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

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UNIDO
Estados

VALORES
Y COMISIÓN DE INTERCAMBIO

WASHINGTON,
D.C.20549

FORMAR
20-F

REGISTRO
DECLARACIÓN DE ACUERDO CON LA SECCIÓN 12 (b) O (g) DE LA LEY DE CAMBIO DE VALORES DE 1934

O

ANUAL
INFORME DE CONFORMIDAD CON LA SECCIÓN 13 O 15 (d) DE LA LEY DE INTERCAMBIO DE VALORES DE 1934

por
el ejercicio fiscal finalizó el 30 de junio de 2019

O

TRANSICIÓN
INFORME DE CONFORMIDAD CON LA SECCIÓN 13 O 15 (d) DE LA LEY DE INTERCAMBIO DE VALORES DE 1934

por
El período de transición de _________ a _____________.

O

CÁSCARA
INFORME DE LA COMPAÑÍA DE CONFORMIDAD CON LA SECCIÓN 13 O 15 (d) DE LA LEY DE INTERCAMBIO DE VALORES DE 1934

Fecha
de evento que requiere este informe de empresa fantasma:

Comisión
número de expediente: 333-226308

Huitao
Tecnología Co., Ltd.

(Exacto
nombre del Registrante como se especifica en su Carta)

Caimán
Islas

(Jurisdicción
de incorporación u organización)

9 9
Cuarta carretera de circunvalación del noroeste

Yingu
Mansion Suite 1708, Distrito de Haidian

Beijing,
República Popular de China 100190

(Habla a
de las principales oficinas ejecutivas)

Yang
(Sean) Liu

Jefe
Oficial ejecutivo

Tel:
+86 10 82525361

9 9
Cuarta carretera de circunvalación del noroeste

Yingu
Mansion Suite 1708, Distrito de Haidian

Beijing,
República Popular de China 100190

(Nombre,
Número de teléfono, correo electrónico y / o fax y dirección de la persona de contacto de la empresa)

Valores
registrado o que se registrará de conformidad con la Sección 12 (b) de la Ley:

Título de cada clase Símbolo (s) de comercio Nombre de cada intercambio en
que se registró
Acciones ordinarias, valor nominal $ 0.001 HHT Mercado de capitales Nasdaq

Valores
registrado o registrado de conformidad con la Sección 12 (g) de la Ley:

Ninguna

(Título
de clase)

Valores
para lo cual existe una obligación de informar de conformidad con la Sección 15 (d) de la Ley:

Ninguna

(Título
de clase)

los
El número de acciones en circulación de cada una de las clases de capital o acciones ordinarias del emisor al 30 de junio de 2019 era:
7.174.626 acciones ordinarias, valor nominal $ 0.001 por acción.

Indicar
mediante una marca de verificación si el solicitante de registro es un emisor experimentado bien conocido, tal como se define en la Regla 405 de la Ley de Valores. si No ☒

Si
este informe es un informe anual o de transición, indique con una marca de verificación si el solicitante no está obligado a presentar informes de conformidad
a la Sección 13 o 15 (d) de la Ley de Bolsa de Valores de 1934. Sí No ☒

Indicar
mediante una marca de verificación si el solicitante de registro (1) ha presentado todos los informes que debe presentar la Sección 13 o 15 (d) de la Bolsa de Valores
Ley de 1934 durante los 12 meses anteriores (o por un período tan corto que se requirió que el solicitante de registro presente dichos informes),
y (2) ha estado sujeto a dichos requisitos de presentación durante los últimos 90 días.
Sí ☒ No ☐

Indicar
mediante una marca de verificación si el solicitante de registro ha enviado electrónicamente todos los archivos de datos interactivos que se deben presentar de conformidad
a la Regla 405 del Reglamento S-T (§ 232.405 de este capítulo) durante los 12 meses anteriores (o por un período más corto que
el solicitante de registro debía presentar dichos archivos).
si No ☐

Indicar
mediante una marca de verificación si el solicitante de registro es un archivador acelerado grande, un archivador acelerado, un archivador no acelerado o un emergente
empresa en crecimiento. Consulte la definición de "gran archivador acelerado", "archivador acelerado" y "crecimiento emergente
empresa "en la Regla 12b-2 de la Ley de Intercambio.

Grande
archivador acelerado Archivador acelerado ☐ Archivador no acelerado ☒ Emergente
empresa de crecimiento

Si
una compañía de crecimiento emergente que prepara sus estados financieros de acuerdo con los US GAAP, indique con una marca de verificación si
El solicitante de registro ha optado por no utilizar el período de transición extendido para cumplir con las normas de contabilidad financiera nuevas o revisadas †
provisto de conformidad con la Sección 13 (a) de la Ley de Intercambio.

Indicar
mediante una marca de verificación qué base de contabilidad ha utilizado el registratario para preparar los estados financieros incluidos en esta presentación:

NOSOTROS.
GAAP Normas Internacionales de Información Financiera emitidas por la Contabilidad Internacional
Junta de normas Otro ☐

Si
Se ha marcado "Otro" en respuesta a la pregunta anterior, indique con una marca de verificación qué elemento del estado financiero
el solicitante de registro ha elegido seguir: Artículo 17 Artículo 18 ☐

Si
Este es un informe anual, indique mediante una marca de verificación si el solicitante de registro es una compañía fantasma (como se define en la Regla 12b-2 del Intercambio
Actuar). si No ☒

Huitao
TECNOLOGÍA CO., LTD.

FORMAR
INFORME ANUAL 20-F

MESA
De contenidos

PARTE
yo

CIERTO
INFORMACIÓN

En
este informe anual en el Formulario 20-F, a menos que se indique lo contrario, "nosotros", "nos", "nuestro", la "Compañía"
y "Huitao Technology" se refieren a Huitao Technology Co., Ltd., una compañía organizada en las Islas Caimán, su predecesora
entidades y sus filiales.

A no ser que
el contexto indica lo contrario, todas las referencias a "China" y "China" se refieren a la República Popular
de China, todas las referencias a "Renminbi" o "RMB" son a la moneda legal de la República Popular
de China, todas las referencias a "EE. UU. dólares "," dólares "y" $ "corresponden a la moneda legal de
los Estados Unidos. Este informe anual contiene traducciones de montos de Renminbi a dólares estadounidenses a tasas específicas únicamente para
La conveniencia del lector. No hacemos ninguna representación de que las cantidades de Renminbi o dólares estadounidenses a las que se hace referencia en este informe puedan
han sido o podrían convertirse a dólares estadounidenses o renminbi, según sea el caso, a una tasa particular o en absoluto. En octubre
31, 2019, la tasa de compra en efectivo anunciada por el Banco Popular de China fue de RMB7.0395 a $ 1.00.

A no ser que
indicado lo contrario, referencias a

"China,"
    "Chino" y "RPC" son referencias a la República Popular de China;
"BVI"
    se refiere a las Islas Vírgenes Británicas;
"Tecnología Huitao", "Huitao", "la Compañía", "nosotros", "nosotros"
o "nuestro" son referencias al negocio combinado de Huitao Technology Co., Ltd. y sus subsidiarias de propiedad absoluta,
BVI-ACM, CACM y China-ACMH, así como su entidad VIE Xin Ao;
"BVI-ACM"
    se refiere a Xin Ao Construction Materials, Inc;
"CACM" se refiere a CACM Group NY, Inc.
"China-ACMH"
    se refiere a Beijing Ao Hang Construction Materials Technology Co., Ltd .;
"Xin Ao" se refiere a Beijing Xin Ao Concrete Group Co., Ltd .;

MIRANDO HACIA ADELANTE
Declaraciones

Esta
el informe contiene "declaraciones prospectivas" a los efectos de las disposiciones de seguridad de los valores privados
Ley de Reforma de Litigios de 1995 que representa nuestras creencias, proyecciones y predicciones sobre eventos futuros. Todas las declaraciones otras
que las declaraciones de hechos históricos son "declaraciones a futuro", incluidas las proyecciones de ganancias, ingresos
u otros elementos financieros, cualquier declaración de los planes, estrategias y objetivos de gestión para operaciones futuras, cualquier declaración
con respecto a nuevos proyectos propuestos u otros desarrollos, cualquier declaración con respecto a condiciones o desempeño económico futuro, cualquier
declaraciones de creencias, metas, estrategias, intenciones y objetivos de la administración, y cualquier declaración de suposiciones subyacentes
cualquiera de los anteriores Palabras como "may", "will", "should", "could", "would",
"Predice", "potencial", "continuar", "espera", "anticipa", "futuro",
"Intenciones", "planes", "cree", "estimaciones" y expresiones similares, así como
declaraciones en tiempo futuro, identifique declaraciones prospectivas.

Estas
Las declaraciones son necesariamente subjetivas e implican riesgos conocidos y desconocidos, incertidumbres y otros factores importantes que podrían
causar que nuestros resultados reales, desempeño o logros, o resultados de la industria, difieran materialmente de cualquier resultado futuro, desempeño
o logros descritos o implícitos en tales declaraciones. Los resultados reales pueden diferir materialmente de los resultados esperados descritos
en nuestras declaraciones prospectivas, incluso con respecto a la medición correcta e identificación de factores que afectan nuestro negocio
o el alcance de su impacto probable, y la precisión e integridad de la información disponible públicamente con respecto a
los factores en los que se basa nuestra estrategia comercial o el éxito de nuestro negocio. Dadas estas incertidumbres, no debe
deposite una confianza indebida en estas declaraciones prospectivas. Estas declaraciones prospectivas incluyen, entre otras cosas, declaraciones
relativa a:

nuestra
    expectativas con respecto al mercado de nuestros productos y servicios concretos;
nuestra
    expectativas con respecto al continuo crecimiento de la industria del concreto;
nuestra
    creencias sobre la competitividad de nuestros productos;
nuestra
    expectativas con respecto a la expansión de nuestra capacidad de fabricación;
nuestra
    expectativas con respecto al aumento en el crecimiento de los ingresos y nuestra capacidad de mantener la rentabilidad como resultado de los aumentos en
    nuestros volúmenes de producción;
nuestra
    desarrollo comercial futuro, resultados de operaciones y condición financiera;
competencia
    de otros fabricantes de productos de hormigón;
el
    pérdida de cualquier miembro de nuestro equipo de gestión;
nuestras expectativas con respecto a litigios pendientes y reclamos de garantía;
nuestra
expectativas con respecto al financiamiento de nuestro negocio;
nuestra
    capacidad de integrar filiales y operaciones adquiridas en operaciones existentes;
mercado
    condiciones que afectan nuestro capital social;
nuestra
    capacidad de implementar con éxito nuestra estrategia de adquisición selectiva;
cambios
    en condiciones económicas generales;
cambios
    en las normas contables o en la aplicación de tales normas;
alguna
incumplimiento de la presentación periódica y otros requisitos de The Nasdaq Stock Market, o Nasdaq, para continuar cotizando;
alguna
    no identificar y remediar las debilidades materiales u otras deficiencias en nuestro control interno y control de divulgación
    sobre informes financieros;

el
    inicio de cualquier litigio civil, procedimientos regulatorios, acciones gubernamentales de cumplimiento u otros efectos adversos como resultado
    de las reformulaciones de nuestro Informe Anual en el formulario 10-K para el año fiscal que finalizó el 30 de junio de 2017 e informes trimestrales
    en el Formulario 10-Q para los períodos que terminaron el 31 de marzo de 2018, el 31 de diciembre de 2017 y el 30 de septiembre de 2017 (en lo sucesivo denominado "Reexpresado
    Informes "o" Reexpresión ").

Mirando hacia adelante
las declaraciones no deben leerse como una garantía de rendimiento o resultados futuros, y no serán necesariamente indicaciones precisas
de si, o los tiempos en que, nuestro rendimiento o resultados pueden lograrse. Las declaraciones prospectivas se basan en información
disponible en el momento en que se hacen esas declaraciones y la creencia de la gerencia a partir de ese momento con respecto a eventos futuros, y
están sujetos a riesgos e incertidumbres que podrían causar que el desempeño real o los resultados difieran materialmente de los expresados
en o sugerido por las declaraciones prospectivas. Los factores importantes que podrían causar tales diferencias incluyen, pero no están limitados
a, aquellos factores discutidos bajo los encabezados "Factores de riesgo", "Revisión operativa y financiera y perspectivas"
y en otra parte de este informe.

ARTICULO
    1)
IDENTIDAD
    DE DIRECTORES, DIRECCIÓN SUPERIOR Y ASESORES

No
Aplicable.

ARTICULO
    2)
OFERTA
    ESTADÍSTICA Y CALENDARIO ESPERADO

No
Aplicable.

3.A.
Datos financieros seleccionados

los
La siguiente tabla presenta la información financiera consolidada seleccionada de nuestra empresa. Los estados consolidados seleccionados
de datos integrales de ingresos para los años terminados el 30 de junio de 2019, 2018 y 2017 y los datos del balance general consolidado seleccionados
al 30 de junio de 2019 y 2018 se han derivado de nuestros estados financieros consolidados auditados, que se incluyen en este
informe anual que comienza en la página F-1. Nuestros estados financieros consolidados auditados se preparan y presentan de acuerdo con
principios de contabilidad generalmente aceptados en los Estados Unidos, o US GAAP. Nuestros resultados históricos no necesariamente indican
resultados esperados para cualquier período futuro. Debe leer los siguientes datos financieros seleccionados junto con el consolidado
estados financieros y notas relacionadas y "Punto 5. Revisión operativa y financiera y perspectivas" incluidos en otra parte
en este informe

los
La siguiente tabla presenta nuestro resumen de los estados consolidados de resultados e información integral de resultados:

Por los años terminados
2019 2018 2017
Ingresos PS43,651,923 PS45,734,647 PS45,048,413
Costo de ingresos 39,093,782 39,022,360 43,953,477
Beneficio bruto 4,558,141 6.712.287 1,094,936
Provisión para cuentas incobrables (2,559,785) (2,184,221) (3,352,063)
Gastos de venta, generales y administrativos. (5,996,609) (5,301,168) (5.380.702)
Gastos de investigación y desarrollo. (223,668) (1,182,133) (846,438)
Gastos de compensación de acciones (4,592,200) (1,388,501) (289,000)
Pérdida de operaciones (8.814.121) (3,343,736) (8,773,267)
Otros gastos, neto (5,574,409) (4,056,229) (2,264,853)
Pérdida antes de la provisión para impuestos sobre la renta (14.388.530) (7.399.965) (11,038,120)
Provisión para impuestos sobre la renta - - -
Pérdida neta PS(14.388.530) PS(7.399.965) PS(11,038,120)

los
La siguiente tabla presenta los datos resumidos de nuestro balance general:

Al 30 de junio de
2019 2018
Efectivo y equivalentes de efectivo PS347,486 PS1,098,691
Cuentas y documentos por cobrar, neto (incluida la parte relacionada) 37,010,458 43.322.463
Otros activos circulantes 15,147,569 6.230.520
Planta y equipo, neto 1,659,520 2,748,409
Los activos totales 54,165,033 53,400,083
Responsabilidad total (53,644,235) (43,697,875)
Equidad total de los accionistas PS520,798 PS9,702,208

3.B.
Capitalización y endeudamiento

No
Aplicable.

3.C.
Razones para la oferta y uso de los ingresos

No
Aplicable.

3.D.
Factores de riesgo

Un
La inversión en nuestras acciones ordinarias implica un alto grado de riesgo. Debe considerar cuidadosamente los riesgos e incertidumbres descritos
a continuación junto con toda la otra información contenida en este informe anual, incluidos los asuntos discutidos bajo los títulos
“Declaraciones prospectivas” y “Revisión y perspectivas operativas y financieras” antes de que decida invertir
en nuestro
acciones ordinarias. Somos una compañía holding con operaciones sustanciales en China y estamos sujetos a un
entorno regulatorio que en muchos aspectos difiere de los Estados Unidos. Si alguno de los siguientes riesgos, o cualquier otro riesgo
e incertidumbres que actualmente no son previsibles para nosotros, realmente ocurren, nuestro negocio, condición financiera, resultados de operaciones,
La liquidez y nuestras perspectivas de crecimiento futuro podrían verse afectadas de manera adversa y material.

