**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-K**




x ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For
      the
      Fiscal Year Ended **** **June
      30, 2008**




OR




 ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT
      OF 1934




Commission
      file number **333-141568**




**CHINA
      ADVANCED CONSTRUCTION MATERIALS GROUP, INC.** ****


(Exact
      name of registrant as specified in its charter)




**Delaware**
            **20-8468508**(State
                or other Jurisdiction of Incorporation or
            (I.R.S.
                Employer Identification No.)Organization)**Yingu
                Plaza, 9 Beisihuanxi Road, Suite 1708****Haidian
                District, Beijing 100080 PRC**
            **n/a**(Address
                of Principal Executive Offices)
            (zip
                code)




Registrant's
      telephone number, including area code: **+86
      10 82525301**




Securities
      registered pursuant to Section 12(b) of the Act:




Title
                of Each Class
            
            Name
                of Each Exchange On Which Registered**N/A**
            
            **N/A**




Securities
      registered pursuant to Section 12(g) of the Act:




**Common
      Stock, Par Value $0.001**




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 the Securities Act.


Yes  ̈ No x




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.


Yes  ̈ No x




Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports) and (2) has been subject to such filing requirements
      for
      the last 90 days. Yes x No  ̈




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
      be contained, to the best of registrant's knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-K
      or any amendment to this Form 10-K.  ̈












Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      definition of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer  ̈    Accelerated
      filer  ̈




Non-accelerated
      filer  ̈    Smaller
      reporting company x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes  ̈ No x




The
      aggregate market value of Common Stock held by non-affiliates of the Registrant
      on September 26, 2008 was $4,460,085 based on a $2.60 closing price for the
      Common Stock on September 26, 2008. For purposes of this computation, all
      executive officers and directors have been deemed to be affiliates. Such
      determination should not be deemed to be an admission that such executive
      officers and directors are, in fact, affiliates of the Registrant.




Indicate
      the number of shares outstanding of each of the registrant’s classes of common
      stock as of the latest practicable date.




**10,525,000
      Shares as of September 29, 2008**




DOCUMENTS
      INCORPORATED BY REFERENCE




**None** .


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          2
          -




**TABLE
      OF CONTENTS**




**Page**Item
                1.
            Business
            4Item
                2.
            Properties
            27Item
                3.
            Legal
                Proceedings
            27Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            28Item
                5.
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            28Item
                6.
            Selected
                Financial Data
            28Item
                7.
            Management’s
                Discussion and Analysis of Financial Condition and Results of Operations
            28Item
                7A.
            Quantitative
                and Qualitative Disclosure of Market Risk
            38Item
                8.
            Financial
                Statements and Supplementary Data
            41Item
                9.
            Changes
                in and Disagreements With Accountants on Accounting and Financial
                Disclosure
            69Item
                9A(T).
            Controls
                and Procedures
            69Item
                9B.
            Other
                Information
            72Item
                10.
            Directors,
                Executive Officers and Corporate Governance
            72Item
                11.
            Executive
                Compensation
            73Item
                12.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            75Item
                13.
            Certain
                Relationships and Related Transactions, and Director Independence
            77Item
                14.
            Principal
                Accountant Fees and Services
            80Item
                15.
            Exhibits,
                Financial Statements and Schedules
            80


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          3
          -




**PART
      I**




**Item
      1.        Business**




**Our
      Corporate Structure**





We
      own
      all of the issued and outstanding capital stock of BVI-ACM, which in turn owns
      100% of the outstanding capital stock of China-ACMH. On November 28, 2007,
      China-ACMH entered into a series of contractual agreements with Xin Ao and
      its
      two shareholders, pursuant to 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.





The
      following chart reflects our organizational structure as of the date of this
      prospectus.











**Our
      Corporate History**




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 corporate 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 connection with a reverse acquisition transaction with BVI-ACM as described
      below.





**Background
      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 matter under the “Circular 106” in the PRC. On September 29, 2007,
      BVI-ACM was approved by local Chinese SAFE as a “special purpose vehicle”
offshore company.





On
      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.





BVI-ACM,
      through its 100% owned China-ACMH and its variable interest entity Xin Ao,
      is
      engaged in producing general ready-mixed concrete, customized mechanical
      refining concrete, and some other concrete-related products which are mainly
      sold in China.





Xin
      Ao,
      licensed by Beijing Administration of Industry & Commerce, PRC, was
      established on June 28, 2002 with an initial capital contribution of
      approximately $3,630,000 (RMB30 million) and owned by Beijing Shang Di Xing
      Da
      Mixed Soil Ltd Co. (“Shang Di”) with 79% of ownership and Beijing Heng Xin Ao
      Tong Trading Ltd. (“Heng Xin”) with 21% of ownership. On September 17, 2004,
      Shang Di transferred its 79% ownership in Xin Ao to Beijing Boya Fangyuan
      Investment Management Co. (“Boya Fangyuan”) and Heng Xin transferred its 21%
      ownership to Beijing Jia Shi Long Teng Technology Development Co. (“Jia Shi Long
      Teng”). The transfers were approved at Xin Ao’s shareholder
      meeting.




-
          4
          -




On
      July
      8, 2005, the Board of Directors of Xin Ao made a decision to increase its
      registered capital from approximately $3,630,000 (RMB30 million) to $12,100,000
      (RMB100 million) through the use of Xin Ao’s undistributed profits. The
      percentage of the shareholders did not change and the registered capital
      contributed by Boya Fangyuan had increased from approximately $2.9 million
      (RMB23.7 million) to $9.6 million (RMB79 million) and by Jia Shi Long Teng
      had
      increased from approximately $762,300 (RMB6.3 million) to $2.5 million (RMB21
      million). On the same day, Xin Ao had an ownership change with Boya Fangyuan
      transferring 50% of its 79% ownership, which was approximately $6.05 million
      (RMB50 million) of registered capital to Mr. Han Xianfu and Jia Shi Long Teng
      transferring 1% of its 21% interest to Mr. Han Xianfu. In December 2005, Jia
      Shi
      Long Teng transferred its remaining 20% ownership in Xin Ao to Boya Fangyuan.
      On
      August 27, 2007, Boya Fangyuan transferred its 9% to Mr. Han Xianfu and 40%
      to
      Mr. He Weili.




As
      discussed above, on November 28, 2007, China-ACMH entered a series of
      contractual arrangements with Xin Ao and its shareholders pursuant to which
      China-ACMH effectively assumes control 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.





Through
      China-ACMH, BVI-ACM operates and controls Xin Ao. The reasons that BVI-ACM
      used
      the contractual arrangements to acquire control of Xin Ao, instead of using
      a
      complete acquisition of Xin Ao’s assets or equity to make Xin Ao a wholly-owned
      subsidiary of BVI-ACM, are that (i) new PRC laws effective as of September
      8,
      2006, governing share exchanges with foreign entities, make the consequences
      of
      such acquisitions uncertain and (ii) other than by share exchange transactions,
      PRC law requires Xin Ao to be acquired for cash, and BVI-ACM was not able to
      raise sufficient funds to pay the full appraised value for Xin Ao’s assets or
      shares as required under PRC law.





**Acquisition
      of BVI-ACM and Related Financing**





On
      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.




Upon
      the
      closing of the reverse acquisition, Brandi Iannelli, our former President,
      Chief
      Executive Officer, Chief Financial Officer, Principal Accounting Officer, and
      Chairman and Frank Iannelli, our former Secretary, Treasurer and Director
      resigned from their respective positions. Xianfu Han, Weili He and Xiangsheng
      “Norman” Xu were appointed to the board of directors at the closing of the
      reverse acquisition. In addition, our executive officers were replaced by the
      BVI-ACM executive officers upon the closing of the reverse acquisition as
      indicated in more detail below.




For
      accounting purposes, the share exchange transaction was treated as a reverse
      acquisition with BVI-ACM as the acquirer and TJS Wood Flooring, Inc. as the
      acquired party. When we refer in this prospectus to business and financial
      information for periods prior to the consummation of the reverse acquisition,
      we
      are referring to the business and financial information of BVI-ACM on a
      consolidated basis unless the context suggests otherwise.





Thereafter
      on June 11, 2008, we completed a private placement pursuant to which we sold
      to
      27 accredited investors 875,000 investment units, or Units, for a total of
      $7,000,000 in gross proceeds. Each Unit consists of one share of the Company’s
      Series A Convertible Preferred Stock, each share of which is convertible into
      four shares of our common stock, and a common stock purchase warrant for the
      purchase of two shares of our common stock at an exercise price equal to $2.40
      per share. After the payment of certain fees and expenses in connection with
      the
      private placement, the net proceeds to the Company was $5,223,291.





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          5
          -




In
      connection with the private placement, we agreed to file a registration
      statement on Form S-1 within 60 days after the closing of the private placement
      and have it declared effective within 120 days after its closing to register
      (i)
      100% of the shares of our common stock underlying the Series A Convertible
      Preferred Stock; (ii) 100% of the shares of our common stock underlying the
      warrants sold to the investors as well as the warrants issued to the placement
      agent; (iii) the 3,500,000 shares of Common Stock which may be transferred
      to
      the Investors pursuant to a Make Good Escrow Agreement (as discussed below);
      and
      (iv) 100% of the Warrants purchased in the private placement. In the event
      of a
      full review of the Registration Statement by the SEC, the deadline for
      effectiveness will be extended by 30 days.




If
      a
      registration statement covering the registration of the shares described above
      is not declared effective by the effectiveness deadline, the Company will be
      obligated to pay to each investor in the private placement, as liquidated
      damages, a cash payment equal to 1.5% of the aggregate amount invested by such
      investor for every 30-day period, calculated pro rata, until the registration
      statement has been filed or declared effective. The total cash payment made
      by
      the Company pursuant to such registration obligation will not exceed $420,000,
      or 6% of the gross proceeds of the private placement.





The
      following table indicates the total possible profit the investors in the private
      placement could recognize from the sale of the shares underlying the Series
      A
      Convertible Preferred Stock:





Shares of
              Common
              Stock
              Underlying
              Series A
              Convertible
              Preferred
              Stock
              purchased by
              the investors
            
            Market Price
              of Common
              Stock on the
              date of sale of
              the Series A
              Preferred
              Stock (1)
            
            Conversion
              Price (2)
            
            Shares of
              Common
              Stock
              Multiplied by
              the Market
              Price
            
            Shares of
              Common
              Stock
              Multiplied by
              the Conversion
              Price
            
            Discount to
              Selling
              Shareholders3,500,000
            
            $
            2.00
            
            $
            2.00
            
            $
            7,000,000
            
            $
            7,000,000
            
            $
            0.00




(1)
At
      the
      time of the sale of the Series A Convertible Preferred Stock no established
      trading market existed for our common stock. Accordingly, the market price
      of
      our common stock at the time of the private placement was determined by valuing
      the Company at $21,000,000 based on arms-length negotiations between the Company
      and the investors in the private placement. At the time of the private
      placement, there were 10,500,000 shares of our common stock outstanding.
      Accordingly, each share of common stock was therefore valued at $2.00 per
      share.





(2)
      The
      determination to set the price to convert each share of Series A Convertible
      Preferred Stock into four shares of common stock at $8.00, or $2.00 per share
      of
      common stock, was based on arms-length negotiations between the Company and
      the
      investors in the private placement.




The
      following table indicates the total possible profit the investors in the private
      placement could recognize from the sale of the shares underlying the
      warrants:





Shares of
              Common Stock
              Underlying
              Warrants
              purchased by
              investors
            
            Market Price
              on the date of
              sale of the
              Warrants (1)
            
            Exercise Price
              (2)
            
            Shares of
              Common Stock
              Multiplied by
              the Market
              Price
            
            Shares of
              Common Stock
              Multiplied by
              the Exercise
              Price
            
            Discount to
              selling
              shareholders1,750,000
            
            $
            2.00
            
            $
            2.40
            
            $
            3,500,000
            
            $
            4,200,000
            
            $
            0.00




(1)
At
      the
      time of the sale of the Series A Convertible Preferred Stock no established
      trading market existed for our common stock. Accordingly, the market price
      of
      our common stock at the time of the private placement was determined by valuing
      the Company at $21,000,000 based on arms-length negotiations between the Company
      and the investors in the private placement. At the time of the private
      placement, there were 10,500,000 shares of our common stock outstanding.
      Accordingly, each share of common stock was therefore valued at $2.00 per
      share.





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          6
          -




(2)
      The
      determination to set the price to exercise each warrant into two shares of
      common stock at $4.80, or $2.40 per share, was based on arms-length negotiations
      between the Company and the investors in the private placement.




**OUR
      BUSINESS**




**Overview**




We
      are a
      producer of advanced ready mix concrete materials in Beijing, China. We are
      committed to conducting our operations with an emphasis on the extensive use
      of
      recycled waste materials, the efficient production of our concrete materials
      with minimal energy usage, dust and air pollution, and innovative products,
      methods and practices.




We
      are
      able to meet the stringent environmental and technical needs of a rapidly
      growing market. The types of projects that we provide concrete for include
      large
      express railways, bridges, tunnels, skyscrapers, dams, and nuclear reactor
      infrastructure projects that many competitors are not able to produce due to
      technical difficulties, resource and information limitations. Recent projects
      for which we have acted as a leading concrete and structural materials provider
      include the new CCTV broadcasting site in Beijing, the Beijing-Tianjin Intercity
      Rail/Beijing South Railway Station, the Beijing Olympic Park Conference Center,
      Financial Street F2 Office Building, DongGuan Bridge Project, and MaJuQiao
      Residential Project.




**Our
      Industry**





China
      is
      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. According
      to the Industrial Ceramics, Vol. 27, February 2007, total revenues for the
      Chinese construction materials market in 2006 was approximately $171.5 billion.”
and that “[i]t is estimated that the total production value will reach $294.8
      billion by 2011, an average annual growth rate of 11.4%. (Industrial Ceramics,
      Vol. 27, February 2007,” page 142). This information is publicly available
      at**www.technagroup.it/sample_IC.pdf**.According
      to the National Development and Reform Commission, or NDRC, total revenues
      for
      the industry during the first five months of 2008 was approximately $112.8
      billion, representing an increase of 33.4% over the same period in 2007. Also
      according to the NDRC, profits by companies in the construction materials market
      in China during the first five months of 2008 were approximately $5.26 billion,
      representing an increase of 43.6% over the same period in 2007”, is the “Year
      2008 First Five Months Construction Material Industry Sector Analysis” provided
      by the National Development and Reform Commission (NDRC). The Chinese version
      of
      this information is publicly available on NDRC’s website at**http://yxj.ndrc.gov.cn/gjyx/jc/t20080714_223974.htm**.





***Construction
      Demand in China***





Concrete
      product producers will remain the largest market for cement in China, accounting
      for approximately 40% of all cement consumption in 2010. The government’s
      continued efforts to modernize the country’s infrastructure is exemplified by
      such massive projects as the South-North Water Diversion — designed to redirect
      water to the northern plains from Central and South China. This project,
      scheduled for completion in 2050, will result in annual cement consumption
      of
      over one million metric tons alone.





China
      accounts for half of all new building activity in the world and rapid expansion
      is expected to continue to 2030 as up to 400 million citizens are expected
      to
      move into urban areas.





***China’s
      Cement & Concrete Demand***





Residential
      and non-residential buildings in China are increasingly requiring much more
      concrete due to, among other reasons, the short supply of wood. China is
      currently the largest consumption market of cement worldwide at over $200
      billion annually. China’s cement consumption will amount to approximately 44% of
      global demand in 2008 and will be greater than current combined consumption
      of
      India and the U.S. by 2010. According to the National Development and Reform
      Commission, companies in the construction materials market in China recognized
      a
      92.6% increase in profits from 2005 to 2006. The government’s continued efforts
      to modernize the country’s infrastructure is exemplified by such projects as the
      South-North Water Diversion. At the present rate, it is presumed that China
      will
      continue to be an important player in the global construction materials
      marketplace for at least the next two decades.





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          7
          -




According
      to custom statistics included in the *China Cement Industry Research Report 2007-2008* prepared
      by Research and Markets, in 2007 total exports of cement from China was 33.01
      million tons, valued at approximately $1.15 billion. The primary importers
      of
      Chinese cement include Europe, the United States and the United Arab Emirates,
      which imported 9.743 million tons, 5.315 million tons and 3.39 million tons
      in
      2007, respectively. These three markets accounted for 55.9% of total cement
      exports from China.





***Demand
      for Ready-Mixed Concrete***




We
      anticipate that cement demand in the ready-mixed concrete market will realize
      the strongest gains of any market category through 2010, with an annual increase
      of 11.2%. Recognizing the environmental devastation created from the massive
      construction activities undertaken in the past few decades, and the thousands
      more in the foreseeable future, China’s government implemented Decree #341 in
      2004 which bans onsite concrete production in over 200 major cities across
      China
      in order to reduce environmental damage from onsite cement mixing and improve
      the quality of concrete used in construction.




***Competitive
      Market for Ready-Mixed Materials in China***




China’s
      concrete market is considered highly competitive, with over 100,000 providers.
      Global Information Inc. reports that ready-mix concrete companies will benefit
      from an extremely favorable outlook in China, where large-scale construction
      projects will require significant amounts of ready-mixed concrete. In the
      Beijing concrete market, for example, no competitor has greater than a 10%
      market share.





We
      currently have an estimated market share of 6.8% in the open tendered ready
      mix
      concrete market in Beijing. Our management believes that we have the ability
      to
      capture a much greater share of the Beijing market and further expand our
      footprint in China via expanding relationships and networking, signing new
      contracts, and continually developing innovative and eco-friendly ready mix
      products.




Sources: *China Society of Structural Materials, Real Wealth Report, BCC Research,
      Freedonia Group* China
      Concrete http://www.chinahnt.com, Company Estimates





**Our
      Competitive Strengths**





We
      believe that the following competitive strengths enable us to compete
      effectively and to capitalize on the growth of the 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 present less credit risks to us. For the the
                year ended June 30, 2008, our top ten customers’ sales accounted
                for 58.20% of total sales; the largest three customers accounted
                for
                16.9%, 8.6% and 6.2% of total sales,
                respectively.





·
            ***Experienced
                Management***.
                Management’s technological knowledge and business relationships gives us
                the ability to secure major infrastructure projects, which provides
                us
                with leverage to acquire less sophisticated operators, increase production
                volumes, and implement quality standards and environmentally sensitive
                policies.





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          8
          -





·
            ***Innovation
                Efforts***.
                We strive to produce the most technically and scientifically advanced
                products to our customers and maintain close relationships with Tsinghua
                University, Xi’an University of Architecture and Technology
                and Beijing Dongfangjianyu Institute of Concrete Science &
                Technology which assist us with our research and development activities.
                As a result of our relationships with these universities and institute,
                we
                have realized an advantage over many of our competitors by gaining
                access
                to a wide array of resources and
                knowledge.





**Our
      Growth Strategy**





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




·
            ***Capacity
                Expansion via Building New Plants***.
                We plan to add up to three additional plants within the next six
                to
                eighteen months in order to meet the requirements of existing contracts
                and anticipated demand. We plan to add three more mixer stations
                in 2009
                and 2010 as part of our long-term expansion
                plans.





·
            ***Mergers
                and Acquisitions***.
                We intend to capitalize on the challenges that smaller companies
                are
                encountering in our industry by acquiring complementary companies
                at
                favorable prices. We believe that buying rather than building capacity
                is
                an option that may be attractive to us if replacement costs are higher
                than purchase prices. We are currently looking into acquiring smaller
                concrete manufacturers in China as part of our expansion plans; further
                information will be reported when key details have been confirmed.
                No
                Letters-of-Intent have been entered into or specific targets identified
                at
                this time.





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




·
            ***Supply
                Chain Efficiencies and Scale***.
                We intend to streamline our supply chain process and leveraging our
                economies of scale.





·
            ***New
                Product Offering***.
                We plan to produce a lightweight aggregate concrete for use in projects
                and to expand product offerings to include pre-cast
                concrete.





**Our
      Operations**





We
      provide materials and services through our network of seven ready-mixed concrete
      plants throughout Beijing. We own all of the production equipment, as well
      as
      fifty-four concrete mixers and eight pump trucks at one of our plants, though
      we
      do not own the land use rights or the factory buildings, which we lease from
      the
      owner, Beijing SanTaiSan Chemical Trading & Logistics Co. At two of our
      plants, we lease all of the production equipment, mixers, pump trucks and
      factory buildings from the plant owners. At the remaining four plants, which
      are
      independently operated, we perform work through technical services and preferred
      procurement agreements.




In
      fiscal
      year 2007 and in the first half of fiscal year 2008, we solely operated out
      of
      one plant, which has an operating capacity of 768,000 cubic meters. For year
      ended June 30, 2008 and 2007, we produced approximately 699,550 cubic meters
      and
588,100
      cubic meters, respectively, of ready mix concrete.





-
          9
          -




We
      also
      have an extensive fleet of 54 concrete mixers, eight pump trucks, and have
      access to an additional 10-20 rental vehicles if needed for certain larger
      projects. All vehicles are equipped with GPS and tracking devices from the
      plants central dispatch center in order to optimize capacity utilization,
      production and delivery schedules.





We
      are
      led by a well-rounded management team that, in only five years, has built a
      fast-growing, highly-profitable concrete company. Our success has been achieved
      by consistently delivering quality products and services backed by a team of
      dedicated managers and employees. Collectively, the management team has
      extensive experience in engineering, operations, construction materials and
      working in the concrete industry. Through the Company’s extensive relationships
      with R&D institutions and industry associations, we have access to a large
      pool of experienced managers and knowledgeable advisors.





***Products
      and Services***





As
      architectural designs have become more complex, challenging, and modern in
      scope, the need for technology driven companies, such us, to provide high-end
      specialty concrete mixtures has been rapidly accelerating. 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 C15 to C100
      range of 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.
      Such concrete is the most common form of concrete, and 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.




This
      sector in the concrete market is growing at an immensely 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 cement mixing and improves the
      quality of cement 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 to use at least
      30%
      recyclable components in our mixtures.





We
      are
      building a product portfolio that serves the diverse needs of our developing
      customer base and its unique construction and infrastructure projects. While
      we
      mainly specialize in ready-mix concrete formulations from controlled
      low-strength material to high-strength concrete, each specifically formulated
      to
      meet the individual 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





-
          10
          -




**Our
      Customers**





For
      the
      fiscal year 2008 which ended on June 30, 2008, we had one customer, China
      Railway Construction, Beijing South Station Branch, whose sales accounted for
      more than 10% of our total sales. Our top ten customers, identified in the
      table
      below, accounted for 58.20% of our total sales for fiscal year ended June 30,
      2008.


No.
              
