction Materials Group, Inc., a newly formed Cayman Islands company and the surviving entity in the merger,
pursuant to the terms and conditions of an Agreement and Plan of Merger adopted in July 2018. As a result of the reincorporation,
the Company is now governed by the laws of the Cayman Islands.

Organizational
Structure Chart

los
following diagram illustrates our corporate structure, including our subsidiaries and consolidated affiliated entities, as of
the date of this report:

Property,
Plants and Equipment

There
is no private land ownership in China. Individuals and companies are permitted to acquire land use rights for specific purposes.
We lease our 44,041 square meter facility located at Jia 1, SanTaiShan, XiaoHongMen County, ChaoYang District, Beijing, China,
from Beijing SanTaiShan Chemical Trading & Logistics Co., who was granted land use rights from the PRC government. The lease
provides for a four-year term beginning on October 1, 2013, with the option to extend following expiration. The lease was extended
to September 30, 2022. The annual rent on the property is approximately $409,000. We also have a lease agreement for roadway access
to the west side entry of the concrete service plant with an unrelated party, which will expire on June 30, 2019 and is currently
under negotiation for renewal terms, with annual payment of approximately $15,000. In addition, we have a lease agreement for
office space from Mr. Weili He, the Company’s Interim Chief Financial Officer, through October 31, 2023, with annual payments
of approximately $24,000. We also have a lease agreement for an office space in New York through May 31, 2019, with annual
payments of $27,600, and the lease has been extended from June 1, 2019 to May 31, 2020 with annual payments of $28,980.

We
have an extensive fleet of 78 transit mounted concrete mixers, 10 pump trucks, and we have access to an additional 11 concrete
mixers and 5 pump truck vehicles for lease in Beijing depending on specific project requirements.  More than half of the
vehicles are equipped with GPS and tracking devices from the plant central dispatch center in order to optimize capacity utilization,
production and delivery schedules.

Legal
Proceedings

From
time to time, the Company is a party to various legal actions. The majority of these claims and proceedings relate to or
arise from, commercial disputes, labor contract complaints and sales contract complaints. The Company accrues costs related
to these matters when they become probable and as a result the amount of loss can be reasonably estimated (See Dispute
Matters Arising in the Ordinary Course of Business for more information). In determining whether a loss from a claim is
probable, and if it is possible to estimate the loss, the Company reviews and evaluates its litigation and regulatory matters
on at least a quarterly basis in light of potentially relevant factual and legal developments. If the Company determines a
favorable outcome is probable, or that the amount of loss cannot be reasonably estimated, the Company does not accrue costs
for a potential litigation loss. In those situations, the Company discloses an estimate of the probable losses or a range of
possible losses, if such estimates can be made as indicated below (See Legal Matters). Currently, except as otherwise noted
below, the Company does not believe that it is possible to estimate the potential losses incurred or a range of reasonably
possible losses related to the outstanding claims. Legal costs incurred in connection with loss contingencies are expensed as
incurred.

As of June 30, 2019, the Company’s
VIE, Xin Ao, was subject to several civil lawsuits for which the Company estimated that it is more than likely to pay judgments
in the amount of approximately $6.6 million (including interest and penalties of $1.3 million). These amounts are presented in
the accompanying consolidated balance sheets (See Accrued Contingent Liabilities). During the years ended June 30, 2019, 2018
and 2017, additional estimated claims charges of approximately $3.5 million, $2.8 million and $1.3 million, on some of the remaining
claims are presented in the accompanying consolidated statements of operations under the caption “Estimated claims charges,”
respectively.

In addition, the Company is in default of its bank loan agreement for which the bank obtained a court
order demanding the immediate repayment of the debt in May 2019. The balance due to the bank is approximately $24.7 million as
of June 30, 2019. The Company has not made the repayment.

Como
of the filing of this Report, the Company’s management does not expect any other material liability from the disposition
of claims from litigation individually, or in the aggregate that would have a material adverse impact on the Company’s consolidated
financial position, results of operations and cash flows.

Due
to the Company’s operations in the PRC and the legal environment in the PRC, it is possible that the Company’s VIE,
Xin Ao could be named as a defendant in additional litigation based upon the guarantees of Mr. Han and Mr. He and/or their related
parties.

As of June 30, 2019, the Company had approximately $6.6 million in accrued contingent liabilities, net
of amounts paid by a related party of approximately $2.4 million, and approximately $3.5 million of additional estimated claims
charges for the year ended June 30, 2019. As of June 30, 2019, further details regarding the type of litigation disputes and accrued
costs associated with the claims are summarized as follows:

As of June 30, 2019, the Company’s
VIE, Xin Ao, was subject to several civil lawsuits with potential judgments of approximately $26.7 million and the likelihood
of the outcome of these lawsuits cannot be determined as of the date of this report. These lawsuits involved with the Company
were mainly due to the personal guarantees by Mr. Xianfu Han, and Mr. Weili He, the Company’s shareholders and former officers,
and of which they are also the shareholders of Xin Ao. Because Mr. Han and Mr. He were the controlling shareholders of Xin Ao,
the plaintiffs included Xin Ao in their joint complaints. Xin Ao was not involved in some of the lawsuits but named as a joint
defendant in the lawsuits. As a result, Xin Ao might have exposure to the pending and additional judgements in the future under
PRC laws.