Riesgos
Relacionado con nuestro negocio

Consideraciones de liquidez y preocupación actual

Al evaluar la liquidez de la Compañía,
La Compañía monitorea y analiza su efectivo disponible y sus compromisos operativos y de gastos de capital. La liquidez de la empresa
las necesidades son cumplir con sus requisitos de capital de trabajo, gastos operativos y obligaciones de gastos de capital.

La empresa se dedica a la producción de productos avanzados.
Materiales de construcción para infraestructura a gran escala, desarrollos comerciales y residenciales. El negocio de la Compañía es
capital intensivo y la Compañía está altamente apalancada. Financiamiento de la deuda en forma de préstamos bancarios a corto plazo, préstamos relacionados
las partes y las notas de aceptación bancaria se han utilizado para financiar los requisitos de capital de trabajo y los gastos de capital de
la compañia. El déficit de trabajo de la Compañía era de aproximadamente $ 1.1 millones al 30 de junio de 2019. Al 30 de junio de 2019, la Compañía
tenía efectivo disponible de aproximadamente $ 0.3 millones, y los activos corrientes restantes se componen principalmente de cuentas por cobrar y pagos anticipados
y avances.

Aunque la Compañía cree que puede darse cuenta
sus activos actuales en el curso normal de los negocios, la capacidad de la Compañía de pagar sus obligaciones actuales dependerá de
La realización futura de sus activos corrientes. La gerencia ha considerado su experiencia histórica, el entorno económico, las tendencias.
en la industria de la construcción en la RPC, la cobranza esperada de sus cuentas por cobrar y otras cuentas por cobrar y la realización
de los pagos anticipados en inventario, y proporcionó una reserva para cuentas incobrables al 30 de junio de 2019. La Compañía espera darse cuenta
el saldo de sus activos corrientes, neto de la reserva para cuentas de cobro dudoso dentro del ciclo operativo normal de doce meses.

Sin embargo, la Compañía está involucrada en varios
demandas, reclamos y disputas relacionadas con sus operaciones y las garantías personales de sus funcionarios a las entidades afiliadas de su propiedad
por ellos. La Compañía defiende activamente estas acciones e intenta mitigar la exposición de la Compañía a cualquier responsabilidad.
en exceso de la provisión actual de aproximadamente $ 6.6 millones, (véase la Nota 14 en las notas adjuntas a la información financiera consolidada
declaraciones). El resultado final de estas acciones pendientes no se puede determinar actualmente, pero actualmente la gerencia opina
que cualquier posible responsabilidad adicional no tendría un impacto material en la posición financiera consolidada de la Compañía.
Sin embargo, debido a las incertidumbres con los litigios, el sistema legal de la RPC, las reclamaciones y las disputas, es al menos razonablemente posible
La opinión de la gerencia sobre el resultado podría cambiar en el corto plazo.

Además, al 30 de junio de 2019, la Compañía
VIE, Xin Ao, estuvo sujeto a varios juicios civiles con juicios potenciales por un monto aproximado de $ 26.7 millones (ver Nota
14 en las notas adjuntas a los estados financieros consolidados) y la probabilidad del resultado de estas demandas no puede
Actualmente se determinará. Estas demandas involucran a la Compañía principalmente debido a las garantías personales del Sr. Xianfu Han y el Sr.
Weili He, los accionistas y ex funcionarios de la Compañía. Porque el Sr. Han y el Sr. He eran los accionistas controladores de
Xin Ao, los demandantes incluyeron a Xin Ao en sus quejas conjuntas. Xin Ao no estuvo involucrado en la mayoría de las demandas, pero fue nombrado como
un acusado conjunto en las demandas. Como resultado, Xin Ao podría estar expuesto a cualquier juicio en el futuro según las leyes de la RPC. señor.
Han y el Sr.He acordaron indemnizar a la Compañía por cualquier monto que Xin Ao deba pagar. En caso de que el resultado de estas demandas
exigir a Xin Ao que pague porque los otros coacusados ​​de las demandas y el Sr. Han y el Sr.He no pudieron liquidar sus gastos personales.
activos o su interés de propiedad en sus compañías privadas a tiempo para pagar los juicios, el trabajo de la Compañía
el déficit al 30 de junio de 2019 podría incrementarse de aproximadamente $ 1.1 millones a un déficit operativo neto de aproximadamente $ 27.8
millón.

Además, la Compañía está en pago y
incumplimiento técnico bajo su acuerdo de préstamo bancario para el cual el banco ha presentado ante los tribunales de la RPC que ha emitido un aviso de demanda
en mayo de 2019 para el reembolso inmediato de los préstamos pendientes. No se han realizado reembolsos y el saldo al 30 de junio de 2019
es de aproximadamente $ 24.7 millones.

La gerencia de la Compañía ha considerado
si hay un problema de empresa en funcionamiento debido a las pérdidas recurrentes de la Compañía por las operaciones, el incumplimiento de la Compañía
préstamos bancarios, los cargos por reclamos estimados y la posible exposición adicional por acciones pendientes contra la Compañía que actualmente se encuentra
desconocido. La gerencia ha determinado que hay dudas sustanciales sobre nuestra capacidad de continuar como empresa en funcionamiento. Si la empresa
no puede generar ingresos significativos, asegurar la paciencia continua de su banco y / o financiamiento adicional o resolver
cualquier cargo de reclamo estimado pendiente, se le puede solicitar a la Compañía que suspenda o reduzca sus operaciones. La empresa financiera
Las declaraciones no incluyen ajustes que podrían resultar del resultado de esta incertidumbre.

La gerencia está tratando de aliviar la marcha
preocupan el riesgo a través del financiamiento de capital, obteniendo apoyo financiero adicional y compromisos de garantía de crédito y reestructuración de deuda
para la mayoría de los pasivos por litigios.

Nuestra
El negocio está sujeto al riesgo de concentración de proveedores.

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:

el
    Necesidad de fondos adicionales para construir instalaciones de fabricación adicionales, que es posible que no podamos obtener de manera razonable
    términos o en absoluto;

retrasos
    y sobrecostos como resultado de una serie de factores, muchos de los cuales pueden estar fuera de nuestro control, como problemas con el equipo
    proveedores y servicios de fabricación proporcionados por terceros fabricantes o subcontratistas;

nuestra
    recibo de las aprobaciones o permisos gubernamentales necesarios que puedan requerirse para expandir nuestras operaciones de manera oportuna
    o en absoluto;

desviación
    de atención gerencial significativa y otros recursos; y

fracaso
    para ejecutar nuestro plan de expansión de manera efectiva.

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:

en el sitio
    condiciones que difieren de las asumidas en la oferta original;
retrasos
    causado por las condiciones climáticas;
más tarde
    fechas de inicio del contrato de lo esperado cuando ofertamos por el contrato;
contrato
    modificaciones que crean costos no anticipados no cubiertos por las órdenes de cambio;
cambios
    en disponibilidad, proximidad y costos de materiales, incluidos acero, concreto, agregados y otros materiales de construcción (tales
    como piedra, grava y arena), así como combustible y lubricantes para nuestros equipos;
disponibilidad
    y nivel de habilidad de los trabajadores en la ubicación geográfica de un proyecto;
nuestra
    incumplimiento de los proveedores o subcontratistas;
fraude
    o robo cometido por nuestros empleados;
mecánico
    problemas con nuestra maquinaria o equipo;
citas
    emitido por autoridades gubernamentales
dificultades
    en la obtención de los permisos o aprobaciones gubernamentales requeridos;
cambios
    en las leyes y reglamentos aplicables; y
reclamaciones
    o demandas de terceros que aleguen daños derivados de nuestro trabajo o del proyecto del que forma parte nuestro trabajo.

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.

los
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:

our current financial position and the continuing going concern and litigation issues;
investors’
    perception of, and demand for, securities of Chinese-based companies involved in construction supply or concrete industries;
conditions
    of the U.S. and other capital markets in which we may seek to raise funds;
our
    future results of operations, financial condition and cash flows; y
economic,
    political and other conditions in China.

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.

los
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.

los
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:

el
    higher level of government involvement;
el
    early stage of development of the market-oriented sector of the economy;
el
    rapid growth rate;
el
    higher level of control over foreign exchange; y
el
    allocation of resources.

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.

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

los
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.

los
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.

los
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).

los
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.

los
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.

ITEM
    4.
INFORMATION
    ON THE COMPANY

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

los
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.

los
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:

Large
    Scale Contractor Relationships.
We have contracts with major construction contractors which are constructing key
    infrastructure, commercial and residential projects. Our sales efforts focus on large-scale projects and large customers which
    place large recurring orders and raise less credit risk to us. For the year ended June 30, 2019, five customers accounted
    for approximately 52.1% of the Company’s sales and 23.0% of the Company’s accounts receivable as of June 30, 2019.
    Should we lose these customers in the future and are unable to obtain additional customers, our revenues will suffer.

Experienced
    Management
. The technical knowledge and business relationships of our management give us the ability to secure major infrastructure
    projects, increase production volumes, and implement quality standards and environmentally sensitive policies, and it also
    provide us with leverage to acquire less sophisticated operators. If there is any significant turnover in our management,
    we would lose the institutional knowledge held by our existing senior management team.

Innovation
    Efforts
. We strive to produce the most technically and scientifically advanced products for our customers hence we maintain
    close relationships with Tsinghua University, Xi’an University of Architecture and Technology and Beijing Dongfang Jianyu
    Institute of Concrete Science &Technology, which assist us with our research and development activities. During our five
    year agreement with the Institute, we obtain an advantageous status over many of our competitors by gaining access to a wide
    array of resources and knowledge.  The Company incurred research & development expenses of approximately $0.2 million
    and $1.2 million for the years ended June 30, 2019 and 2018, respectively.

Our
Growth Strategy

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

Focusing
    on High Capacity Utilization.
We intend to focus on achieving high capacity utilization in order to efficiently operate
    our plant, by increasing capacity utilization at our existing plant or expanding capacity by building new plants to meet existing
    contracts and anticipated increase in demand. As a result, we terminated our leased station in the eastern suburban area of
    Beijing based on slowing demand for railway construction and the suspension of new and ongoing high speed railway projects
    stemming from a changing policy announced by China’s Ministry of Rail and national development and reform commission.

Mergers
    and Acquisitions
. When capital permits, we intend to capitalize on the challenges that smaller companies are encountering
    in our industry by acquiring complementary companies at favorable prices. We believe that buying rather than building capacity
    is an option that may be attractive to us if replacement costs are higher than purchase prices. We continue to look into acquiring
    smaller concrete manufacturers in China as part of our expansion plans. We have not identified specific targets or entered
    into any Letters-of-Intent with smaller concrete manufacturers at this time.

Vertical
    Integration
. When capital permits, we plan to acquire smaller companies within the construction industry, develop more
    material recycling centers, and hire additional highly qualified employees. In order to accomplish this, we may need to offer
    additional equity or debt securities. Certain companies we seek to acquire are suppliers of the raw materials we purchase
    to manufacture our products. If we do acquire such companies we will have greater control over our raw material costs.

Supply
    Chain Efficiencies and Scale.
We intend to streamline our supply chain process and leverage our scale.

Nuevo
    Product Offerings
. We plan to produce a lightweight aggregate concrete for use in projects and to expand product offerings
    to include pre-cast concrete.

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:

Common
    Industry Mixtures
(Customized
    to Project)
Industry
    Leading Mixtures
Highly
    Technical Blends
Ready-mixed
    Concrete Blends: C10 to C100
Compound
    Admixture Concrete
Controlled
    Low-Strength Material (CLSM)
Lightweight
    Aggregate Concrete
High-Strength
    Concrete with Customized Fibers
Energy-saving
    Phase change thermostat concrete
Soil
    Cement, Unique Foundation Concrete
C100
    High Performance Concrete

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

los
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:

Specification
    For Mix Proportion Design of Ordinary Concrete JGJ55-2000
Code
    for Acceptance of Constructional Quality Of Concrete Structures GB 50204-2002
Applied
    Technical Specification of Mineral Admixtures In Concrete DBJ/T01-64-2002
Ready-Mixed
    Concrete GB/T 14902-2003
Practice
    Code for Application of Ready-Mixed Mortar DBJ 01-99-2005
Management
    Specification of Quality for Ready-Mixed Concrete
Technical
    Requirement for Environmental Labeling Products Ready-Mixed Concrete HJ/T412- 2007
High
    Performance Concrete mineral admixtures; GB/T18736-2012
Test
    method for determining cement density GB/T 208-2014

Evaluation
    for Life Cycle Environment-friendly Assessment of concrete products national standard GB/T XXXX- 20XX
Compound
    admixtures for concrete industry standard JG/T XXXX-20XX
los
    evaluation system on clean production of ready-mixed concrete
Safety
    production management regulation of premixed concrete
Technical
    specifications of waster concrete regeneration, commercial standard

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:

Research
    on Compound Admixture HPC; 3rd Class Award for China Building Materials Science & Technology Progress.
Research
    and Application of C100 HPC; 3rd Class Award for Beijing Science & Technology Progress.
Research
    on pumping Light Aggregate Concrete; Innovation Award for China Building Materials Science& Technology.
Research
    and Application of Green (nontoxic) HPC; First Prize for Beijing Science & Technology Progress.
Construction
    Technology of HPC for the Capital International Airport.
Research
    on Production and Construction Technology of Phase Change Energy-saving Thermostat Concrete and Mortar.
Polycarboxylate
    Series High Performance Water Reducing Agent Compositing Technique.
State
    Swimming Center for Concrete Cracking Control Technology.
Research
    on construction waste recycled materials in concrete; Through the identification of the scientific and technological achievements
    with China Building Materials Science& Technology Progress.
Research
    on the application of tailings waste rocks in the concrete. Through the scientific and technological achievements identification
    by China Building Materials Science & Technology.
los
    research and application of alkali-free & high performance accelerator on concrete; Through the scientific and technological
    achievement identification by China Building Materials Science & Technology.

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

los
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

los
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:

Name Patent
    No.
Duration Patent
    Owner
Un
    ultra-fine powder and its preparation method active regeneration
ZL
    2013 1 0070164.7
julio
    9, 2014-July 8, 2034
Xin
    Ao
A
    Polycarboxylate and preparation method used recycled aggregate concrete
ZL
    2013 1 0072014.X
January
    1, 2014-December 31, 2034
Xin
    Ao
Un
    early strength of recycled aggregate concrete superplasticizer
ZL
    2013 1 0072015.4
abril
    9, 2014-April 8, 2034
Xin
    Ao

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

Management & Administrative Staff 56 24.03%
Sales 16 6.87%
Technical & Engineering Staff 18 años 7.73%
Production Staff 27 11.59%
Drivers & Heavy Equipment Operators 46 19.74%
Sub-Total 163 69.96%
Independent Contractors 70 30.04%
Total 233 100.00%

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

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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.

(i)Disputes
    Arising in the Ordinary Course of Business

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:

Dispute matter Claim
amount as of June 30,
2019
Interest and penalties Total claim amount as of June 30,
2019
1) Guarantees PS2,155,740 PS352,411 PS2,508,151
2) Sales 20,177 9,284 29,461
3) Purchases 1,367,237 175,069 1,542,306
4) Leases 3,808,038 670,914 4,478,952
5) Labor 26,204 - 26,204
6) Others 307,222 135,866 443,088
Total PS7,684,618 PS1,343,544 9,028,162
Payments made by related party (2,436,977)
Accrued contingent liabilities PS6,591,185

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.