              Customer Name
              
              % of Total
                Sales1
              
              China Railway Construction Group,
                  Beijing South Station Branch
              
              16.89%2
              
              China
                  Railway Construction Group, He Xie Jia Yuan Branch
              
              8.62%3
              
              China
                  Construction Group, Bureau 8, Xia Hong Men Residential Project
                  R6R
              
              6.24%4
              
              Beijing
                  Chong Jia Engineering Co., Ltd. - Jing Yu Chi Phase II
              
              5.79%5
              
              Beijing
                  Great Wall Eng. Mo Shi Chang Residential
              
              5.71%6
              
              Beijing
                  Xing Wang Bridge Construction Co., Ltd. - South Airport Jing Cheng
                  Highway
              
              4.34%7
              
              China
                  Construction Group, Bureau 5, Zhong Hai Zi Yu Gong Guan
              
              2.90%8
              
              China
                  Railway Construction Group, Bureau 6, Beijing Railway Construction,
                  South
                  Station Expansion Project
              
              2.74%9
              
              Beijing
                  Tianrun Construction, Finance Street E7,E8
              
              2.60%10
              
              Guangdong
                  Hang Jian Branch 3
              
              2.38%Total
              
              58.20%





Recent
      notable projects and clients include:





**Client**
            
            **Project Description**
            
            **Contract Value**China State
                Construction Engineering Corp.
            
            Construction
                of new CCTV site
            
            $
            3,966,114Beijing
                Railway Construction Company Ltd.
            
            Construction
                of Beijing-Tianjin Intercity Rail
            
            $
            6,492,000Beijing
                Railway Construction Company Ltd.
            
            Construction
                of Beijing South Railway Station (project ongoing)
            
            $
            4,293,113China
                State Construction Engineering Corp.
            
            Construction
                of Beijing Olympic Park Conference Center
            
            $
            1,402,236





We
      were
      also the exclusive concrete supplier to a recent 50,000 cubic meter U.S. Embassy
      Project, which satisfied both the U.S. and the international ASTM standards.
      The
      project was completed in 2007 with total project sales & services revenue of
      $400,000.




Developing
      New Relationships





Our
      sales
      strategy focuses on building new long-term cooperative relationships with some
      of China’s top construction companies in order to benefit from their reputations
      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 our 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.
      The
      main components of our products include cement, fly ash, slag powder, admixture,
      sand and gravel. Our primary suppliers of each are:




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          11
          -




**Raw Material**
            
            **Suppliers**Cement
            
            Beijing
                Jinyu Group Co., Ltd. Cement Branch and Beijing Xingang Cement Making
                Co.,
                Ltd.Fly
                ash
            
            Beijing
                Kunhaijiang Construction Material Supply Station and Beijing Xingda
                Huanqiu Industry Trade Co., Ltd.Slag
                powder
            
            Chengde
                Jinyunda Trade Co., Ltd. and  Tangshan Xintai Environmental Protected
                Construction Material Co., Ltd.Admixture
            
            Xika(China)
                Construction Material Co., Ltd. and Beijing Jiankai Waijiaji Co.,
                Ltd.Sand
            
            Sanhe
                Qibaihu Jianmin ShiliaochangGravel
            
            Sanhe
                Huangtuzhuang Xinda Shiliaochang and  Sanhe Duanjialingzhen Lingtong
                Shiliaocheng





We
      believe we are not dependent on any of these suppliers and will be able to
      replace them, if necessary, without material difficulties.





**Sales
      and Marketing**




Our
      marketing efforts are geared towards advancing China-ACMH as the supplier of
      choice for building 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 on its successful reputation. The
      primary goal when expanding into new markets is to reinforce the sales effort
      by
      promoting positive testimonials and success stories from the Company’s strong
      base of high profile clients.





***Research
      and Development***





Construction
      materials companies are under extreme pressure to respond quickly to industry
      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 demands of project specific needs 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, access to highly
      specialized market research, cooperation with a leading research institution,
      experienced management and advisory board, and close relationships with leading
      concrete materials experts. Our research and development expense amounted to
      $6,000 and $165,000 for the years ended June 30, 2008 and 2007, respectively.





University
      Relationships & Cooperation Agreements





We
      have
      strong relationships with Tsinghua University and the Xi’an University of
      Architecture and Technology. We have signed a ten-year cooperation agreement
      with Xi’an University on June 10, 2007 pursuant to which we will pay
      approximately $42,857 to Xi’an University per year and Xi’an University will set
      up a technical research center to conduct scientific research for the Company
      and work with the Company in the areas of technical development, engineering
      design and human resource training according to the Company’s business
      strategies and requirements. Xi’an University is a top university in the fields
      of building and material science research and education and works with the
      Company to follow the advancements of the cement and concrete industries
      globally.





Beijing
      Concrete Institute Partnership





The
      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 participated
      and
      collaborated with national and local government agencies to establish the
      following industry standards:




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          12
          -




·
            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




·
            Technical
                Code for Application of Mineral Admixture GBJXX-XX (in the approval
                process)




·
            Standard
                For Inspection And Assessment of Strength Of Concrete GBJ107-XX (in
                discussion)




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. The Beijing Concrete Institute was established by our Chairman
      and
      Vice Chairman, which currently maintain majority ownership. As such, we work
      closely with the institute and, in return for sponsoring multiple research
      initiatives, have been granted exclusive work space for the development of
      the
      materials used for our existing plant’s regional projects.





We
      are
      able to use the Research Findings & Technical Publication and Procedures of
      the Beijing Concrete Institute in our business, which provides us with an
      advantage over many of our competitors. Because our five year exclusive contract
      with the institute, our competitors are unable to benefit from the same findings
      for commercial use. 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




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          13
          -




·
            State
                Swimming Center for Concrete Cracking Control
                Technology




In
      addition, we are able to collaborate closely with the institute and its
      executives who play a strong role 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 more advanced products and processes developed through our relationships
      with research institutes and universities include:





*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 relates to the compressive
      strength that refers to 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 firms in the Beijing area have the expertise to produce C100
      High Performance Concrete.





*Compound
      Admixture Concrete*





This
      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 adding. The mixture is the sixth composite
      of the concrete which adds water reducing admixture to produce a high quality
      concrete.




*Lightweight
      Aggregate Concrete & Innovative Pumping Technology*





This
      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. After
      preservation, a shell will be made. Lightweight aggregate concrete prepared
      using the above pretreatment method, will dry quicker under pumping pressure,
      and maintain saturation state. Accordingly, lightweight aggregate concrete
      will
      be easily pumped which can shorten construction time.





*Energy-saving
      Technologies of Phase Change Thermostat Concrete*





Energy
      conservation concrete may adjust and reflect process temperature, and
      temperature self-control may solve cracking brought by cement heat of hydration
      in large-scale concrete.





*Polycarboxylate
      Series High Performance Water Reducing Agent Compositing
      Technique*





The
      research and production of water reducing admixture in the world tends to be
      high performance and low polluting. Super plasticizer Polycarboxylate series
      with high water reducing rates is an attractive admixture in that it prepares
      high strength concrete, super-strength concrete, high fluidity and super
      plasticizer concrete, and self-dense concrete. The water reducing rate of
      Polycarboxylate series product may reach 20% to 25%, which is higher than the
      Naphthaline series water reducing agent, which is the current industry standard.
      The cost of the water reducing agent is well situated and it may be used to
      prepare high strength and performance concrete instead of the Naphthaline series
      water reducing agent.





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          14
          -




*Application
      of Reused Water in Concrete*





The
      re-use of waste water of a concrete plant to mix concrete is significant as
      its
      saves production costs, minimizes fresh water use and represents an efficient
      approach to address industrial wastes. 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 our principal market.




We
      compete primarily on the basis of quality, technological innovation and price.
      Our main comeptitors include Jiangong Shanggong Center, Jingo Group Concrete,
      Zhuzong Shanggong Center and Zhonghang Konggang Concrete.





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 contract schedules or prior experience with the customer
      are often just as important. Within our markets, we compete with many national,
      regional and local construction firms. Some of these competitors have achieved
      greater market penetration or have greater financial and other resources than
      us.





There
      are
      approximately 130 concrete mixture stations in the Beijing area. The concrete
      production industry is highly segmented, with no single supplier having greater
      than a 10% market share.




**Intellectual
      Property**




We
      do not
      have any patents or other registered intellectual property.





**Properties**




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 three year term beginning on October 1, 2007, with the option to extend
      following expiration. Annual rent on the property is approximately
      $139,000.




The
      Company also has an extensive fleet of 54 concrete mixers, eight pump trucks,
      and access to an additional 10-20 rental vehicles depending on specific project
      requirements. All vehicles are equipped with GPS and tracking devices from
      the
      plants central dispatch center in order to optimize capacity utilization,
      production and delivery schedules.





**Environmental
      Matters**




We
      are
      required to comply with environmental protection laws and regulations
      promulgated by the Ministry of Construction and the State Environmental
      Protection Administration. Some specific environmental regulations apply to
      sealed transportation of dust materials and final products, non-open storage
      of
      sand and gravel, as well as reduction of noise and dust pollution on production
      site and encouraged 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 ten companies in the industry that have
      been
      awarded the honor of “Green Concrete Producer” by the PRC
      government.





-
          15
          -




**Regulation**




The
      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
      qualification, registered capital and capital equipment, as well as performance
      on past projects. Level II companies are licensed to produce concrete of all
      strength levels as well as special concrete, and Level III producers are
      licensed to produce concrete with strength level C60 and below. We are a Level
      II concrete producer.





Additionally,
      to make improvements at our currently existing plants, we do not need to apply
      for regulatory approval. However, in order to build a new concrete plant, 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 costs to apply
      for (i), (ii) and (iii) are approximately $44, $442, and $147, respectively.
      The
      time estimated to receive each of these approvals is approximately one month.
      We
      are quite confident that we can receive these approvals. In the past, we have
      not been rejected by any of these three regulators for
      approval.





**Our
      Employees**




As
      of
      June 30, 2008, we employed 226 full-time employees. The following table sets
      forth the number of our full-time employees by function as of June 30,
      2008




As of
              June 30, 2008**Functions**Executives
                Management & Sales
            
            
            34Technical
                & Engineering Staff
            
            
            24Production
                Staff
            
            
            33Administrative
                Staff
            
            
            34Drivers
                & Heavy Equipment Operators
            
            
            101**Total**
            
            
            **226**





As
      required by applicable PRC law, we have entered into employment contracts with
      all of 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 for our
      operations.




In
      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 PRC laws.




**Insurance**




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




**Litigation**




From
      time
      to time, we may become involved in various lawsuits and legal proceedings,
      which
      arise, in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. We are currently not aware
      of any such legal proceedings or claims that we believe will have a material
      adverse effect on our business, financial condition or operating
      results.





-
          16
          -




**REPORTS
      TO SECURITY HOLDERS********




We
      are
      required to file annual, quarterly and current reports, proxy statements and
      other information with the Securities and Exchange Commission and our filings
      are available to the public over the internet at the Securities and Exchange
      Commission’s website at http://www.sec.gov. The public may read and copy any
      materials filed by us with the Securities and Exchange Commission at the
      Securities and Exchange Commission’s Public Reference Room at 100 F Street N.E.
      Washington D.C. 20549. The public may obtain information on the operation of
      the
      Public Reference Room by calling the Securities and Exchange Commission at
      1-800-732-0330. The SEC also maintains an Internet site that contains reports,
      proxy and formation statements, and other information regarding issuers that
      file electronically with the SEC, at http://www.sec.gov.




**Item
      1A.    Risk Factors**




**RISKS
      RELATED TO OUR BUSINESS**




***Our
      plans to build additional plants and to improve and upgrade our internal control
      and management system will require capital expenditures in
      2008.***





Our
      plans
      to build additional plants and to improve and upgrade our internal control
      and
      management system will require significant capital expenditures in 2008. We
      may
      also need further funding for working capital, investments, potential
      acquisitions and joint ventures and other corporate requirements. We cannot
      assure you that cash generated from our operations will be sufficient to fund
      these development plans, or that our actual capital expenditures and investments
      will not significantly exceed our current planned amounts. If either of these
      conditions arises, we may have to seek external financing to satisfy our capital
      needs. Our ability to obtain external financing at reasonable costs is subject
      to a variety of uncertainties. Failure to obtain sufficient external funds
      for
      our development plans could adversely affect our business, financial condition
      and operating performance.





***Three
      customer orders consisted of 31.75% of the net sales of the Company for the
      fiscal year ended June 30, 2008, and the loss of any of these three customers
      can result in a depressive effect on our net profit.***





Our
      Company focuses on large projects for large Chinese customers. In this regard,
      during the fiscal year ended June 30, 2008, three Chinese customers orders
      consisted of 31.75% of the net sales of the Company. Should we lose any of
      these
      three customers in the future and are unable to obtain additional customers,
      our
      revenues will decrease.





***We
      may experience major accidents in the course of our operations, which may cause
      significant property damage and personal injuries.***





Significant
      industry-related accidents and natural disasters may cause interruptions to
      various parts of our operations, or could result in property or environmental
      damage, increase in operating expenses or loss of revenue. The occurrence of
      such accidents and the resulting consequences may not be covered adequately,
      or
      at all, by the insurance policies we carry. In accordance with customary
      practice in China, we do not carry any business interruption insurance or third
      party liability insurance for personal injury or environmental damage arising
      from accidents on our property or relating to our operations other than our
      automobiles. Losses or payments incurred may have a material adverse effect
      on
      our operating performance if such losses or payments are not fully
      insured.





-
          17
          -




***Our
      planned expansion and technical improvement projects could be delayed or
      adversely affected by, among other things, failures to receive regulatory
      approvals, difficulties in obtaining sufficient financing, technical
      difficulties, or human or other resource constraints.***





We
      intend
      to build up to three new production facilities during the next two years. The
      costs projected for our planned expansion and technical improvement projects
      and
      expansion may exceed those originally contemplated. Costs savings and other
      economic benefits expected from these projects may not materialize as a result
      of any such project delays, cost overruns or changes in market circumstances.





To
      make
      improvement at our currently existing plants, we do not need to apply for
      regulatory approval. However, in order to build a new concrete plant, we will
      need to (i) apply for a business license from the local Administration of
      Industry and Commerce, (ii) apply for an Industry Qualification Certificate
      from
      the local Municipal Construction Committee, and (iii) receive environmental
      approval from the local Environmental Protection Bureau in the relevant district
      area. There is no guarantee that we will be able to obtain these regulatory
      approvals in a timely manner or at all.




Additionally,
      in order to construct a new concrete plant, we will need to apply for a short
      term loan from a local commercial bank to be used for working capital. Because
      the lending policies of the local commercial banks are subject to change, there
      is no guarantee that we will be able to obtain approval for such a loan with
      conditions favorable to us in a timely manner or at all.




Failure
      to obtain intended economic benefits from these new plants and technical
      improvements projects, either due to cost overruns, our failure to obtain the
      necessary regulatory approvals or our failure to obtain necessary loan financing
      on terms favorable to us could adversely affect our business, financial
      condition and operating performances.





***We
      cannot assure you that our growth strategy will be
      successful.***





One
      of our strategies is to grow through increasing the distribution and sales
      of
      our products by penetrating existing markets in China and entering new
      geographic markets in China. However, many obstacles to entering such new
      markets exist including, but not limited to, competition from established
      companies in such existing markets in the China. We cannot, therefore, assure
      you that we will be able to successfully overcome such obstacles and establish
      our products in any additional markets. Our inability to implement this growth
      strategy successfully may have a negative impact on our growth, future financial
      condition, results of operations or cash flows.





***If
      we fail to effectively manage our growth and expand our operations, our
      business, financial condition, results of operations and prospects could be
      adversely affected.***





Our
      future success depends on our ability to expand our business to address growth
      in demand for our products and services. In order to maximize potential growth
      in our current and potential markets, we believe that we must expand our
      manufacturing and marketing operations. Our ability to accomplish these goals
      is
      subject to significant risks and uncertainties, including:




·
            the
                need for additional funding to construct additional manufacturing
                facilities, which we may be unableto
                obtain on reasonable terms or at
                all;




·
            delays
                and cost overruns as a result of a number of factors, many of which
                may be
                beyond our control, suchas
                problems with equipment vendors and manufacturing services provided
                by
                third-party manufacturers orsubcontractors;




·
            our
                receipt of any necessary government approvals or permits that may
                be
                required to expand our operationsin
                a timely manner or at all;




·
            diversion
                of significant management attention and other resources;
                and




·
            failure
                to execute our expansion plan
                effectively.





-
          18
          -




To
      accommodate our growth, we will need to implement a variety of new and upgraded
      operational and financial systems, procedures, and controls, including
      improvements to our accounting and other internal management systems, by
      dedicating additional resources to our reporting and accounting function, and
      improvements to our record keeping and contract tracking system. We will also
      need to recruit more personnel and train and manage our growing employee base.
      Furthermore, our management will be required to maintain and expand our
      relationships with our existing customers and find new customers for our
      services. There is no guarantee that our management can succeed in maintaining
      and expanding these relationships.





If
      we
      encounter any of the risks described above, or if we are otherwise unable to
      establish or successfully operate additional capacity or increase our output,
      we
      may be unable to grow our business and revenues, reduce our operating costs,
      maintain our competitiveness or improve our profitability and, consequently,
      our
      business, financial condition, results of operations, and prospects will be
      adversely affected.




***If
      we are unable to accurately estimate the overall risks or costs associated
      with
      a project on which we are bidding on, we may achieve a profit lower than
      anticipated or even incur a loss on the contract.***




Substantially
      all of our revenues and contract backlog are typically derived from fixed unit
      price contracts. Fixed unit price contracts require us to perform the contract
      for a fixed unit price irrespective of our actual costs. As a result, we realize
      a profit on these contracts only if we successfully estimate our costs and
      then
      successfully control actual costs and avoid cost overruns. If our cost estimates
      for a contract are inaccurate, or if we do not execute the contract within
      our
      cost estimates, then cost overruns may cause the contract not to be as
      profitable as we expected, or may cause us to incur losses. This, in turn,
      could
      negatively affect our cash flow, earnings and financial position.





The
      costs
      incurred and gross profit realized on those contracts can vary, sometimes
      substantially, from the original projections due to a variety of factors,
      including, but not limited to:




·
            onsite
                conditions that differ from those assumed in the original
                bid;




·
            delays
                caused by weather conditions;




·
            later
                contract start dates than expected when we bid the
                contract;




·
            contract
                modifications creating unanticipated costs not covered by change
                orders;




·
            changes
                in availability, proximity and costs of materials, including steel,
                concrete, aggregate and otherconstruction
                materials (such as stone, gravel and sand), as well as fuel and lubricants
                for our equipment;




·
            availability
                and skill level of workers in the geographic location of a
                project;




·
            our
                suppliers’ or subcontractors’ failure to
                perform;




·
            fraud
                or theft committed by our
                employees;




·
            mechanical
                problems with our machinery or
                equipment;




·
            citations
                issued by governmental authorities




·
            difficulties
                in obtaining required governmental permits or
                approvals;




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          19
          -




·
            changes
                in applicable laws and regulations;
                and




·
            claims
                or demands from third parties alleging damages arising from our work
                or
                from the project of whichour
                work is part.





***Economic
      downturns or reductions in government funding of infrastructure projects could
      significantly reduce our revenues.***





Our
      business is highly dependent on the amount of infrastructure work funded by
      various governmental entities, which, in turn, depends on the overall condition
      of the economy, the need for new or replacement infrastructure, the priorities
      placed on various projects funded by governmental entities and national or
      local
      government spending levels. Decreases in government funding of infrastructure
      projects could decrease the number of civil construction contracts available
      and
      limit our ability to obtain new contracts, which could reduce our revenues
      and
      profits.





***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 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. Our main competitors include
      Jiangong Shanggong Center, Jinyu Group Concrete, Zhuzong Shanggong Center and
      Zhonghang Konggang Concrete. 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 contract schedules
      or
      prior experience with the customer are often just as important. Within our
      markets, we compete with many national, regional and local 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.


***Risk
        factor to address the risks relating to receiving regulatory approvals and
        obtaining sufficient financing.***
  Our
        planned expansion and technical improvement projects could be delayed or
        adversely affected by, among other things, failures to receive regulatory
        approvals, difficulties in obtaining sufficient financing, technical
        difficulties, or human or other resource constraints.
 
 We
        intend
        to build up to three new production facilities during the next two years.
        The
        costs projected for our planned expansion and technical improvement projects
        and
        expansion may exceed those originally contemplated. Costs savings and other
        economic benefits expected from these projects may not materialize as a result
        of any such project delays, cost overruns or changes in market circumstances.




-
          20
          -


To
        make
        improvement at our currently existing plants, we do not need to apply for
        regulatory approval. However, in order to build a new concrete plant, we
        will
        need to (i) apply for a business license from the local Administration of
        Industry and Commerce, (ii) apply for an Industry Qualification Certificate
        from
        the local Municipal Construction Committee, and (iii) receive environmental
        approval from the local Environmental Protection Bureau in the relevant district
        area. There is no guarantee that we will be able to obtain these regulatory
        approvals in a timely manner or at all.
  Additionally,
        in order to construct a new concrete plant, we will need to apply for a short
        term loan from a local commercial bank to be used for working capital. Because
        the lending policies of the local commercial banks are subject to change,
        there
        is no guarantee that we will be able to obtain approval for such a loan with
        conditions favorable to us in a timely manner or at all.
  Failure
        to obtain intended economic benefits from these new plants and technical
        improvements projects, either due to cost overruns, our failure to obtain
        the
        necessary regulatory approvals or our failure to obtain necessary loan financing
        on terms favorable to us could adversely affect our business, financial
        condition and operating performances.




***We
      may be exposed to liabilities under the Foreign Corrupt Practices Act, and
      any
      determination that we violated the Foreign Corrupt Practices Act 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. We have
      operations, agreements with third parties and make sales in China, which may
      experience corruption. 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 discourage
      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 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 government may seek to hold our Company liable
      for
      successor liability FCPA violations committed by companies in which we invest
      or
      that we acquire.





***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 Xianfu Han, our Chairman and Chief Executive Officer and Weili He,
      our
      Vice-Chairman and Chief Operating 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
      Chairman, Xianfu Han, owns approximately 50.22% of our outstanding voting
      securities and our Vice-Chairman, Weili He, owns approximately 33.48% of our
      outstanding voting securities. 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
      may require additional capital and we may not be able to obtain it on acceptable
      terms or at all.***





We
      believe that our current cash and cash flow from operations will be sufficient
      to meet our present cash needs. We may, however, require additional cash
      resources due to changed business conditions or other future developments,
      including any investments or acquisitions we may decide to pursue. If these
      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:




-
          21
          -




·
            investors’
                perception of, and demand for, securities of Chinese-based companies
                involved in construction supply or concrete
                industries;





·
            conditions
                of the U.S. and other capital markets in which we may seek to raise
                funds;





·
            our
                future results of operations, financial condition and cash flows;
                and





·
            economic,
                political and other conditions in
                China.





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 and our ability to have those controls attested to by our
      independent auditors.***





As
      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, including Form 10-K. In addition, the independent registered public
      accounting firm auditing a company’s financial statements must also attest to
      and report on management’s assessment of the effectiveness of the company’s
      internal controls over financial reporting as well as the operating
      effectiveness of the company’s internal controls. We were not subject to these
      requirements for the fiscal year ended June 30, 2007, accordingly we have not
      evaluated our internal control systems in order to allow our management to
      report on, and our independent auditors to attest to, our internal controls
      as
      required by these requirements of SOX 404. Under current law, we will be subject
      to these requirements beginning with our annual report for the fiscal year
      ending June 30, 2009, although the auditor attestation will not be required
      until our annual report for the fiscal year ending June 30, 2010. We can provide
      no assurance that we will comply with all of the requirements imposed thereby.
      There can be no positive assurance that we will receive a positive attestation
      from our independent auditors. In the event we identify significant deficiencies
      or material weaknesses in our internal controls that we cannot remediate in
      a
      timely manner or 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.