En
September 28, 2018, Mr. Han and Mr. He signed an agreement with the Company to indemnify the Company for these liabilities and
personally become responsible for all of the pending potential judgement amounts from these related civil lawsuits. Both Mr. Han
and Mr. He agreed to liquidate their personal assets or their ownership interest in their privately held companies to pay for
any of the pending potential judgement amounts of approximately $26.7 million.

En
November 14, 2019, Mr. Han and Mr. He entered into an amendment No. 2 to the indemnification agreement to clarify the indemnification
terms which Mr. Han and Mr. He’s certain actions including but not limited to personal guarantees, loans or investments
in their own name to other entities which has caused Xin Ao to be involved as a co-defendant in certain legal proceedings. señor.
Han and Mr. He have agreed to unconditionally indemnify Xin Ao for all losses, damages, legal fees, expenses or other costs related
to the legal proceedings whereby Xin Ao was named as a co-defendant or defendant due to Mr. Han and Mr. He being a shareholder
of Xin Ao. The indemnification for the amended terms are irrevocable. In addition, Mr. Han and Mr. He agreed to unconditionally
indemnify Xin Ao for all the losses, damages, legal fees, expenses and other costs, including additional interest, related to
the legal proceedings accrued and contingencies determined in the future.

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type of litigation disputes with contingencies associated are summarized as follows as of June 30, 2019:

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major legal cases are summarized as follows:

During 2017, Sihong Jinghong
Sheng Concrete Co., Ltd. (“Sihong”) was subject to certain labor disputes. The potential total amounts of judgment
is approximately $0.2 million (RMB 1,702,000). Since Mr. Xianfu Han and Mr. Weili He were the controlling shareholders of Xin Ao,
Xin Ao was also brought into the lawsuit as a co-defendant. As of the date of the report, Sihong has not made any payment.

No
Applicable

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following discussion and analysis of our financial condition and results of operations should be read in conjunction with our
consolidated financial statements that appear in this annual report. In addition to historical consolidated financial information,
the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results
could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these
differences include those discussed below and elsewhere in this annual report, particularly in “Risk Factors.” All
amounts in included in the fiscal years ended June 30, 2019, 2018 and 2017 (“Annual Financial Statements”) are derived
from our audited consolidated financial statements included elsewhere in this annual report. These Annual Financial Statements
have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP.

5A.
Operating Results

Overview

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

During
the years ended June 30, 2019, 2018 and 2017, we supplied materials and provided services to our projects through one ready-mixed
concrete plant in Beijing.

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

Principal
Factors Affecting Our Financial Performance

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

Comparison
of the years ended June 30, 2019 and 2018

Revenue.
Our revenue is primarily generated from sales of our advanced ready-mix concrete products. For the year ended June 30, 2019, we
generated revenue of approximately $43.6 million, as compared to approximately $45.7 million during the year ended June 30, 2018,
a decrease of approximately $2.1 million, or 5%. The decrease was primarily due to the depreciation of Chinese Reminbi (“RMB”)
against the U.S. dollar of 4.9%. The decrease in revenue was also caused by 2.5% decrease of sales volume. Starting on November
15, 2017, certain districts of the local government implemented the suspension or production limitation policy on some of our
customers. Additionally, there were fewer construction jobsites in Beijing area as compared with the same period of last year,
which caused the demand of concrete products to decrease. The decrease was partially offset by the increase of unit price which
was due to the increase of our unit cost.

Cost
of Revenue. Cost of revenue, which consists of direct labor, rentals, depreciation, other overhead and raw materials,
including inbound freight charges, was approximately $39.1 million for the year ended June 30, 2019, as compared to approximately
$39.0 million for the year ended June 30, 2018, an increase of approximately $71,000, or 0.2%. The increase in cost of revenue
was primarily caused by unit price inflation of our raw materials, such as stone, slag powder and mine powder for the year ended
June 30, 2019, as compared to the same period in 2018. Additionally, the unit price of sand increased most among all the raw materials.
The government started to enhance the sand mining management along the Yangtze River to protect the environment in July 2018 which
caused the supply of sand to decrease. The unit price of sand is expected to keep going up, and we are working on finding a suitable
substitute for sand to increase our gross margin.

Gross
Profit. Gross profit was approximately $4.6 million for the year ended June 30, 2019, as compared to approximately $6.7
million of gross profit for the year ended June 30, 2018, a negative change of approximately $2.1 million, which was primarily
due to the decrease of sale volume of concrete and the increase of unit production cost during the year ended June 30, 2019 as
compared to the same period in 2018 for the reasons as discussed above.

Provision
for Doubtful Accounts. We made a provision of doubtful accounts charge of approximately $2.6 million for the year ended
June 30, 2018 as compared to provision of doubtful accounts charge of approximately $2.2 million during the year ended June 30,
2017, an increase of approximately $0.4 million, or 17%. The change was attributable to the fact that we collected less of our
aged accounts receivable and other receivables that were over 720 days past due during the year ended June 30, 2019 as compared
to the same period in 2018 and we correspondingly resulted in more provision for doubtful accounts in accordance with our allowance
policy in 2019. The increase was offset by a recovery of doubtful accounts of prepayments – related party as we have received
most inventories we made prepayments for from the related party.