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

Dispute matter Claim
amount as of
June 30,
2019
Interest and penalties Total claim amount as of
June 30,
2019
1) Guarantees PS59,127,585 PS10,171,070 PS69,298,655
2) Purchases 2,771,981 71,649 2,843,630
3) Leases 8,852,874 - 8,852,874
4) Labor 227,963 - 227,963
Total PS70,980,403 PS10,242,719 81,223,122
Settled claims (54,474,782)
Remaining claims amount PS26,748,340

los
major legal cases are summarized as follows:

1)Claims
Resulting from Executives’ Personal Guarantee to Affiliated Entities

(a)Mr. Xianfu Han, the former CEO and director of the Company and a shareholder of Xin Ao, Mr. Weili He,
the former interim CFO and director of the Company and a shareholder of Xin Ao, and Xin Ao (the “Defendants”) were
parties to a lawsuit filed on June 23, 2017, by China Cinda Asset Management Co., Ltd. Beijing Branch (“Cinda Beijing Branch”)
in the Beijing First Intermediate People’s Court (the “Beijing Intermediate Court”) to seek compensatory damages,
liquidated damages, costs, and attorney’s fees for default in a certain loan repayment. The loan agreement was entered into
by and between Xin Ao Ecological Construction Materials Co., Ltd. (“Borrower”) and Cinda Beijing Branch dated as of
June 23, 2014 with Mr. Han and Mr. He acting as the guarantors for such loans (the “Guarantors”). Mr. Han and Mr. He
together are the controlling shareholders of the Borrower, holding an aggregate of 60% equity interests of the Borrower. The aggregate
amount of the loan was approximately $42.0 million (RMB 288,506,497) with interest at 12.8% per annum (the “Loan”).
Cinda Beijing Branch alleged that since the Borrower breached its obligation to make the repayment of the Loan on the maturity
date, the Guarantors, along with Xin Ao and those entities owned or controlled by the Guarantors, should be brought into the lawsuit
as co-defendants (the “Defendants”). On July 5, 2017, Beijing Intermediate Court ruled in favor of Cinda Beijing Branch
and issued a judgment for execution to freeze the Defendants’ assets, an aggregate amount of approximately $44.4 million
(RMB 304,972,608) which shall be used for the repayment of the Loan, the liquidated damages, the interest on the Loan, and other
costs and expenses undertaken by Cinda Beijing Branch. Following the mediation, China Cinda Asset Management Co., Ltd. (“Cinda”),
two shareholders of Da Tong Lianlv Technologies Co., Ltd. (“Datong Lianlv”), Beijing Ao Huan Fund Management Co., Ltd.
(“Ao Huan”), and Shou Tai Jin Xin (Chang Xing) Investment Management Co., Ltd (“Jin Xin”) entered into
a certain limited partnership agreement (the “Partnership Agreement”) on December 22, 2017 to settle the lawsuit. Datong
Lianlv is an affiliate of the Company and Xin Ao. Cinda is the parent company of Cinda Beijing Branch. As provided in the Partnership
Agreement, the distributions of the limited partnership shall be allocated to Cinda first, who made a capital contribution in the
form of its rights, title and interests in and to the repayment of the Loan in an aggregate amount of approximately $46.9 million
(RMB 322,435,300) (the “Capital Contribution”). Pursuant to the Partnership Agreement, payment shall be made until
Cinda has received an amount equal to the aggregate of its unreturned Capital Contributions and a cumulative distribution equal
to 7.5% of all distributions made. Datong Lianlv made its capital contribution in cash in an aggregate amount of approximately
$21.8 million (RMB 150,000,000) along with its shareholders consent to transfer 99% of Datong Lianlv’s equity interests to
the limited partnership. The PRC legal counsel of Xin Ao indicated that Cinda and Cinda Beijing Branch orally confirmed that this
claim was fully settled in the form of the Partnership Agreement. In February 2018, the Cinda Beijing Branch filed an enforcement
order with the court as the partnership had not been formed at that time. The partnership was subsequently formed in March 2018. In December 2018, a new management team of the Cinda Beijing Branch asked to review all litigation, including
this case as they were not fully aware of the resolution. On December 28, 2018, the Court re-executed their prior order against
Xin Ao and other defendants. Accordingly, Xin Ao and other defendants remain liable due to court ruling and remain subject to continuous
execution orders as long as the plaintiff initiates execution orders against Xin Ao and other defendants in the future. No attempt
to collect payment from Xin Ao has been made since the enforcement order was filed in February and December 2018. Based upon the
legal opinion issued by the Company’s PRC legal counsel, Xin Ao believes a favorable outcome is probable and has no exposure
for the pending judgements as the enforcement order has been resolved with the establishment of the Partnership.

(b)On July 11, 2018, Chengde County Rural Cooperatives Credit Union (the “Credit Union”) filed
an arbitration demand (“Arbitration Demand”) with the People’s Court of Shuangqiao District, Chengde, Hebei Province
(“Shuangqiao Court”) against certain entities and individuals (collectively the “Respondents”) including
Xin Ao and Chengde Tianhang Concrete Co Ltd. (“Chengde Tianhang”) and Chengde Kaixuan Real Estate Development Co. Ltd.
(“Chengde Kaixuan”) in connection with Chengde Tianhang’s potential default in its loan repayment. In accordance
with the loan agreement, Mr. Weili He and Mr. Xianfu Han together acted as the guarantors for such loan. In addition, Mr. Han and
Mr. He were the controlling shareholders and officers of Xin Ao. They are also the shareholders of Chengde Tianhang. Mr. Han
and Mr. He were therefore named as co-respondents in the Arbitration Demand, where the Bank sought property preservation. Shuangqiao
Court, accepting the Arbitration Demand of the Bank, rendered a decision to seize the bank deposits or equivalents of Respondent
in an aggregate amount of approximately $3.8 million (RMB 26,000,000). Currently, none of the Company’s funds on deposit
have been seized.

(c)On October 9, 2017, Yong Fan filed a lawsuit against Beijing Lianlv Technology Group Co. Ltd (“Beijing
Lianlv”), Xin Ao, and Mr. Weili He, in connection with Beijing Lianlv’s failure to pay off the principal and interest
of approximately $0.4 million (RMB 2,927,400) under its loan agreement (the “Loan Agreement”). Given that Mr. Weili
He acted as the guarantor for such loan, Mr. He was brought into the lawsuit as one of the co-defendants. Since Mr. He is
one of the controlling shareholders of Xin Ao, Xin Ao was also brought into the lawsuit as one of the co-defendants. The Court
rendered a judgement in May 2018, ruling that

1)Beijing Lianlv shall pay Yong Fan approximately $0.4 million (RMB 2,895,000) as principal of the loan
and approximately $5,000 (RMB 32,400) as interest on the loan. As of the date of this report, Beijing Lianlv has not made any payment
and the Company is currently in the process of appealing the judgement;

2) Xin
    Ao and Mr. Weili He are entitled to the right of recourse to Beijing Lianlv.

(a)Nanling Yirui Materials Supplier Co., Ltd. (Nanling Yirui”) filed a lawsuit against Sihong Jinghong
Sheng Concrete Co., Ltd. (“Sihong”) on October 23, 2017 in the People’s Court in Nanling County, Anhui Province,
to seek compensatory damages, interest and attorney’s fees. A Raw Material Purchase Agreement was entered into by and between
Nanling Yirui and Sihong on April 30, 2017. The purchase price of raw materials supplied by Nanling Yirui was approximately $0.5
million (RMB 3,452,799), the payment of which was overdue. Mr. Xianfu Han and Mr. Weili He are the shareholders of Sihong. Since
Mr. Han and Mr. He were the controlling shareholders of Xin Ao, Xin Ao was also brought into the lawsuit as a co-defendant. los
Court rendered a final judgement in June 2018 in favor of Nanling Yirui. As of the date of the report, Sihong has not made any
payment. On November 12, 2018, the court executed a demand and froze Xin Ao’s bank deposit of approximately $0.5 million
(RMB 3,489,727). The Company appealed for the execution and explained that Xin Ao was not involved in the transaction. The Court
granted the appeal. Currently, none of the Company’s funds on deposit have been seized.

(b)On August 8, 2018, Shenzhen High-tech National Finance Education Information Technology Co., Ltd. (“Shenzhen
High-tech”) filed an arbitration demand (“Arbitration Demand”) with People’s Court of Haidian District,
Beijing against Tangshan Yitong Netcom Logistics Co., Ltd. (“Tangshan Yitong”), Tangshan Xinglong, Ruihai Dong and
Xin Ao (collectively the “Respondents”) in connection with Tangshan Yitong’s breach of a finance lease agreement
by failing to pay the rent for a total of approximately $1.8 million (RMB 12,656,282) from September 3, 2014 to September 2, 2017.
In accordance with the finance agreement, Xin Ao, as the guarantor on such agreement, was named as co-respondent to the Arbitration
Demand. The case is still preliminary review by the court. Based upon the opinion of the Company’s internal legal counsel,
Xin Ao believes a favorable outcome is probable.

(a)On January 29, 2018, Xugong Group Construction Equipment Co., Ltd. (“Xugong”) filed a lawsuit
with People’s Court of Xuzhou Economic and Technological Development Zone District, Jiangsu (“Xuzhou Court”)
against Xin Ao and Jingshengding (collectively the “Respondents”) in connection with Xin Ao’s breach of a finance
lease agreement signed on June 19, 2012 by failing to pay the rent of five concrete pump trucks together with default interests
for a total of approximately $0.4 million (RMB 2,593,839). The case is still under preliminary review by the court. Based upon
the opinion of the Company’s internal legal counsel, Xin Ao believes a favorable outcome is probable.

(b)On January 24, 2019, Citic Futong Finance Lease Co., Ltd. (“Citic Futong”) filed an arbitration
demand (“Arbitration Demand”) with People’s Court of Dongcheng District, Beijing (“Dongcheng Court”)
against Tianjin Hump Investment Co., Ltd. (“Tianjin Hump”) and Xin Ao (collectively the “Respondents”)
in connection with Tianjin Hump’s breach of a finance lease agreement by failing to pay the rent of a mineral waste grind
production line for a total of approximately $8.2 million (RMB 56,250,000) from September 3, 2014 to September 1, 2017. In accordance
with the finance lease agreement, Xin Ao, as the guarantor on such lease, was named as co-respondent to the Arbitration Demand.
After investigation, Dongcheng Court rendered that the original finance lease agreement is invalid and Xin Ao does not need to
make any payment. The plaintiff appealed, and Dongcheng Court rejected the plaintiff’s arbitration demand again and suspended
the trail on October 22, 2019 due to lack of evidence. The plaintiff can apply for retrial if they can provide enough evidence
in the future.

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.

ITEM
4A.
UNRESOLVED
    STAFF COMMENTS

No
Applicable

ITEM
5.
OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS

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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:

- Large-Scale Contractor
    Relationships. We have contracts with major construction contractors that are constructing key infrastructure, commercial
    and residential projects. Our sales efforts focus on large-scale projects and large customers which place large recurring
    orders and present less credit risk to us. For the years ended June 30, 2019, we had two customers accounting for approximately
    25.1% and 13.5% of total sales. Should we lose any large-scale customers in the future and are unable to obtain additional
    customers, our revenues will suffer.
- Experienced Management.
    Management’s technical knowledge and business relationships give us the ability to secure major infrastructure projects,
    which provides us with leverage to acquire less sophisticated operators, increase production volumes, and implement quality
    standards and environmentally sensitive policies. If there were to be any significant turnover in our senior management, it
    could deplete the institutional knowledge held by our existing senior management team.
- Innovation Efforts.
    We strive to produce the most technically and scientifically advanced products for our customers and maintain close relationships
    with Tsinghua University, Xi’an University of Architecture and Technology and Beijing Dongfang Jianyu Institute of Concrete
    Science & Technology. We entered into technical service contracts with these research institutes to further improve our
    production and products. If our research and development efforts are not sufficient to adapt to the change in technology in
    the industry, our products may not compete effectively.
- Competition. Our
    competition includes a number of state-owned and large private PRC-based manufacturers and distributors that produce and sell
    products similar to ours. We compete primarily on the basis of quality, technological innovation and price. Essentially, all
    of the contracts on which we bid are awarded through a competitive bidding process, with award contracts often being made
    awarded to the lowest bidder, though other factors such as shorter schedules or prior experience with the customer are often
    just as important. Within our markets, we compete with many national, regional and local state- owned and private construction
    entities some of which have achieved greater market penetration or have greater financial and other resources than us. En
    addition, there are a number of larger national companies in our industry that could potentially establish a presence in our
    markets and compete with us for contracts. If we are unable to compete successfully in our markets, our relative market share
    and profits could be reduced.

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.

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

For the Years Ended June 30,
2019 2018 2017
Net cash (used in) provided by operating activities PS(1,076,142) PS2,450,018 PS1,700,657
Net cash used in investing activities (135,705) (138,151) (210,962)
Net cash provided by (used in) financing activities 522,667 (5,795,823) (2,056,169)
Effect of exchange rate change on cash (62,024) 149,203 (104,673)
Net change in cash and cash equivalents PS(751,205) PS(3,334,753) PS(671,147)

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

los
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.

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

Dispute matter Claim
amount as of June 30,
2019
Interest and penalties Total claim amount as of June 30,
2019
1) Guarantees PS59,127,585 PS10,171,070 PS69,298,655
2) Purchase 2,771,981 71,649 2,843,630
3) Leases 8,852,874 - 8,852,874
4) Labor 227,963 - 227,963
Total PS70,980,403 PS10,242,719 81,223,122
Settled claims (54,474,782)
Remaining claims amount PS26,748,340

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

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

Payments due by period
Contractual obligations Total Less than 1 year 1 – 3 years 3 – 5 years More than 5 years

Short term loans-banks-in default

PS24,686,899 PS24,686,899 PS- PS- PS-
Operating lease obligations 1,459,000 459,000 866,000 134,000 -
Total PS26,145,899 PS25,145,000 PS866,000 PS134,000 PS-

ITEM
    6.
DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES

6.A.
Directors, Executive Officers and Key Employees

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

Directors
                                         and Executive Officers

Años

Position/Title

Yang
    (Sean) Liu
40 Chief
    Executive Officer, Chairman of the Board
Lili
    Jiang
29 Chief
    Financial Officer and Director
Yan
    Zhang
37 Independent
    Director
Wei
    Pei
35 Independent
    Director
Xiaoyuan
    Zhang
31 Independent
    Director

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

los
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.

Non-
Equity Non-
Incentive Qualified
Plan Deferred All
Name and Year Stock Option Compensation Compensation Otro
Principal Ended Salario Prima Premios Premios Earnings Earnings Compensation Total
Position June 30 ($) ($) ($) ($) ($) ($) ($) ($)
Xianfu Han, 2019 270,000 - - - - - - 270,000
Former Chairman and
CEO (1)
2018 360,000 - - - - - - 300,000
Weili He, Former Vice 2019 270,000 - - - - - - 270,000
Chairman, interim CFO and COO (2) 2018 360,000 - - - - - - 300,000
Yang (Sean) Liu, Chairman and CEO (3)

2019

2018

87,900 87,900
Lili Jiang, Director and
CFO (4)
2019
2018
87,900 87,900

(1)señor.
    Han became our Chief Executive Officer on April 29, 2008. He was entitled to an annual salary of $300,000 for service as our
    Chief Executive Officer from July 1, 2014 to June 30, 2017 and increased to an annual salary of $360,000 from July 1, 2017
    to June 30, 2020. Mr. Han resigned from his positions as CEO and Chairman on March 28, 2019.

(2)señor.
    He became our Chief Operating Officer on April 29, 2008, and became our Interim Chief Financial Officer on September 21, 2012.
    He was entitled to an annual salary to $300,000 for service as our Interim Chief Financial Officer from July 1, 2014 to June
    30, 2017 and increased to $360,000 from July 1, 2017 to June 30, 2020. Mr. He resigned from his positions as Interim Chief
    Financial Officer, Chief Operating Officer, and Vice Chairman on March 28, 2019.
(3)señor.
    Liu became our Chief Executive Officer and Chairman on March 28, 2019. He is entitled to an annual compensation of 120,000
    ordinary shares of the Company.
(4)Ms.
    Jiang became our Chief Financial Officer and Director on March 28, 2019. She is entitled to an annual compensation of 120,000
    ordinary shares of the Company.

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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.