**RISKS
      RELATED TO DOING BUSINESS IN CHINA**




***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:




·
            the
                higher level of government
                involvement;




·
            the
                early stage of development of the market-oriented sector of the
                economy;




·
            the
                rapid growth rate;




-
          22
          -




·
            the
                higher level of control over foreign exchange;
                and




·
            the
                allocation of resources.





As
      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.





Although
      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.





Any
      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 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.




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




The
      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.




-
          23
          -




***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. Although the PRC economy has
      grown
      significantly in recent years, we cannot assure you that such growth will
      continue. A slowdown in overall economic growth, an economic downturn or
      recession or other adverse economic developments in the PRC may materially
      reduce the demand for new construction projects and adversely affect our
      business.





***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.





***PRC
      regulations relating to the establishment of offshore special purpose companies
      by PRC residents, if applied to us, may subject our PRC resident stockholders
      to
      personal liability and limit our ability to acquire PRC companies or to inject
      capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to
      distribute profits to us or otherwise materially adversely affect
      us.***





In
      October 2005, SAFE issued the Notice on Relevant Issues in the Foreign Exchange
      Control over Financing and Return Investment Through Special Purpose Companies
      by Residents Inside China, or the SAFE Notice. The SAFE Notice requires PRC
      residents to register with the appropriate local SAFE branch before using assets
      or equity interests in their PRC entities to capitalize offshore special purpose
      companies, or SPVs, or to raise capital overseas. A SAFE registration must
      be
      amended by a PRC resident if the SPV undergoes a significant event, such as
      a
      change in share capital, share transfer, merger, acquisition, spin-off
      transaction or use of assets in China to guarantee offshore obligations.
      Moreover, if the SPV was established and owned the onshore assets or equity
      interests before the implementation of the SAFE Notice, a retroactive SAFE
      registration is required to have been completed before March 31, 2006. Our
      PRC
      resident shareholders have filed their SAFE registration with the local SAFE
      branch which has indicated to us that the registrations comply with applicable
      laws. However, we cannot provide any assurances that their existing registration
      have fully complied with, and they have made necessary amendments to their
      registration to fully comply with, all applicable registrations or approvals
      required by this SAFE Notice.





-
          24
          -




Moreover,
      because of uncertainty over how the SAFE Notice will be interpreted and
      implemented, and how or whether SAFE will apply it to us, we cannot predict
      how
      it will affect our business operations or future strategies. For example, our
      present and prospective PRC subsidiaries’ ability to conduct foreign exchange
      activities, such as the remittance of dividends and foreign currency-denominated
      borrowings, may be subject to compliance with the SAFE Notice by our PRC
      resident beneficial holders. In addition, such PRC residents may not always
      be
      able to complete the necessary registration procedures required by the SAFE
      Notice. We also have little control over either our present or prospective
      direct or indirect stockholders or the outcome of such registration procedures.
      A failure by our PRC resident beneficial holders or future PRC resident
      stockholders to comply with the SAFE Notice, if SAFE requires it, could subject
      these PRC resident beneficial holders to fines or legal sanctions, restrict
      our
      overseas or cross-border investment activities, limit our subsidiaries’ ability
      to make distributions or pay dividends or affect our ownership structure, which
      could adversely affect our business and prospects.





***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.***




The
      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.




The
      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.***




The
      value
      of our common stock 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 and the net proceeds from this offering
      will be denominated in U.S. dollars, fluctuations in the exchange rate between
      the U.S. dollar and the RMB will affect the relative purchasing power of these
      proceeds, our balance sheet and our earnings per share in U.S. dollars following
      this offering. 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 after this offering 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.




-
          25
          -




Since
      July 2005, the RMB has no longer been pegged to the U.S. dollar. Although the
      People’s Bank of China regularly intervenes in the foreign exchange market to
      prevent significant short-term fluctuations in the exchange rate, the RMB may
      appreciate or depreciate significantly in value against the U.S. dollar in
      the
      medium to long term. Moreover, it is possible that in the future PRC authorities
      may lift restrictions on fluctuations in the RMB exchange rate and lessen
      intervention in the foreign exchange market.





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 cost increases on to our customers, our profitability and
      operating results will suffer.





**RISKS
      RELATED TO THE MARKET FOR OUR STOCK GENERALLY**




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





Our
      shares of common stock 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 shares of common stock 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 shares of common stock, 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 the shares of our common stock, 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 shares of common stock as collateral for any loans.





***We
      do not intend to pay dividends on shares of our common stock 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. In 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.





-
          26
          -




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





The
      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 common
      stock 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.





For
      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 common stock will qualify for exemption from the Penny
      Stock Rule. In any event, even if our common stock 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
      1B.     Unresolved Staff Comments**




Not
      applicable.




**Item
      2.        Properties**




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 three year term beginning on October 1, 2007, with the option to extend
      following expiration. Annual rent on the property is approximately
      $139,000.




The
      Company also has an extensive fleet of 54 concrete mixers, eight pump trucks,
      and access to an additional 10-20 rental vehicles depending on specific project
      requirements. All vehicles are equipped with GPS and tracking devices from
      the
      plants central dispatch center in order to optimize capacity utilization,
      production and delivery schedules.





**Item
      3.        Legal Proceedings**





From
      time
      to time, we may become involved in various lawsuits and legal proceedings,
      which
      arise, in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. We are currently not aware
      of any such legal proceedings or claims that we believe will have a material
      adverse effect on our business, financial condition or operating
      results.




-
          27
          -




**Item
      4.        Submission of Matters to a Vote of
      Security Holders**




None.




**PART
      II**




**Item
      5.        Market for Registrant’s Common
      Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**


Our
        common stock has been quoted on the OTC Bulletin Board since May 19, 2008
        under
        the symbol CADC. Prior to that date, there was no active market for our common
        stock. The following table sets forth the high and low bid prices for our
        common
        stock for the periods indicated, as reported by the OTC Bulletin Board. The
        quotations reflect inter-dealer prices, without retail mark-up, mark-down
        or
        commission, and may not represent actual transactions.
 High
                
                LowFiscal Year 2008Fourth Quarter: 4/1/08 to 6/30/08
                
                $
                2.30
                
                $
                .30
 The
          last
          reported sales price of our common stock on the OTC Bulletin Board on September
          26, 2008, was $2.60 per share. As of September 29, 2008, there were
          approximately 52 stockholders of record of our common stock.
 
 We
          have
          not declared or paid any cash dividends on our common stock and do not
          anticipate declaring or paying any cash dividends in the foreseeable future.
          We
          currently expect to retain future earnings, if any, for the development
          of our
          business. Dividends may be paid on our common stock only if and when declared
          by
          our board of directors.




**Item
      6.        Selected Financial Data**




As
      a
“smaller reporting company”, we are not required to provide the information
      required by this Item.




**Item
      7.        Management’s Discussion and
      Analysis of Financial Condition and Results of Operations**




*The
      following discussion and analysis of the results of operations and financial
      condition of China Advanced Construction Materials Group, Inc. (“China ACM”) for
      the fiscal years ended June 30, 2008 and 2007, should be read in conjunction
      with the Selected Consolidated Financial Data, China ACM’s consolidated
      financial statements, and the notes to those financial statements that are
      included elsewhere in this Form 10-K. Our discussion includes forward-looking
      statements based upon current expectations that involve risks and uncertainties,
      such as our plans, objectives, expectations and intentions. Actual results
      and
      the timing of events could differ materially from those anticipated in these
      forward-looking statements as a result of a number of factors, including those
      set forth under the Risk Factors, Special Note Regarding Forward-Looking
      Statements and Business sections in this Form 10-K. We use words such as
“anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,”
“believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions
      to identify forward-looking statements.*





**Overview**




China
      Advanced Construction Materials Group, Inc. (“China ACM”) is a holding company
      whose primary business operations are conducted through our wholly-owned
      subsidiaries BVI-ACM and China-ACMH. BVI-ACM engages in the production of
      advanced construction materials for large scale commercial, residential, and
      infrastructure developments. The Company is 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.
      BVI-ACM owns 100% of the issued and outstanding capital stock of 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
      Co.
      Ltd. (“Xin Ao”), a company incorporated under the laws of China, and its two
      shareholders pursuant to which China-ACMH effectively takes 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. As all of the companies are under common control, this has
      been accounted for as a reorganization of entities and the financial statements
      have been prepared as if the reorganization had occurred retroactively. The
      Company has consolidated Xin Ao’s operating results, assets and liabilities
      within its financial statements.




-
          28
          -







BVI-ACM,
      through China-ACMH, operates and controls Xin Ao through the contractual
      arrangements mentioned above. BVI-ACM used the contractual arrangements to
      acquire control of Xin Ao, instead of using a complete acquisition of Xin Ao’s
      assets or equity to make Xin Ao a wholly-owned subsidiary of BVI-ACM because
      (i)
      new PRC laws governing share exchanges with foreign entities, which became
      effective on September 8, 2006, make the consequences of such acquisitions
      uncertain and (ii) other than by share exchange transactions, PRC law requires
      Xin Ao to be acquired for cash and BVI-ACM was not able to raise sufficient
      funds to pay the full appraised value for Xin Ao’s assets or shares as required
      under PRC law.





Together
      with our subsidiaries, we are an advanced ready-mix concrete provider in the
      Beijing area with an estimated market share of 6.8% in the open tendered
      ready-mix concrete market in Beijing. Our management believes that we have
      the
      ability to capture a much greater share of the Beijing market and further expand
      our footprint in China via expanding relationships and networking, signing
      new
      contracts, and continually developing market-leading innovative and eco-friendly
      ready-mix concrete products.





In
      the
      fiscal year ended June 30, 2007, and in the first half of the fiscal year ended
      June 30, 2008, we operated our sole facility with a production capacity of
      768,000 cubic meters. In fiscal year 2007, we produced approximately 588,100
      cubic meters ready mix concrete. For the year ended June 30, 2008, we produced
      approximately 699,550 cubic meters ready mix concrete. In the second half of
      fiscal year 2008, we entered technical consulting and marketing cooperation
      agreements with several independently owned mixture stations, pursuant to which,
      we are paid certain percentages of cost savings of clients we provide technical
      support to and of sales price for projects we refer to other stations due to
      the
      restriction of our station’s geographical location.





**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 which are constructing key
      infrastructure, commercial and residential projects. Our sales efforts focus
      on
      large-scale projects and large customers which place large recurring orders
      and
      present less credit risks to us. In the fiscal year ended June 30, 2008, our
      top
      ten customers’ sales accounted for 58.2% of all sales; three of these customers
      accounted for sales of 16.89%, 8.62%, and 6.24%, respectively.




*Experienced
      Management* .
      Management’s technical knowledge and business relationships gives us the ability
      to secure major infrastructure projects, which provides us with leverage to
      acquire less sophisticated operators, increase production volumes, and implement
      quality standards and environmentally sensitive policies.




*Innovation
      Efforts* .
      We
      strive to produce the most technically and scientifically advanced products
      to
      our customers and maintain close relationships with Tsinghua University, Xi’an
      University of Architecture and Technology and Beijing Dongfangjianyu
      Institute of Concrete Science & Technology which assist us with our research
      and development activities. During our 5 year agreement with the parties, we
      have realized an advantage over many of our competitors by gaining access to
      a
      wide array of resources and knowledge.


-
          29
          -





**PRC
      Taxation**





Our
      subsidiary China-ACMH is governed by the Income Tax Law of the People’s Republic
      of China concerning Foreign Investment Enterprises and Foreign Enterprises
      and
      various local income tax laws (the Income Tax Laws).





Xin
      Ao
      has been using recycled raw materials in its production since its inception
      which entitled us to an income tax exemption from January 1, 2003 through
      December 31, 2007 as granted by the State Administration of Taxation, PRC.
      The
      Company will apply for renewal of the income tax exemption. However in the
      interim, the Company estimates Xin Ao’s net income after January 1, 2008 will be
      taxed at a rate of 25%.





On
      March
      16, 2007, the National People’s Congress of the PRC passed the new EIT Law,
      which took effect as of January 1, 2008. Under the new EIT Law, an enterprise
      established outside of the PRC with “de facto management bodies” within the PRC
      is considered a resident enterprise and will normally be subject to the
      enterprise income tax at the rate of 25.0% on its global income. The new EIT
      Law, however, does not define the term “de facto management bodies.” If the PRC
      tax authorities subsequently determine that we should be classified as a
      resident enterprise, then our global income will be subject to PRC income tax
      at
      a tax rate of 25.0%. In addition, under the new EIT Law, dividends from our
      PRC
      subsidiaries to us will be subject to a withholding tax. The rate of the
      withholding tax has not yet been finalized, pending promulgation of implementing
      regulations. Furthermore, the ultimate tax rate will be determined by treaty
      between the PRC and the tax residence of the holder of the PRC subsidiary.
      We
      are actively monitoring the proposed withholding tax and are evaluating
      appropriate organizational changes to minimize the corresponding tax impact.
      The
      new EIT Law imposes a unified income tax rate of 25.0% on all domestic-invested
      enterprises and FIEs, such as our PRC operating subsidiaries, unless they
      qualify under certain limited exceptions, but the EIT Law permits companies
      to
      continue to enjoy their existing preferential tax treatments until such
      treatments expire in accordance with their current terms. We expect details
      of
      the transitional arrangement for the five-year period from January 1, 2008
      to
      December 31, 2012 applicable to enterprises approved for establishment prior
      to
      March 16, 2007 to be set out in more detailed implementing rules to be adopted
      in the future. Any increase in our effective tax rate as a result of the above
      may adversely affect our operating results. However, details regarding
      implementation of this new law are expected to be provided in the form of one
      or
      more implementing regulations to be promulgated by the PRC government, and
      the
      timing of the issuance of such implementing regulations is currently
      unclear.




**Results
      of Operations**




The
      following table sets forth key components of our results of operations for
      the
      periods indicated, in US dollars.




**Years Ended June 30,****2008**
            
            **2007**Sales
                revenue
            
            $
            27,565,044
            
            $
            21,082,534Cost
                of sales
            
            
            20,799,398
            
            
            16,393,134Gross
                profit
            
            
            6,765,646
            
            
            4,689,400Selling,
                general and administrative expenses
            
            
            1,946,541
            
            
            1,273,415Other
                income, net
            
            
            1,139,047
            
            
            482,068Income
                before income taxes
            
            
            5,958,152
            
            
            3,898,053Income
                taxes
            
            
            1,012,382
            
            
            -Net
                income
            
            $
            4,945,770
            
            $
            3,898,053




-
          30
          -




The
      following table sets forth the results of our operations for the periods
      indicated as a percentage of total net sales:




**Years Ended June 30,****2008**
            
            **2007****As
                a percentage of Revenue**Sales
                revenue
            
            
            100
            %
            
            100
            %Cost
                of sales
            
            
            75.46
            %
            
            77.76
            %Gross
                profit
            
            
            24.54
            %
            
            22.24
            %Selling,
                general and administrative expenses
            
            
            7.06
            %
            
            6.04
            %Other
                income, net
            
            
            4.13
            %
            
            2.29
            %Income
                before income taxes
            
            
            21.61
            %
            
            18.49
            %Income
                taxes
            
            
            3.67
            %
            
            -Net
                income
            
            
            17.94
            %
            
            18.49
            %





***Comparison
      of Years Ended June 30, 2008 and 2007***





***Sales
      Revenue*** .
      Our
      sales revenue is generated from sales of our advanced ready-mix concrete
      products, marketing cooperation and technical consulting services. For the
      year
      ended June 30, 2008 as compared to the year ended June 30, 2007, the Company
      generated revenues of $27,565,044 and $21,082,534, respectively, reflecting
      an
      increase of 30.75%. Of which approximately 21.63% is attributable to increased
      sales, with the rest being due to the exchange rate effect of appreciating
      RMB
      against USD. The average price of our products remained relatively stable from
      2007 to 2008 while the sales volume increased in 2008, which contributed to
      the
      increased sales revenue. The increased volume in 2008 was due to the fact that
      we were awarded new projects and that some existing projects accelerated during
      the year, with the most prominent ones being Beijing south railway station,
      HeXie Garden residential project, XiaoHongMen New Village, JinYuChi Office
&
Hotel project. During fiscal year 2008, we also entered technical consulting
      and
      marketing cooperation agreements with several independently owned mixture
      stations, which generated revenue of $1,128,508. We believe our sales will
      continue to grow as we leverage on our existing infrastructure, begin to target
      accretive acquisition of existing ready-mixed plants, as well as expand into
      other geographical markets.





***Cost
      of Sales*** *.* Cost of
      Sales, which consists of raw materials including inbound freight charge, direct
      labor, rentals, depreciation and other overheads was $20,799,398 for the year
      ended June 30, 2008 as compared to $16,393,134 for the year ended June 30,
      2007,
      an increase of 26.88%, which is approximately in line with the increase in
      sales.




***Gross
      Profit*** .
      Our
      gross profit is equal to the difference between our sales revenue and our cost
      of sales. Gross profit was $6,765,646 for the year ended June 30, 2008 as
      compared to $4,689,400 for the year ended June 30, 2007, representing gross
      margins of approximately 24.54% and 22.24%, respectively. The 44.28% increase
      in
      gross profit is mostly attributable to increased sales as well as higher gross
      margin on technical service and marketing cooperation contracts we entered
      during 2008. We believe that this trend will continue because our sales will
      continue to grow while gross margin will remain relatively stable at current
      level.


-
          31
          -





***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
      and legal fees paid to third parties. The company incurred selling, general
      and
      administrative expenses of $1,946,541 for the year ended June 30, 2008, an
      increase of 52.86%, as compared to $1,273,415 for the year ended June 30, 2007.
      The increase is primarily due to cash and non-cash expenses associated with
      the
      reverse merger of BVI-ACM and the preferred stock offering, totaling $420,159
      and including fees paid to attorneys and consultants and non-cash charges
      related warrants issued for services. Excluding these one-time charges, we
      have
      managed to keep our selling, general and administrative expenses at
      approximately the same level as prior year measured by percentage of total
      revenue.





***Research
      and Development Costs*** .
      Research and development costs consist of amounts spent on developing new
      products and enhancing our existing products *.* Research
      and development costs totaled $6,000 for the year ended June 30, 2008, as
      compared to $165,000 for the year ended June 30, 2007. The decrease was mainly
      because we had less new product development projects in 2008.





***Other
      Income (Expenses)*** .
      Our
      other income (expenses) consists of valued added tax exemption from the
      government, financial income (expenses) and other non-operating income
      (expenses). We had net other income of $1,139,047 for the year ended June 30,
      2008 as compared to $482,068 for the year ended June 30, 2007, an increase
      of
      $656,979. The increase in net other income is partly due to receiving of value
      added tax exemption from the government, which increased 25.4% and is in line
      with the increase in concrete sales as this tax credit is related to gross
      sales
      price of our concrete products. We had other expenses of $447,145 for the year
      ended June 30, 2008 as compared to $782,884 for the year ended June 30, 2007,
      a
      decrease of $335,739. The decrease in other expenses is mainly due to lower
      interest expense in 2008. We further paid down our short-term bank loans and
      incurred less new borrowings for the year ended June 30, 2008 which resulted
      in
      lower interest expense and financial leverage as compared to the same period
      last year. **




***Provision
      for Income Taxes.*** Provision
      for income taxes amounted to $1,012,382 and $0 for the years ended June 30,
      2008
      and 2007, respectively. The Company has been using recycled raw materials in
      its
      production since its inception which entitled us to an income tax exemption
      from
      January 1, 2003 through December 31, 2007 as granted by the State Administration
      of Taxation, PRC. Starting January 1, 2008, the Company is subject to 25% income
      tax.





***Net
      Income*** .
      We had
      net income of $4,945,770 for the year ended June 30, 2008 as compared to
      $3,898,053 for the year ended June 30, 2007, an increase of 26.88%. Excluding
      exchange rate effect, the increase in net income is attributable to increased
      sales as more projects being awarded to us and the acceleration of some existing
      projects, lower interest expenses as we paid down short-term bank loans, as
      well
      as increased government value added tax exemption in line with increased sales.
      Our net margin decreased from 18.49% for the year ended June 30, 2007 to 17.94%
      for the year ended June 30, 2008 due to one-time charges associated with reverse
      merge of BVI-ACM and preferred stock offering, as well as the 25% income tax
      the
      Company began to be subject to starting January 1, 2008, partly offset by higher
      margin we realized on technical service and marketing cooperation contracts
      entered during the year. Excluding the one-time charges related to reverse
      merger and the offering, the company’s net margin for the year ended June 30,
      2008 would be 19.59%, an increase of 1.10% from prior year. Our management
      believes that our profits will continue to increase as we lease or build new
      plants to increase the customer reach to construction sites located in Beijing,
      expand into other geographical areas, as well as vertically integrate our
      operations across the supply chain, which will further lower our costs and
      provide even greater profitability.




**Liquidity
      and Capital Resources**




As
      of
      June 30, 2008, we had cash and cash equivalents of $1,910,495 and restricted
      cash of $913,092. The following table provides detailed information about our
      net cash flow for all financial statement periods presented in this Form
      10-K:


-
          32
          -





**Years Ended
                June30,****2008**
            
            **2007**Net
                cash provided by operating activities
            
            $
            5,110,924
            
            $
            2,833,576Net
                cash used in investing activities
            
            
            (8,701,026
            )
            
            (241,004
            )Net
                cash provided by (used in) financing activities
            
            
            4,376,507
            
            
            (1,608,605
            )Effect
                of foreign currency translation on cash and cash equivalents
            
            
            (300,793
            )
            
            37,094Net
                cash Flow
            
            $
            485,612
            
            $
            1,021,061





Principal
      demands for liquidity are for construction or acquisition of concrete mixture
      stations, purchases of concrete mixers and pump trucks, working capital and
      general corporate purposes.





**Comparison
      of Years Ended June 30, 2008 and 2007**





***Net
      Cash Provided By Operating Activities*** .
      We
      generated positive cash flow from operating activities for both years ended
      June 30, 2008 and 2007. Specifically, net cash provided by operating activities
      totaled $5,110,924 for the year ended June 30, 2008 as compared to $2,833,576
      for the year ended June 30, 2007. The increase in cash provided by operating
      activities was primarily due to the increase in net income, deferred cash
      payment of income taxes and collection of receivables, partially offset by
      increase in prepayments to vendors and suppliers’ demand for payables. We expect
      our cash flow from operating activities to continue to be strong as our
      projected net income continues to increase and we strengthen our efforts to
      negotiate better terms with our suppliers and customers.