Selling,
General and Administrative Expenses. Selling, general and administrative expenses consist of sales commissions, advertising
and marketing costs, office rent and expenses, costs associated with staff and support personnel who manage our business activities,
and professional fees paid to third parties. We incurred selling, general and administrative expenses of approximately $7.3 million
for the year ended June 30, 2019 as compared to approximately $6.7 million for the year ended June 30, 2018, an increase of approximately
$0.6 million. The increase was primarily due to a $0.2 million increase in legal expenses, a $0.2 million increase in consulting
fees, a $0.1 million increase in repairs and maintenance expense and $0.1 million increase in meals and entertainment expense
as compared to the year ended June 30, 2018.

Research
and Development Expenses. Research and development expenses were approximately $0.2 million for the year ended June 30,
2019 as compared to $1.2 million for the same period in 2018. We decreased our research and development expenditures during this
period as we deemed the quality of our products is competitive in the market and we can spend minimum research and development
cost to remain competitive with the quality of our products.

Loss
from Operations. We incurred a loss from operations of approximately $8.8 million and a loss of approximately $3.3 million
for the years ended June 30, 2019 and 2018, respectively. The negative change of approximately $5.5 million was primarily due
to the reasons previously discussed.

Otro
Income (Expense), Net. Our other income (expense) consists of interest income (expense), finance expense and other non-operating
income (expense). We had other expense of approximately $4,000 and other income of approximately $112,000 during the years ended
June 30, 2019 and 2018, respectively. We earned interest income of approximately $2,000 and $6,000 for the years ended June 30,
2019 and 2018, respectively. Approximately $2.0 million and $1.4 million of interest expense was recorded for the years ended
June 30, 2019 and 2018, and approximately $13,000 and $5,000 of finance expense was recorded for the years ended June 30, 2019
and 2018. Approximately $3.5 million and $2.8 million of estimated claims charges and its related interest charges were recorded
for the years ended June 30, 2019 and 2018 due to legal actions related to several lawsuits against Xin Ao.

Provision
for Income Taxes. We did not incur income tax expense for the years ended June 30, 2019 and 2018 as we had net operating
losses.

Net
Loss. We incurred net loss of approximately $14.4 million for the year ended June 30, 2019, as compared to a net loss
of approximately $7.4 million for the year ended June 30, 2018. This change was the result of the combination of the changes as
discussed above.

Comparison
of the years ended June 30, 2018 and 2017

Revenue.
Our revenue is primarily generated from sales of our advanced ready-mix concrete products. For the year ended June 30, 2018, we
generated revenue of approximately $45.7 million, as compared to approximately $45.0 million during the year ended June 30, 2017,
an increase of approximately $0.7 million, or 2%. The increase in revenue was principally due to increased selling unit price
by 21.7% resulting from the turnaround of the concrete industry. In late 2017, the local government shut down a number of small
and non-qualified concrete manufactures, which led to less competition in the industry and drove up the selling price of the concrete
as the supply of concrete was reduced. The increase was also due to the appreciation of Chinese Reminbi (“RMB”) against
the U.S. dollar of 4.5%. The increase in revenue was offset by 20.3% decrease of sales volume due to the suspension or production
limitation policy enforced by certain districts of the local government on some of our customers starting on November 15, 2017.
The policy prohibits construction jobsites in certain areas from producing industrial waste or dust to aggravate winter haze weather
during the winter time. Our production returned to normal levels on March 15, 2018 after the suspension and production limitations
were removed from our customers.

Cost
of Revenue. Cost of revenue, which consists of direct labor, rentals, depreciation, other overhead and raw materials,
including inbound freight charges, was approximately $39.0 million for the year ended June 30, 2018, as compared to approximately
$43.9 million for the year ended June 30, 2017, an decrease of approximately $4.9 million, or 11%. The decrease in cost of revenue
was primarily associated with the decrease in our sales volume mainly due to the suspension or production limitation policies
as discussed above partially offset by the increase of unit production costs of 6.5%, which was principally caused by unit price
inflation of our raw materials, such as cement, stone, slag powder and mine powder for the year ended June 30, 2018, as compared
to the same period in 2017.

Gross
Profit. Gross profit was approximately $6.7 million for the year ended June 30, 2018, as compared to approximately $1.1
million of gross profit for the year ended June 30, 2017, a positive change of approximately $5.6 million, which was primarily
due to the increase of our selling price of concrete at a higher rate than the slight increase of unit production cost during
the year ended June 30, 2018 as compared to the same period in 2017 for the reasons as discussed above.

Provision
for Doubtful Accounts. We made a provision of doubtful accounts charge of approximately $2.2 million for the year ended
June 30, 2018 as compared to provision of doubtful accounts charge of approximately $3.4 million during the year ended June 30,
2017, a decrease of approximately $1.2 million, or 35%. The change was attributable to the fact that we collected more of our
aged accounts receivable and other receivables that were over 720 days past due during the year ended June 30, 2018 as compared
to the same period in 2017 and we correspondingly resulted in recovery for doubtful accounts in accordance with our allowance
política. The decrease was offset by an increase of the provision of doubtful accounts of prepayments – related party as the
related party is being named as a joint defendant in one of our civil lawsuits, so we made approximately $0.3 million allowance
for prepayments – related party.