Fees
Earned or
Paid in
Efectivo
Stock
Premios
Option
Premios

Non-equity incentive plan

compensation

Nonqualified deferred

compensation earnings

All other

compensation

Total
Name ($) ($) ($) ($) ($) ($) ($)
Tao Jin (1) PS25,000 PS- - - - - PS25,000
Wei Pei (2) PS25,000 - - - - - PS25,000
Jiehui Fan (3) PS30,000 - - - - - PS30,000
Xiaoyuan Zhang (4)
Yan Zhang (5)

(1)En
    May 4, 2011, we entered into a director agreement with Tao Jin pursuant to which he is entitled to receive, annually, a cash
    compensation of $25,000 in cash. Mr. Tao Jin resigned on June 28, 2019.
(2)En
    March 21, 2017, we entered into a director agreement with Mr. Wei Pei pursuant to which he is entitled to receive annual compensation
    of $25,000.
(3)En
    June 12, 2018, we entered into a director agreement with Ms. Jiehui Fan pursuant to which she is entitled to receive annual
    compensation of $30,000. Ms. Fan resigned as a Director on July 19, 2019.
(4)En
    July 19, 2019, we entered into a director agreement with Ms. Xiaoyuan Zhang pursuant to which she is entitled to receive annual
    compensation of $10,000.
(5)En
    June 28, 2019, we entered into a director agreement with Ms. Yan Zhang pursuant to which she is entitled to receive annual
    compensation of 10,000 ordinary shares

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:

selecting our independent auditors and pre-approving all
auditing and non-auditing services permitted to be performed by our independent auditors;

reviewing with our independent auditors any audit problems
or difficulties and management’s response;

reviewing and approving all proposed related-party transactions,
as defined in Item 404 of Regulation S- K under the Securities Act of 1933, as amended;

discussing the annual audited financial statements with
management and our independent auditors;

reviewing major issues as to the adequacy of our internal
controls and any special audit steps adopted in light of significant internal control deficiencies;

annually reviewing and reassessing the adequacy of our
audit committee charter;

meeting separately and periodically with management and
our independent auditors;

reporting to the Board; y

such other matters that are specifically delegated to our
audit committee by the Board from time to time.

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:

reviewing and approving the total compensation package
for our senior executives; y

reviewing periodically, and approving, any long-term incentive
compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.

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:

identify qualified individuals to become Board members,
consistent with criteria approved by the Board, and to recommend that the Board select, the director nominees for the next annual
meeting of shareholders;

develop and recommend to the Board a set of corporate governance
guidelines applicable to the Company; y

to oversee the evaluation of the Board and management.

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:

each
of our directors and executive officers; y

each
person known to us to beneficially own more than 5% of our outstanding ordinary shares.

Ordinary Shares
Beneficially Owned
As of November 14,
2019
Name of Beneficial Owners(2) Number

%(1)

Directors and Executive Officers:
Yang (Sean) Liu 120,000 1.58%
Lili Jiang 120,000 1.58%
Xiaoyuan Zhang - -
Yan Zhang - -
Wei Pei - -
All directors and officers as a group (five individuals) 240,000 3.17%
5% shareholders:
Hou Sing International Business Limited(3) 2,480,000 32.74%

(1)Applicable
    percentage of ownership is based on 7,574,626 ordinary shares outstanding together with securities exercisable or convertible
    into ordinary shares within sixty (60) days as of the date hereof for each shareholder.

(2)Unless otherwise noted, the business address of each of the following entities or individuals is 9 North West Fourth Ring Road, Yingu Mansion Ste 1708, Haidian District, Beijing 100190.
(3)The business address of Hou Sing International Business Limited is Times Square, 1 Matheson St, Unit 6, Room 901, Causeway Bay, Hong Kong.

ITEM 7.MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

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:

June 30,
2019
June 30,
2018
Xianfu Han PS361,336 PS91,336
Weili He 396,401 104,428
PS757,737 PS195,763

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.

June 30,
2019
June 30,
2018
Na Wang PS2,341,932 PS -
Wei Zhang 2,251,942 -
PS4,593,874 PS-

7.C.
Interests of Experts and Counsel

No
applicable.

ITEM
    8)
FINANCIAL
    INFORMATION

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

Except
as disclosed elsewhere in this annual report, no other significant changes to our financial condition have occurred since
the date of the annual financial statements contained herein.

ITEM
    9)
THE
    OFFER AND LISTING

9.A.
Offer and Listing Details

Our
ordinary shares are listed for trading on the NASDAQ Capital Market under the symbol “HHT.” The shares began trading
on February 25, 2013 on the NASDAQ Capital Market.

9.B.
Plan of Distribution

No
Applicable.

9.C.
Markets

Our
ordinary shares are currently traded on the NASDAQ Capital Market.

9.D.
Selling Shareholders

No
Applicable.

9.E.
Dilution

No
Applicable.

9.F.
Expenses of the Issuer

No
Applicable.

ITEM
    10)
ADDITIONAL
    INFORMATION

10.A.
Share Capital

No
Applicable.

10.B.
Memorandum and Articles of Association

We
are a Cayman Islands exempted company with limited liability and our affairs are governed by our Memorandum and Articles, the
Companies Law, the common law of the Cayman Islands, our corporate governance documents and rules and regulations of the stock
exchange on which are shares are traded.

Como
of the date hereof, the authorized share capital of the Company is $75,000 divided into 75,000,000 Ordinary Shares with a nominal
or par value of USD 0.001 each. As of the date hereof, 7,574,626 Ordinary Shares are issued and outstanding. All of our issued
and outstanding Ordinary Shares are fully paid.

Ordinary
Shares

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following are summaries of material provisions of our Memorandum and Articles, corporate governance policies and the Companies
Law insofar as they relate to the material terms of our Ordinary Shares.

Objetos
of Our Company

Under
our Memorandum and Articles, the objects of our Company are unrestricted and we have the full power and authority to carry out
any object not prohibited by the law of the Cayman Islands.

Compartir
Capital

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holders of our Ordinary Shares are entitled to one vote for each such share held and shall be entitled to notice of any shareholders’
meeting, and, subject to the terms of Memorandum and Articles, to vote thereat.

Dividends

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holders of our Ordinary Shares are entitled to such dividends as may be declared by our Board of Directors subject to the Companies
Law and to our Memorandum and Articles.

Voting
Rights

En
respect of all matters subject to a shareholders’ vote, each Ordinary Share is entitled to one vote. Voting at any shareholders’
meeting is by show of hands unless a poll is demanded by the chairman or persons holding certain amounts of shares as set forth
in the Memorandum and Articles. Actions that may be taken at a general meeting also may be taken by a unanimous resolution of
the shareholders in writing.

No
business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds
to business; two members present in person or by proxy shall be a quorum provided always that if the Company has one member of
record the quorum shall be that one member present in person or by proxy. An ordinary resolution to be passed at a general meeting
requires the affirmative vote of a simple majority of the votes cast.

A
special resolution of members is required to change the name of the Company, approve a merger, wind up the Company, amend the
Memorandum and Articles and reduce the share capital.

Transfer
of Ordinary Shares

Subject
to the restrictions set out below, any of our shareholders may transfer all or any of his, its or her Ordinary Shares by an instrument
of transfer in the usual or common form or any other form approved by our Board of Directors or in a form prescribed by the stock
exchange on which our shares are then listed.

Our
Board of Directors may, in its sole discretion, decline to register any transfer of Ordinary Shares whether or not it is fully
paid up to the total consideration paid for such shares. Our directors may also decline to register any transfer of Ordinary Shares
if (a) the instrument of transfer is not accompanied by the certificate covering the shares to which it relates or any other evidence
as our Board of Directors may reasonably require to prove the title of the transferor to, or his/her right to transfer the shares;
or (b) the instrument of transfer is in respect of more than one class of shares.

If
our directors refuse to register a transfer, they shall, within two months after the date on which the instrument of transfer
was lodged, send to the transferee notice of such refusal.

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registration of transfers may be suspended and the register closed at such times and for such periods as our Board of Directors
may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register
closed for more than 30 days in any year.

Winding-Up/Liquidation

En
a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), a liquidator may
be appointed to determine how to distribute the assets among the holders of the Ordinary Shares. If our assets available for distribution
are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders
proportionately; a similar basis will be employed if the assets are more than sufficient to repay the whole of the capital at
the commencement of the winding up.

Calls
on Ordinary Shares and Forfeiture of Ordinary Shares

Our
Board of Directors may from time to time make calls upon shareholders for any amounts unpaid on their Ordinary Shares in a notice
served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called
upon and remain unpaid on the specified time are subject to forfeiture.

Redemption
of Shares

We
may issue shares on terms that are subject to redemption, at our option or at the option of the holders, on such terms and in
such manner as may be determined by our Board of Directors.

Inspection
of Books and Records

Directors
shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations
the accounts and books of the Company or any of them shall be open to the inspection of members not being Directors and no member
(not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by
Companies Law or authorized by the Directors or by the Company in a general meeting. However, the Directors shall from time to
time cause to be prepared and to be laid before the Company in a general meeting, profit and loss accounts, balance sheets, group
accounts (if any) and such other reports and accounts as may be required by Companies Law. (See “Where You Can Find More
Information”)

Issuance
of Additional Shares

Our
Memorandum and Articles authorize our Board of Directors to issue additional Ordinary Shares from time to time as our Board of
Directors shall determine, to the extent there are available authorized but unissued shares.

Our
Memorandum and Articles also authorizes our Board of Directors to establish from time to time one or more series of preferred
shares and to determine, subject to compliance with the variation of rights of shares provision in the Memorandum and Articles,
with respect to any series of preferred shares, the terms and rights of that series, including:

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    designation of the series;
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    number of shares of the series;
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    dividend rights, dividend rates, conversion rights, voting rights; y
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    rights and terms of redemption and liquidation preferences.

Our
Board of Directors may, issue preferred shares without action by our shareholders to the extent there are authorized but unissued
shares available.

Anti-Takeover
Provisions

Some
provisions of our Memorandum and Articles may discourage, delay or prevent a change of control of our Company or management that
shareholders may consider favorable, including provisions that:

authorize
    our Board of Directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges
    and restrictions of such preferred shares without any further vote or action by our shareholders (subject to variation of
    rights of shares provisions in our Memorandum and Articles); y
limit
    the ability of shareholders to requisition and convene general meetings of shareholders. Our Memorandum and Articles allow
    our shareholders holding shares representing in aggregate not less than twenty percent of our paid up share capital (as to
    the total consideration paid for such shares) in issue to requisition an extraordinary general meeting of our shareholders,
    in which case our directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote at such
    meeting.

Sin embargo,
under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our Memorandum and Articles
for a proper purpose and for what they believe in good faith to be in the best interests of our Company.

General
Meetings of Shareholders and Shareholder Proposals

Our
shareholders’ general meetings may be held in such place within or outside the Cayman Islands as our Board of Directors
considers appropriate.

Como
a Cayman Islands exempted company, we are not obliged by the Companies Law to call shareholders’ annual general meetings.
The directors may, whenever they think fit, convene an extraordinary general meeting.

Shareholders’
general meetings and any other general meetings of our shareholders may be convened by a majority of our Board of Directors. Our
Board of Directors shall give not less than seven days’ written notice of a shareholders’ meeting to those persons
whose names appear as members in our register of members on the date the notice is given (or on any other date determined by our
directors to be the record date for such meeting) and who are entitled to vote at the meeting.

Cayman
Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders
with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles
of association. Our Memorandum and Articles allow our shareholders holding shares representing in aggregate not less than ten
percent of our paid up share capital (as to the total consideration paid for such shares) in issue to requisition an extraordinary
general meeting of our shareholders, in which case our directors are obliged to call such meeting and to put the resolutions so
requisitioned to a vote at such meeting; otherwise, our Memorandum and Articles do not provide our shareholders with any right
to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.

Exempted
Company

We
are an exempted company with limited liability under the Companies Law. The Companies Law distinguishes between ordinary resident
companies and exempted companies. A Cayman Islands exempted company:

es
    a company that conducts its business mainly outside of the Cayman Islands;
es
    exempted from certain requirements of the Companies Law, including the filing an annual return of its shareholders with the
    Registrar of Companies or the Immigration Board;
hace
    not have to make its register of members open for inspection;
hace
    not have to hold an annual general meeting;
may
    issue negotiable or bearer shares or shares with no par value (subject to the provisions of the Companies Law);
may
    obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the
    first instance); y
may
    register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands.

“Limited
liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares
of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an
illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

Register
of Members

Under
Cayman Islands law, we must keep a register of members and there should be entered therein:

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    names and addresses of the members, a statement of the shares held by each member, and of the amount paid or agreed to be
    considered as paid, on the shares of each member;
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    date on which the name of any person was entered on the register as a member; y
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    date on which any person ceased to be a member.

Under
Cayman Islands law, the register of members of our Company is prima facie evidence of the matters set out therein (i.e. the register
of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register
of members is deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register
of members. Once our register of members has been updated, the shareholders recorded in the register of members are deemed to
have legal title to the shares set against their name.

If
the name of any person is incorrectly entered in, or omitted from, our register of members, or if there is any default or unnecessary
delay in entering on the register the fact of any person having ceased to be a member of our Company, the person or member aggrieved
(or any member of our Company or our Company itself) may apply to the Cayman Islands Grand Court for an order that the register
be rectified, and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order
for the rectification of the register.

Indemnification
of Directors and Executive Officers and Limitation of Liability

Cayman
Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification
of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to
public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our Memorandum
and Articles require us to indemnify our officers and directors for actions, proceedings, claims, losses, damages, costs, liabilities
and expenses (“Indemnified Losses”) incurred in their capacities as such unless such Indemnified Losses arise from
dishonesty of such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General
Corporation Law for a Delaware corporation.

Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.

Material
Differences between U.S. Corporate Law and Cayman Islands Corporate Law

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Companies Law is modeled after that of English law but does not follow many recent English law statutory enactments. In addition,
the Companies Law differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary
of the significant differences between the provisions of the Companies Law applicable to us and the laws applicable to companies
incorporated in the State of Delaware.

Mergers
and Similar Arrangements
. A merger of two or more constituent companies under Cayman Islands law requires a plan
of merger or consolidation to be approved by the directors of each constituent company and authorization by (a) a special resolution
of the shareholders and (b) such other authorization, if any, as may be specified in such constituent company’s articles
of association.

A
merger between a Cayman Islands parent company and its Cayman Islands subsidiary or subsidiaries does not require authorization
by a resolution of shareholders of that Cayman Islands subsidiary if a copy of the plan of merger is given to every member of
that Cayman Islands subsidiary to be merged unless that member agrees otherwise. For this purpose a subsidiary is a company of
which at least ninety percent (90%) of the issued shares entitled to vote are owned by the parent company.

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consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement
is waived by a court in the Cayman Islands.

Save
in certain circumstances, a dissentient shareholder of a Cayman constituent company is entitled to payment of the fair value of
his shares upon dissenting to a merger or consolidation. The exercise of appraisal rights will preclude the exercise of any other
rights save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

En
addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement
is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who
must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are
present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings
and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has
the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve
the arrangement if it determines that:

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    statutory provisions as to the required majority vote have been met;

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    shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without
    coercion of the minority to promote interests adverse to those of the class;

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    arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his
    interest; y

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    arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law.

Cuando
a takeover offer is made and accepted by holders of 90.0% of the shares within four months, the offeror may, within a two-month
period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares
on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in
the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

If
an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights,
which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive
payment in cash for the judicially determined value of the shares.

Shareholders’
Suits.
 In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be
brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority
in the Cayman Islands, there are exceptions to the foregoing principle, including when:

una
    company acts or proposes to act illegally or ultra vires;

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    act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote
    that has not been obtained; y

aquellos
    who control the company are perpetrating a “fraud on the minority.”

Indemnification
of Directors and Executive Officers and Limitation of Liability
. Cayman Islands law does not limit the extent to
which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except
to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide
indemnification against civil fraud or the consequences of committing a crime. Our current memorandum and articles of association
permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such
unless such losses or damages arise from dishonesty or fraud of such directors or officers. This standard of conduct is generally
the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we have entered into
indemnification agreements with our directors and executive officers that provide such persons with additional indemnification
beyond that provided in our current memorandum and articles of association.

Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.

Directors’
Fiduciary Duties
. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty
to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care
requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances.
Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available
regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be
in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits
self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any
interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general,
actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action
taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of
the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural
fairness of the transaction, and that the transaction was of fair value to the corporation.

Como
a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company
and therefore it is considered that he or she owes the following duties to the company — a duty to act bona fide in the
best interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits
him or her to do so) and a duty not to put himself or herself in a position where the interests of the company conflict with his
or her personal interest or his or her duty to a third party. A director of a Cayman Islands company owes to the company a duty
to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties
a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, English
and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities
are likely to be followed in the Cayman Islands.

Shareholder
Action by Written Consent
. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders
to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and our current articles of association
provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each
shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.

Shareholder
Proposals
. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the
annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting
may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may
be precluded from calling special meetings.