***Net
      Cash Used In Investing Activities*** .
       Net cash used in investing activities was $8,701,026 **** for
      the
      year ended June 30, 2008 and $241,004 for the year ended June 30, 2007. The
      cash
      was primarily used for the purchase of concrete mixers and pump
      trucks.





***Net
      Cash Provided By/Used in Financing Activities*** .
      Net
      cash provided by financing activities totaled $4,376,507 **** for
      the
      year ended June 30, 2008 as compared to net cash used in financing activities
      of
      $1,608,605 for the year ended June 30, 2007. The reason for the increase in
      cash
      provided by financing activities was due to issuance of $7 million preferred
      stock and $873,020 non-interest bearing advances from current shareholders,
      partially offset by pay down of short-term bank loans and we no long had capital
      lease payment obligation in 2008.





On
      June
      11, 2008, the Company completed a private placement, pursuant to which we issued
      875,000 shares of redeemable preferred stock, each convertible into four shares
      of common stock at $2.00 per share, and five-year warrants to purchase 1,750,000
      shares of common stock at an exercise price of $2.40 per share, for aggregate
      gross proceeds of $7,000,000. Although there is no fixed redemption requirement,
      the entire amount of $7,000,000 could become redeemable at end of two years
      from
      closing. After
      the
      payment of certain fees and expenses in connection with the private placement,
      the net proceeds to the Company was $5,223,291 with $930,000 in an escrow
      account for future dividends and investor relation payments.In
      connection with this private placement, we incurred placement agent fee and
      expense of approximately $497,500, and issued the placement agent five-year
      warrant to purchase an aggregate of 245,000 shares of common stock at an
      exercise price of $2.40 per share. In addition, we incurred other professional
      fees and expenses totaling approximately $114,500. Pursuant to escrow agreement
      entered during the financing with investors, the Company also placed a total
      of
      $930,000 in an escrow account with the Company’s legal counsel for restricted
      use of dividend payment and investor relation activities. The net proceeds
      from
      the above financing will be used, in part, for building plant and purchasing
      concrete mixers and pump trucks.





***Cash*** *.* As
      of June 30, 2008, we had cash of $1,910,495, as compared to $1,424,883 as of
      June 30, 2007. This increase was due primarily to increase in net income,
      collection of receivables, issuance of preferred stock and advances from current
      shareholders, partially offset by suppliers’ demand for payment, repayment of
      short-term bank loans and purchase of capital assets.


-
          33
          -





The
      Company believes it can meet its liquidity and capital requirements in 2009
      from
      a variety of sources. These include present capital resources, internally
      generated cash, short-term borrowings from both related parties and financial
      institutions, and future equity financings.





***Loan
      Facilities***





We
      had a
      total of $4,271,222 and $5,876,735 outstanding on loans and credit facilities
      as
      of June 30, 2008 and 2007, respectively. The loans consisted of the
      following:





June
                30,
            
            June
                30,2008
            
            2007Loan
                from Huaxia Bank, with effective annual interest rate of 8.59%, due
                August
                10, 2008, guaranteed by Company’s shareholder Mr. Han
                Xianfu.
            
            $
            2,918,000
            
            $
            -Loan
                from Huaxia Bank, with effective annual interest rate of 6.7275%,
                due July
                11, 2007, guaranteed by an unrelated company.
            
            
            -
            
            
            2,630,000Loan
                from Beijing Rural Commercial Bank, with effective annual interest
                rate of
                7.956%, due on August 20, 2007, guaranteed by a financing company
                in
                exchange for a fee of 2.5% of the face amount of the loan.
            
            
            -
            
            
            3,024,500Loan
                from unrelated company Beijing Hengxin Huaxing Auto Accessories Company,
                with no interest, due upon demand, unsecured.
            
            
            379,340
            
            
            -Loan
                from unrelated company Beijing Hongda Huaxin Wujinjidian Company,
                with no
                interest, due upon demand, unsecured.
            
            
            204,260
            
            
            -Loan
                from unrelated company, Beijing Sigi Qingbaosan Cement Company, with
                no
                interest, due upon demand, unsecured
            
            
            116,720
            
            
            -Loan
                from unrelated individual Xia Hua Qing, with no interest, due on
                demand,
                no guarantee or collateral required.
            
            
            128,392
            
            
            -Loan
                from various employees, with effective annual interest rate of 20%,
                due
                upon demand, unsecured.
            
            
            524,510
            
            
            222,235Total
                short term loans
            
            $
            4,271,222
            
            $
            5,876,735





Total
      interest expense on short term loans for the twelve months ended June 30, 2008
      and 2007 amounted to $310,875 and $682,688, respectively.


-
          34
          -


***Obligations
      Under Material Contracts***





Below
      is
      a table setting forth our contractual obligations as of June 30,
      2008:




**Payment due by period****Total**
            
            **Less than 1 year**
            
            **1-3 years**
            
            **3-5 years**
            
            **More than**
              **5 years**Long
                term debt obligations
            
            $
            -
            
            $
            -
            
            $
            -
            
            
            -
            
            
            -Capital
                commitment
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Operating
                lease obligations
            
            
            618,025
            
            
            372,293
            
            
            245,732
            
            
            -
            
            
            -Purchase
                obligations
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Total
            
            $
            618,025
            
            $
            372,293
            
            $
            245,732
            
            
            -
            
            
            -





**Seasonality**




Our
      manufacturing operations are primarily located in northeastern China, which
      is
      extremely cold during the winter months. During such time, we are able to
      manufacture our advanced ready-mix concrete materials, however many construction
      projects operate on an abbreviated work schedule, if at all.




**Critical
      Accounting Policies and Estimates**




The
      accompanying consolidated financial statements include the financial statements
      of China ACM and its wholly owned subsidiaries, BVI-ACM, China-ACMH and its
      variable interest entity Xin Ao. All significant inter-company transactions
      and
      balances have been eliminated in consolidation. China ACM, its subsidiaries
      and
      Xin Ao, together are referred to as the Company. In accordance with FASB
      Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN
      46(R)”), variable interest entities, or 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. All VIEs 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 VIE for financial reporting
      purposes. In connection with the adoption of FIN 46(R), the Company concludes
      that Xin Ao is a VIE and China ACM is the primary beneficiary. Under FIN 46(R)
      transition rules, the financial statements of Xin Ao are then consolidated
      into
      the Company’s consolidated financial statements.





Our
      management's discussion and analysis of our financial condition and results
      of
      operations are based on the consolidated financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires us to
      make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of contingent assets and liabilities at the
      date
      of the financial statements as well as the reported net sales and expenses
      during the reporting periods. On an ongoing basis, we evaluate our estimates
      and
      assumptions. We base our estimates on historical experience and on various
      other
      factors that we believe are reasonable under the circumstances, the results
      of
      which form the basis for making judgments about the carrying value of assets
      and
      liabilities that are not readily apparent from other sources. Actual results
      may
      differ from these estimates under different assumptions or
      conditions.





While
      our
      significant accounting policies are more fully described in Note 2 to our
      consolidated financial statements included , we believe that the following
      accounting policies are the most critical to aid you in fully understanding
      and
      evaluating this management discussion and analysis:


-
          35
          -





***Accounting
      for redeemable convertible preferred stock:*** The
      Company adopted SFAS 150, “Accounting for Certain Financial Instruments with
      Characteristics of Both Liabilities and Equity” to determine the accounting
      treatment of the redeemable convertible preferred stock issued on June 11,
      2008
      which was disclosed in Note 2 to the accompanying consolidated financial
      statements. Because the terms of the stock permit the holder to demand
      redemption, the redeemable convertible preferred stock was accounted for as
      liability, and carried at the fair value of the redemption or cash settlement
      amount. In addition, the annual dividends payable to the holder regardless
      of
      the Companies profitability are more akin to debt than equity; therefore, the
      dividends are accounted for as interest. Additionally, pursuant to APB 14,
      “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants,”
the Company discounted the fair value of the warrants from the carrying value
      of
      the redeemable stock. The discount is amortized into interest expense over
      the
      two year redemption period. The Company analyzed the conversion feature and
      determined the effective conversion price was higher than the market price;
      therefore, no beneficial conversion feature was recorded.





***Use
      of estimates:*** The
      Company has identified all accounting estimates that could be material to the
      financial statements, including key factors and significant assumptions
      underlying those estimates, and the Company believes the estimates are
      reasonable in the circumstances. The Company determined the value of warrants
      convertible from the redeemable convertible preferred using the CRR binomial
      model. The volatility of the Company’s common stock was estimated by management
      based on the historical volatility of a similar US public company due to limited
      trading history of the common stock. The risk-free interest rate was based
      on
      Treasury Constant Maturity Rates published by the U.S. Federal Reserve for
      periods applicable to the expected life of the warrants. The expected dividend
      yield was based on the Company’s current and expected dividend policy and the
      expected term is equal to the contractual life of the warrants.




***Revenue
      recognition.***  The
      Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”)
      No. 101, “ *Revenue
      Recognition in Financial Statements* ”
as
      amended by SAB No. 104 (together, “SAB 104”), which specifies that revenue is
      realized or realizable and earned when four criteria are met:





·
            Persuasive
                evidence of an arrangement exists (the Company considers its sales
                contracts to be pervasive evidence of an
                arrangement);


·
            Delivery
                has occurred or services have been rendered;


·
            The
                seller’s price to the buyer is fixed or determinable; and


·
            Collectibility
                of payment is reasonably assured.





The
      Company sells its products mainly to major local construction companies. Sales
      agreements are signed with each customer. The agreements list all terms and
      conditions with the exception of delivery date and quantity, which are evidenced
      separately in purchase orders. The purchase price of products is fixed in the
      agreement and customers are not permitted to renegotiate after the contracts
      have been signed. The agreements include a cancellation clause if the Company
      breaches the contract terms specified in the agreement. The Company does not
      sell products to customers on a consignment basis. There is no right of return
      after the product has been injected into the location specified by the contract
      and accepted by the customer. The
      Company recognizes revenue when the goods are accepted by the customer and
      title
      has passed.





Sales
      revenue represents the invoiced value of goods, net of a value-added tax
      (“VAT”). All of the Company’s products that are sold in the PRC are subject to a
      Chinese value-added tax at the rate of 6% of the gross sales price.





Due
      to
      the fact that the Company uses recycled raw materials to manufacture its
      products, the State Administration of Taxation has granted the Company VAT
      tax
      exemption from August 2005 thru to August 2009. The VAT tax collected from
      the
      Company’s customers is kept by the Company and recorded as Other Subsidy
      Income.




***Accounts
      receivable.*** During
      the normal course of business, the Company extends unsecured credit to its
      customers. 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. The Company’s reserves are consistent with its historical experience
      and considered adequate by management.


-
          36
          -





The
      ultimate collection of the Company’s accounts receivable may take more than one
      year, and any portion of accounts receivable expected to be collected in more
      than one year is reflected as noncurrent, net of allowance for doubtful accounts
      relating to that portion of receivables. The bifurcation between current and
      noncurrent portions of accounts receivable is based on management’s estimate and
      predicated on historical collection experience.





***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 (“VAT”). The
      standard VAT rate is 6% of gross sales for the Company’s industry. A credit is
      available whereby VAT paid on the purchases of raw materials used in the
      production of the Company’s finished products can be used to offset the VAT due
      on sales of finished products. Due to the fact that the Company uses recycled
      raw materials to manufacture its products, the State Administration of Taxation
      has granted the Company VAT Tax Exemption from August 2005 through to August
      2009. For the years ended June 30, 2008 and 2007, $1,586,192 and $1,264,952,
      respectively, was recognized as other subsidy income from VAT taxes collected.





**Recently
      Issued Accounting Pronouncements**





SFAS
      No.
      157, “Fair Value Measurements.” defines fair value, establishes a three-level
      valuation hierarchy for disclosures of fair value measurement and enhances
      disclosures requirements for fair value measures. The carrying amounts reported
      in the balance sheets for receivables and payables qualified as financial
      instruments and are a reasonable estimate of fair value because of the short
      period of time between the origination of such instruments and their expected
      realization and their current market rate of interest. The three levels are
      defined as follow:





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


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


·
            Level
                3 – inputs to the valuation methodology are unobservable and significant
                to the fair value.





The
      provisions of SFAS No. 157 are effective for financial statements issued for
      fiscal years beginning after November 15, 2007.The Company is currently
      evaluating the impact on its consolidated financial position or result of
      operations.





In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No. 159 (“SFAS 159”), “The Fair Value Option for Financial Assets and
      Financial Liabilities-Including an amendment of FASB Statement No. 115.
      SFAS No. 159 permits entities to choose to measure many financial
      instruments and certain other items at fair value. Most of the provisions of
      SFAS 159 apply only to entities that elect the fair value option. However,
      the
      amendment to SFAS No. 115, “Accounting for Certain Investments in Debt and
      Equity Securities, applies to all entities with available-for-sale and trading
      securities. SFAS 159 is effective for financial statements with fiscal
      years beginning after November 15, 2007. The Company is currently
      evaluating the impact, if any, that the adoption of SFAS 159 will have on its
      consolidated results of operations and its financial position.





In
      December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of Accounting Research Bulletin
      No. 51” , which establishes accounting and reporting standards for ownership
      interests in subsidiaries held by parties other than the parent, the amount
      of
      consolidated net income attributable to the parent and to the noncontrolling
      interest, changes in a parent’s ownership interest and the valuation of retained
      non-controlling equity investments when a subsidiary is deconsolidated. The
      Statement also establishes reporting requirements that provide sufficient
      disclosures that clearly identify and distinguish between the interests of
      the
      parent and the interests of the non-controlling owners. SFAS 160 is effective
      for fiscal years beginning after December 15, 2008. The
      Company has not determined the effect that the application of SFAS 160 will
      have
      on its consolidated financial statements .


-
          37
          -





In
      December 2007, SFAS 141(R), Business Combinations, was issued. SFAS 141R
      requires an acquirer to recognize the assets acquired, the liabilities assumed,
      and any noncontrolling interest in the acquiree at the acquisition date,
      measured at their fair values as of that date, with limited exceptions. This
      replaces SFAS 141’s cost-allocation process, which required the cost of an
      acquisition to be allocated to the individual assets acquired and liabilities
      assumed based on their estimated fair values. SFAS 141R also requires the
      acquirer in a business combination achieved in stages (sometimes referred to
      as
      a step acquisition) to recognize the identifiable assets and liabilities, as
      well as the noncontrolling interest in the acquiree, at the full amounts of
      their fair values (or other amounts determined in accordance with SFAS 141R).
      SFAS 141R applies prospectively to business combinations for which the
      acquisition date is on or after the beginning of the first annual reporting
      period beginning on or after December 15, 2008. An entity may not apply it
      before that date. SFAS 141R will change the accounting for all future business
      combinations.





In
      March
      2008, SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities
      - An Amendment of SFAS No. 133” was issued. SFAS 161 requires (1) the
      disclosure of the fair value of derivative instruments and gains and losses
      in a
      tabular format; (2) the disclosure of derivative features that are credit
      risk-related; and (3) cross-referencing within the footnotes. The
      provisions of SFAS 61 are effective for interim period and fiscal years
      beginning after November 15, 2008. The Company does not anticipate that the
      adoption of SFAS 161 will have a material impact on its consolidated financial
      position or results of operations.





In
      June
      2008, EITF 07-5, “Determining whether an Instrument (or Embedded Feature) is
      indexed to an Entity’s Own Stock” was issued. This standard triggers liability
      accounting on all options and warrants exercisable at strike prices denominated
      in any currency other than the Company’s functional currency. This Issue is
      effective for financial statements issued for fiscal years beginning after
      December 15, 2008, and interim periods within those fiscal years. Early
      application is not permitted. The Company is currently evaluating the impact
      that EITF 07-5 will have on its consolidated financial position or result of
      operations.





In
      June
      2008, FASB issued EITF Issue No. 08-4, “Transition Guidance for Conforming
      Changes to Issue No. 98-5 (“EITF No. 08-4”)”. The objective of EITF No.08-4
      is to provide transition guidance for conforming changes made to EITF No. 98-5,
      “Accounting for Convertible Securities with Beneficial Conversion Features or
      Contingently Adjustable Conversion Ratios”, that result from EITF No. 00-27
“Application of Issue No. 98-5 to Certain Convertible Instruments”, and SFAS No.
      150, “Accounting for Certain Financial Instruments with Characteristics of both
      Liabilities and Equity”. This Issue is effective for financial statements issued
      for fiscal years ending after December 15, 2008. Early application is
      permitted. Management is currently evaluating the impact of adoption of
      EITF No. 08-4.





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity, capital
      expenditures or capital resources that is material to our
      stockholders.




**Item
      7A.     Quantitative and Qualitative Disclosures About
      Market Risk**




**Interest
      Rate Risk**




At
      times
      when we have short-term loans outstanding, we are exposed to interest rate
      risk
      due primarily to our short-term bank loans. Although the interest rates for
      our
      short-term loans are typically fixed for the terms of the loans, the terms
      are
      typically twelve months and interest rates are subject to change upon renewal.
      Since July 20, 2007, the People’s Bank of China has increased the interest rate
      of Renminbi bank loans with a term of six months or less by 0.2% and loans
      with
      a term of six to 12 months by 0.3%. The new interest rates are approximately
      6.0% and 6.8% for Renminbi bank loans with a term six months or less and loans
      with a term of six to 12 months, respectively. The change in interest rates
      has
      no impact on our bank loans secured before July 28, 2007. We monitor
      interest rates in conjunction with our cash requirements to determine the
      appropriate level of debt balances relative to other sources of
      funds.




-
          38
          -





**Credit
      Risk**





The
      Company is exposed to credit risk from its cash in bank and fixed deposits
      and
      bills and accounts receivable. The credit risk on cash in bank and fixed
      deposits is limited because the counterparties are recognized financial
      institutions. Bills and accounts receivable are subjected to credit evaluations.
      An allowance has been made for estimated irrecoverable amounts which has been
      determined by reference to past default experience and the current economic
      environment.





**Foreign
      Exchange Risk**




The
      value
      of the Renminbi against the U.S. dollar and other currencies is affected by,
      among other things, changes in China’s political and economic conditions. Since
      July 2005, the Renminbi has no longer been pegged to the U.S. Dollar. Although
      the People’s Bank of China regularly intervenes in the foreign exchange market
      to prevent significant short-term fluctuations in the exchange rate, the
      Renminbi may appreciate or depreciate significantly in value against the U.S.
      dollar in the medium to long term. Moreover, it is possible that in the future,
      PRC authorities may lift restrictions on fluctuations in the Renminbi exchange
      rate and lessen intervention in the foreign exchange market.





Because
      substantially all of our earnings and cash assets are denominated in Renminbi,
      but our reporting currency is the U.S. dollar, fluctuations in the exchange
      rate
      between the U.S. dollar and the Renminbi will affect our balance sheet and
      our
      earnings per share in U.S. dollars. In addition, appreciation or depreciation
      in
      the value of the Renminbi 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 in the future
      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.




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 Renminbi into foreign
      currencies.





Most
      of
      the transactions of the Company are settled in Renminbi and U.S. dollars. In
      the
      opinion of the directors, the Company is not exposed to significant foreign
      currency risk.




**Inflation**




Inflationary
      factors, such as increases in the cost of raw materials and overhead costs,
      could impair our operating results. Although we do not believe that inflation
      has had a material impact on our financial position or results of operations
      to
      date, a high rate of inflation in the future may have an adverse effect on
      our
      ability to maintain current levels of gross margin and selling, general and
      administrative expenses as a percentage of sales revenue if the selling prices
      of our products do not increase with these increased costs.





**Company’s
      Operations are Substantially in China**





Substantially
      all of our operations are conducted in China and are subject to various
      political, economic, and other risks and uncertainties inherent in conducting
      business in China. Among other risks, the Group’s operations are subject to the
      risks of restrictions on transfer of funds; export duties, quotas, and
      embargoes; domestic and international customs and tariffs; changing taxation
      policies; foreign exchange restrictions; and political conditions and
      governmental regulations. Additional information regarding such risks can be
      found under the heading “Risk Factors” located elsewhere in this
      prospectus.


-
          39
          -


**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
        the
        Board of Directors and Stockholders
 of
        China
        Advanced Construction Materials Group, Inc. and Subsidiaries
 
 
 We
        have
        audited the accompanying consolidated balance sheets of China Advanced
        Construction Materials Group, Inc. and Subsidiaries as of June 30, 2008 and
        2007, and the related consolidated statements of income and other comprehensive
        income, shareholders’ equity, and cash flows for each of the years in the
        two-year period ended June 30, 2008. China Advanced Construction Materials
        Group, Inc. and Subsidiaries’ management is responsible for these financial
        statements. Our responsibility is to express an opinion on these financial
        statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. The company is not required
        to
        have, nor were we engaged to perform, an audit of its internal control over
        financial reporting. Our audit included consideration of internal control
        over
        financial reporting as a basis for designing audit procedures that are
        appropriate in the circumstances, 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. An audit also includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements, assessing the accounting principles used and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audits provide a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of China Advanced Construction
        Materials Group, Inc. and Subsidiaries as of June 30, 2008 and 2007, and
        the
        results of its operations and its cash flows for each of the years in the
        two-year period ended June 30, 2008 in conformity with accounting principles
        generally accepted in the United States of America.
 