Selling,
General and Administrative Expenses. Selling, general and administrative expenses consist of sales commissions, advertising
and marketing costs, office rent and expenses, costs associated with staff and support personnel who manage our business activities,
and professional fees paid to third parties. We incurred selling, general and administrative expenses of approximately $6.7 million
for the year ended June 30, 2018 as compared to approximately $5.7 million for the year ended June 30, 2017, an increase of approximately
$1.0 million. The increase was primarily due to a $0.1 million increase in legal expenses and $1.1 million increase in compensation
expense. The increase was offset by $0.1 million decrease in social insurance expense and $0.1 million decrease in meals and entertainment
expense as compared to the year ended June 30, 2017.

Research
and Development Expenses. Research and development expenses were approximately $1.2 million for the year ended June 30,
2018 as compared to $0.8 million for the same period in 2017. We increased our research and development expenditures during this
period as we worked to improve our competitive advantage with respect to our products.

Loss
from Operations. We incurred a loss from operations of approximately $3.3 million and a loss of approximately $8.8 million
for the years ended June 30, 2018 and 2017, respectively. The decrease of approximately $5.5 million was primarily due to the
reasons previously discussed.

Otro
Income (Expense), Net. Our other income (expense) consists of interest income (expense), finance expense and other non-operating
income (expense). We had other income of approximately $112,000 and $407,000 during the years ended June 30, 2018 and 2017, respectively.
We earned interest income of approximately $6,000 and $30,000 for the years ended June 30, 2018 and 2017, respectively. Approximately
$1,360,000 and $831,000 of interest expense was recorded for the years ended June 30, 2018 and 2017, and approximately $5,000
and $604,000 of finance expense was recorded for the years ended June 30, 2018 and 2017. Approximately $2.8 million and $1.3 million
of estimated claims interest charges were recorded for the years ended June 30, 2018 and 2017 due to legal actions related to
several lawsuits against Xin Ao.

Provision
for Income Taxes. We did not incur income tax expense for the years ended June 30, 2018 and 2017 as we had net operating
losses.

En
December 22, 2017, the “Tax Cuts and Jobs Act” (“The Act”) was enacted. Under the provisions of the Act,
the U.S. corporate tax rate decreased from 35% to 21%. As we have a June 30 fiscal year-end, the lower corporate income tax rate
will be phased in, resulting in a U.S. statutory federal rate of approximately 28% for our fiscal year ending June 30, 2018, and
21% for subsequent fiscal years. Accordingly, we have remeasured our deferred tax asset for net operating loss carryforward in
the U.S at the lower enacted tax rate of 21%. However, this remeasurment has no effect on our income tax expense as we have provided
a 100% valuation allowance on our deferred tax assets previously.

Adicionalmente,
the Tax Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future
foreign earnings are subject to U.S. taxation. However, this one-time transition tax had no effect on our income tax expense as
we have no undistributed foreign earnings through June 30, 2018 as we have cumulative foreign losses as of June 30, 2018.

Net
Loss. We incurred net loss of approximately $7.4 million for the year ended June 30, 2018, as compared to a net loss of
approximately $11.0 million for the year ended June 30, 2017. This change was the result of the combination of the changes as
discussed above.

5.B.
Liquidity and Capital Resources

Como
of June 30, 2019, we had cash and cash equivalents of approximately $28,000, which was held by our consolidated subsidiaries and
VIE located outside the U.S. We would be required to accrue and pay U.S. taxes if we were to repatriate these funds. Any company
which is registered in mainland PRC must apply to the State Foreign Exchange Administration for approval in order to remit foreign
currency to any foreign country. We currently do not intend to repatriate to the U.S. the cash and short-term investments held
by our foreign subsidiaries. However, if we were to repatriate funds to the U.S., we would assess the feasibility and plan any
transfer in accordance with foreign exchange regulations, taking into account tax consequences. As we conduct all of our operations
in the PRC, the restriction on the conversion of cash and short-term investments held in RMB to other currencies should not affect
our liquidity.

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

We engage in the production of advanced
construction materials for large-scale infrastructure, commercial and residential developments. Our business is capital intensive
and we are highly leveraged. Debt financing in the form of short term bank loans, loans from related parties and bank acceptance
notes have been utilized to finance the working capital requirements and the capital expenditures of us. Our working deficit was
approximately $1.1 million as of June 30, 2019. As of June 30, 2019, we had cash on-hand of approximately $0.3 million, with remaining
current assets mainly composed of accounts receivable and prepayments and advances.

Although we believe that we can realize
our current assets in the normal course of business, our ability to repay our current obligations will depend on the future realization
of our current assets. Management has considered our historical experience, the economic environment, trends in the construction
industry in the PRC, the expected collectability of its accounts receivable and other receivables and the realization of the prepayments
on inventory, and provided an allowance for doubtful accounts as of June 30, 2019. We expect to realize the balance of its current
assets, net of the allowance for doubtful accounts within the normal operating cycle of twelve months.