Cayman
Islands law does not provide shareholders any right to put proposals before a meeting or requisition a general meeting. Sin embargo,
these rights may be provided in articles of association. Our current articles of association allow our shareholders holding not
less than one-third of all voting power of our share capital in issue to requisition a shareholder’s meeting. Other than
this right to requisition a shareholders’ meeting, our current articles of association do not provide our shareholders other
right to put proposal before a meeting. As a Cayman Islands exempted company, we are not obliged by law to call shareholders’
annual general meetings.

Cumulative
Voting.
 Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted
unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates
the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the
votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect
to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but
our current articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less
protections or rights on this issue than shareholders of a Delaware corporation.

Removal
of Directors.
 Under the Delaware General Corporation Law, a director of a corporation with a classified board may
be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of
incorporation provides otherwise. Under our current articles of association, directors may be removed with or without cause, by
an ordinary resolution of our shareholders.

Transactions
with Interested Shareholders.
 The Delaware General Corporation Law contains a business combination statute applicable
to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment
to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested
shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder
generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting share within
the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target
in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on
which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the
transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware
corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

Cayman
Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware
business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant
shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not
with the effect of constituting a fraud on the minority shareholders.

Dissolution;
Winding up.
 Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve,
dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution
is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares.
Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in
connection with dissolutions initiated by the board. Under Cayman Islands law, a company may be wound up by either an order of
the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they
fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances
including where it is, in the opinion of the court, just and equitable to do so. Under the Companies Law and our current articles
of association, our company may be dissolved, liquidated or wound up by a special resolution of our shareholders.

Variation
of Rights of Shares.
 Under the Delaware General Corporation Law, a corporation may vary the rights of a class of
shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides
otherwise. Under Cayman Islands law and our current articles of association, if our share capital is divided into more than one
class of shares, we may vary the rights attached to any class with the written consent of the holders of three-fourths of the
issued shares of that class or with the sanction of a resolution passed by not less than three-fourths of such holders of the
shares of that class as may be present at a general meeting of the holders of the shares of that class.

Amendment
of Governing Documents.
 Under the Delaware General Corporation Law, a corporation’s governing documents may
be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation
provides otherwise. As permitted by Cayman Islands law, our current memorandum and articles of association may only be amended
with a special resolution of our shareholders.

Rights
of Non-resident or Foreign Shareholders.
 There are no limitations imposed by our post-offering amended and restated
memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights
on our shares. In addition, there are no provisions in our current memorandum and articles of association governing the ownership
threshold above which shareholder ownership must be disclosed.

10.C.
Material Contracts

We
have not entered into any material contracts other than in the ordinary course of business and other than those described in this
annual report.

10.D.
Exchange Controls

Cayman
Islands

There
are currently no exchange control regulations in the Cayman Islands applicable to us or our shareholders.

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PRC

China
regulates foreign currency exchanges primarily through the following rules and regulations:

Foreign
    Currency Administration Rules of 1996, as amended; y

Administrative
    Rules of the Settlement, Sale and Payment of Foreign Exchange of 1996.

Renminbi
is not a freely convertible currency at present. Under the current PRC regulations, conversion of Renminbi is permitted in China
for routine current-account foreign exchange transactions, including trade and service related foreign exchange transactions,
payment of dividends and service of foreign debts. Conversion of Renminbi for most capital-account items, such as direct investments,
investments in PRC securities markets and repatriation of investments, however, is still subject to the approval of SAFE.

Pursuant
to the above-mentioned administrative rules, foreign-invested enterprises may buy, sell and/or remit foreign currencies for current
account transactions at banks in China with authority to conduct foreign exchange business by complying with certain procedural
requirements, such as presentment of valid commercial documents. For capital-account transactions involving foreign direct investment,
foreign debts and outbound investment in securities and derivatives, approval from SAFE is a pre-condition. Capital investments
by foreign-invested enterprises outside China are subject to limitations and requirements in China, such as prior approvals from
the PRC Ministry of Commerce or SAFE.

10.E.
Taxation

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following summary of the material Cayman Islands, PRC and U.S. tax consequences of an investment in our ordinary shares is based
upon laws and relevant interpretations thereof in effect as of the date hereof, all of which are subject to change, possibly with
retroactive effect. This summary is not intended to be, nor should it be construed as, legal or tax advice and is not exhaustive
of all possible tax considerations. This summary also does not deal with all possible tax consequences relating to an investment
in our ordinary shares, such as the tax consequences under state, local, non-U.S., non-PRC, and non-Cayman Islands tax laws. Investors
should consult their own tax advisors with respect to the tax consequences of the acquisition, ownership and disposition of our
ordinary shares.

Cayman
Islands Taxation

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Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and
there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes levied by the Government of the
Cayman Islands that are likely to be material to holders of ordinary shares or ordinary shares. The Cayman Islands is not party
to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman Islands.

People’s
Republic of China Taxation

Under
the EIT Law, an enterprise established outside the PRC with a “de facto management body” within the PRC is considered
a PRC resident enterprise for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax
rate on its worldwide income as well as tax reporting obligations. Under the Implementation Rules, a “de facto management
body” is defined as a body that has material and overall management and control over the manufacturing and business operations,
personnel and human resources, finances and properties of an enterprise. In addition, SAT Circular 82 issued in April 2009 specifies
that certain offshore-incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC
resident enterprises if all of the following conditions are met: (a) senior management personnel and core management departments
in charge of the daily operations of the enterprises have their presence mainly in the PRC; (b) their financial and human resources
decisions are subject to determination or approval by persons or bodies in the PRC; (c) major assets, accounting books and
company seals of the enterprises, and minutes and files of their board’s and shareholders’ meetings are located or
kept in the PRC; and (d) half or more of the enterprises’ directors or senior management personnel with voting rights habitually
reside in the PRC. Further to SAT Circular 82, the SAT issued SAT Bulletin 45, which took effect in September 2011, to provide
more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 provides for procedures and administration details
of determination on PRC resident enterprise status and administration on post-determination matters. If the PRC tax authorities
determine that Huitao Technology Co., Ltd. is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable
PRC tax consequences could follow. For example, Xin Ao may be subject to enterprise income tax at a rate of 25% with respect to
its worldwide taxable income. Also, a 10% withholding tax would be imposed on dividends we pay to our non-PRC enterprise shareholders
and with respect to gains derived by our non-PRC enterprise shareholders from transferring our shares or ordinary shares and potentially
a 20% of withholding tax would be imposed on dividends we pay to our non-PRC individual shareholders and with respect to gains
derived by our non-PRC individual shareholders from transferring our shares or ordinary shares.

Eso
is unclear whether, if we are considered a PRC resident enterprise, holders of our shares or ordinary shares would be able to
claim the benefit of income tax treaties or agreements entered into between China and other countries or areas. See “Risk
Factors — Risk Factors Relating to Doing Business in China — Under the PRC Enterprise Income Tax Law, we may be classified
as a PRC resident enterprise for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax
consequences to us and our non-PRC Shareholders and have a material adverse effect on our results of operations and the value
of your investment”.

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SAT issued SAT Circular 59 together with the Ministry of Finance in April 2009 and SAT Circular 698 in December 2009. Both SAT
Circular 59 and SAT Circular 698 became effective retroactively as of January 1, 2008. By promulgating and implementing these
two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in
a PRC resident enterprise by a non-PRC resident enterprise. Under SAT Circular 698, where a non-PRC resident enterprise transfers
the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company,
and the overseas holding company is located in a tax jurisdiction that: (1) has an effective tax rate of less than 12.5% or (2)
does not impose tax on foreign income of its residents, the non-PRC resident enterprise, being the transferor, must report to
the relevant tax authority of the PRC resident enterprise this Indirect Transfer. Using a “substance over form” principle,
the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose
and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect
Transfer may be subject to PRC tax at a rate of up to 10%. Although it appears that SAT Circular 698 was not intended to apply
to share transfers of publicly traded companies, there is uncertainty as to the application of SAT Circular 698 and we and our
non-PRC resident investors may be at risk of being required to file a return and being taxed under SAT Circular 698 and we may
be required to expend valuable resources to comply with SAT Circular 698 or to establish that we should not be taxed under SAT
Circular 698. See “Risk Factors — Risk Factors Relating to Doing Business in China — We face uncertainty regarding
the PRC tax reporting obligations and consequences for certain indirect transfers of our operating company’s equity interests.
Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions
we may pursue in the future.”

Pursuant
to the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation
and Tax Evasion on Income, or the Tax Arrangement, where a Hong Kong resident enterprise which is considered a non-PRC tax resident
enterprise directly holds at least 25% of a PRC enterprise, the withholding tax rate in respect of the payment of dividends by
such PRC enterprise to such Hong Kong resident enterprise is reduced to 5% from a standard rate of 10%, subject to approval of
the PRC local tax authority. Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application
of the Dividend Clauses of Tax Agreements, or Circular 81, a resident enterprise of the counter-party to such Tax Arrangement
should meet the following conditions, among others, in order to enjoy the reduced withholding tax under the Tax Arrangement: (i)
it must directly own the required percentage of equity interests and voting rights in such PRC resident enterprise; and (ii) it
should directly own such percentage in the PRC resident enterprise anytime in the 12 months prior to receiving the dividends.
Furthermore, the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties (For Trial Implementation),
or the Administrative Measures, which became effective in October 2009, requires that the non-resident enterprises must obtain
the approval from the relevant tax authority in order to enjoy the reduced withholding tax rate under the tax treaties. There
are also other conditions for enjoying such reduced withholding tax rate according to other relevant tax rules and regulations.
According to Circular 81, if the relevant tax authorities consider the transactions or arrangements we have are for the primary
purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future.

United
States Federal Income Taxation

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following is a discussion of United States federal income tax considerations relating to the acquisition, ownership, and disposition
of our ordinary shares by a U.S. Holder, as defined below, that acquires our ordinary shares and holds our ordinary shares as
“capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986,
as amended (the “Code”). This discussion is based upon existing United States federal income tax law, which is subject
to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue
Service (the “IRS”) with respect to any United States federal income tax consequences described below, and there can
be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United
States federal income taxation that may be important to particular investors in light of their individual circumstances, including
investors subject to special tax rules (such as, for example, certain financial institutions, insurance companies, regulated investment
companies, real estate investment trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships
and their partners, tax-exempt organizations (including private foundations)), investors who are not U.S. Holders, investors that
own (directly, indirectly, or constructively) 10% or more of our voting stock, investors that hold their ordinary shares as part
of a straddle, hedge, conversion, constructive sale or other integrated transaction), or investors that have a functional currency
other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. En
addition, this discussion does not address any tax laws other than the United States federal income tax laws, including any state,
local, alternative minimum tax or non-United States tax considerations, or the Medicare tax. Each potential investor is urged
to consult its tax advisor regarding the United States federal, state, local and non-United States income and other tax considerations
of an investment in our ordinary shares.

General

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purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ordinary shares that is, for United States
federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other
entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the
United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income
for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject
to the primary supervision of a United States court and which has one or more United States persons who have the authority to
control all substantial decisions of the trust or (B) that has otherwise elected to be treated as a United States person under
the Code.

If
a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of
our ordinary shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities
of the partnership. Partnerships and partners of a partnership holding our ordinary shares are urged to consult their tax advisors
regarding an investment in our ordinary shares.

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discussion set forth below is addressed only to U.S. Holders that purchase ordinary shares. Prospective purchasers are urged to
consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as
well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our ordinary
shares.

Taxation
of Dividends and Other Distributions on our Ordinary Shares

Subject
to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect
to the ordinary shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income
as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated
earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends
will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other
U.S. corporations.

Con
respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate
applicable to qualified dividend income, provided that (1) the ordinary shares are readily tradable on an established securities
market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States
that includes an exchange of information program, (2) we are not a passive foreign investment company (as discussed below) for
either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements
are met. Because there is no income tax treaty between the United States and the Cayman Islands, clause (1) above can be satisfied
only if the ordinary shares are readily tradable on an established securities market in the United States. Under U.S. Internal
Revenue Service authority, ordinary shares are considered for purpose of clause (1) above to be readily tradable on an established
securities market in the United States if they are listed on Nasdaq. You are urged to consult your tax advisors regarding the
availability of the lower rate for dividends paid with respect to our ordinary shares, including the effects of any change in
law after the date of this report.

A
the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S.
federal income tax principles), it will be treated first as a tax-free return of your tax basis in your ordinary shares, and to
the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to
calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution
will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital
gain under the rules described above.

Taxation
of Dispositions of Ordinary Shares

Subject
to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange
or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and
your tax basis (in U.S. dollars) in the ordinary shares. The gain or loss will be capital gain or loss. If you are a non-corporate
U.S. Holder, including an individual U.S. Holder, who has held the ordinary shares for more than one year, you may be eligible
for reduced tax rates on any such capital gains. The deductibility of capital losses is subject to limitations.

Passive
Foreign Investment Company

A
non-U.S. corporation is considered a PFIC for any taxable year if either:

at
    least 75% of its gross income for such taxable year is passive income; o

at
    least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is
    attributable to assets that produce or are held for the production of passive income (the “asset test”).

Passive
income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct
of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share
of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly,
at least 25% (by value) of the stock. In determining the value and composition of our assets for purposes of the PFIC asset test,
(1) the cash we hold will generally be considered to be held for the production of passive income and (2) the value of our assets
must be determined based on the market value of our ordinary shares from time to time, which could cause the value of our non-passive
assets to be less than 50% of the value of all of our assets (including the cash raised in any offering) on any particular quarterly
testing date for purposes of the asset test.

We
must make a separate determination each year as to whether we are a PFIC. Depending on the amount of cash we hold, together with
any other assets held for the production of passive income, it is possible that, for our 2018 taxable year or for any subsequent
taxable year, more than 50% of our assets may be assets held for the production of passive income. We will make this determination
following the end of any particular tax year. Although the law in this regard is unclear, we treat our consolidated affiliated
entities, as being owned by us for United States federal income tax purposes, not only because we exercise effective control over
the operation of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result,
we consolidate their operating results in our consolidated financial statements. In particular, because the value of our assets
for purposes of the asset test will generally be determined based on the market price of our ordinary shares and because cash
is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on
the market price of our ordinary shares and the amount of cash we hold. Accordingly, fluctuations in the market price of the ordinary
shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects.
We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination
of the value of our assets will depend upon material facts (including the market price of our ordinary shares from time to time
that may not be within our control. If we are a PFIC for any year during which you hold ordinary shares, we will continue to be
treated as a PFIC for all succeeding years during which you hold ordinary shares. However, if we cease to be a PFIC and you did
not previously make a timely “mark-to-market” election as described below, you may avoid some of the adverse effects
of the PFIC regime by making a “purging election” (as described below) with respect to the ordinary shares.

If
we are a PFIC for your taxable year(s) during which you hold ordinary shares, you will be subject to special tax rules with respect
to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including
a pledge) of the ordinary shares, unless you make a “mark-to-market” election as discussed below. Distributions you
receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the
three preceding taxable years or your holding period for the ordinary shares will be treated as an excess distribution. Under
these special tax rules:

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    excess distribution or gain will be allocated ratably over your holding period for the ordinary shares;

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    amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first
    taxable year in which we were a PFIC, will be treated as ordinary income, and

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    amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and
    the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each
    such year.

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tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset
by any net operating losses for such years, and gains (but not losses) realized on the sale of the ordinary shares cannot be treated
as capital, even if you hold the ordinary shares as capital assets.

A
U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to
elect out of the tax treatment discussed above. If you make a mark-to-market election for first taxable year which you hold (or
are deemed to hold) ordinary shares and for which we are determined to be a PFIC, you will include in your income each year an
amount equal to the excess, if any, of the fair market value of the ordinary shares as of the close of such taxable year over
your adjusted basis in such ordinary shares, which excess will be treated as ordinary income and not capital gain. You are allowed
an ordinary loss for the excess, if any, of the adjusted basis of the ordinary shares over their fair market value as of the close
of the taxable year. However, such ordinary loss is allowable only to the extent of any net mark-to-market gains on the ordinary
shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well
as gain on the actual sale or other disposition of the ordinary shares, are treated as ordinary income. Ordinary loss treatment
also applies to any loss realized on the actual sale or disposition of the ordinary shares, to the extent that the amount of such
loss does not exceed the net mark-to-market gains previously included for such ordinary shares. Your basis in the ordinary shares
will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply
to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital
gains rate for qualified dividend income discussed above under “— Taxation of Dividends and Other Distributions on
our ordinary shares” generally would not apply.