 
 /S/
        Moore
        Stephens Wurth Frazer and Torbet, LLP
 
 Walnut,
        California
 
 September
        26, 2008
 
 -
            40
            -




**Item
      8.        Financial Statements and
      Supplementary Data**


CHINA
        ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        BALANCE SHEETS
 AS
        OF
        JUNE 30, 2008 AND 2007
 
 2008
              
              2007ASSETSCURRENT
                  ASSETS:Cash
              
              $
              1,910,495
              
              $
              1,424,883Restricted
                  cash
              
              
              913,092
              
              
              -Investments
              
              
              61,767
              
              
              69,209Accounts
                    receivable, net of allowance for doubtful accounts of $224,924
                    and$53,038,
                    respectively
              
              
              9,365,486
              
              
              12,388,484Inventories
              
              
              237,836
              
              
              416,420Other
                  receivables
              
              
              505,968
              
              
              1,227,622Prepayment
              
              
              3,240,394
              
              
              512,874Total
                  current assets
              
              
              16,235,038
              
              
              16,039,492PLANT
                  AND EQUIPMENT, net
              
              
              16,730,220
              
              
              7,894,876OTHER
                  ASSETS:Financing
                  cost
              
              
              586,818
              
              
              -Accounts
                    receivable (non-current), net of allowance for doubtful accounts
                    of$411,061
                    and $96,929, respectively
              
              
              4,753,006
              
              
              2,243,566Total
                  other assets
              
              
              5,339,824
              
              
              2,243,566Total
                  assets
              
              $
              38,305,082
              
              $
              26,177,934LIABILITIES
                  AND SHAREHOLDERS' EQUITYCURRENT
                  LIABILITIES:Accounts
                  payable
              
              $
              6,293,553
              
              $
              8,453,884Customer
                  deposits
              
              
              165,434
              
              
              -Short
                  term loans
              
              
              4,271,222
              
              
              5,876,735Other
                  payables
              
              
              254,259
              
              
              142,330Other
                  payables - shareholder
              
              
              880,302
              
              
              -Accrued
                  liabilities
              
              
              145,207
              
              
              208,093Taxes
                  payable
              
              
              1,073,237
              
              
              661Current
                  portion of contribution payable
              
              
              -
              
              
              750,000Total
                  current liabilities
              
              
              13,083,214
              
              
              15,431,703Contribution
                  payable
              
              
              -
              
              
              4,250,000Redeemable
                  preferred stock ($0.001 par value, 875,000 and 0 shares
                  issued)
              
              
              5,831,452
              
              
              -net
                  of discount of $1,168,548 and $0 at June 30, 2008 and 2007,
                  respectivelyTotal
                  liabilities
              
              
              18,914,666
              
              
              19,681,703COMMITMENTS
                  AND CONTINGENCIES
              
              
              -
              
              
              -SHAREHOLDERS'
                  EQUITY:Preferred
                          stock $0.001 par value, 1,000,000 shares authorized, 875,000
                          redeemable
                          preferred shares issued and outstanding in 2008, and reported
                          in
                          liabilities above
              
              
              -
              
              
              -Common
                          Stock, $0.001 par value, 74,000,000 shares authorized,
                          10,525,000 and
                          8,809,583 shares issued and outstanding,
                          respectively
              
              
              10,525
              
              
              8,810Paid-in-capital
              
              
              13,494,105
              
              
              12,091,290Contribution
                  receivable
              
              
              (1,210,000
              )
              
              (13,470,100
              )Deferred
                  Compensation
              
              
              (27,708
              )
              
              -Retained
                  earnings
              
              
              3,072,249
              
              
              6,309,675Statutory
                  reserves
              
              
              1,452,779
              
              
              896,634Accumulated
                  other comprehensive income
              
              
              2,598,466
              
              
              659,922Total
                  shareholders' equity
              
              
              19,390,416
              
              
              6,496,231Total
                  liabilities and shareholders' equity
              
              $
              38,305,082
              
              $
              26,177,934
  See
          report of independent registered public accounting firm.
 The
          accompanying notes are an integral part of these consolidated financial
          statements.
  -
            41
            -
 
 CHINA
        ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
 FOR
        THE
        YEARS ENDED JUNE 30, 2008 AND 2007
 
 2008
              
              2007REVENUE
              
              $
              27,565,044
              
              $
              21,082,534COST
                  OF SALES
              
              
              20,799,398
              
              
              16,393,134GROSS
                  PROFIT
              
              
              6,765,646
              
              
              4,689,400SELLING,
                  GENERAL AND ADMINISTRATIVE EXPENSES
              
              
              1,946,541
              
              
              1,273,415INCOME
                  FROM OPERATIONS
              
              
              4,819,105
              
              
              3,415,985OTHER
                  INCOME, NETOther
                  subsidy income
              
              
              1,586,192
              
              
              1,264,952Non-operating
                  (expense) income, net
              
              
              (79,312
              )
              
              14,494Interest
                  expense, net
              
              
              (367,833
              )
              
              (797,378
              )TOTAL
                  OTHER INCOME, NET
              
              
              1,139,047
              
              
              482,068INCOME
                  BEFORE PROVISION FOR INCOME TAXES
              
              
              5,958,152
              
              
              3,898,053PROVISION
                  FOR INCOME TAXES
              
              
              1,012,382
              
              
              -NET
                  INCOME
              
              
              4,945,770
              
              
              3,898,053OTHER
                  COMPREHENSIVE INCOME:Unrealized
                  (loss) gain from marketable securities
              
              
              (12,482
              )
              
              8,523Foreign
                  currency translation adjustment
              
              
              1,951,026
              
              
              461,570COMPREHENSIVE
                  INCOME
              
              $
              6,884,314
              
              $
              4,368,146EARNING
                  PER SHAREBasicWeighted
                  average number of shares
              
              
              9,064,359
              
              
              8,809,583Earning
                  per share
              
              $
              0.55
              
              $
              0.44DilutedWeighted
                  average number of shares
              
              
              9,255,616
              
              
              8,809,583Earning
                  per share
              
              $
              0.35
              
              $
              0.44
  See
          report of independent registered public accounting firm.
 The
          accompanying notes are an integral part of these consolidated financial
          statements.
  -
            42
            -
 
 CHINA
        ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF SHAREHOLDERS' EQUITY
 Series
                    A Preferred Stock
                
                Common
                    stock
                
                Additional
                
                
                
                
                
                Retained
                    earnings
                
                Accumulated
                    otherNumber
                
                Par
                
                Number
                
                Par
                
                Paid-in
                
                Contribution
                
                Deferred
                
                
                
                Statutory
                
                comprehensiveof
                    shares
                
                amount
                
                of
                    shares
                
                amount
                
                capital
                
                receivable
                
                Compensation
                
                Unrestricted
                
                reserves
                
                income
                
                TotalBALANCE,
                    June 30, 2006
                
                
                -
                
                $
                -
                
                
                8,809,583
                
                $
                8,810
                
                $
                12,091,290
                
                $
                (13,470,100
                )
                $
                -
                
                $
                2,801,427
                
                $
                506,829
                
                $
                189,829
                
                $
                2,128,085Adjustment
                    to statutory reserve
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (389,805
                )
                
                389,805
                
                
                
                
                
                -Net
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,898,053
                
                
                
                
                
                
                
                
                3,898,053Unrealized
                    gain on marketable securities
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                8,523
                
                
                8,523Foreign
                    currency translation gain
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                461,570
                
                
                461,570BALANCE,
                    June 30, 2007
                
                
                -
                
                $
                -
                
                
                8,809,583
                
                $
                8,810
                
                $
                12,091,290
                
                $
                (13,470,100
                )
                $
                -
                
                $
                6,309,675
                
                $
                896,634
                
                $
                659,922
                
                $
                6,496,231Shares
                    issued due to reorganization
                
                
                
                
                
                
                
                
                1,690,417
                
                
                1,690
                
                
                (1,690
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Shares
                    issued for services
                
                
                
                
                
                
                
                
                25,000
                
                
                25
                
                
                33,225
                
                
                
                
                
                (27,708
                )
                
                
                
                
                
                
                
                
                
                
                5,542Warrants
                    issued for services
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                169,345
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                169,345Contribution
                    receivable offset with distribution owed
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                7,260,000
                
                
                
                
                
                (7,627,051
                )
                
                
                
                
                367,051
                
                
                -Capital
                    contribution received
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,000,100
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,000,100Fair
                    value of warrants issued with preferred stock
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,201,935
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,201,935Adjustment
                    to statutory reserve
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (556,145
                )
                
                556,145
                
                
                
                
                
                -Net
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                4,945,770
                
                
                
                
                
                
                
                
                4,945,770Unrealized
                    loss on marketable securities
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (12,482
                )
                
                (12,482
                )Foreign
                    currency translation gain
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,583,975
                
                
                1,583,975BALANCE,
                    June 30, 2008
                
                
                -
                
                $
                -
                
                
                10,525,000
                
                $
                10,525
                
                $
                13,494,105
                
                $
                (1,210,000
                )
                $
                (27,708
                )
                $
                3,072,249
                
                $
                1,452,779
                
                $
                2,598,466
                
                $
                19,390,416
  See
          report of independent registered public accounting firm.
 The
          accompanying notes are an integral part of these consolidated financial
          statements.
  -
            43
            -
 
 CHINA
        ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF CASH FLOWS
 FOR
        THE
        YEARS ENDED JUNE 30, 2008 AND 2007
 
 2008
              
              2007CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  income
              
              $
              4,945,770
              
              $
              3,898,053Adjustments
                    to reconcile net income to cashprovided
                    by operating activities:Depreciation
              
              
              1,178,745
              
              
              1,091,740Amortization
                  of discount on capital lease
              
              
              -
              
              
              121,834Amortization
                  of financing cost
              
              
              15,682
              
              
              -Amortization
                  of discount on convertible preferred stock
              
              
              33,387Loss
                  on disposal of equipment
              
              
              -
              
              
              7,638Bad
                  debt expense, net of recovery
              
              
              443,171
              
              
              -Warrants
                  issued for services
              
              
              169,345
              
              
              -Amortization
                  of deferred compensation expense
              
              
              5,542
              
              
              -Changes
                  in operating assets and liabilitiesAccounts
                  receivable
              
              
              (4,831,494
              )
              
              (11,539,141
              )Inventories
              
              
              211,569
              
              
              (141,789
              )Other
                  receivables
              
              
              1,109,454
              
              
              345,625Other
                  receivables - shareholders
              
              
              -
              
              
              96,068Prepayment
              
              
              (2,523,568
              )
              
              (498,652
              )Accounts
                  payable
              
              
              3,157,464
              
              
              10,056,683Customer
                  deposits
              
              
              156,125
              
              
              -Other
                  payables
              
              
              108,430
              
              
              (474,761
              )Accrued
                  liabilities
              
              
              (80,851
              )
              
              (130,365
              )Taxes
                  payable
              
              
              1,012,153
              
              
              643Net
                  cash provided by operating activities
              
              
              5,110,924
              
              
              2,833,576CASH
                  FLOWS FROM INVESTING ACTIVITIES:Acquisition
                  of property, plant, and equipment
              
              
              (8,701,026
              )
              
              (241,004
              )Net
                  cash used in investing activities
              
              
              (8,701,026
              )
              
              (241,004
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Borrowings
                  under short term loans
              
              
              3,925,075
              
              
              481,763Principal
                  payments under short term loans
              
              
              (5,906,096
              )
              
              -Restricted
                  cash
              
              
              (913,092
              )
              
              -Proceeds
                  from issuance of redeemable preferred stock
              
              
              6,397,500
              
              
              -Proceeds
                  from capital contribution
              
              
              100
              
              
              -Proceeds
                  from advances by shareholder
              
              
              873,020
              
              
              -Payments
                  on capital lease obligations
              
              
              -
              
              
              (2,090,368
              )Net
                  cash provided by (used in) financing activities
              
              
              4,376,507
              
              
              (1,608,605
              )EFFECTS
                  OF EXCHANGE RATE CHANGE IN CASH
              
              
              (300,793
              )
              
              37,094INCREASE
                  IN CASH
              
              
              485,612
              
              
              1,021,061CASH,
                  beginning of year
              
              
              1,424,883
              
              
              403,822CASH,
                  end of year
              
              $
              1,910,495
              
              $
              1,424,883
  See
          report of independent registered public accounting firm.
 The
          accompanying notes are an integral part of these consolidated financial
          statements.
  -
            44
            -
 
 CHINA
        ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
        30,
        2008
 
 **Note
        1 - Organization and description of business**
 
 China
        Advanced Construction Materials Group, Inc. (“China ACM” or the “Company”) was
        founded as an unincorporated business on September 1, 2005, under the name
        TJS
        Wood Flooring, Inc. (“TJSW”), and incorporated in the State of Delaware on
        February 15, 2007. On April 29, 2008, TJSW changed its name to China Advanced
        Construction Materials Group, Inc. in connection with a share exchange
        transaction as described below.
 
 On
        April
        29, 2008, the Company entered into and closed a share exchange agreement
        with
        Xin Ao Construction Materials, Inc. (“BVI-ACM”) whereby the Company issued to
        the stockholders of BVI-ACM 8,809,583 shares of the Company’s common stock in
        exchange for all of the issued and outstanding capital stock of BVI-ACM (the
        “Share Exchange”). Prior to the Share Exchange, and after the cancellation of
        9,990,000 shares, China ACM had 1,166,667 shares of common stock issued and
        outstanding. After the Share Exchange, China ACM had 10,500,000 shares of
        common
        stock outstanding and the former shareholders of BVI-ACM owned 90.79% of
        the
        issued and outstanding shares. The directors and executive officers of BVI-ACM
        became the directors and officers of China ACM. This transaction has been
        accounted as a reverse acquisition and recapitalization of the Company whereby
        BVI-ACM is deemed to be the accounting acquirer (legal acquiree) and the
        Company
        the accounting acquiree (legal acquirer). The historical financial statements
        for periods prior to April 29, 2008 are those of BVI-ACM except that the
        equity
        section and earnings per share have been retroactively restated to reflect
        the
        reverse acquisition.
 .
 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
        Beijing Xin Ao Concrete Co., Ltd. (“Xin Ao”), a limited liability company formed
        under the laws of the People’s Republic of China (“PRC”). BVI-ACM was
        established as a “special purpose vehicle” for foreign fund raising for Xin Ao.
        China State Administration of Foreign Exchange (“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 under the “Circular 106” in the PRC. On September 29, 2007,
        BVI-ACM was approved by the local Chinese SAFE as a “special purpose vehicle”
offshore company.
 
 On
        November 23, 2007, BVI-ACM established a subsidiary, Beijing Ao Hang
        Construction Material Technology Co., Ltd. (“China-ACMH”), in PRC as a
        wholly-owned foreign limited liability company with registered capital of
        $5
        million.
 
 BVI-ACM,
        through its 100% owned China-ACMH and its variable interest entity (“VIE”) Xin
        Ao (see Note 2), is engaged in producing general ready-mixed concrete,
        customized mechanical refining concrete, and other concrete-related products
        that are mainly sold in the PRC. Xin Ao, licensed by the Beijing Administration
        of Industry & Commerce, PRC, was established on June 28, 2002 with an
        initial capital contribution of approximately $3,630,000 (RMB30 million). On
        July
        8, 2005, the Board of Directors of Xin Ao increased its registered capital
        to
        $12,100,000 (RMB100 million) through the use of Xin Ao’s undistributed profits.
 
 See
        report of independent registered public accounting firm.
  -
            45
            -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 On
        November 28, 2007, China-ACMH entered a series of contractual arrangements
        (the
“Contractual Arrangements”) with Xin Ao and its shareholders in which China-ACMH
        effectively took over management of the business activities of Xin Ao. The
        Contractual Arrangements are comprised of a series of agreements, including:
 
 ·
              Exclusive
                  Technical Consulting and Services Agreement, through which China-ACMH
                  will
                  provide exclusive technical consulting and services to Xin Ao for
                  an
                  annual fee in the amount of Xin Ao’s yearly net income after tax.
  ·
              Equity
                  Pledge Agreement. Xin Ao’s shareholders pledged their rights, title and
                  equity interest in Xin Ao as security for China-ACMH to collect
                  technical
                  consulting and services fees provided to
                  China-ACMH.
  ·
              Operating
                  Agreement, through which China-ACMH has exclusive authority of
                  all
                  decision-making of ongoing major operations, including establishing
                  compensation levels and hiring and firing of key personnel. In
                  order to
                  ensure Xin Ao’s normal operation, China-ACMH agrees to act as the
                  guarantor and provide full guarantee for Xin Ao in entering and
                  performing
                  contracts, agreements or transactions in association with Xin Ao’s
                  operation between Xin Ao and any other third parties. As a counter
                  guarantee, Xin Ao agrees to mortgage all of its assets including
                  receivables which have not been mortgaged to any third parties
                  at the
                  execution date of this agreement to
                  China-ACMH.
  ·
              Power
                  of Attorney, signed by Xin Ao’s 100% shareholders Mr. Han Xianfu and Mr.
                  He Weili, which authorize the individuals appointed by China-ACMH
                  to
                  exercise all of their respective voting rights as a shareholder
                  at Xin
                  Ao’s shareholder meetings.
  ·
              Option
                  Agreement, through which Xin Ao’s shareholders granted China-ACMH the
                  exclusive right and option to acquire all of their equity interests
                  in Xin
                  Ao.
  The
        term
        of these agreements is for ten (10) years and shall terminate automatically
        upon
        expiration, and may be extended only if China-ACMH gives its written consent
        of
        the extension before the expiration. The parties shall, through negotiations,
        determine the extension term. During the term, Xin Ao may not terminate the
        agreements except in the case of gross negligence, fraud or other illegal
        acts
        or bankruptcy of China-ACMH. Notwithstanding the foregoing, China-ACMH may
        terminate the agreement at any time with a written notice to Xin Ao thirty
        (30)
        days before such termination. Additionally, without China-ACMH’s prior written
        consent, Xin Ao shall not assign or otherwise transfer its rights and
        obligations under the agreements. Subject to compliance with the Laws of
        China,
        China-ACMH may assign the agreements to any affiliate or any other designated
        entity without the prior consent of Xin Ao.
 
 Through
        China-ACMH, BVI-ACM operates and controls Xin Ao through the Contractual
        Arrangements. BVI-ACM utilized the Contractual Arrangements to gain control
        the
        operations of Xin Ao, instead of acquiring Xin, due to : (i) new PRC laws
        governing share exchange transactions with foreign entities, effective since
        September 8, 2006, make the consequences of such acquisitions uncertain and
        (ii)
        other than by share exchange transactions, PRC laws require Xin Ao to be
        acquired for cash and BVI-ACM was not able to raise sufficient funds to pay
        the
        full appraised value for Xin Ao’s assets or shares as required under PRC laws.
 
 See
        report of independent registered public accounting firm.
  -
            46
            -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 Through
        this series of Contractual Arrangements, China-ACMH provides exclusive technical
        consulting services to Xin Ao for an annual fee equal to Xin Ao’s yearly net
        income. China-ACMH effectively took over management of daily business activities
        of Xin Ao and has the right to appoint all executives, senior management
        and
        members of the board of directors of Xin Ao. China-ACMH guarantees all of
        Xin
        Ao’s business activities with any third parties and in return is guaranteed
        all
        of Xin Ao’s assets. In addition, shareholders of Xin Ao pledged their shares in
        Xin Ao as collateral for the annual fees due to the Company and granted
        China-ACMH the exclusive right and option to acquire all of their equity
        interests in Xin Ao.
 
 **Note
        2**–**Summary of significant accounting
        policies**
 
 Basis
        of presentation
 
 The
        Company’s accounting policies used in the preparation of the accompanying
        consolidated financial statements conform to accounting principles generally
        accepted in the United States of America ("US GAAP") and have been consistently
        applied.
 
 Principles
        of consolidation
 
 The
        accompanying consolidated financial statements include the accounts of China
        ACM, BVI-ACM, including its wholly owned subsidiary China-ACMH, and its variable
        interest entity Xin Ao. All significant inter-company transactions and balances
        have been eliminated in consolidation.
 
 In
        accordance with Financial Accounting Standards Board (“FASB”) Interpretation No.
        46R (“FIN 46R”), *Consolidation
        of Variable Interest Entities* ,
        all
        VIEs with which the Company is involved must be evaluated to determine the
        primary beneficiary of the risks for financial reporting purposes. In connection
        with the adoption of FIN 46R, the Company determined Xin Ao is a VIE and
        China
        ACM is the primary beneficiary. Accordingly, the financial statements of
        Xin Ao
        are included in the consolidated financial statements of the
        Company.
 
 Company
        reporting year end
 
 For
        US
        financial statement reporting purposes beginning from 2006, the Company has
        adopted June 30 as its fiscal year end.
 
 See
        report of independent registered public accounting firm.
  -
            47
            -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
  Foreign
        currency translation
 
 The
        reporting currency of the Company is the US dollar. The functional currency
        of
        China ACM and BVI-ACM is the US dollar. China-ACMH and Xin Ao use their local
        currency Chinese Renminbi (“RMB”) as their functional currency. According to
        Statement of Financial Accounting Standards (“SFAS”) No. 52, “ *Foreign
        Currency Translation,* ”
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 the historical exchange
        rates.
        As a result, amounts related to assets and liabilities reported on the statement
        of cash flows will not necessarily agree with changes in the corresponding
        balances on the balance sheets.
 
 Accumulated
        other comprehensive income in the consolidated statement of shareholders’ equity
        amounted to $ 2,598,466 and $659,922 as of June 30, 2008 and 2007, respectively.
        Asset and liability accounts at June 30, 2008 and 2007 were translated at
        6.85
        RMB and 7.60 RMB to $1.00, respectively. Equity accounts were stated at their
        historical rates. The average translation rates applied to consolidated
        statements of income and cash flows for the years ended June 30, 2008 and
        2007
        were 7.26 RMB and 7.81 RMB to $1.00, respectively.
 
 Translation
        gains and 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 as incurred. Gains and losses from foreign currency
        transactions are included in the results of operations. No material transaction
        gain or loss for the years ended June 30, 2008 and 2007.
 
 Revenue
        recognition
 
 The
        Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”)
        No. 101, “ *Revenue
        Recognition in Financial Statements* ”
as
        amended by SAB No. 104 (together, “SAB 104”), which specifies that revenue is
        realized or realizable and earned when four criteria are met:
 
 ·
              Persuasive
                  evidence of an arrangement exists (the Company considers its sales
                  contracts to be pervasive evidence of an
                  arrangement);
 ·
              Delivery
                  has occurred or services have been rendered;
 ·
              The
                  seller’s price to the buyer is fixed or determinable; and
 ·
              Collectibility
                  of payment is reasonably assured.
 
 The
        Company sells its products mainly to major local construction companies.
        Sales
        agreements are signed with each customer. The agreements list all terms and
        conditions with the exception of delivery date and quantity, which are evidenced
        separately in purchase orders. The purchase price of products is fixed in
        the
        agreement and customers are not permitted to renegotiate after the contracts
        have been signed. The agreements include a cancellation clause if the Company
        breaches the contract terms specified in the agreement. The Company does
        not
        sell products to customers on a consignment basis. There is no right of return
        after the product has been injected into the location specified by the contract
        and accepted by the customer. The
        Company recognizes revenue when the goods are accepted by the customer and
        title
        has passed.
 
 See
        report of independent registered public accounting firm.
  -
            48
            -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 Sales
        revenue represents the invoiced value of goods, net of a value-added tax
        (“VAT”). All of the Company’s products that are sold in the PRC are subject to a
        Chinese value-added tax at the rate of 6% of the gross sales price.
 
 Due
        to
        the fact that the Company uses recycled raw materials to manufacture its
        products, the State Administration of Taxation has granted the Company VAT
        tax
        exemption from August 2005 through to August 2009. The VAT tax collected
        from
        the Company’s customers is kept by the Company and recorded as Other Subsidy
        Income.
  Shipping
        and handling
 
 Shipping
        and handling costs related to costs of the raw materials purchased is included
        in cost of revenues.
 
 Use
        of
        estimates
 
 The
        preparation of financial statements in conformity with US 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 period. The significant estimates made in the
        preparation of the Company’s consolidated financial statements related to the
        assessment of the carrying value of accounts receivable and related allowance
        for doubtful accounts. Actual results could be materially different from
        those
        estimates.
 
 Financial
        instruments
 
 SFAS
        107,
“ *Disclosures
        about Fair Value of Financial Instruments* ”
        requires disclosure of the fair value of financial instruments held by the
        Company. SFAS 107 defines the fair value of the financial instruments as
        the
        amount at which the instrument could be exchanged in a current transaction
        between willing parties. The Company considers the carrying amount of cash,
        accounts receivable, other receivables, prepayments, accounts payable, accrued
        liabilities, other payables, taxes payable, and loans to approximate their
        fair
        values because of the short period of time between the origination of such
        instruments and their expected realization and their current market rate
        of
        interest.
 