However, we are involved in various lawsuits,
claims and disputes related to our operations and the personal guarantees of our officers to affiliated entities owned by them.
We are actively defending these actions and attempting to mitigate our exposure to any liability in excess of the current provision
of approximately $6.6 million, (see Note 14 in the accompanying notes to the consolidated financial statements). The ultimate
outcome of these pending actions cannot presently be determined, but currently management is of the opinion that any potential
additional liability would not have a material impact on our consolidated financial position. Nevertheless, due to the uncertainties
with litigation, the PRC legal system, claims and disputes, it is at least reasonably possible that management’s view of
the outcome could change in the near term.

Furthermore, as of June 30, 2019, our VIE,
Xin Ao, was subject to several civil lawsuits with potential judgments in the amount of approximately $26.7 million (see Note 14
in the accompanying notes to the consolidated financial statements) and the likelihood of the outcome of these lawsuits cannot
presently be determined. These lawsuits involve us principally due to the personal guarantees by Mr. Xianfu Han, and Mr. Weili
He, our shareholders and former officers. Because Mr. Han and Mr. He were the controlling shareholders of Xin Ao, the plaintiffs
included Xin Ao in their joint complaints. Xin Ao was not involved in most of the lawsuits but named as a joint defendant in the
lawsuits. As a result, Xin Ao might have exposure to any judgements in the future under PRC laws. Mr. Han and Mr. He have
agreed to indemnify us for any amounts Xin Ao may have to pay.  Should the outcome of these lawsuits require Xin Ao to pay
because the other co-defendants of the lawsuits and Mr. Han and Mr. He were unable to liquidate their personal assets or their
ownership interest in their privately held companies timely to pay for the judgements, our working deficit as of June 30, 2019
could be increased from approximately $1.1 million to a net working deficit of approximately $27.8 million.

In addition, the Company is in default
of its bank loan agreement for which the bank obtained a court order demanding the immediate repayment of the debt in May 2019.
The balance due to the bank is approximately $24.7million as of June 30, 2019. The Company has not made the repayment.

Our management has considered whether there
is a going concern issue due to our recurring losses from operations, the default of the Company’s bank loans, the estimated
claims charges and the possible additional exposure for pending actions against us which is presently unknown. Management has determined
there is substantial doubt about our ability to continue as a going concern. If we are unable to generate significant revenue,
defer payment or the replacement of our current bank loans and secure additional financing or resolve any pending estimated claim
charges, we may be required to cease or curtail our operations. Our financial statements do not include adjustments that might
result from the outcome of this uncertainty.

Management is trying to alleviate the going
concern risk through equity financing, obtaining financial support, the continued forbearance of the bank, and credit guarantee
commitments from our officers/shareholders (See Note 8 – Related party transactions) and debt restructuring for most litigation
liabilities.

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

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

Operating
Activities

Net cash used in operating activities totaled approximately $1.1 million for the years ended June 30,
2019, which was attributable to a net loss of $14.4 million and adjustments to reconcile the net loss to net cash used in operating
activities of approximately $8.3 million, including adjustments for approximately $1.1 million of depreciation, approximately $4.6
million of stock compensation expense, approximately $2.6 million of a provision for doubtful accounts, and the increase of accounts
receivable of approximately $6.0 million, excluding a non-cash offset of $9.4 million, payments of other receivables of approximately
$1.4 million, payments of prepayments and advances of approximately $6.3 million, excluding a non-cash offset of $5.0 million,
decrease of customer deposits of approximately $0.2 million and decrease of taxes payable of approximately $0.1 million. Net cash
outflow was primarily offset by the decrease of prepayment – related party of $2.5 million as we have already secured enough
materials for production from third parties, increase of accounts payable of approximately $10.4 million, excluding a non-cash
offset of $3.2 million, addition of approximately $0.5 million other payables-shareholders, and an increase of approximately $5.7
million in accrued liabilities and contingent liabilities, excluding a non-cash offset of $1.2 million.

Net cash provided by operating activities
totaled approximately $2.5 million for the year ended June 30, 2018, which was attributable to a net loss of $7.4 million and adjustments
to reconcile the net loss to net cash provided by operating activities of $4.8 million, including adjustments for $1.2 million
of depreciation, $1.4 million of stock compensation expense, and $2.2 million of a provision for doubtful accounts. Net cash from
changes in operating assets and liabilities resulted in a net cash inflow, which mainly included cash inflow for decrease of inventories
of $0.2 million, decrease of other receivables of $1.5 million, reduction of prepayments and advances of $16.0 million from third
parties and reduction of prepayments and advances of $4.2 million from a related party as we have already secured enough materials
for production, the addition of $1.0 million in customer deposits, excluding non-cash offset of $0.7 million, addition of $0.7
million other payables-shareholders, excluding a non-cash offset of $1.0 million and an increase of $2.8 million in accrued liabilities
and contingent liabilities, excluding a non-cash offset of $2.5 million. Net cash inflow was primarily offset by an increase of
accounts receivable of $4.6 million, excluding a non-cash offset of $6.9 million, payments of accounts payable $12.8 million, excluding
non-cash offset of $6.9 million, payments of other payables of $3.9 million, excluding a non-cash offset of $0.1 million, as we
had sufficient cash flow to pay down our accounts payable and other payables when due.