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mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis
quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other
market (as defined in applicable U.S. Treasury regulations), including Nasdaq. If the ordinary shares are regularly traded on
Nasdaq and if you are a holder of ordinary shares, the mark-to-market election would be available to you were we to be or become
a PFIC.

Alternatively,
a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect
out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC
will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings
and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S.
Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We
do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election.
If you hold ordinary shares in any taxable year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service
Form 8621 in each such year and provide certain annual information regarding such ordinary shares, including regarding distributions
received on the ordinary shares and any gain realized on the disposition of the ordinary shares.

If
you do not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during
the period you hold our ordinary shares, then such ordinary shares will continue to be treated as stock of a PFIC with respect
to you even if we cease to be a PFIC in a future year, unless you make a “purging election” for the year we cease
to be a PFIC. A “purging election” creates a deemed sale of such ordinary shares at their fair market value on the
last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the
special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging
election, you will have a new basis (equal to the fair market value of the ordinary shares on the last day of the last year in
which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your ordinary
shares for tax purposes.


are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our ordinary shares and
the elections discussed above.

Information
Reporting and Backup Withholding

Dividend
payments with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares may be
subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate of
24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes
any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding.
U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue
Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting
and backup withholding rules.

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withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income
tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold
taxes for individual shareholders. However, transactions effected through certain brokers or other intermediaries may be subject
to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such
taxes.

Under
the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our
ordinary shares, subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain
financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial
Assets, with their tax return for each year in which they hold ordinary shares.

10.F.
Dividends and Paying Agents

No
Applicable.

10.G.
Statement by Experts

No
Applicable.

10.H.
Documents on Display

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Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and will file reports,
registration statements and other information with the SEC. The Company’s reports, registration statements and other information
can be inspected on the SEC’s website at www.sec.gov and such information can also be inspected and copies ordered at the
public reference facilities maintained by the SEC at the following location: 100 F Street NE, Washington, D.C. 20549. You may
also visit us on the World Wide Web at http://www.China-ACM.com. However, information contained on our website does not constitute
a part of this annual report.

10.I.
Subsidiary Information

No
Applicable.

ITEM
    11.
QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

No
Applicable.

ITEM
    12.
DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES

No
Applicable.

PART
II

ITEM
    13.
DEFAULTS,
    DIVIDEND ARREARAGES AND DELINQUENCIES

No
Applicable.

ITEM
    14.
MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

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.

ITEM
    15.
CONTROLS
    AND PROCEDURES

(a)Disclosure
    Controls and Procedures

Our
management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of
the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act.

Based
on that evaluation, we concluded that as of June 30, 2019, due to the material weaknesses in our internal control over financial
reporting discussed below, our disclosure controls and procedures were not effective.

(b)Management’s
    Report on Internal Control Over Financial Reporting

Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with international financial reporting standards (“IFRSs”). Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the
degree of compliance with policies or procedures may deteriorate. Under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, we conducted an assessment of the effectiveness of our internal
control over financial reporting as of June 30, 2019. The assessment was based on criteria established in the framework Internal
Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on this assessment, management determined that, as of June 30, 2019, we did not maintain effective internal control over financial
reporting due to the existence of the following significant deficiencies and material weaknesses:

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                                         personnel primarily responsible for the preparation of our financial statements do not
                                         have requisite levels of knowledge, experience and training in the application of U.S.
                                         GAAP commensurate with our financial reporting requirements;

Ineffective
                                         supervision of the Company’s internal and disclosure controls over financial reporting;

Management
is in the process of re-assessing the design of certain control activities and developing its remediation plan for the above identified
weaknesses. The Company’s actions are subject to ongoing senior management review, as well as Audit Committee oversight.
The Company has implemented or will implement following remedial measures within its resources as soon as practicable:

Establishing
                                         an internal audit function or engage an external consulting firm, to assist with assessment
                                         of Sarbanes-Oxley compliance requirements and improvement of overall internal controls;

(c)Attestation
    Report of Independent Registered Public Accounting Firm

No
applicable.

(d)Changes
    in Internal Control over Financial Reporting

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management is committed to improving the internal controls over financial reporting and will undertake consistent improvements
or enhancements on an ongoing basis. Except as described above, there were no changes in our internal controls over financial
reporting during our fiscal year ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.

ITEM
    16A.
AUDIT
    COMMITTEE FINANCIAL EXPERT

Our
audit committee consists of Xiaoyuan Zhang, Yan Zhang and Wei Pei. Our board of directors has determined Xiaoyuan Zhang, Yan Zhang
and Wei Pei are “independent directors” within the meaning of NASDAQ Stock Market Rule 5605(a)(2) and meet the criteria
for independence set forth in Rule 10A−3(b) of the Exchange Act. Xiaoyuan Zhang meets the criteria of an audit committee
financial expert as set forth under the applicable rules of the SEC.

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Board has adopted a Code of Conduct and Ethics that applies to the Company’s directors, officers and employees. A copy of
this policy is available via our website at www.China-ACM.com. Printed copies of our Code of Ethics may be obtained, without charge,
by contacting the Corporate Secretary, Huitao Technology Co., Ltd., 9 North West Fourth Ring Road Yingu Mansion Suite 1708, Haidian
District Beijing, People’s Republic of China 100190

ITEM
    16C.
PRINCIPAL
    ACCOUNTANT FEES AND SERVICES

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following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered
by our principal external auditors, for the periods indicated.

Year Ended
June 30,
2018
Year  Ended
June 30,
2019
Audit fees(1) PS185,000 PS387,529
Audit related fees(2) - -
Tax fees(3) - -
All other fees(4) 19,000 6,000
TOTAL PS204,000 PS393,529

(1)“Audit
    fees” means the aggregate fees billed for each of the fiscal years for professional services rendered by our principal
    accountant for the audit of our annual financial statements or services that are normally provided by the accountant in connection
    with statutory and regulatory filings or engagements for those fiscal years.
(2)“Audit
    related fees” means the aggregate fees billed for each of the fiscal years for assurance and related services by our
    principal accountant that are reasonably related to the performance of the audit or review of our financial statements and
    are not reported under paragraph (1).

(3)“Tax
    Fees” represents the aggregate fees billed in each of the fiscal years listed for the professional tax services rendered
    by our principal auditors.

(4)

“All
Other Fees” represents the aggregate fees billed in each of the fiscal years listed for services rendered by our principal
auditors other than services reported under “Audit fees,” “Audit-related fees” and “Tax fees.”

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policy of our audit committee and our board of directors is to pre-approve all audit and non-audit services provided by our principal
auditors, including audit services, audit-related services, and other services as described above, other than those for de minimis
services which are approved by the audit committee or our board of directors prior to the completion of the services.

ITEM
    16D.
EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

No
Applicable.

ITEM
    16E.
PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

No
Applicable.

ITEM
    16F.
CHANGE
    IN REGISTRANT’S CERTIFYING ACCOUNTANT

(a)
Resignation of Previous Independent Registered Public Accounting Firm

Por
letter dated (and received) October 11, 2018, our independent registered public accounting firm, Friedman LLP (“Friedman”)
notified the Audit Committee of the Board of Directors of China Advanced Construction Materials Group, Inc. (the “Company”,
“we”, or “us”) of its resignation as the Company’s independent registered public accounting firm.
On October 11, 2018, the Board of Directors accepted such resignation. The auditor’s report of Friedman on the Company’s
consolidated financial statements as of and for the year ended June 30, 2016 did not contain an adverse opinion or a disclaimer
of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles.

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.

During
the two most recent fiscal years and through the subsequent interim period preceding Friedman’s resignation, there were
no (i) “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) between the Company and Friedman
on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements,
if not resolved to the satisfaction of Friedman would have caused Friedman to make reference to the subject matter thereof in
its reports for such fiscal years and interim periods, or (ii) “reportable events” as that term is described in Item
304(a)(1)(v) of Regulation S-K.

We
furnished a copy of this disclosure to Friedman and have requested that Friedman furnish us with a letter addressed to the Securities
and Exchange Commission (the “SEC”) stating whether such firm agrees with the above statements or, if not, stating
the respects in which it does not agree. We have received the requested letter from Friedman, and a copy of their letter is filed
with the Securities and Exchange Commission on October 16, 2018 in our Current Report on Form 8-K as Exhibit 16.1.

(b)
Engagement of New Independent Registered Public Accounting Firm

En
October 13, 2018, the Board of Directors approved the engagement of Wei, Wei & Co., LLP (“WWC”) as the Company’s
independent registered public accounting firm to audit the Company’s consolidated financial statements as of and for the
fiscal year ended June 30, 2018 and 2017.

During
the two most recent fiscal years and through the subsequent interim period preceding WWC’s engagement, the Company has not
consulted with WWC regarding (i) the application of accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report
was provided to the Company nor oral advice was provided that WWC concluded was an important factor considered by the Company
in reaching a decision as to the accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject
of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K)
or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

ITEM
    16G.
CORPORATE
    GOVERNANCE

Other than as described in this section,
our corporate governance practices do not differ from those followed by domestic companies listed on the NASDAQ Capital Market.
NASDAQ Listing Rule 5635 generally provides that shareholder approval is required of U.S. domestic companies listed on the NASDAQ
Capital Market prior to issuance (or potential issuance) of securities (i) equaling 20% or more of the company’s common stock
or voting power for less than the greater of market or book value (ii) resulting in a change of control of the company; and (iii)
which is being issued pursuant to a stock option or purchase plan to be established or materially amended or other equity compensation
arrangement made or materially amended. Notwithstanding this general requirement, NASDAQ Listing Rule 5615(a)(3)(A) permits foreign
private issuers to follow their home country practice rather than these shareholder approval requirements. The Cayman Islands do
not require shareholder approval prior to any of the foregoing types of issuances. The Company, therefore, is not required to obtain
such shareholder approval prior to entering into a transaction with the potential to issue securities as described above. The Board
of Directors of the Company has elected to follow the Company’s home country rules as to such issuances and will not be required
to seek shareholder approval prior to entering into such a transaction.

ITEM
    16H.
MINE
    SAFETY DISCLOSURE

No
applicable.

PART
III

ITEM
    17.
FINANCIAL
    STATEMENTS

We have elected to provide financial statements
pursuant to Item 18.

ITEM
    18.
FINANCIAL
    STATEMENTS

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consolidated financial statements and related notes required by this item are contained on pages F-1 through F-32.

* *Filed
    as an exhibit hereto.

(1)

(2)

Incorporated by reference to the Company’s
        Current Report on Form 6-K filed with the SEC on July 17, 2019.

Incorporated by reference to the Company’s
        Current Report on Form 6-K filed with the SEC on June 5, 2019.

(3)Incorporated by reference to the Company’s Current Report on Form 6-K filed with the SEC on March 28, 2019.
(4)Incorporated by reference to the Company’s Current Report on Form 6-K filed with the SEC on July 24, 2019.

SIGNATURES

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registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.

HUITAO
    TECHNOLOGY CO., LTD.
/s/
    Yang (Sean) Liu
Nombre:
    Yang (Sean) Liu
Title:
    Chief Executive Officer
Date:
    15 de noviembre de 2019

HUITAO TECHNOLOGY CO., LTD.

TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Board of Directors and
Shareholders of Huitao Technology Co., Ltd. and subsidiaries

Opinion on the Consolidated Financial
Statements

We have audited the accompanying consolidated
balance sheets of Huitao Technology Co., Ltd. and subsidiaries (formerly
China Advanced Construction Materials Group, Inc.) (the “Company”) as of June 30, 2019 and 2018, and the related consolidated
statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the
three year period ended June 30, 2019 , and the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
as of June 30, 2019 and 2018, and the results of their operations and their cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are
required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures
to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe
that our audits provide a reasonable basis for our opinion.

Substantial Doubt about the Company’s
Ability to Continue as a Going Concern

The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated
financial statements, Company’s recurring losses from operations, the estimated claims charges and the possible additional
exposure for pending litigation actions against Company which is presently unknown. In addition, the Company is in default under
its bank loan agreement for which the bank has filed with the PRC courts to demand repayment. These factors indicate the Company
may not be able to continue as a going concern. The Company continues to be reliant on borrowings from its shareholders and the
continued forbearance of the bank and the Company’s creditors. Management’s evaluation of the events and conditions
and management’s plans, regarding those matters are also described in Note 2 to the consolidated financial statements. los
consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ Wei, Wei & Co., LLP

We have served as the Company’s auditor
since 2018.

New York, New York
15 de noviembre de 2019

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY KNOWN AS CHINA ADVANCED CONSTRUCTION
MATERIALS GROUP, INC.)

CONSOLIDATED BALANCE SHEETS

June 30, June 30,
2019 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents PS347,486 PS1,098,691
Accounts and notes receivable, net 37,010,458 43,322,463
Inventories 511,160 427,193
Other receivables, net 1,423,563 71,242
Other receivable - related party 165,075 1,397,042
Prepayments and advances, net 12,566,372 1,569,162
Prepayment - related party 456,399 2,725,423
Prepaid expenses 25,000 40,458
Total de activos corrientes 52,505,513 50,651,674
PROPERTY PLANT AND EQUIPMENT, net 1,659,520 2,748,409
Los activos totales PS54,165,033 PS53,400,083
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short term bank loans - in default PS24,686,899 PS26,062,665
Cuentas por pagar 12,841,076 10,340,072
Customer deposits 635,762 903,034
Other payables 372,913 369,780
Other payables - related parties 757,737 195,763
Loans payable - employees 4,593,874 -
Obligaciones acumuladas 3,083,929 1,217,584
Taxes payable 80,860 178,190
Accrued contingent liabilities 6,591,185 4,430,787
Total pasivos corrientes 53,644,235 43,697,875
COMMITMENTS AND CONTINGENCIES (Note 14) - -
SHAREHOLDERS’ EQUITY:
Preferred shares, $0.001 par value, 1,000,000 shares authorized, no shares issued or outstanding - -
Ordinary shares, $0.001 par value, 74,000,000 shares authorized, 7,174,626 and 5,488,649 shares issued and outstanding as of June 30, 2019 and 2018, respectively 7,175 5,489
Additional paid-in-capital 54,237,082 48,360,368
Deferred stock compensation (3,161,200) (2,825,000)
Deficit (64,031,446) (49,642,916)
Statutory reserves 6,248,092 6,248,092
Accumulated other comprehensive income 7,221,095 7,556,175
Total shareholders’ equity 520,798 9,702,208
Total liabilities and shareholders’ equity PS54,165,033 PS53,400,083

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

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the years ended June 30,
2019 2018 2017
REVENUE PS43,651,923 PS45,734,647 PS45,048,413
COST OF REVENUE 39,093,782 39,022,360 43,953,477
GROSS PROFIT 4,558,141 6,712,287 1,094,936
PROVISION FOR DOUBTFUL ACCOUNTS (2,559,785) (2,184,221) (3,352,063)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (5,996,609) (5,301,168) (5,380,702)
RESEARCH AND DEVELOPMENT EXPENSES (223,668) (1,182,133) (846,438)
STOCK COMPENSATION EXPENSE (4,592,200) (1,388,501) (289,000)
LOSS FROM OPERATIONS (8,814,121) (3,343,736) (8,773,267)

OTHER INCOME (EXPENSE)

Other (expense) income, net (4,113) 111,922 407,452
Interest income 2,282 6,051 30,464
Gastos por intereses (2,038,291) (1,360,608) (830,978)
Finance expense (13,201) (5,137) (604,498)
Estimated claims charges (3,521,086) (2,808,457) (1,267,293)
TOTAL OTHER EXPENSE, NET (5,574,409) (4,056,229) (2,264,853)
LOSS BEFORE PROVISION FOR INCOME TAXES (14,388,530) (7,399,965) (11,038,120)
PROVISION FOR INCOME TAXES - - -
NET LOSS PS(14,388,530) PS(7,399,965) PS(11,038,120)
COMPREHENSIVE INCOME  (LOSS)
Net loss PS(14,388,530) PS(7,399,965) PS(11,038,120)
Other comprehensive (loss) income - foreign currency translation (loss) gain (335,080) 347,097 (499,361)
COMPREHENSIVE LOSS PS(14,723,610) PS(7,052,868) PS(11,537,481)
LOSS PER ORDINARY SHARE
Weighted average number of shares:
Basic 5,841,614 2,942,945 2,266,826
Diluted 5,841,614 2,942,945 2,266,826
Loss per share:
Basic PS(2.46) PS(2.51) PS(4.87)
Diluted PS(2.46) PS(2.51) PS(4.87)