 See
        report of independent registered public accounting firm.
  -
            49
            -
 CHINA
            ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
            30,
            2008
 
 Concentration
          of risk
 
 ·
              Cash
                  - Cash includes cash on hand and demand deposits in accounts maintained
                  with state owned banks within the People’s Republic of China. The Company
                  considers all highly liquid instruments purchased with original
                  maturities
                  of three months or less, and money market account, to be cash equivalents.
                  Total cash in these banks at June 30, 2008 and 2007 amounted to
                  $1,795,388
                  and $1,424,883, respectively, of which no deposits were covered
                  by
                  insurance. Also, as of June 30, 2008, the Company held $913,092
                  in
                  restricted cash in a corporate legal counsel’s trust account, in
                  accordance with an agreement with investors for the restricted
                  use of
                  preferred stock dividend and investor relation related expenses.
                  Nonperformance by these institutions could expose the Company to
                  losses
                  not covered by insurance. The Company has not experienced, nor
                  dose it
                  anticipate, nonperformance by the institutions.
 
 ·
              Major
                  customers and suppliers - For the year ended June 30, 2008, one
                  customer
                  accounted for approximately 17% of the Company's sales and 16%
                  of the
                  Company’s accounts receivable as of June 30, 2008. For the year ended June
                  30, 2007, three customers accounted for approximately 40% of the
                  Company's
                  sales, and approximately 47% of the Company’s accounts receivable as of
                  June 30, 2007. For the year ended June 30, 2008, one supplier accounted
                  for approximately 26% of the Company’s purchases to this supplier as of
                  June 30, 2008. For the year ended June 30, 2007, four suppliers
                  accounted
                  for approximately 90% of the Company's purchases. These four suppliers
                  represent approximately 21% of the Company's total accounts payable
                  balance as of June 30, 2007.
 
 ·
              Political
                  and economic risks - The Company's operations are carried out in
                  the PRC.
                  Accordingly, the Company's business, financial condition, and results
                  of
                  operations may be influenced by the political, economic, and legal
                  environments in the PRC, and by the general state of the PRC's
                  economy.
                  The Company's operations in the PRC are subject to specific considerations
                  and significant risks not typically associated with companies in
                  North
                  America and Western Europe. These include risks associated with,
                  among
                  others, the political, economic, and legal environments, and foreign
                  currency exchange. The Company's results may be adversely affected
                  by
                  changes in governmental policies with respect to laws and regulations,
                  anti-inflationary measures, currency conversion and remittance
                  abroad, and
                  rates and methods of taxation, among
                  others.
 
 See
        report of independent registered public accounting firm.
  -
            50
            -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 Restricted
        Cash
 
 The
        Company restricted cash totaled $913,092 and $0 as of June 30, 2008 and 2007,
        respectively. Restricted cash represents portion of the proceeds received
        from
        the June 11, 2008 Private Placement that was deposited in a trust account
        held
        by the Company’s legal counsel for payment of dividends, investor relations
        fees, and other miscellaneous professional fees (see Note 11). Restricted
        cash
        is classified in current assets as of June 30, 2008, based on the time period
        funds are expected to be used.
 
 Inventories
 
 Inventories
        consist of raw materials and are stated at the lower of cost or market, using
        the weighted average cost method. The Company reviews its inventory periodically
        for possible obsolescence. As of June 30, 2008, the Company determined no
        reserves were necessary.
 
 Prepayments
 
 The
        Company advances monies to certain suppliers for raw materials. These advances
        are interest free and unsecured.
 
 Plant
        and equipment
 
 Plant
        and
        equipment are stated at cost. Depreciation is provided over the estimated
        useful
        life of each class of depreciable asset and is computed using the straight-line
        method with 5% residual value.
 
 The
        estimated useful lives of assets are as follows:
 Useful
                  LifeTransportation
                  equipment
              
              
              10
                  yearsPlant
                  machinery
              
              
              10
                  yearsOffice
                  equipment
              
              
              5
                  years
 
 The
        cost
        and related accumulated depreciation of assets sold or otherwise retired
        are
        eliminated from the accounts and any gain or loss is included in the statement
        of income.
 
 Impairment
        of long-lived assets
 
 Long-lived
        assets of the Company are reviewed at least annually, more often if
        circumstances dictate, for possible impairment. Whenever events or changes
        in
        circumstances indicate that the carrying amount of the assets may not be
        recoverable, the Company records an impairment to reduce the related assets
        to
        their net realizable value. The Company believes no impairment exists at
        June
        30, 2008.
 
 See
        report of independent registered public accounting firm.
  -
            51
            -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
  Accounts
        receivable
 
 During
        the normal course of business, the Company extends unsecured credit to its
        customers. 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. The Company’s reserves are consistent with its historical experience
        and considered adequate by management.
 
 The
        ultimate collection of the Company’s accounts receivable may take more than one
        year, and any portion of accounts receivable expected to be collected in
        more
        than one year is reflected as noncurrent, net of allowance for doubtful accounts
        relating to that portion of receivables. The bifurcation between current
        and
        noncurrent portions of accounts receivable is based on management’s estimate and
        predicated on historical collection experience.
 
 Redeemable
        preferred stock
 
 On
        June
        11, 2008, the Company completed an offering of the sale of 875,000 of investment
        units for a total of $7,000,000, each unit consisting of one share of the
        Company’s Series A Convertible Preferred Stock and one warrant to purchase two
        shares of the Company’s common stock. The preferred stock pay annual dividends
        of 9% regardless of the Company’s profitability. Each preferred share is
        convertible into four shares of common stock. The Company received $7,000,000
        (or approximately $5.3 million net proceeds after offering expense and the
        $930,000 restricted cash placed in escrow) from a group of accredited investors.
        The Securities Purchase Agreement contained a transferrable provision such
        that
        if any governmental agency in the PRC takes action that adversely affects
        the
        Restructuring Agreements or the Share Exchange Agreement and the company
        doesn’t
        mitigate the adverse effect to the investors’ reasonable satisfaction within 60
        days of the PRC action, then the company is required to pay liquidated damages
        in an amount equal to the initial investment without interest and the
        shareholder must return the shares acquired under the agreement. Consequently,
        the total amount of the gross proceeds has been excluded from permanent equity
        and recorded as redeemable preferred stock in accordance with Rule 5-02.28
        of
        Regulation S-X and Section 211 of the Codification of Financial Reporting
        Policies. Although there is no fixed redemption requirement in any of the
        next
        two years, the entire amount of $7,000,000 could become redeemable in any
        of the
        next two years. SFAS 150, “Accounting for Certain Financial Instruments with
        Characteristics of Both Liabilities and Equity,” requires the redeemable
        preferred stock to be carried at the fair value of the redemption or cash
        settlement amount because the terms of the stock permit the holder to demand
        redemption. Also, the annual 9% dividends payable to the holder regardless
        of
        the Companies profitability are more akin to debt than equity; therefore,
        the
        dividends are accounted for as interest. Additionally, pursuant to APB 14,
        “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants,”
the Company discounted the fair value of the warrants from the carrying value
        of
        the redeemable stock. The discount is amortized into interest expense over
        the
        two year redemption period. The
        Company analyzed the conversion feature and determined the effective conversion
        price was higher than the market price; therefore, no beneficial conversion
        feature was recorded.
 
 See
        report of independent registered public accounting firm.
  -
            52
            -
 CHINA
            ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
            30,
            2008
 
 Income
          taxes
 
 The
        Company is governed by the Income Tax Laws of the PRC. The Company accounts
        for
        income taxes in accordance with FAS 109, “ *Accounting
        for Income Taxes* ”
which
        requires the company to use the assets and liability method of accounting
        for
        income taxes. Under the assets 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.
        Under SFAS 109, 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. Since the Company’s operations
        are outside of the United States, the Company did not have any provision
        for
        income taxes including any deferred income taxes, as of and for the years
        ended
        June 30, 2008 and 2007.
 
 The
        Company adopted FIN 48, “ *Accounting
        for Uncertainty in Income Taxes-an interpretation of FASB Statements No.
        109* ,”
as
        of
        July 1, 2007. Under FIN 48, the evaluation of a tax position is 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 is greater than 50 percent likely 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. FIN 48 also provides guidance on de-recognition,
        classification, interest and penalties, accounting in interim periods,
        disclosures, and transition. The adoption had no affect on the Company’s
        financial statements. There are no deferred tax amounts as of June 30, 2008
        and
        2007.
 
 Chinese
        Income Taxes
 
 The
        Company and its subsidiaries are governed by the Income Tax Laws of the PRC
        concerning Foreign Investment Enterprises and Foreign Enterprises and various
        local income tax laws (the “Income Tax Laws”).
 
 Xin
        Ao’s
        use of recycled raw materials in its production since its inception entitles
        the
        Company to an income tax exemption from January 1, 2003, through December
        31,
        2007, as granted by the State Administration of Taxation of the PRC. Beginning
        January 1, 2008, the new Chinese Enterprise Income Tax (“EIT”) law replaced the
        existing laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises
        (“FIEs”). The new standard EIT rate of 25% replaced the existing rates currently
        applicable to both DES and FIEs. The income tax exemption granted to the
        Company
        was eliminated after December 31, 2007. The Company is currently evaluating
        the
        effect of the new EIT law will have on its financial position.
 
 See
        report of independent registered public accounting firm.
  -
            53
            -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 PRC
        law
        requires that before a foreign invested enterprise can legally distribute
        profits to its partners, it must satisfy all tax liabilities, provide for
        losses
        in previous years, and make allocations in proportions made at the discretion
        of
        the board of directors, after the statutory reserve. The statutory reserve
        includes the surplus reserve fund and the common welfare fund, and represents
        restricted retained earnings.
 
 The
        following table reconciles the U.S. statutory rates to the Company’s effective
        tax rate for the years ended June
        30,
        2008 and 2007:
 
 2008
              
              2007U.S.
                  statutory rates
              
              
              34.0
              %
              
              34.0
              %Foreign
                  income not recognized in U.S.
              
              
              (34.0
              )
              
              (34.0
              )China
                  income taxes
              
              
              25.0
              
              
              33.0China
                  income tax exemption
              
              
              (9.3
              )
              
              (33.0
              )Effective
                  income tax rates
              
              
              15.7
              %
              
              -
              %
 
 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 (“VAT”). The
        standard VAT rate is 6% of gross sales for the Company’s industry. A credit is
        available whereby VAT paid on the purchases of raw materials used in the
        production of the Company’s finished products can be used to offset the VAT due
        on sales of finished products. Due to the fact that the Company uses recycled
        raw materials to manufacture its products, the State Administration of Taxation
        has granted the Company VAT Tax Exemption from August 2005 through to August
        2009. For the years ended June 30, 2008 and 2007, $1,586,192 and $1,264,952,
        respectively, was recognized as other subsidy income from VAT taxes collected.
 
 Research
        and development costs
 
 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. Research and development expenses
        amounted to approximately $6,000 and $165,000 for the years ended June 30,
        2008
        and 2007, respectively.
 
 See
        report of independent registered public accounting firm.
  -
            54
            -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 Earnings
        per share
 
 Basic
        earnings per common share is computed on the basis of the weighted average
        number of common shares outstanding during the period. Diluted earnings per
        share is computed on the basis of the weighted average number of common shares
        and dilutive securities (such as warrants and convertible preferred stock)
        outstanding. Dilutive securities having an anti-dilutive effect on diluted
        earnings per share are excluded from the calculation.
 
 Comprehensive
        income
 
 SFAS
        No.
        130 (“SFAS 130”), Reporting Comprehensive Income establishes, standards for
        reporting and display of comprehensive income and its components in financial
        statements. It requires that all items that are required to be recognized
        under
        accounting standards as components of comprehensive income be reported in
        a
        financial statement that is displayed with the same providence as other
        financial statements. The accompanying consolidated financial statements
        include
        the provision of SFAS 130, and therefore, comprehensive income consists of
        net
        income, unrealized gains and losses from marketable securities, and foreign
        currency translation adjustments.
 
 Recently
        issued accounting pronouncements
 
 In
        February 2007, the FASB issued Statement of Financial Accounting Standards
        No. 159 (“SFAS 159”), “The Fair Value Option for Financial Assets and
        Financial Liabilities-Including an amendment of FASB Statement No. 115.
        SFAS No. 159 permits entities to choose to measure many financial
        instruments and certain other items at fair value. Most of the provisions
        of
        SFAS 159 apply only to entities that elect the fair value option. However,
        the
        amendment to SFAS No. 115, “Accounting for Certain Investments in Debt and
        Equity Securities, applies to all entities with available-for-sale and trading
        securities. SFAS 159 is effective for financial statements with fiscal
        years beginning after November 15, 2007. The Company is currently
        evaluating the impact, if any, that the adoption of SFAS 159 will have on
        its
        consolidated results of operations and its financial position.
 
 In
        December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in
        Consolidated Financial Statements - an amendment of Accounting Research Bulletin
        No. 51” , which establishes accounting and reporting standards for ownership
        interests in subsidiaries held by parties other than the parent, the amount
        of
        consolidated net income attributable to the parent and to the noncontrolling
        interest, changes in a parent’s ownership interest and the valuation of retained
        non-controlling equity investments when a subsidiary is deconsolidated. The
        Statement also establishes reporting requirements that provide sufficient
        disclosures that clearly identify and distinguish between the interests of
        the
        parent and the interests of the non-controlling owners. SFAS 160 is effective
        for fiscal years beginning after December 15, 2008. The
        Company has not determined the effect that the application of SFAS 160 will
        have
        on its consolidated financial statements .
 
 See
        report of independent registered public accounting firm.
  -
            55
            -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 In
        December 2007, SFAS 141(R), Business Combinations, was issued. SFAS 141R
        requires an acquirer to recognize the assets acquired, the liabilities assumed,
        and any noncontrolling interest in the acquiree at the acquisition date,
        measured at their fair values as of that date, with limited exceptions. This
        replaces SFAS 141’s cost-allocation process, which required the cost of an
        acquisition to be allocated to the individual assets acquired and liabilities
        assumed based on their estimated fair values. SFAS 141R also requires the
        acquirer in a business combination achieved in stages (sometimes referred
        to as
        a step acquisition) to recognize the identifiable assets and liabilities,
        as
        well as the noncontrolling interest in the acquiree, at the full amounts
        of
        their fair values (or other amounts determined in accordance with SFAS 141R).
        SFAS 141R applies prospectively to business combinations for which the
        acquisition date is on or after the beginning of the first annual reporting
        period beginning on or after December 15, 2008. An entity may not apply it
        before that date. SFAS 141R will change the accounting for all future business
        combinations.
 
 In
        March
        2008, SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities
        - An Amendment of SFAS No. 133” was issued. SFAS 161 requires (1) the
        disclosure of the fair value of derivative instruments and gains and losses
        in a
        tabular format; (2) the disclosure of derivative features that are credit
        risk-related; and (3) cross-referencing within the footnotes. The
        provisions of SFAS 61 are effective for interim period and fiscal years
        beginning after November 15, 2008. The Company does not anticipate that the
        adoption of SFAS 161 will have a material impact on its consolidated financial
        position or results of operations.
 
 In
        June
        2008, EITF 07-5, “Determining whether an Instrument (or Embedded Feature) is
        indexed to an Entity’s Own Stock” was issued. This standard triggers liability
        accounting on all options and warrants exercisable at strike prices denominated
        in any currency other than the Company’s functional currency. This Issue is
        effective for financial statements issued for fiscal years beginning after
        December 15, 2008, and interim periods within those fiscal years. Early
        application is not permitted .
        The
        Company is currently evaluating the impact that EITF 07-5 will have on its
        consolidated financial position or result of operations .
 
 In
        June
        2008, FASB issued EITF Issue No. 08-4, “Transition Guidance for Conforming
        Changes to Issue No. 98-5 (“EITF No. 08-4”)”. The objective of EITF No.08-4
        is to provide transition guidance for conforming changes made to EITF No.
        98-5,
“Accounting for Convertible Securities with Beneficial Conversion Features
        or
        Contingently Adjustable Conversion Ratios”, that result from EITF No. 00-27
“Application of Issue No. 98-5 to Certain Convertible Instruments”, and SFAS No.
        150, “Accounting for Certain Financial Instruments with Characteristics of both
        Liabilities and Equity”. This Issue is effective for financial statements issued
        for fiscal years ending after December 15, 2008. Early application is
        permitted. Management is currently evaluating the impact of adoption of
        EITF No. 08-4.
  See
        report of independent registered public accounting firm.   -
              56
              -
 CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 SFAS
          No.
          157, “Fair Value Measurements” defines fair value, establishes a three-level
          valuation hierarchy for disclosures of fair value measurement and enhances
          disclosures requirements for fair value measures. The carrying amounts
          reported
          in the balance sheets for receivables and payables qualified as financial
          instruments and are a reasonable estimate of fair value because of the
          short
          period of time between the origination of such instruments and their expected
          realization and their current market rate of interest. The three levels
          are
          defined as follow:
 
 ·
                Level
                    1 — inputs to the valuation methodology are quoted prices (unadjusted)
                    for
                    identical assets or liabilities in active
                    markets.
 ·
                Level
                    2 — inputs to the valuation methodology include quoted prices for
                    similar
                    assets and liabilities in active markets, and inputs that are
                    observable
                    for the assets or liability, either directly or indirectly, for
                    substantially the full term of the financial
                    instruments.
 ·
                Level
                    3 — inputs to the valuation methodology are unobservable and significant
                    to the fair value.
  The
          provisions of SFAS No. 157 are effective for financial statements issued
          for
          fiscal years beginning after November 15, 2007. The Company is currently
          evaluating the impact on its consolidated financial position or result
          of
          operations.
 
 Company
          reporting year end
 
 For
          US
          financial statement reporting purposes beginning from 2006, the Company
          has
          adopted June 30 as its fiscal year end.
 
 **Note
          3 - Supplemental disclosure of cash flow information**
 
 During
          the years ended June 30, 2008 and 2007, the Company paid interest totaling
          $310,875 and $811,661, respectively. There were no income tax payments
          for the
          years ended June 30, 2008 and 2007.
 
 Non-cash
          transactions in 2008
 
 The
          Company assigned accounts receivables totaling $13,769 as payment to holders
          of
          amounts due whose balances were included in other payables.
 
 The
          Company assigned accounts receivables totaling $6,069,802 as payment to
          suppliers whose balances were included in accounts payable.
 
 See
          report of independent registered public accounting firm.
  -
              57
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 The
          company transferred $7,260,000 in undistributed profits to reduce amounts
          owed
          to the Company and included in contributed receivable. See Note 1 1.
 
 Non-cash
          transactions in 2007
 
 The
          Company assigned accounts receivables totaling $13,776,694 and other receivables
          totaling $1,337,371 as payment to suppliers whose balances were included
          in
          accounts payable.
 
 **Note
          4 – Marketable securities**
 
 All
          securities are available for sale and therefore are carried at fair value
          with
          unrealized gains and losses reported as accumulated other comprehensive
          income
          in shareholders’ equity. Realized gains and losses are included in other income
          (expense) and, when applicable, are reported as a reclassification adjustment
          in
          other comprehensive income. Gains and losses on the sale of securities
          are
          determined using the specific-identification method.
 
 There
          were no realized gains or losses from the sale of marketable securities
          for the
          years ended June 30, 2008 and 2007. The Company determines cost on the
          specific
          identification method. Unrealized gains (losses) totaling ($12,482) and
          $8,523
          were recorded as other comprehensive income for the years ended June 30,
          2008
          and 2007, respectively.
 
 **Note
          5 – Accounts receivable, trade**
 
 Accounts
          receivable and allowance for doubtful accounts consist of the following:
  June
                    30,
                  2008
                
                June
                    30,
                  2007Accounts
                    receivable, current
                
                $
                9,590,410
                
                $
                12,441,522Less:
                    allowance for doubtful accounts, current
                
                
                (224,924
                )
                
                (53,038
                )Net
                    accounts receivable, current
                
                
                9,365,486
                
                
                12,388,484Accounts
                    receivable, non-current
                
                
                5,164,067
                
                
                2,340,495Less:
                    allowance for doubtful accounts, non-current
                
                
                (411,061
                )
                
                (96,929
                )Net
                    accounts receivable, non-current
                
                
                4,753,006
                
                
                2,243,566Total
                    accounts receivable, net
                
                $
                14,118,492
                
                $
                14,632,050
  See
          report of independent registered public accounting firm.
  -
              58
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
  **Note
            6 – Plant and equipment**
 
 Plant
            and
            equipment consist of the following:
  June
                    30, 2008
                
                June
                    30, 2007Transportation
                    equipment
                
                $
                13,298,674
                
                $
                4,293,503Capital
                    lease equipment
                
                
                6,988,192
                
                
                5,795,553Plant
                    machinery
                
                
                1,894,585
                
                
                1,661,569Office
                    equipment
                
                
                43,057
                
                
                37,861Construction-
                    in-progress
                
                
                295,033
                
                
                198,565Total
                
                
                22,519,541
                
                
                11,987,051Less:
                    accumulated depreciation
                
                
                (5,789,321
                )
                
                (4,092,175
                )Plant
                    and equipments, net
                
                $
                16,730,220
                
                $
                7,894,876
 
 In
          March
          2004, The Company leased 37 concrete mixing trucks under non cancelable
          capital
          lease agreements. As of June
          30,
          2008 and 2007, all capital lease obligations were fully paid. The amount
          of
          transportation equipment capitalized under such agreements and related
          accumulated depreciation are included in the table above.
 
 Construction-in-progress
          represents labor costs, materials, and capitalized interest incurred in
          connection with the construction of a new mixer station inside the current
          plant
          facility in Beijing. No depreciation is provided for construction in progress
          until it is completed and placed into service. Maintenance, repairs and
          minor
          renewals are charged to expense as incurred. Major additions and betterment
          to
          property and equipment are capitalized. The Company expects that the
          construction of the new plant will be completed by December 2008. As of
          June 30,
          2008 and 2007, $16,248 and 14,663, respectively, of interest was capitalized
          into construction in progress.
 
 Depreciation
          expense for the years ended June
          30,
          2008 and 2007 amounted to $1,178,745 and $1,091,740, respectively. Accumulated
          depreciation on leased equipment amounted to $ 2,710,836 and $1,894,791,
          respectively.
 
 **Note
          7 – Short term loans**
 
 Short
          term loans represent amounts due to various banks, finance companies, unrelated
          companies with existing business relationships with the Company, and the
          Company’s employees, that are due on demand or within one year. These loans are
          renewable. As of June 30, 2008 and 2007, the outstanding balance on these
          loans
          were $4,271,222 and $5,876,735, respectively, and these loans consisted
          of the
          following:
 
 See
          report of independent registered public accounting firm.
 
 -
              59
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 June
                    30,
                
                June
                    30,2008
                
                2007Loan
                    from Huaxia Bank, with effective annual interest rate of 7.866%,
                    due
                    August 10, 2008, guaranteed by Company’s shareholder Mr. Han
                    Xianfu.
                
                $
                2,918,000
                
                $
                -Loan
                    from Huaxia Bank, with effective annual interest rate of 6.7275%,
                    due July
                    11, 2007, guaranteed by an unrelated company.
                