Net cash provided by operating activities
totaled approximately $1.7 million for the year ended June 30, 2017, which was primarily attributable to the net loss of $11.0
million, which was offset by the adjustments to reconcile to net cash provided by operating activities of $1.7 million, including
adjustments for $1.2 million of depreciation, $0.3 million of stock compensation expense, and $3.4 million provision for doubtful
accounts as well as $7.9 million cash inflow from a change in operating assets and liabilities. Net cash from changes in operating
assets and liabilities resulted in a net cash inflow, which mainly included cash inflow for reduction in inventories of $0.4 million,
collection of other receivables of $7.5 million as we increased our efforts on other receivables collections, reduction of prepayments
and advances net of $12.3 million as we have already secured enough materials for production, additional accounts payable of $0.01
million, excluding non-cash offset of $1.5 million, as we were in waiting for our accounts receivable collection and maturities
of notes receivable to repay our vendors, and additional other payables, including related party payables, of $4.1 million, due
to accrued research and development expenses, accrued salary and rental expense payable to our related parties, and was primarily
offset by additional accounts receivable of $13.5 million, excluding a non-cash offset of $1.5 million, due to delays in the receipt
of customer payments, a reduction of customer deposits of approximately $3.6 million and increased accrued liabilities and contingent
liabilities of $0.6 million.

Investing
Activities

Net
cash used in investing activities was approximately $0.1 million for the year ended June 30, 2019, which was primarily attributable
to the purchase of equipment.

Net
cash used in investing activities was approximately $0.1 million, excluding $0.1 million non-cash offset of $0.1 million, for
the year ended June 30, 2018, which was primarily attributable to the purchase of equipment.

Net
cash used in investing activities was approximately $0.2 million for the year ended June 30, 2017, which was primarily attributable
to the purchase of equipment.

Financing
Activities

Net
cash provided by financing activities totaled approximately $0.5 million for the year ended June 30, 2019, which was primarily
attributable to approximately $5.0 million in new bank loans, approximately $1.0 million for the sale of ordinary share and approximately
$24,000 for the borrowings received from shareholders. Net cash inflow was offset by approximately $5.4 million in repayments
of bank loans.

Net cash used in financing activities totaled
approximately $5.8 million for the year ended June 30, 2018, which was primarily attributable to $26.6 million for the repayments
of bank loans, $14.6 million for the repayments of notes payable. Net cash outflow was offset by $34.7 million in new bank loans,
$0.1 million borrowings from shareholders, excluding non-cash offset of $1.0 million and receipt of $0.6 million common stock.

Net cash used in financing activities totaled
approximately $2.1 million for the year ended June 30, 2017, which was primarily attributable to $20.7 million in cash proceeds
from bank loans and bank guarantees, $30.4 million in proceeds from notes payable and $0.1 million in borrowing from shareholders,
which was offset by $19.2 million for the repayment of bank loans and bank guarantees and $34.1 million for the repayment of notes
payable.

5.C.
Research and Development, Patents and Licenses, etc.

Research
and Development

During
the years ended June 30, 2019, 2018 and 2017, we had research and development expenses of approximately $0.2 million, $1.2 million
and $0.8 million, respectively.

5.D.
Trend Information

Otro
than as disclosed elsewhere in this annual report and below, we are not aware of any trends, uncertainties, demands, commitments
or events that are reasonably likely to have a material effect on our revenues, income from continuing operations, profitability,
liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future
operating results or financial condition.

Contingencies

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Company has been and continues to be a party to various legal actions. The majority of these claims and proceedings relate to
or arise from, commercial disputes, labor contract complaints and sales contract complaints. The Company accrues costs related
to these matters when they become probable and as a result the amount of loss can be reasonably estimated (See Dispute Matters
Arising in the Ordinary Course of Business for more information). In determining whether a loss from a claim is probable, and
if it is possible to estimate the loss, the Company reviews and evaluates its litigation and regulatory matters on at least a
quarterly basis in light of potentially relevant factual and legal developments. If the Company determines a favorable outcome
is probable, or that the amount of loss cannot be reasonably estimated, the Company does not accrue costs for a potential litigation
loss. In those situations, the Company discloses an estimate of the probable losses or a range of possible losses, if such estimates
can be made as indicated below (See Legal Matters). Currently, except as otherwise noted below, the Company does not believe that
it is possible to estimate the potential losses incurred or a range of reasonably possible losses related to the outstanding claims. 
Legal costs incurred in connection with loss contingencies are expensed as incurred.

As of June 30, 2019, the Company’s VIE, Xin Ao, was subject to several civil lawsuits for which
the Company estimated that it is more than likely to pay judgments in the amount of approximately $6.6 million (including interest
and penalty of $1.3 million and exclusive of the Company’s $24.7 million bank debt in default). These amounts are presented
in the accompanying consolidated balance sheets (See Accrued Contingent Liabilities). During the years ended June 30, 2019, 2018
and 2017, additional estimated claims charges of approximately $3.5 million, $2.8 million and $1.3 million, respectively, on some
of the remaining claims is presented in the accompanying consolidated statements of operations under the caption “Estimated
claims charges”.

Como
of the date of this 20-F, the Company’s management does not expect any other material liability from the disposition of
claims as of the date of this 20-F report from litigation individually, or in the aggregate that would have a material adverse
impact on the Company’s consolidated financial position, results of operations and cash flows.