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

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY

Ordinary
    share
Additional Deferred Accumulated
    otro
Number Par Paid-in Compartir Statutory comprehensive
of
    shares
amount capital Compensation Deficit reserves income Total
BALANCE,
    June 30, 2016
2,180,799 PS2,181 PS38,373,584 PS- PS(31,204,831) PS6,248,357 PS7,708,439 PS21,127,730
Ordinary
    shares issued for services without performance commitment
106,859 107 (107) - - - - -
Ordinary
    shares issued for compensation
100,000 100 288,900 - - - - 289,000
Net
    loss
- - - - (11,038,120) - - (11,038,120)
Dissolution
    of subsidiaries
- - - - - (265) - (265)
Foreign
    currency translation loss
- - - - - - (499,361) (499,361)
BALANCE,
    June 30, 2017
2,387,658 2,388 38,662,377 - (42,242,951) 6,248,092 7,209,078 9,878,984
Cancellation
    of ordinary shares issued for services
(56,859) (57) 57 - - - - -
Ordinary
    shares issued for services
- - 144,500 - - - - 144,500
Ordinary
    shares issued for compensation
475,195 475 1,243,526 - - - - 1,244,001
Ordinary
    shares issued for debt repayment
1,882,655 1,883 3,857,560 - - - - 3,859,443
Sale
    of ordinary shares
300,000 300 599,700 - - - - 600,000
Ordinary
    shares issued for services
500,000 500 2,824,500 (2,825,000) - - - -
Payments
    made by major shareholders for litigation
- - 1,028,148 - - - - 1,028,148
Net
    loss
- - - - (7,399,965) - - (7,399,965)
Foreign
    currency translation gain
- - - - - - 347,097 347,097
BALANCE,
    June 30, 2018
5,488,649 5,489 48,360,368 (2,825,000) (49,642,916) 6,248,092 7,556,175 9,702,208
Sale of ordinary shares 295,977 296 949,704 - - - - 950,000
Ordinary
    shares issued for compensation
550,000 550 1,319,450 - - - - 1,320,000
Ordinary
    shares issued for services
600,000 600 1,757,400 (1,758,000) - - - -
Unvested
    restricted ordinary shares issued to officers
240,000 240 1,850,160 (1,850,400) - - - -
Amortization
    of deferred share compensation
- - - 3,272,200 - - - 3,272,200
Net
    loss
- - - - (14,388,530) - - (14,388,530)
Foreign
    currency translation loss
- - - - - - (335,080) (335,080)
BALANCE,
    June 30, 2019
7,174,626 PS7,175 PS54,237,082 PS(3,161,200) PS(64,031,446) PS6,248,092 PS7,221,095 PS520,798

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

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

CONSOLIDATED
STATEMENTS OF CASH FLOWS

For the years ended June 30,
2019 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss PS(14,388,530) PS(7,399,965) PS(11,038,120)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation 1,128,832 1,239,383 1,178,427
Loss (gain) on disposal of equipment 3,866 (2,306) -
Stock compensation expense 4,592,200 1,388,501 289,000
Provision for doubtful accounts 2,559,782 2,184,221 3,352,063
Changes in operating assets and liabilities
Accounts and notes receivable (6,032,880) (4,647,399) (13,544,355)
Inventories (99,755) 218,252 374,676
Other receivables (1,425,544) 1,458,316 7,534,134
Prepayments and advances (6,298,504) 15,996,599 18,161,510
Prepayment - related party 2,477,931 4,209,149 (5,856,413)
Prepaid expenses 15,458 (40,458) -
Cuentas por pagar 10,418,874 (12,834,912) 11,783
Customer deposits (236,542) 971,235 (3,556,647)
Other payables 15,273 (3,924,701) 3,493,637
Other payables - related parties 540,000 720,000 623,924
Accrued liabilities and contingent liabilities 5,744,928 2,840,480 667,463
Taxes payable (91,531) 73,623 9,575
Net cash (used in) provided by operating activities (1,076,142) 2,450,018 1,700,657
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (135,705) (138,151) (210,962)
Net cash used in investing activities (135,705) (138,151) (210,962)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short term loans, banks and bank guarantees 4,980,762 34,724,896 20,706,132
Repayments of short term loans, banks and bank guarantees (5,431,960) (26,639,329) (19,237,612)
Proceeds from notes payable - - 30,398,364
Repayments of notes payable - (14,603,210) (34,069,664)
Borrowings from shareholders 23,865 121,820 146,611
Proceeds from sale of ordinary shares 950,000 600,000 -
Net cash provided by (used in) financing activities 522,667 (5,795,823) (2,056,169)
EFFECTS OF EXCHANGE RATE CHANGE IN CASH, CASH EQUIVALENTS AND RESTICTED CASH (62,025) 149,203 (104,673)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTICTED CASH (751,205) (3,334,753) (671,147)
CASH, CASH EQUIVALENTS AND RESTICTED CASH, beginning of year 1,098,691 4,433,444 5,104,591
CASH, CASH EQUIVALENTS AND RESTICTED CASH, end of year PS347,486 PS1,098,691 PS4,433,444
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of year PS1,098,691 PS224,679 PS1,006,970
Restricted cash at beginning of year - 4,208,765 4,097,621
Cash, cash equivalents and restricted cash at beginning of year PS1,098,691 PS4,433,444 PS5,104,591
Cash and cash equivalents at end of year PS347,486 PS1,098,691 PS224,679
Restricted cash at end of year - - 4,208,765
Cash, cash equivalents and restricted cash at end of year PS347,486 PS1,098,691 PS4,433,444
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest expense PS2,038,291 PS1,360,608 PS825,772
Cash paid for income tax PS- PS- PS-
NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES:
Property, plant and equipment additions accrued PS- PS99,125 PS-
Customer deposits reclassified to other payables - shareholders upon execution of tri-party agreements PS- PS692,387 PS-
Accrued liabilities reclassified to other payables -  shareholders upon execution of tri-party agreements PS- PS259,105 PS-
Accrued liabilities reclassified to loans payable -  employees upon execution of tri-party agreements PS308,089 PS- -
Forgiveness of payable to shareholder as a capital contribution PS- PS691,731 PS-
Litigation liability paid by related party PS- PS354,921 PS660,834
Accrued related party’s litigation liabilities PS- PS1,422,186 PS-
Ordinary share issued to repay other payables - related parties and service providers PS4,928,400 PS3,859,443 PS-
Other receivables – related party offset with contingent liabilities upon litigation payments made by related party PS1,189,285 PS- PS-
OTHER NON-CASH TRANSACTIONS:
Accounts receivable offset with accounts payable upon execution of debt obligation transfer agreements PS3,221,736 PS6,945,445 PS1,535,126
Accounts receivable assigned to prepayments and advances upon execution of accounts receivable assignment agreements PS5,008,417 PS- PS-
Reclassification from accounts payable to loans payable upon payment made by employees of the Company on its behalf PS4,311,234 PS- PS-

los
accompanying notes are an integral part of these consolidated financial statements.

HUITAO TECHNOLOGY CO.,
LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note
1 – Organization and description of business

China
Advanced Construction Materials Group, Inc. (“CADC Delaware”) was incorporated in the State of Delaware on February
15, 2007. On August 1, 2013, CADC Delaware consummated a reincorporation merger with its newly formed wholly-owned subsidiary,
China Advanced Construction Materials Group, Inc. (“CADC Nevada”), a Nevada corporation, with CADC Delaware merging
into CADC Nevada and CADC Nevada being the surviving company, for the purpose of changing CADC Delaware’s state of incorporation
from Delaware to Nevada. On December 27, 2018, CADC Nevada was merged with and into China Advanced Construction Materials Group,
Inc. (“CADC Cayman”), a Cayman Islands corporation, whereupon the separate existence of CADC Nevada ceased and CADC
Cayman was continued as the surviving entity. On July 16, 2019, CADC Cayman received the stamped Certificate of Incorporation
on Change of Name from the Cayman Islands Registrar of Companies and the Amended and Restated Memorandum and Articles of Association
from the Cayman Islands General Registry, dated July 12, 2019 pursuant to which CADC Cayman’s name has been changed from
“China Advanced Construction Materials Group, Inc.” to “Huitao Technology Co., Ltd.” (the Company or “HHT”).

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Company, through its 100% owned subsidiaries and its variable interest entities (“VIEs”), is engaged in producing
general ready-mix concrete, customized mechanical refining concrete, and other concrete-related products that are only sold in
the People’s Republic of China (the “PRC”).

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Company has a wholly-owned subsidiary in the British Virgin Islands, Xin Ao Construction Materials, Inc. (“BVI-ACM”),
which is a holding company with no operations. BVI-ACM has a wholly-owned foreign subsidiary, Beijing Ao Hang Construction Material
Technology Co., Ltd. (“China-ACMH”), and China-ACMH has contractual agreements with Beijing XinAo Concrete Group (“Xin
Ao”) and therefore Xin Ao is considered to be a VIE of China-ACMH. On August 20, 2018, CACM Group NY, Inc. (“CACM”)
was incorporated in the State of New York and is 100% owned by the Company. 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.

Note 2 – Going Concern

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

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

Although the Company believes that it can
realize its current assets in the normal course of business, the Company’s ability to repay its current obligations will
depend on the future realization of its current assets. Management has considered its historical experience, the 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. The Company
expects to realize the balance of its current assets, net of the allowance for doubtful accounts within the normal operating cycle
of twelve months.

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

However, the Company is involved in various lawsuits, claims and disputes related to its operations and
the personal guarantees of its officers to affiliated entities owned by them. The Company is actively defending these actions and
attempting to mitigate the Company’s 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 the Company’s 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, the Company’s 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
the Company principally due to the personal guarantees by Mr. Xianfu Han, and Mr. Weili He, the Company’s 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 the
Company 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, the Company’s 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 payment and technical default under its bank loan agreement for which the
bank has filed with the PRC courts which has issued a demand notice in May 2019 for the immediate repayment of the outstanding
loans. No repayments have been made and the balance at June 30, 2019 is approximately $ 24.7 million.

The management of the Company has considered
whether there is a going concern issue due to the Company’s 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 Company which is presently
unknown. Management has determined there is substantial doubt about our ability to continue as a going concern. If the Company
is unable to generate significant revenue, secure the continued forbearance of its bank and/or additional financing or resolve
any pending estimated claim charges, the Company may be required to cease or curtail its operations. The Company’s 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 additional financial support and credit guarantee commitments and debt restructuring
for most litigation liabilities.

Note 3 – Summary of significant
accounting policies

Basis
of presentation

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accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). These financial statements include the accounts of all the directly and indirectly owned subsidiaries
and VIEs listed below. All intercompany transactions and balances have been eliminated in consolidation.

Principles
of consolidation

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

Subsidiaries and VIEs Place incorporated Propiedad
percentage
CACM New York, USA 100%
BVI-ACM British Virgin Island 100%
China-ACMH Beijing, China 100%
Xin Ao Beijing, China VIE

VIEs
are generally entities that lack sufficient equity to finance their activities without additional financial support from other
parties or whose equity holders lack adequate decision-making ability.  The VIE with which the Company is involved
must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required
to consolidate the VIEs for financial reporting purposes.

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

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carrying amount of the VIE’s assets and liabilities are as follows:

June 30, June 30,
2019 2018
Current assets PS52,147,926 PS50,219,221
Property, plants and equipment 1,659,520 2,748,409
Los activos totales 53,807,446 52,967,630
Liabilities (52,161,353) (43,372,069)
Intercompany payables* (7,328,943) (7,705,339)
Responsabilidad total (59,490,296) (51,077,408)
Net (deficit) assets PS(5,682,850) PS1,890,222

* *Payables to China-ACMH
    and BVI-ACM have been eliminated in consolidation.

Use
of estimates and assumptions

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preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions
made in the preparation of the Company’s consolidated financial statements include the allowance for doubtful accounts,
deferred income taxes, prepayments and advances, stock-based compensation, contingent liabilities, and fair value and useful lives
of property, plant and equipment. Actual results could be materially different from those estimates.

Foreign
currency translation

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

Asset
and liability accounts at June 30, 2019 and 2018 were translated at RMB 6.87 and RMB 6.62 to USD$1.00, respectively. Equity accounts
are translated at their historical rate. The average translation rates applied to the consolidated statements of operations and
comprehensive loss and cash flows for the years ended June 30, 2019, 2018 and 2017 were RMB 6.83, RMB 6.51 and RMB 6.81 to USD$1.00,
respectively.

Translation
gains (losses) that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional
currency are included in the results of operations. There were no foreign currency transaction gains or losses for the years ended
June 30, 2019, 2018 and 2017. The effects of foreign currency translation adjustments are included in shareholders’ equity
as a component of accumulated other comprehensive income (loss).

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

Revenue
recognition

En
July 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers
(ASC 606) using the modified retrospective method for contracts that were not completed as of July 1, 2018. The core principle
underlying revenue recognition is that the Company recognizes its revenue to represent the transfer of goods and services to customers
in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This requires the Company
to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over
time, based on when control of goods and services transfers to a customer.  The Company’s revenue streams are primarily
recognized at a point in time, principally upon delivery.

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ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that
the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine
the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will
not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue
when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared
to the prior guidance did not result in significant changes in the way the Company records its revenue. Upon adoption, the
Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASU under previous standards
and using the five-step model under the new guidance and confirmed that there were no material differences in the pattern of revenue
recognition.

Sales
of concrete products

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Company continues to derive its revenues from sales contracts with its customers with revenues being recognized upon delivery
of products. Persuasive evidence of an arrangement is demonstrated via sales contract and invoice; and the sales price to the
customer is fixed upon acceptance of the sales contract and there is no separate sales rebate, discount, or other incentive. Such
revenues are recognized at a point in time after all performance obligations are satisfied and based on when control of goods
transfer to a customer, which is generally similar to when its delivery has occurred prior to July 1, 2018.

Financial
instruments

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

los
three levels of inputs are defined as follows:

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

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

Level 3inputs
to the valuation methodology are unobservable.

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

Efectivo
and cash equivalents

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Company considers all highly liquid investments with the original maturity of three months or less at the date of purchase to
be cash equivalents.

Restricted Cash

Restricted cash represents cash held by
banks as guarantee deposit collateralizing notes payable.

In November 2016, the FASB issued ASU No.
2016-18, Statement of Cash Flows (230): Restricted Cash. The amendments in this update require that a statement of cash flows explain
the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted
cash equivalents. For public business entities, the amendments in this update are effective for fiscal years beginning after December
15, 2017, and interim periods within those annual periods. Earlier adoption is permitted. The amendments in this update should
be applied using a retrospective transition method to each period presented. On July 1, 2018, the Company adopted this guidance
on a retrospective basis. The Company’s years ended June 30, 2018 and 2017 statements of cash flows have been retroactively
presented and adopted this guidance.

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

Accounts
and notes receivable, net

The Company extends unsecured credit to
its customers in the normal course of business. Accounts are considered past due after 180 days. In establishing the required allowance
for doubtful accounts, management considers historical experience, the economic environment, trends in the construction industry
and the expected collectability of the overdue receivables. Management reviews its accounts receivable each reporting period to
determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is recorded when collection of
the full amount is no longer probable. Account balances are charged off against the allowance after all means of collection have
been exhausted and the potential for recovering is considered remote. The Company provides an allowance for doubtful accounts provision
of 15% for accounts receivable balances that are past due more than 180 days but less than one year, an allowance for doubtful
accounts provision of 40% for accounts receivable past due from one to two years, an allowance for doubtful accounts provision
of 75% for accounts receivable past due beyond two years, an allowance for doubtful accounts provision of 100% for accounts receivable
past due beyond three years, plus additional amounts as necessary when the Company’s collection department determines the
collection of the full amount is remote and the Company’s management approves 100% of the allowance for doubtful accounts.
The Company’s management has continued to evaluate the reasonableness of its valuation allowance policy and will update it
if necessary. As of June 30, 2019 and 2018, the Company made $21,191,849 and $19,291,772 allowance for doubtful accounts for accounts
receivable, respectively.