                
                -
                
                
                2,630,000Loan
                    from Beijing Rural Commercial Bank, with effective annual interest
                    rate of
                    7.956%, due on August 20, 2007, guaranteed by a financing company
                    in
                    exchange for a fee of 2.5% of the face amount of the loan.
                
                
                -
                
                
                3,024,500Loan
                    from unrelated company Beijing Hengxin Huaxing Auto Accessories
                    Company,
                    with no interest, due upon demand, unsecured.
                
                
                379,340
                
                
                -Loan
                    from unrelated company Beijing Hongda Huaxin Wujinjidian Company,
                    with no
                    interest, due upon demand, unsecured.
                
                
                204,260
                
                
                -Loan
                    from unrelated company, Beijing Sigi Qingbaosan Cement Company,
                    with no
                    interest, due upon demand, unsecured.
                
                
                116,720
                
                
                -Loan
                    from unrelated individual Xia Hua Qing, with no interest, due
                    on demand,
                    no guarantee or collateral required.
                
                
                128,392
                
                
                -Loan
                    from various employees, with effective annual interest rate of
                    20%, due
                    upon demand, unsecured.
                
                
                524,510
                
                
                222,235Total
                    short term loans
                
                $
                4,271,222
                
                $
                5,876,735
 
 Total
          interest expense on short-term loans for the years ended June 30, 2008
          and 2007
          amounted to $310,875 and
          $682,688, respectively.
 
 **Note
          8– Other payables – shareholder**
 
 Beginning
          in July 2007, one of the Company’s shareholder, leased an office to the Company.
          For the year ended June 30, 2008, the Company recorded rent expense of
          $162,827,
          of which $129,402 remained unpaid as of June 30, 2008 and is included as
          other
          payables- shareholder.
 
 See
          report of independent registered public accounting firm.
  -
              60
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 The
          Company’s shareholders Mr. Han,
          Xianfu and Mr. He Weili, who have 57.15% and 38.10% of ownership interest
          in
          BVI-ACM, respectively, together loaned $750,900 to BVI-ACM on March 12,
          2008 for
          cash flow purposes. This is a non-interest bearing loan, unsecured, and
          is
          payable on demand.
 
 Total
          other payables - shareholders are as follows:
 
 June
                    30, 2008
                
                June
                    30, 2007Han
                    Xianfu, shareholder
                
                $
                450,550
                
                $
                -He
                    Weili, shareholder
                
                
                429,752
                
                
                -Total
                    other payable – shareholder
                
                $
                880,302
                
                $
                -
 
 **Note
          9** **–
          Taxes payable**
 
 Corporate
          income taxes
 
 Companies
          established before March 16, 2007 will continue to enjoy tax holiday treatment
          approved by local government for a grace period of either for the next
          5 years
          or until the tax holiday term is completed, whichever is sooner. These
          companies
          will pay the standard tax rate when the grace period expires.
 
 The
          Company was granted income tax exemption from January 1, 2003 to December
          31,
          2007. Beginning on January 1, 2008, the Company and its subsidiaries were
          subject to an EIT rate of 25%. For
          the
          years ended June 30, 2008 and 2007, the provision for income taxes amounted
          to
          $1,012,382 and $0, respectively. The estimated tax savings due to this
          tax
          exemption for the years ending June 30, 2008 and 2007 amounted to $832,255
          and
          $1,286,358, respectively.  If
          the
          income tax had been applied, for the year ended June 30, 2008, the basic
          and
          diluted earnings per share will decrease by $0.10 and $0.09, respectively.
          For
          the year ended June 30, 2007, the basic and diluted earnings per share
          will
          decrease by $0.14.
 
 Taxes
          payable consisted of the following:
 
 June
                    30, 2008
                
                June
                    30, 2007Income
                    taxes payable
                
                $
                1,072,747
                
                $
                -Other
                
                
                490
                
                
                661Total
                    taxes payable
                
                $
                1,073,237
                
                $
                661
 
 The
          Company did not make any income tax payments during the years ended June
          30 ,
          2008
          and 2007.
 
 See
          report of independent registered public accounting firm.
  -
              61
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 **Note
          10 – Shareholders’ equity**
 
 On
          June
          11, 2008, the Company completed an offering (the “Offering”) on the sale of
          875,000 of investment units for a total of $7,000,000, each unit consisting
          of
          one share of the Company’s Series A convertible preferred stock, $0.001 par
          value per share, and one (1) five year warrant to purchase two shares of
          Common
          Stock (the “Warrants”). Each preferred share is convertible into four shares of
          common stock. Additionally, each holder is entitled to cumulative dividends
          equal to 9% annually, payable in cash, whether or not the Company has profits.
 
 The
          Company received net proceeds of approximately $5,223,291with
          $930,000 in an escrow and after payment of certain fees and expenses.from the offering. $497,500 was paid to Maxim Group LLC (“Maxim”) who
          served as the placement agent for the transaction, $9,500 was paid to American
          Stock Transfer & Trust Company as a transfer agent fee, $60,000 was paid to
          the attorney, and $45,000 was paid for a finance fee for the purchasers
          in
          connection with the transaction.
 
 The
          carrying value of mandatorily redeemable preferred stock was determined
          to be
          $5,831,452, net of outstanding discount of $1,168,548 at June 30, 2008.
 
 The
          Company also issued to the placement agent a warrant to purchase an aggregate
          of
          245,000 shares of common stock with an exercise price of $2.40 per share
          with a
          life of five years. The value of the warrants issued to the placement agent
          was
          calculated as $169,345 using the CRR Binomial Model. The fair value of
          these
          warrants of $169,345 was recognized as offering expense in the consolidated
          statement of income for the year ended June 30, 2008.
 
 The
          warrants will be exercisable on a cashless basis, in whole or in part,
          at an
          exercise price equal to $2.40 per share. The Company may call the warrants
          for
          redemption at any time after the warrants become exercisable (i) at a price
          of
          $.01 per warrant; (ii) upon not less than 30 days’ prior written notice of
          redemption to each warrant holder; and (iii) if, and only if, the last
          sale
          price of the common stock equals or exceeds $5.00 per share, for any twenty
          (20)
          trading days within a thirty (30) consecutive trading day period ending
          on the
          third business day prior to the notice of redemption to warrant
          holders.
 
 The
          value
          of the warrants was determined using the CRR binomial model using the following
          assumptions: volatility 75%; risk-free interest rate of 3.49% of the Investor
          Warrants, the Placement, and Advisory Warrants; dividend yield of 0%, and
          expected term of 5 years of the Investor Warrants and the Placement and
          Advisory
          Warrants. The volatility of the Company’s common stock was estimated by
          management based on the historical volatility of a similar US public company
          due
          to limited trading history of the common stock. The risk-free interest
          rate was
          based on Treasury Constant Maturity Rates published by the U.S. Federal
          Reserve
          for periods applicable to the expected life of the warrants. The expected
          dividend yield was based on the Company’s current and expected dividend policy
          and the expected term is equal to the contractual life of the
          warrants.
 
 See
          report of independent registered public accounting firm.
  -
              62
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 Following
          is a summary of the status of warrants outstanding:
 
 Outstanding
                    Warrants
                
                Exercisable
                    WarrantsExercise
                  Price
                
                Number
                
                Average
                  Remaining
                  Contractual
                  Life
                
                Average
                  Exercise
                  Price
                
                Number$2.40
                
                
                875,000
                
                4.95 years
                
                $
                2.40
                
                
                875,000$2.40
                
                
                122,500
                
                4.95 years
                
                $
                2.40
                
                
                122,500Total
                
                
                997,500
                
                
                
                
                
                
                
                997,500
 
 Following
          is a summary of the Warrants activity:
 
 Outstanding
                    as of June 30, 2007
                
                
                -Granted
                
                
                997,500Forfeited
                
                
                -Exercised
                
                
                -Outstanding
                    as of June 30, 2008
                
                
                997,500
 
 Additionally,
          the Company's officers, directors and majority shareholders, Xianfu Han
          and
          Weili He, entered into a Lock-Up Agreement with the investors whereby both
          Xianfu Han and Weili He agreed they will not, offer, pledge, sell or otherwise
          dispose of any shares of common stock or any securities convertible into
          or
          exercisable or exchangeable for common stock during the period beginning
          on and
          including the date of the final closing of the Offering through and including
          the earlier of (i) two (2) years after the final closing of the Offering,
          (ii)
          the voluntary conversion of all outstanding shares of preferred stock,
          (iii) the
          mandatory conversion of all outstanding shares of Preferred Stock, or (iv)
          the
          sale of the Company.
 
 Pursuant
          to an escrow agreement signed between the Company, Maxim and the investors
          on
          June 11, 2008, the Company placed a total of $930,000 in an escrow account
          with
          the Company’s legal counsel, $630,000 of which will be used for the payment of
          dividends on the preferred stock which the Company shall be obligated to
          replenish each year prior to the year’s end, and $300,000 of which will be used
          for the payment of investor relation fees.
 
 See
          report of independent registered public accounting firm.
  -
              63
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
  Pursuant
          to the Make Good Escrow agreement, signed between the Company, American
          Stock
          Transfer Trust Company, the shareholders Han Xianfu and He Weili, and the
          investors on June 11, 2008, the shareholders agreed to transfer a total
          of
          3,500,000 shares of common stock into the name of escrow agent if the Company
          fails to meet certain performance thresholds:(1) $5,200,000 of net
          income(calculated on a pre-tax basis solely with respect to 2008) for 2008;
          (2)
          $9,000,000 of net income for 2009; (3) net income equal or greater than
          the
          Company's net income for 2009, for 2010. The Company determined that the
          threshold for the year ended June 30, 2008 has been met.
  **Note
          11** **–
          Contribution receivable**
 
 On
          July
          8, 2005, Xin Ao’s board of directors passed a resolution to increase the
          registered capital from $3,630,000 (RMB30,000,000) to $12,100,000
          (RMB100,000,000). The increase in registered capital of $8,470,000
          (RMB70,000,000) was funded by the undistributed profits as of June 30,
          2005.
          Since Xin Ao did not have sufficient undistributed profits from June 30,
          2005,
          based on the PRC government regulation, all companies need to record its
          capital
          in accordance with the business license, the unfunded amount has been recorded
          as contribution receivable. Since the capital should be contributed by
          the
          shareholders of the Company, the contribution receivable was recorded as
          part of
          the equity transaction.
 
 At
          the
          inception of BVI-ACM, BVI-ACM issued 10,000 shares of common stock to its
          founding shareholders. The shares were issued at par value or $0.01 per
          share.
 
 On
          November 23, 2007, BVI-ACM established a 100% subsidiary, Beijing Ao Hang
          Construction Material Technology Co., Ltd. (“China-ACMH”), in PRC as a wholly
          owned foreign limited liability company with registered capital of $5 million.
          According to the laws of PRC, BVI-ACM is required to pay 15% of $5 million
          by
          February 22, 2008 and the remaining balance by November 22, 2009.
 
 On
          March
          30, 2008, Xin Ao’s board of directors approved to transfer $7,260,000 from
          undistributed retained earnings into registered capital. Concurrently,
          China-ACMH made a payment of $5 million and BVI-ACM made a payment of $100.
          As
          of June 30, 2008, a contribution receivable in the amount of $1,210,000
          remains
          unpaid.
  See
          report of independent registered public accounting firm.
  -
              64
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
  Contribution
          receivable consisted of the following:
 
 Xin
                      Ao
                  
                  CHINA-AC
                    MH
                  
                  BVI-ACM
                  
                  TotalBalance
                      at June 30, 2007
                  
                  $
                  8,470,000
                  
                  $
                  5,000,000
                  
                  $
                  100
                  
                  $
                  13,470,100Less:
                      contribution received
                  
                  
                  (7,260,000
                  )
                  
                  (5,000,000
                  )
                  
                  (100
                  )
                  
                  (12,260,100
                  )Balance
                      at June 30, 2008
                  
                  $
                  1,210,000
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  1,210,000
 
 **Note
          12 – Reserves and dividends**
 
 The
          laws
          and regulations of the PRC require that before foreign invested enterprise
          can
          legally distribute profits, it must first satisfy all tax liabilities,
          provide
          for losses in previous years, and make allocations, in proportions determined
          at
          the discretion of the board of directors, after the statutory reserves.
          The
          statutory reserves include the surplus reserve fund and the common welfare
          fund.
 
 The
          Company is required to transfer 10% of its net income, as determined in
          accordance with the PRC accounting rules and regulations, to a statutory
          surplus
          reserve fund until such reserve balance reaches 50% of the Company’s registered
          capital.
 
 The
          transfer to this reserve must be made before distribution of any dividends
          to
          shareholders. For the years ended June 30, 2008 and 2007, the Company
          transferred $556,145 and $389,805 to this reserve in accordance with PRC
          accounting rules and regulations.
 
 The
          surplus reserve fund is non-distributable other than during liquidation
          and can
          be used to fund previous years’ losses, if any, and may be utilized for business
          expansion or converted into share capital by issuing new shares to existing
          shareholders in proportion to their shareholding or by increasing the par
          value
          of the shares currently held by them, provided that the remaining reserve
          balance after such issue is not less than 25% of the registered
          capital.
 
 The
          Chinese government restricts distributions of registered capital and the
          additional investment amounts required by a foreign invested enterprise.
          Approval by the Chinese government must be obtained before distributions
          of
          these amounts can be returned to the shareholders.
  See
          report of independent registered public accounting firm.
  -
              65
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
  **Note
            13 – Earnings Per Share**
 
 The
            following demonstrates calculation of the differences between basic and
            diluted
            earnings per common share for the years ended June 30, 2008 and
            2007:
 
 **Basic
                    earning per share**
                
                2008
                
                2007Net
                    income
                
                $
                4,945,770
                
                $
                3,898,053Weighted
                    shares outstanding-Basic
                
                
                9,064,359
                
                
                8,809,583Earnings
                    per share-Basic
                
                $
                0.55
                
                $
                0.44**Diluted
                    earning per share**Net
                    income
                
                $
                4,945,770
                
                $
                3,898,053Subtract:
                    loan issuance cost
                
                
                586,818
                
                
                -Subtract:
                    Unamortized discount on convertible notes
                
                
                1,168,548
                
                
                -Add:
                    Interest expense
                
                
                34,461
                
                
                -Net
                    income for diluted EPS
                
                $
                3,224,865
                
                $
                $3,898,053Weighted
                    shares outstanding-Basic
                
                
                9,064,359
                
                
                8,809,583Effect
                    of diluted securities-Warrants
                
                
                191,257
                
                
                -Weighted
                    shares outstanding-Diluted
                
                
                9,255,616
                
                
                8,809,583Earning
                    per share-Diluted
                
                $
                0.35
                
                
                0.44
 
 Warrants
          to purchase 1,995,000 shares of common stock at $2.40 per share, issued
          on June
          11, 2008, were outstanding at end of the year 2008 but were not included
          in the
          computation of diluted EPS because the exercise price was greater than
          the
          average market price of the common shares.
 
 **Note
          14 – Employee pension**
 
 The
          Company offers a discretionary pension fund, a defined contribution plan,
          to
          qualified employees. The pension includes two parts: the first to be paid
          by the
          Company is 20% of the employee’s actual salary in the prior year. The other
          part, paid by the employee, is 8% of the actual salary. The Company made
          $42,273
          and $4,537 in contributions of employment benefits, including pension for
          the
          years ended June 30, 2008 and 2007, respectively.
 
 See
          report of independent registered public accounting firm.
  -
              66
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 **Note
          15** **–
          Operating leases**
  The
          Company leases manufacturing plant, office space, and employee dorms from
          related and unrelated parties. Total operating lease expense for the years
          ended
          June 30, 2008 and 2007 was $309,840 and $147,646, respectively, and is
          included
          in selling, general, and administrative expenses. Future minimum lease
          payments
          under noncancellable operating leases with a term of one year or more consist
          of
          the following:
  Year
                    ended June 30,
                
                Amount2009
                
                $
                372,2932010
                
                
                196,5862011
                
                
                49,1462012
                
                
                -2013
                
                
                -Thereafter
                
                
                -
 
 **Note
          16 – Commitments and contingencies**
 
 Litigation
 
 From
          time
          to time, the Company becomes involved in various lawsuits and legal proceedings
          which arise in the ordinary course of business.
  Following
          is the summary of the current litigation as of June 30, 2008:
  Beijing
          Xin’Ao Concrete Co., Ltd vs. Beijing Boda Guosheng Investment Co., Ltd. (Beijing
          District Court, PRC)
 
 In
          August
          2006, Xin Ao filed a lawsuit against Beijing Boda Guosheng Investment Co.,
          Ltd
          (“Boda”) seeking specific performance of Boda’s obligations under the sales
          contract to pay approximately $275,380 (RMB2 million) for the cement supplied
          by
          Xin Ao between March 2005 and June 2005 and compensatory damages of
          approximately $23,500 (RMB171 thousand) to cover the interest incurred
          on the
          unpaid balance. The Court ruled against Boda and ordered Boda to pay the
          amounts
          requested by Xin Ao; however, Boda appealed the court’s rulings. In November
          2007, the Appeals Court upheld the original verdict and again ordered Boda
          to
          pay all the damages. Management does not believe that the ultimate outcome
          of
          this case will have a material adverse effect on the Company’s consolidated
          financial position or results of operations. As of June 30, 2008, the Company
          has not received the damage payment from Boda, and management has estimated
          that
          the collectability of the receivable is deemed low, therefore, the Company
          wrote
          off the amount from its book.
 
 See
          report of independent registered public accounting firm.
  -
              67
              -
  CHINA
          ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2008
 
 Yunwei
          Zhang vs. Beijing Xin’Ao Concrete Co., Ltd. (Beijing District Court,
          PRC)
 
 In
          May
          2006, an action against Xin Ao and Beijing Shangdi Xinda Company was filed
          by
          (“Shangdi”) Yunwei Zhang in Beijing District Court seeking payment of
          approximately $112,000 (RMB814 thousand for damages caused by Qingbao Zhang,
          a
          contracted driver of Xin Ao and an employee of Zhangbei County Labor Service
          Co., Ltd. The vehicle involved in the accident is owned by Beijing Shangdi
          Xingda Company who leased to Xin Ao who subsequently leased the vehicle
          to
          Zhangbei County Labor Service Company. On June 16, 2008, the Court ruled
          against
          Xin Ao and Shangdi to pay the damages incurred to Yunwei Zhang in the accident.
          Xinao is responsible for approximately $39,000 (approximately RMB 273,000)
          for
          the damages.
 
 **Note
          17 – Subsequent Events**
 
 Short-term
          loan repayment
 
 The
          Company repaid the bank loan in the amount of approximately $2.9 million
          (RMB20
          million) to Huaxia Bank on August 10, 2008, in accordance with the terms
          and
          conditions established by the loan agreement.
 
 See
          report of independent registered public accounting firm.
  -
              68
              -




**Item
      9.        Changes in and Disagreements With
      Accountants on Accounting and Financial Disclosure**




Prior
      to
      our reverse acquisition transaction with BVI-ACM, our independent registered
      public accounting firm was Li & Company, PC, while BVI-ACM’s independent
      registered public accounting firm was Moore Stephens Wurth Frazer and Torbet,
      LLP, or Moore Stephens. On May 1, 2008, concurrent with the change in control
      transaction discussed above, our board of directors approved the dismissal
      of Li
& Company, as our independent auditor, effective immediately. Concurrent
      with the decision to dismiss Li & Company as our independent auditor, our
      board of directors elected to continue the existing relationship of BVI-ACM
      with
      Moore Stephens and appointed Moors Stephens as our independent
      auditor.




Li
&
      Company’s reports on the our financial statements as of and for the fiscal years
      ended December 31, 2007 and 2006, did not contain an adverse opinion or
      disclaimer of opinion and were not qualified or modified as to uncertainty,
      audit scope, or accounting principles, except that its report for the fiscal
      year ended December 31, 2007 contained a going concern qualification as to
      our
      ability to continue.





In
      connection with the audits of the fiscal years ended December 31, 2007 and
      2006,
      and during the subsequent interim period through March 31, 2008, there were
      (1)
      no disagreements with Li & Company 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 Li & Company,
      would have caused Li & Company to make reference to the subject matter of
      the disagreements in connection with its reports, and (2) no events of the
      type
      listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation
      S-K.





During
      the fiscal years ended June 30, 2007 and 2006 and through the date hereof,
      neither us nor anyone acting on our behalf consulted Moore Stephens with respect
      to (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 our financial statements, and neither a written report was provided
      to us or oral advice was provided that Moore Stephens concluded was an important
      factor considered by us in reaching a decision as to the accounting, auditing
      or
      financial reporting issue; or (ii) any matter that was the subject of a
      disagreement or reportable events set forth in Item 304(a)(1)(iv) and (v),
      respectively, of Regulation S-K.





We
      provided Li & Company with a copy of this disclosure on May 1, 2008,
      providing Li & Company with the opportunity to furnish us with a letter
      addressed to the SEC stating whether it agrees with the statement made by us
      herein in response to Item 304(a) of Regulation S-K and, if not, stating the
      respect in which it does not agree. A letter from Li & Company dated May 1,
      2008 was filed by us as Exhibit 16.1 to our current report on Form 8-K on May
      5,
      2008.




**Item
      9A(T). Controls and Procedures**




We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our reports filed under the *Securities
      Exchange Act of 1934* ,
      as
      amended, is recorded, processed, summarized and reported within the time periods
      specified in the Securities and Exchange Commission's rules and forms, and
      that
      such information is accumulated and communicated to our management, including
      our principal executive officer (our president) and our principal accounting
      and
      financial officer (our chief financial officer) to allow for timely decisions
      regarding required disclosure. In designing and evaluating our disclosure
      controls and procedures, our management recognizes that any controls and
      procedures, no matter how well designed and operated, can provide only
      reasonable assurance of achieving the desired control objectives, and our
      management is required to apply its judgment in evaluating the cost-benefit
      relationship of possible controls and procedures.


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          69
          -




Our
      management does not expect that our disclosure controls or our internal controls
      over financial reporting will prevent all error and fraud. A control system,
      no
      matter how well conceived and operated, can provide only reasonable, but no
      absolute, assurance that the objectives of a control system are met. Further,
      any control system reflects limitations on resources, and the benefits of a
      control system must be considered relative to its costs. These limitations
      also
      include the realities that judgments in decision-making can be faulty and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people or by management override of a control. A design of a control
      system is also based upon certain assumptions about potential future conditions;
      over time, controls may become inadequate because of changes in conditions,
      or
      the degree of compliance with the policies or procedures may deteriorate.
      Because of the inherent limitations in a cost-effective control system,
      misstatements due to error or fraud may occur and may not be detected.




As
      of
      June 30, 2008, the year end period covered by this report, we carried out an
      evaluation, under the supervision and with the participation of our management,
      including our principal executive officer and our principal accounting officer,
      of the effectiveness of the design and operation of our disclosure controls
      and
      procedures. Based on the foregoing, our president and our chief financial
      officer concluded that our disclosure controls and procedures were not effective
      as of the end of the period covered by this annual report.