Due
to the Company’s operations in the PRC and the legal environment in the PRC, it is possible that the Company’s VIE,
Xin Ao could be named as a defendant in the litigation based upon the guarantees of Mr. Han and Mr. He and/or their related parties.

Legal
matters

Como
of June 30, 2019, the Company’s VIE, Xin Ao, was subject to several civil lawsuits with potential judgments of approximately
$26.7 million and the likelihood of the outcome of these lawsuits cannot be determined as of the date of this report. These lawsuits
involved with the Company were mainly due to the personal guarantees by Mr. Xianfu Han, and Mr. Weili He, the Company’s
shareholders and officers, because they are also the shareholders of our VIE, Xin Ao. Because Mr. Han and Mr. He are the shareholders
of Xin Ao, the plaintiffs included Xin Ao in the joint complaints. Xin Ao was not involved in most of the lawsuits but named as
a joint defendant in the lawsuits. As a result, Xin Ao might have exposure to the pending judgements in the future.

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type of litigation disputes with contingencies associated are summarized as follows as of June 30, 2019:

5.E.
Off-Balance Sheet Arrangements

Otro
than as disclosed elsewhere in this annual report, we have not entered into any financial guarantees or other commitments to guarantee
the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to its shares
and classified as shareholder’s equity or that are not reflected in its consolidated financial statements. Furthermore,
we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing,
liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.

5.F.
Tabular Disclosure of Contractual Obligations

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following table summarizes our contractual obligations as of June 30, 2019:

6.A.
Directors, Executive Officers and Key Employees

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following table sets forth information regarding our executive officers and directors as of the date of this report.

Biografía

Yang
(Sean) Liu

señor.
Liu has been serving as the Chairman and Chief Executive Officer of the Company since March 28, 2019. He had served as the President
of MagniFinTech (“Magni”) from May 2017 to March 28, 2019 and served as CEO of Wave Sync Corporation from July 2017
to August 2018. Prior to joining Magni, Mr. Liu served as the Murex Regional Manager at UBS from November 2015 to May 2017. From
June 2008 to November 2015, Mr. Liu served as a Senior Consultant, Client Coordinator and Single-point of Contact at Murex North
America. Mr. Liu has a Bachelor’s degree in Engineering from Tsinghua University in China, as well as two Master’s
degrees in Financial Mathematics and Electrical Engineering from New Mexico State University.

Lili
Jiang

Ms.
Jiang has been serving as the Chief Financial Officer and Director of the Company since March 28, 2019. She had served as the
Manager of the Overseas Medical Business Department of Aolan Health Management Co., Ltd (“Aolan”) from May 2016 to
March 28, 2019. Prior to joining Aolan, Ms. Jiang was the Business Executive Assistant at the Australian Embassy in China from
July 2011 to April 2016. She is a Certified Public Accountant in Australia. Ms. Jiang has a Bachelor’s degree in Accounting
and Finance from Sydney Technical University in Australia, and a Master’s degree in Economics in Finance from University
of New South Wales in Sydney, Australia.

Yan
Zhang

señor.
Zhang became a member of our Board of Directors on June 28, 2019. Ms. Zhang served as the Manager of the Shanghai Representative
Office of AL.EA. Consulting S.r.l. since March 2018. She had served as the Purchasing Manager of Datatool Information Technology
Co., Ltd. (“Datatool”) from December 2014 to November 2017. Prior to joining Datatool, Ms. Zhang served as the Sourcing
Supervisor at ACS Auxiliary Equipment (Suzhou) from October 2005 to September 2014. Ms. Zhang has a Bachelor’s degree in
Food Science and Technology from Huai Hai Institute of Technology in China.

Wei
Pei

señor.
Pei became a member of our Board of Directors on March 21, 2018. Mr. Pei has served as the Administrative Director of Wanda Picture
Television & Media Co. since January 2017, responsible for the HR department and administrative office. He also assists the
management work of some filming development projects of the Company. Before that, he worked at the Wanda Hotel Construction Co.
since March 2010 in charge of the HR, project management and organizational work. Mr. Pei graduated from Harbin Institute of Technology
with a bachelor degree in Business Management in 2006.

Xiaoyuan
Zhang

Ms.
Zhang became a member of our Board of Directors on July 19, 2019. Ms. Zhang has served as the Chief Financial Officer and Treasurer
of Senmiao Technology Limited (Nasdaq: AIHS) since September 2018. From October 2010 to September 2018, Ms. Zhang served as Senior
Auditor and Assurance Manager of Ernst & Young Hua Ming LLP, Chengdu Branch, where she participated in audits of several public
companies listed in China, Hong Kong and Singapore, as well as large state-owned and foreign investment enterprises. Ms. Zhang
received her dual bachelor’s degrees in accounting and law from Southwestern University of Finance and Economics in Chengdu,
China. Ms. Zhang is an intermediate accountant and a Certified Public Accountant of the Chinese Institute of Certified Public
Accountants.

6.B.
Compensation

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following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our principal
executive officer and our other most highly paid executive officer (the “named executive officers”) for services rendered
in all capacities during the noted periods. No other executive officers received total annual salary and bonus compensation in
excess of $100,000 during the fiscal years ended June 30, 2019 and 2018.