Notes receivable represents commercial
notes due from various customers where the customers’ banks have guaranteed the payments. The notes are noninterest bearing
and normally paid within three to six months. The Company has the ability to submit requests for payments to the customer’s
banks earlier than the scheduled payments date, but will incur an interest charge and a processing fee.

Inventories

Inventories consist of raw materials and
are stated at the lower of cost or net realizable value, as determined using the weighted average cost method. Management compares
the cost of inventories with the net realizable value and an allowance is made for writing down the inventory to its net realizable
value, if lower than cost. As of June 30, 2019 and 2018, the Company determined that no allowance was necessary.

Otro
receivables

Otro
receivables primarily include prepayments to be refunded by our suppliers if the supplies do not meet the Company’s specification
needs, advances to employees, amounts due from unrelated entities refundable, VAT tax and other deposits. Management regularly
reviews the aging of these receivables and changes in payment trends and records an allowance when management believes collection
of amounts due are at risk. Accounts considered uncollectible are written off against the allowance after exhaustive efforts at
collection are made. The Company provides an allowance for doubtful accounts of 5% for other receivables balances that are aged
within one year, an allowance for doubtful accounts of 50% for other receivables aged from one to two years, and an allowance
for doubtful accounts of 100% for other receivables aged beyond two years. As of June 30, 2019 and 2018, the Company made $263,049
and $208,097 allowance for doubtful accounts for other receivables, respectively.

Prepayments
and advances

Prepayments
are funds deposited or advanced to outside vendors for future inventory purchases. As is standard practice in the PRC, many of
the Company’s vendors require a certain amount to be deposited with them as a guarantee that the Company will complete its
purchases on a timely basis. This amount is refundable and bears no interest. The Company has legally binding contracts with its
vendors, which require any outstanding prepayments to be returned to the Company when such contracts end. The Company provides
a provision of 5% of the allowance for doubtful accounts for prepayments and advances that are aged from six months to one year
and 10% of the allowance for doubtful accounts for prepayments and advances aged beyond one year.

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Company provided an allowance of approximately $0.2 million, $0.3 million and $0 on unrealizable prepayments and advances for
the years ended June 30, 2019, 2018 and 2017, respectively. The Company wrote off approximately $0, $0, and $0.2 million on unrealizable
prepayments for the years ended June 30, 2019, 2018 and 2017, respectively.

Property,
plant and equipment

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

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

los
estimated useful lives of assets are as follows:

Useful
    life
Transportation equipment 7-10 years
Plant and machinery 10 years
Office equipment 5 years
Buildings and improvements 3-20 years

Construction-in-progress represents contractor
and labor costs, design fees and inspection fees in connection with the construction of the Company’s cement mixers, cafeteria,
and office remodel. No depreciation is provided for construction-in-progress until it is completed and placed into service.

Contabilidad
for long-lived assets

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

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

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

There
were no impairment charges for the years ended June 30, 2019, 2018 and 2017.

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

Stock-based
compensation

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

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Company records stock-based compensation expense for non-employees at fair value on the grant date and recognizes the expense
over the service provider’s requisite service period.

Income
taxes

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

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

ASC
740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a
tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will
be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of
that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount
of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that has
a greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not
recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized
tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial
reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax
are classified as income tax expense in the period incurred. United States federal, state and local income tax returns prior to
2016 are not subject to examination by any applicable tax authorities. PRC tax returns filed for calendar years ended December
31, 2016 to 2018 are subject to examination by the applicable tax authorities.

Value
Added Tax

Enterprises
or individuals who sell commodities, engage in repair and maintenance, or import and export goods in the PRC are subject to a
value added tax. The standard VAT rate for the Company’s industry is 3% of gross sales, and revenues are presented net of
VAT.

Research
and development

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

Earnings
(loss) per share

The Company reports earnings (loss) per
share in accordance with U.S. GAAP, which requires presentation of basic and diluted earnings (loss) per share in conjunction with
the disclosure of the methodology used in computing such earnings per share. Basic earnings (loss) per share is computed by dividing
income (loss) available to common shareholders by the weighted average common shares outstanding during the period.  Diluted
earnings per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants,
options, restricted stock based grants and convertible preferred stock, to issue ordinary shares were exercised and converted into
ordinary shares. Ordinary share equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation
of diluted earnings per share.

Dilution is computed by applying the treasury
stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time
of issuance, if later), and as if funds obtained thereby were used to purchase ordinary shares at the average market price during
the period. When the Company has a loss, no potential dilutive items are included since they would be antidilutive.

Stock
dividends or stock splits are accounted for retroactively if the stock dividends or stock splits occur during the period, or retroactively
if the stock dividends or stock splits occur after the end of the period but before the release of the financial statements, by
considering it effective as of the beginning of each period presented.

Comprehensive
income (loss)

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

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

Recent
Accounting Pronouncements

En
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This update will require the recognition of a right-of-use
(“ROU”) asset and a corresponding lease liability, initially measured at the present value of the lease payments,
for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease
term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance
leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement
of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity
while the interest component will be included in the operating section of the statement of cash flows. ASU 2016-02 is effective
for annual and interim reporting periods beginning after December 15, 2018. In July 2018, the FASB issued ASU No. 2018-11, Leases
(Topic 842): Targeted Improvements. The amendments is to assisting stakeholders with implementation questions and issues as organizations
prepare to adopt the new leases standard affect the amendments in ASU 2016-02. Many stakeholders inquired about the following
two requirements in the new leases standard: 1) Comparative reporting requirements for initial adoption and 2) For lessors only,
separating lease and nonlease components in a contract and allocating the consideration in the contract to the separate components.
ASU 2018-11 is effective for annual and interim reporting periods beginning after December 15, 2018. The Company adopted these
updates on July 1, 2019. The adoption of ASU 2016-02 and 2018-11 will recognize additional operating liabilities of approximately
$1.3 million, with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments
under current leasing standards for existing operating leases with a term longer than 12 months.

En
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure
all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions,
and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement
of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the
impact that the standard will have on its consolidated financial statements and related disclosures.

En
August 2017, the FASB issued ASU No. 2017-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and
Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement
of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment
Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant
in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination;
(4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies,
including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests
in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments
are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those
fiscal years. The Company adopted this ASU on July 1, 2018. The adoption of this ASU did not have a material effect on the Company’s
consolidated financial statements.

En
October 2017, the FASB issued ASU No. 2017-17, Consolidation (Topic 810): Interests held through related parties that are under
common control. The amendments in this ASU require that the reporting entity, in determining whether it satisfies the second characteristic
of a primary beneficiary, to include all of its direct variable interests in a VIE and, on a proportionate basis, its indirect
variable interests in a VIE held through related parties, including related parties that are under common control with the reporting
entity. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, including
interim periods within those fiscal years. The Company adopted this ASU on July 1, 2018. The adoption of this ASU did not have
a material effect on the Company’s consolidated financial statements.

En
November 2017, the FASB issued ASU No. 2017-18, “Statement of Cash Flows: Restricted Cash”. The amendments address
diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash
flows. The amendment is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods
within those fiscal years. The Company adopted this ASU on July 1, 2018. The adoption of this ASU did not have a material effect
on the Company’s consolidated financial statements.

En
February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of
Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this Update affect any entity that is required
to apply the provisions of Topic 220, Income Statement – Reporting Comprehensive Income, and has items of other comprehensive
income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this
Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal
years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public
business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities
for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update
should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change
in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not believe the adoption
of this ASU on July 1, 2019 will have a material effect on the Company’s consolidated financial statements.

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

En
June 2018, the FASB issued ASU 2018-07 – Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting, which to include share-based payment transactions for acquiring goods and services from non-employees,
which nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity
instruments that an entity is obligated to issue when the goods have been delivered or the service has been rendered and any other
conditions necessary to earn the right to benefit from the instruments have been satisfied. The definition of the term grant date
is amended to generally state the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions
of a share based payment award. The amendments are effective for public business entities for fiscal years beginning after December
15, 2018, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective
for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.
Early adoption is permitted, including adoption in an interim period. Management plans to adopt this ASU during the quarter ending
September 2019. Management does not believe the adoption of this ASU will have a material effect on the Company’s consolidated
financial statements.

En
August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the
Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 removes, modifies and adds
certain disclosure requirements in Topic 820 “Fair Value Measurement”. ASU 2018-13 eliminates certain disclosures
related to transfers and the valuations process, modifies disclosures for investments that are valued based on net asset value,
clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. ASU
2018-13 is effective for the Company for annual and interim reporting periods beginning July 1, 2020. The Company does not
believe the adoption of this ASU will not have a material effect on the Company’s consolidated financial statements.

En
May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for
the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology.
The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments
to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually
assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial
Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this Update address those stakeholders’
concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at
amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information
by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief
also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement
users with decision-useful information. ASU 2019-05 is effective for the Company for annual and interim reporting periods beginning
July 1, 2020. The Company is currently evaluating the impact of ASU 2019-05 will have on its consolidated financial statements.

los
Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a
material effect on the Company’s consolidated financial statements.

Note
4 – Accounts and notes receivable, net

Accounts
and notes receivable, net consisted of the following:

June 30,
2019
June 30,
2018
Accounts receivable PS58,129,493 PS62,610,943
Notes receivable 72,814 3,292
Less:  Allowance for doubtful accounts (21,191,849) (19,291,772)
Total accounts and notes receivable, net PS37,010,458 PS43,322,463

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

Movement
of allowance for doubtful accounts is as follows:

Year ended
June 30,
2019
Year ended
June 30,
2018
Beginning balance PS19,291,772 PS15,827,348
Provision for doubtful accounts 2,601,781 3,145,087
Less: write-off - -
Exchange rate effect (701,704) 319,336
Ending balance PS21,191,849 PS19,291,772

During the years ended June 30, 2019, 2018
and 2017, the Company offset approximately $3.2 million, $6.9 million and $1.5 million of accounts receivable and accounts payable
pursuant to certain debt obligation transfer agreements, respectively.

Note
5 – Other receivables, net

Otro
receivables consisted of the following:

June 30,
2019
June 30,
2018
Other receivables PS1,686,612 PS279,339
Less:  Allowance for doubtful accounts (263,049) (208,097)
Total other receivables, net PS1,423,563 PS71,242

Movement
of allowance for doubtful accounts is as follows:

Year ended
June 30,
2019
Year ended
June 30,
2017
Beginning balance PS208,097 PS1,432,095
Provision for (recovery of) doubtful accounts 62,726 (1,280,566)
Exchange rate effect (7,774) 56,568)
Ending balance PS263,049 PS208,097

Note
6 – Property, plant and equipment, net

Property,
plant and equipment consist of the following:

June 30,
2019
June 30,
2018
Machinery and equipment PS783,426 PS917,017
Transportation equipment 3,983,361 4,399,356
Office equipment 1,121,186 1,221,704
Buildings and improvements 491,127 458,718
Construction-in-progress 74,659 -
Total 6,453,759 6,996,795
Less: Accumulated depreciation and amortization (4,794,239) (4,248,386)
Property, plant and equipment, net PS1,659,520 PS2,748,409

Depreciation expense amounted to approximately
$1.1 million, $1.2 million and $1.2 million for the years ended June 30, 2019, 2018 and 2017, respectively.

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

Construction-in-progress
consist of the following as of June 30, 2019:

Construction-in-progress
    descripción
Value Estimated

Completion date
Estimated
    Additional Cost to Complete
Overhaul and transformation of concrete mixers PS32,038 December 2019 PS -
Installation of material device to concrete mixers 18,932 December 2019 -
Painting work for assembling and stirring unit and offices 16,310 December 2019 -
Installation of smoke purifier for dining room 7,379 December 2019 -
Total construction-in-progress PS74,659 PS-

These construction projects were fully pre-paid as of June 30, 2019.

Note
7 – Credit Facilities

Short
term loans - banks:

Outstanding
balances on short-term bank loans consisted of the following:

June 30,
2019
June 30,
2018
Loans from China Construction Bank, each with an interest rate of 5.66% per annum, due between July 2018 and January 2019, guaranteed by Beijing Jinshengding Mineral Products Co., LTD (“Jinshengding”), Mr. Xianfu Han, Ms. Chunying Wang, Mr. Weili He, and Ms. Junkun Chen. PS24,686,899(1) PS26,062,665

(1)As of
    the filing of this report, these loan balances are past due and in default due to nonpayment. The bank filed demands to ask
    the Company to pay off the loans immediately or freeze and/or put a lien on the Company’s assets, the personal assets
    of the individual guarantors, and the guarantors of the loans. The court has granted such demand, and the Company has received
    a demand notice from the court to pay off the loans immediately on May 9, 2019. Currently, none of the Company’s funds
    on deposit have been seized.

Jinshengding
is a supplier to the Company. Mr. Xianfu Han was the Company’s former Chief Executive Officer. Chunying Wang is the spouse
of Mr. Xianfu Han. Mr. Weili He was the Company’s former Chief Financial Officer. Ms. Junkun Chen is the spouse of Mr. Weili
He. Also see Note 7 – Related party transactions.

Interest
expense was approximately $0.3 million, $1.4 million and $0.8 million for the years ended June 30, 2019, 2018 and 2017, respectively.
Default interest with an interest rate of 8.49% totaling approximately $1.8 million up to June 30, 2019 has been accrued for the
year ended June 30, 2019 under accrued liabilities.

Note
8 – Related party transactions

Rent
expense - related party

los
Company has a lease agreement for office space from Mr. Weili He, the Company’s shareholder, through October 31, 2023, with
annual payments of approximately $24,000.

Prepayment
- related party

señor.
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.

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

Otro
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.

Otro
payables - related parties

señor.
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).

Otro
payables – related parties consisted of the following:

June 30,
2019
June 30,
2018
Xianfu Han PS361,336 PS91,336
Weili He 396,401 104,428
PS757,737 PS195,763

Note
9 – 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.

June 30,
2019
June 30,
2018
Na Wang PS2,341,932 PS-
Wei Zhang 2,251,942 -
PS4,593,874 PS-

Note
10 – Income taxes

(a) Corporate
    income tax

Under
the current laws of the Cayman Islands, HHT is not subject to tax on income or capital gains. Additionally, upon payments of dividends
to the shareholders, no Cayman Islands withholding tax will be imposed. BVI-ACM was incorporated in the British Virgin Islands
(“BVI”), where its income tax rate is 0% under current BVI law.

CACM

CACM is organized in the United States.
CACM had no taxable income for United States income tax purposes for the year ended June 30, 2019. As of June 30, 2019, CACM’s
net operating loss carry forward for United States income taxes was approximately $0.2 million. The net operating loss carry forwards
are available to reduce future years’ taxable income for unlimited years but limited to 80% use per year. Management believes
that the realization of the benefits from these losses appears uncertain due to the Company’s operating history and continued
losses in the United States. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset of $39,662
to reduce the asset to zero. Management reviews this valuation allowance periodically and makes changes accordingly.

HUITAO TECHNOLOGY CO., LTD. AND SUBSIDIARIES

(FORMERLY
KNOWN AS CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

China-ACMH
and VIE-Chinese operations

China-ACMH
and Xin Ao are governed by the income tax laws of the PRC. Income tax provisions with respect to operations in the PRC are calculated
at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices
in respect thereof. Under the Chinese Enterprise Income Tax (“EIT”) law, the statutory corporate income tax rate applicable
to most companies is 25%. In 2009, Xin Ao applied and received an Enterprise High-Tech Certificate. The High-Tech Certificate
is required to be renewed every 3 years. The certificate was awarded based on Xin Ao’s involvement in producing high-tech
products, its research and development, as well as its technical services. As granted by the State Administration of Taxation
of the PRC, Xin Ao was entitled to a reduction in its income tax rate from 25% to 15% until July 21, 2018. The certificate was
renewed, and the reduction in tax rate has been extended to November 30, 2021.

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

Loss
before provision for income taxes consisted of:

por
    the year
ended
June 30,
2019
por
    the year
ended
June 30,
2018
por
    the year
ended
June 30,
2017
Cayman and BVI PS(6,814,422) PS(2,744,479) PS(1,352,589)
PRC (7,574,108) (4,655,486) (9,685,531)