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executive directors agreed not to receive any compensation for serving on the board.  The following table represents compensation
earned by our non-executive directors in fiscal year ended June 30, 2019.

6.C.
Board Practices

Terms
of Directors and Officers

Our
officers are elected by and serve at the discretion of the Board and the shareholders voting by ordinary resolution. Our directors
are not subject to a set term of office and hold office until the next general meeting called for the election of directors and
until their successor is duly elected or such time as they die, resign or are removed from office by a shareholders’ ordinary
resolution or the unanimous written resolution of all shareholders A director will be removed from office automatically if, among
other things, the director becomes bankrupt or makes any arrangement or composition with his creditors generally or is found to
be or becomes of unsound mind.

Audit
Committee

Xiaoyuan
Zhang, Yan Zhang and Wei Pei are members of our Audit Committee, and Xiaoyuan Zhang serves as the chairwoman. All members of our
Audit Committee satisfy the independence standards promulgated by the SEC and by Nasdaq as such standards apply specifically to
members of audit committees.

Our
Audit Committee performs several functions, including:

Compensation
Committee

Xiaoyuan
Zhang, Yan Zhang and Wei Pei are members of our Compensation Committee, and Yan Zhang serves the chairwoman. All members of our
Compensation Committee are qualified as independent under the current definition promulgated by Nasdaq. The Compensation Committee
is responsible for, among other things:

Corporate
Governance and Nominating Committee

Xiaoyuan
Zhang, Yan Zhang and Wei Pei are members of our Nominating and Corporate Governance Committee and Wei Pei is the chairman. All
members of our Nominating and Corporate Governance Committee are qualified as independent under the current definition promulgated
by Nasdaq. The Nominating and Corporate Governance Committee is responsible for, among other things:

6.D.
Employees

Ver
the section entitled “Employees” in Item 4 above.

6.E.
Share Ownership

Como
of November 14, 2019, 7,574,626 of our ordinary shares were issued and outstanding. Holders of our ordinary shares are entitled
to vote together as a single class on all matters submitted to shareholders for approval. No holder of ordinary shares has different
voting rights from any other holders of ordinary shares. We are not aware of any arrangement that may, at a subsequent date, result
in a change of control of our company.

Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. The percentages of shares beneficially owned
in the table below are based on 7,574,626 ordinary shares outstanding as of November 14, 2019.

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following table sets forth information with respect to the beneficial ownership of our ordinary shares as of November 14, 2019
by:

7.A.
Major Shareholders

Ver
Item 6.E., “Share Ownership,” for a description of our major shareholders.

7.B.
Related Party Transactions

Except
as discussed below, since the beginning of the 2012, there have not been any transactions, nor is there any currently proposed
transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds $120,000, and in which any
related person had or will have a direct or indirect material interest (other than compensation described under “Executive
Compensation”).

Prepayment – related party

Mr. Xianfu Han, and Mr. Weili He, the Company’s
shareholders and former officers, are holding positions as president and director of Ningbo Lianlv Investment Ltd., respectively.
This company owns 99% of the shares of Beijing Lianlv Technical Group Ltd. (“Beijing Lianlv”), the Company’s
supplier. As of June 30, 2019 and 2018, the Company prepaid $456,399 and $3,027,409 to Beijing Lianlv, before any allowance, for
inventory purchases, respectively.

Due to Beijing Lianlv being named as a
joint defendant in one of the civil lawsuits of the Company, the Company provided a provision of 5% of an allowance for doubtful
accounts for Beijing Lianlv’s prepayment that are aged from six months to one year and 10% for the balance beyond one year.
As of June 30, 2019 and 2018, the Company made $0 and $0.3 million allowance for prepayment – related party, respectively.

Other receivable – related party

This balance represents litigation against
Xin Ao who entered into a capital lease agreement on behalf of Beijing Lianlv, an entity whose shareholders are Mr. Han and Mr.
He. The balance was indemnified by Mr. Han and Mr. He in November 2019. As of June 30, 2019 and 2018, other receivable –
related party from Beijing Lianlv was $165,075 and $1,397,042, respectively.

Other payables – related parties

Mr. Xianfu Han, Mr. Weili He have advanced
funds to BVI-ACM for working capital purposes. The advances are non-interest bearing, unsecured, and are payable in cash on demand.
They and their spouses have also guaranteed certain short-term loans payable and notes payable of the Company (see Note 7).

Other payables – related parties
consisted of the following:

Loans payable – employees

Na Wang and Wei Zhang, employees of the
Company, have settled certain liabilities on behalf of the Company with its vendors and advanced funds to the Company for working
capital purposes. The settlement amount and advances are non-interest bearing, unsecured, and are payable in cash on demand.

7.C.
Interests of Experts and Counsel

No
applicable.

Consolidated
Statements and Other Financial Information

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financial statements required by this item may be found at the end of this Annual Report on 20-F, beginning on page F-1.

Legal
Proceedings

Ver
“Item 4. Information on the Company — B. Business Overview — Legal Proceedings.”

Dividends

We
have never declared or paid any dividend on our ordinary shares and we do not anticipate paying any dividends on our ordinary
shares in the future. We currently intend to retain all future earnings to finance our operations and to expand our business.

No
Significant Changes