**Management's
      Report on Internal Control over Financial Reporting**




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
      under the Securities Exchange Act.  Our management is also required to
      assess and report on the effectiveness of our internal control over financial
      reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002
      (“Section 404”).   Management assessed the effectiveness of our
      internal control over financial reporting as of June 30, 2008.  In
      making this assessment, we used the criteria set forth by the Committee of
      Sponsoring Organizations of the Treadway Commission (COSO) in Internal
      Control - Integrated Framework.  During our assessment of the
      effectiveness of internal control over financial reporting as of June 30, 2008,
      management identified significant deficiencies related to the
      following:





*1.  Accounting
      and Finance Personnel Weaknesses -* US
      GAAP expertise - The current staff in the accounting department is relatively
      new and inexperienced, and needs substantial training so as to meet with the
      higher demands of being a U.S. public company. The accounting skills and
      understanding necessary to fulfill the requirements of U.S. GAAP-based
      reporting, including the skills of subsidiary financial statements
      consolidation, are inadequate and were inadequately supervised. The lack of
      sufficient and adequately trained accounting and finance personnel resulted
      in
      an ineffective segregation of duties relative to key financial reporting
      functions.




2. *Lack
      of internal audit function* - The
      Company lacks qualified resources to perform the internal audit functions
      properly.  In addition, the scope and effectiveness of the internal
      audit function are yet to be developed.





*3.  Lack
      of Internal Audit System* - The
      Company lacked an internal audit department, which was ineffective in preventing
      and detecting control lapses and errors in the accounting of certain key areas
      like revenue recognition, purchase approvals, inter-company transactions, cash
      receipt and cash disbursement authorizations, inventory safeguard and proper
      accumulation for cost of products, in accordance with the appropriate costing
      method used by the company.





During
      most of fiscal year ended June 30, 2008, our internal accounting staff was
      primarily engaged in ensuring compliance with PRC accounting and reporting
      requirements for our operating subsidiaries and was not required to meet or
      apply U.S. GAAP requirements.  As a result, our current accounting
      department responsible for financial reporting of the Company, on a consolidated
      basis, is relatively new to U.S. GAAP and the related internal control
      procedures required of U.S. public companies.  Although our accounting
      staff is professional and experienced in accounting requirements and procedures
      generally accepted in the PRC, management has determined that they require
      additional training and assistance in U.S. GAAP matters.  Management
      has determined that our internal audit function is also significantly deficient
      due to insufficient qualified resources to perform internal audit
      functions.  Finally, management determined that the lack of an Audit
      Committee of the board of directors of the Company also contributes to
      insufficient oversight of our accounting and audit functions.


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          70
          -





In
      order
      to correct the foregoing deficiencies, we have taken the following remediation
      measures:





1.  Hiring
      additional accounting and operations personnel and engaging outside contractors
      with technical accounting expertise, as needed, and reorganizing the accounting
      and finance department to ensure that accounting personnel with adequate
      experience, skills and knowledge relating to complex, non-routine transactions
      are directly involved in the review and accounting evaluation of our complex,
      non-routine transactions.




2.  Involving
      both internal accounting and operations personnel and outside contractors with
      technical accounting expertise, as needed, early in the evaluation of a complex,
      non-routine transaction to obtain additional guidance as to the application
      of
      generally accepted accounting principles to such a proposed
      transaction.




3.  Requiring
      senior accounting personnel and the principal accounting officer to review
      complex, non-routine transactions to evaluate and approve the accounting
      treatment for such transactions.




4.  Interviewing
      prospective new Directors for our Board, including a member who is appropriately
      credentialed as a financial expert with a goal to establish both an Audit and
      Compensation committee as well as sufficient independent Directors.




5.
      Evaluating the internal audit function in relation to the Company’s financial
      resources and requirements.




We
      believe that the foregoing steps will remediate the significant deficiency
      identified above, and we will continue to monitor the effectiveness of these
      steps and make any changes that our management deems appropriate.





A
      material weakness (within the meaning of PCAOB Auditing Standard No. 5) 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 our annual or interim financial statements will not be prevented
      or detected on a timely basis.  A significant deficiency is a
      deficiency, or a combination of deficiencies, in internal control over financial
      reporting that is less severe than a material weakness, yet important enough
      to
      merit attention by those responsible for oversight of the company's financial
      reporting.




Our
      management is not aware of any material weaknesses in our internal control
      over
      financial reporting, and nothing has come to the attention of management that
      causes them to believe that any material inaccuracies or errors exist in our
      financial statements as of June 30, 2008.  The reportable conditions
      and other areas of our internal control over financial reporting identified
      by
      us as needing improvement have not resulted in a material restatement of our
      financial statements.  Nor are we aware of any instance where such
      reportable conditions or other identified areas of weakness have resulted in
      a
      material misstatement or omission in any report we have filed with or submitted
      to the Commission.




Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements.  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 that the degree of compliance
      with the policies and procedures may deteriorate.





Auditor
      Attestation





This
      annual report does not include an attestation report of our registered public
      accounting firm regarding internal control over financial
      reporting.  Management’s report was not subject to attestation by our
      registered public accounting firm pursuant to temporary rules of the Securities
      and Exchange Commission that permit us to provide only management’s report in
      this annual report.


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          71
          -





Changes
      in Internal Controls over Financial Reporting




Except
      as
      described above, there were no changes in our internal controls over financial
      reporting during fiscal year 2008 that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.




**Item
      9B.     Other Information**




None.




**PART
      III**




**Item
      10.      Directors, Executive Officers and Corporate
      Governance**




The
      following individuals serve as the directors and executive officers of our
      company as of the date of this annual report. All directors of our company
      hold
      office until the next annual meeting of our shareholders or until their
      successors have been elected and qualified. The executive officers of our
      company are appointed by our board of directors and hold office until their
      death, resignation or removal from office.




**Name**
            
            **Age**
            
            **Position**Xianfu
                Han
            
            50
            
            Chairman, CEO,
                and Interim CFOWeili
                He
            
            52
            
            Chief
                Operating Officer and Vice ChairmanXiangsheng
                Xu
            
            47
            
            President,
                Director





**Xianfu
      Han** .
      Mr. Han
      became our Chairman and Chief Executive Officer on April 29, 2008. On August
      6,
      2008, Mr. Han became our Interim Chief Financial Officer following the
      resignation of our former Chief Financial Officer. From January 2003 to
      present, Mr. Han has worked with Xin Ao as Chairman of the Board of Directors.
      His main responsibilities include daily board leadership and strategy
      initiatives. Since November 2002, Mr. Han has been Chairman at Beijing Tsinghua
      University Management School’s Weilun Club. His responsibilities involve daily
      management work. From January 2001 to March 2007, Mr. Han acted as Executive
      Vice Chairman of the Beijing Concrete Association. His primary functions
      involved public relations and communication with various governmental and
      agencies. Mr. Han is a senior engineer with over 25 years of management
      experience in the building material industry. He contributed to the draft of
      the
      "Local Standard of Mineral Admixtures" regulations and was responsible for
      the
      "Research and Application of Green High Performance Concrete" published by
      the
      Ministry of Construction.




Mr.
      Han
      graduated in 1995 from the Tsinghua University executive MBA program. Mr. Han
      received his Bachelor degree in engineering management in 1992 from Northern
      China University of Technology.




**Weili
      He** .
      Mr. He
      became our Vice-Chairman and Chief Operating Officer on April 29, 2008. From
      August 2007 to present, Mr. He has worked as Vice Chairman of the Board of
      Directors of Xin Ao. His primary responsibility is large client development.
      From January 2003 to August 2007, Mr. He worked as Chairman of the Board of
      Directors of Beijing Xinhang Construction Materials Co., Ltd. His primary
      responsibilities included strategic planning. Since 2007, Mr. He has served
      as a
      Vice Chairman of the Beijing Concrete Association. His primary functions include
      market research. Mr. He has extensive construction and concrete engineering
      experience in China and Japan on numerous high profile projects. His primary
      expertise is plant management and operations. Mr. He received a bachelor’s
      degree in law from Party School of the Central Committee of C.P.C.




**Xiangsheng
      (Norman) Xu** .
      Mr. Xu
      became our President and Director on April 29, 2008. From March 2006 to present,
      Mr. Xu has served as Chief Executive Officer of Xin Ao. His primary
      responsibilities include corporate strategy, general management and daily
      operations. From February 2003 to February 2006, Mr. Xu worked at the
      Enterprises Institute at State Development and Research Center under the State
      Council and was in charge of the New Enterprises Development program. Since
      May
      2007, Mr. Xu has served as an independent director of Guangxi Shunshine Real
      Estate Development Co., Ltd.


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          72
          -





Mr.
      Xu
      received his MBA degree from Renmin University in Beijing, China and has been
      a
      researcher within the Institute of Corporate Culture at Beijing
      University.





**Committees
      and Meetings**





The
      board
      of directors is currently composed of 3 people. All board action requires the
      approval of a majority of the directors in attendance at a meeting at which
      a
      quorum is present. We intend to increase the size of our board of directors
      in
      fiscal year 2009.




We
      currently do not have standing audit, nominating or compensation committees.
      Our
      entire board of directors handles the functions that would otherwise be handled
      by each of the committees. We intend, however, to establish an audit committee,
      a nominating committee and a compensation committee of the board of directors
      as
      soon as practicable. We envision that the audit committee will be primarily
      responsible for reviewing the services performed by our independent auditors,
      evaluating our accounting policies and our system of internal controls. The
      nominating committee would be primarily responsible for nominating directors
      and
      setting policies and procedures for the nomination of directors. The nominating
      committee would also be responsible for overseeing the creation and
      implementation of our corporate governance policies and procedures. The
      compensation committee will be primarily responsible for reviewing and approving
      our salary and benefit policies (including equity plans), including compensation
      of executive officers.




Upon
      the
      establishment of an audit committee, the board will determine whether any of
      the
      directors qualify as an audit committee financial expert.





***Family
      Relationships***





There
      are
      no family relationship among any of our officers or directors.





**Involvement
      in Certain Legal Proceedings**




To
      the
      best of our knowledge, none of our directors or executive officers has been
      convicted in a criminal proceeding, excluding traffic violations or similar
      misdemeanors, or has been a party to any judicial or administrative proceeding
      during the past five years that resulted in a judgment, decree or final order
      enjoining the person from future violations of, or prohibiting activities
      subject to, federal or state securities laws, or a finding of any violation
      of
      federal or state securities laws, except for matters that were dismissed without
      sanction or settlement. Except as set forth in our discussion below in “Certain
      Relationships and Related Transactions,” none of our directors, director
      nominees or executive officers has been involved in any transactions with us
      or
      any of our directors, executive officers, affiliates or associates which are
      required to be disclosed pursuant to the rules and regulations of the SEC.





**Code
      of Business Conduct and Ethics**





We
      currently do not have a code of ethics that applies to our officers, employees
      and directors, including our Chief Executive Officer and senior
      executives.




**Item
      11.      Executive Compensation**




The
      particulars of the compensation paid to the following persons:


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          73
          -




(a)
            our
                principal executive officer;


(b)
            each
                of our two most highly compensated executive officers who were serving
                as
                executive officers at the end of the years ended June 30, 2008 and
                2007;
                and(c)
            up
                to two additional individuals for whom disclosure would have been
                provided
                under (b) but for the fact that the individual was not serving as
                our
                executive officer at the end of the years ended June 30, 2008 and
                2007,




who
      we
      will collectively refer to as the named executive officers of our company,
      are
      set out in the following summary compensation table, except that no disclosure
      is provided for any named executive officer, other than our principal executive
      officers, whose total compensation did not exceed $100,000 for the respective
      fiscal year:




**Name and**
              **Principal**
              **Position**
            
            **Year**
              **Ended**
              **June 30**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Stock**
              **Awards**
              **($)**
            
            **Option**
              **Awards**
              **($)**
            
            **Non-Equity**
              **Incentive Plan**
              **Compensation**
              **Earnings**
              **($)**
            
            **Non-**
              **Qualified**
              **Deferred**
              **Compensation**
              **Earnings**
              **($)**
            
            **All Other**
              **Compensation**
              **($)**
            
            **Total**
              **($)**Brandi
                Iannelli,
            
            
            2007
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0CEO,
                CFO and Director (1)
            
            
            2008
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Xianfu
                Han,
            
            
            2007
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Chairman
                and CEO (2)
            
            
            2008
            
            
            110,719
            
            
            67,620
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            178,339





(1)
            On
                April 29, 2008, we acquired BVI-ACM in a reverse acquisition transaction
                that was structured as a share exchange and in connection with that
                transaction, Brandi Iannelli tendered her resignation as a director
                and
                from all offices she held in our Company effective immediately.





(2)
            In
                connection with the reverse acquisition of BVI-ACM on April 29, 2008,
                Mr.
                Han was elected as our Chairman and Chief Executive Officer effective
                immediately.





**Employment
      Agreements**





In
      connection with the reverse acquisition of BVI-ACM on April 29, 2008, Mr. Han
      was elected as our Chairman and Chief Executive Officer effective immediately.
      On May 1, 2008, we entered into a three year Employment Agreement with Mr.
      Han
      pursuant to which he will receive an annual salary of $140,000 for service
      as
      our Chief Executive Officer.





Upon
      termination of Mr. Han’s employment because of death, disability or for cause,
      the Company will pay or provide to Mr. Han or his estate, as the case may be
      (i)
      any unpaid base salary and any accrued vacation through the date of termination;
      (ii) any unpaid annual bonus accrued with respect to the fiscal year ending
      on
      or preceding the date of termination; (iii) reimbursement for any unreimbursed
      expenses properly incurred through the date of termination; and (iv) all other
      payments or benefits to which Mr. Han may be entitled under the terms of any
      applicable employee benefit plan, program or arrangement.





Upon
      the
      termination of Mr. Han’s employment by the Company without cause, the Company
      will pay or provide to Mr. Han (i) all amounts due as if Mr. Han’s employment
      were terminated because of death, disability or for cause, and (ii) subject
      to
      Mr. Han’s execution (and non-revocation) of a general release of claims against
      the Company and its affiliates in a form reasonably requested by the Company,
      (a) continued payment of his base salary for two months after termination,
      payable in accordance with the regular payroll practices of the Company, but
      off
      the payroll; and (b) payment of his cost of continued medical coverage for
      two
      (2) months after termination (subject to his co-payment of the costs in the
      same
      proportion as such costs were shared immediately prior to the date of
      termination).  Payments provided under this Section 6(d) shall be in lieu
      of any termination or severance payments or benefits for which Mr. Han may
      be
      eligible under any of the plans, policies or programs of the
      Company.


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          74
          -




**Outstanding
      Equity Awards at Fiscal Year End**





None
      of
      our executive officers received any equity awards, including, options,
      restricted stock or other equity incentives during the fiscal year ended June
      30, 2008.





**Compensation
      of Directors**





During
      the 2007 and 2008 fiscal years, no member of our board of directors received
      any
      compensation solely for service as a director.





**Compensation
      Committee Interlocks and Insider Participation**




During
      the last fiscal year we did not have a standing Compensation Committee. The
      Board was responsible for the functions that would otherwise be handled by
      the
      compensation committee.




***Indemnification
      of Directors and Executive Officers and Limitation of
      Liability***





The
      General Corporation Law of Delaware, Section 102(b)(7) provides that directors,
      officers, employees or agents of Delaware corporations are entitled, under
      certain circumstances, to be indemnified against expenses (including attorneys’
fees) and other liabilities actually and reasonably incurred by them in
      connection with any suit brought against them in their capacity as a director,
      officer, employee or agent, if they acted in good faith and in a manner they
      reasonably believed to be in or not opposed to the best interests of the
      corporation, and with respect to any criminal action or proceeding, if they
      had
      no reasonable cause to believe their conduct was unlawful. This statute provides
      that directors, officers, employees and agents may also be indemnified against
      expenses (including attorneys’ fees) actually and reasonably incurred by them in
      connection with a derivative suit brought against them in their capacity as
      a
      director, if they acted in good faith and in a manner they reasonably believed
      to be in or not opposed to the best interests of the corporation, except that
      no
      indemnification may be made without court approval if such person was adjudged
      liable to the corporation





At
      the
      present time, there is no pending litigation or proceeding involving a director,
      officer, employee or other agent of ours in which indemnification would be
      required or permitted. We are not aware of any threatened litigation or
      proceeding which may result in a claim for such indemnification.




**Item
      12.      Security Ownership of Certain Beneficial
      Owners and Management and Related Stockholder Matters**




The
      following table sets forth, as of September 29, 2008, certain information with
      respect to the beneficial ownership of our common shares by each shareholder
      known by us to be the beneficial owner of more than 5% of our common shares,
      as
      well as by each of our current directors and executive officers as a group.
      Each
      person has sole voting and investment power with respect to the shares of common
      stock, except as otherwise indicated. Beneficial ownership is determined in
      accordance with Rule 13d-3 under the Securities Exchange Act of 1934 and
      does not necessarily bear on the economic incidents of ownership or the rights
      to transfer the shares described below. Unless otherwise indicated,
      (a) each stockholder has sole voting power and dispositive power with
      respect to the indicated shares and (b) the address of each stockholder who
      is a director or executive officer is c/o Yingu Plaza, #1708, 9 Beisihuanxi
      Road, Haidian District, Beijing 100080, China.


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          75
          -





Number of Shares
              Beneficially Owned(1)
            
            Percentage(2)Name
                and Address of Beneficial Owner**Executive
                Officers and Directors**Xianfu
                Han(3)
              Chairman
                and CEO
            
            
            5,285,750
            
            
            50.22
            %Weile
                He(4)
              Vice-Chairman
                and COO
            
            
            3,523,833
            
            
            33.48
            %Xiangsheng
                Xu
              President
                and Director
            
            
            0
            
            
            0
            %**All
                officers and directors as a group (3 people)**
            
            
            8,809,583
            
            
            83.30
            %**Over
                5% Beneficial Owners**Xianfu
                Han(3)
              Yingu
                Plaza 9
              Beishuanxi
                Road
              Suite
                1708, Haidan District
              Beijing
                100080
              PRC
            
            
            5,285,750
            
            
            50.22
            %Weile
                He(4)
              Yingu
                Plaza 9
              Beishuanxi
                Road
              Suite
                1708, Haidan District
              Beijing
                100080
              PRC
            
            
            3,523,833
            
            
            33.48
            %Professional
                Offshore Opportunity Fund LTD(5)
            
            
            1,875,000
            
            
            15.12
            %Whitebox
                Intermarket Partners LP(6)
            
            
            750,000
            
            
            6.65
            %





(1)
            Under
                rules adopted by the Securities and Exchange Commission, a person
                is
                deemed to be a beneficial owner of securities with respect to which
                the
                person has or shares: (a) voting power, which includes the power to
                vote or direct the vote of the security, or (b) investment power,
                which includes the power to dispose of or to direct the disposition
                of the
                security. Unless otherwise indicated below, the persons named in
                the table
                above have sole voting and investment power with respect to all shares
                beneficially owned.





(2)
            As
                of September 29, 2008, there were 10,525,000 shares of our common
                stock
                outstanding.




(3)
            On
                June 11, 2008, Mr. Han entered into a Securities Escrow Agreement
                by and
                among the investors to the private placement that closed on June
                11, 2008
                and American Stock Transfer & Trust Company, or AST, whereby 2,100,000
                shares of the Company’s common stock owned by Mr. Han were placed into
                escrow, with AST appointed as the escrow agent. The 2,100,000 shares
                were
                thereafter transferred into the name of AST and are to be held in
                escrow
                and released to Mr. Han if the Company does, or to the investors
                if the
                Company does not, meet certain performance milestones described in
                the
                Securities Escrow Agreement. Mr. Han maintains voting power over
                all
                2,100,000 shares until such time as any such shares are transferred
                to the
                investors, at which time, such transferred shares will be beneficially
                owned by such investors.




(4)
            On
                June 11, 2008, Mr. He entered into a Securities Escrow Agreement
                by and
                among the investors to the private placement that closed on June
                11, 2008
                and American Stock Transfer & Trust Company, or AST, whereby 1,400,000
                shares of the Company’s common stock owned by Mr. He were placed into
                escrow, with AST appointed as the escrow agent. The 1,400,000 shares
                were
                thereafter transferred into the name of AST and are to be held in
                escrow
                and released to Mr. He if the Company does, or to the investors if
                the
                Company does not, meet certain performance milestones described in
                the
                Securities Escrow Agreement. Mr. He maintains voting power over all
                1,400,000 shares until such time as any such shares are transferred
                to the
                investors, at which time, such transferred shares will be beneficially
                owned by such investors.




(5)
            Includes
                625,000 shares of common stock that are exercisable upon exercise
                of
                common stock purchase warrants. Howard Berger and Mark Swickle have
                voting
                and investment power over the securities held by Professional Offshore
                Opportunity Fund LTD.


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          -





(6)
            Includes
                250,000 shares of common stock that are exercisable upon exercise
                of
                common stock purchase warrants. Andrew J. Redleaf is the managing
                member
                the general partner of Whitebox Intermarket Partners LP and has voting
                and
                investment power over the securities held by Whitebox Intermarket
                Partners
                LP.




**Item
      13.      Certain Relationships and Related
      Transactions, and Director Independence**




**Transactions
      with Related Persons**




The
      following includes a summary of transactions since the beginning of the 2006
      fiscal year, or any currently proposed transaction, in which we were or are
      to
      be a participant and the amount involved exceeded or exceeds the lesser of
      $120,000 or one percent of the average of our total assets at year-end for
      the
      last three completed fiscal years, and in which any related person had or will
      have a direct or indirect material interest (other than compensation described
      under “Executive Compensation”). We believe the terms obtained or consideration
      that we paid or received, as applicable, in connection with the transactions
      described below were comparable to terms available or the amounts that would
      be
      paid or received, as applicable, in arm’s-length transactions.





Reverse
      Acquisition Transaction





On
      April
      29, 2008 we consummated the transactions contemplated by a share exchange
      agreement with the owners of all issued and outstanding capital stock of
      BVI-ACM, which included our Chairman and CEO, Xianfu Han, and our Vice-Chairman
      and COO, Weili He. Pursuant to the share exchange agreement, we acquired 100%
      of
      the outstanding capital stock of BVI-ACM in exchange for 11,500,000 shares
      of
      our common stock. As a result of this transaction, Mr. Han and Mr. He became
      the
      beneficial owners of approximately 51.5% and 33.34% of our outstanding capital
      stock, respectively.





Securities
      Escrow Agreement in connection with the Private Placement





In
      connection with the private placement that we closed on June 11, 2008, our
      Chairman and CEO, Xianfu Han, our Vice-Chairman and COO, Weili He, the Company
      and the investors in the private placement entered into a Make Good Agreement
      whereby Mr. Han and Mr. He have agreed to transfer a total of 3,500,000 shares
      of Common Stock to the investors on a pro rata basis in the event that the
      Company does not meet certain performance targets for its fiscal years ending
      June 30, 2008, June 30, 2009 and June 30, 2010. The performance target for
      the
      Company's fiscal year ended June 30, 2008 is the achievement of pre-tax net
      income of at least $5,200,000. This target has been met. The performance target
      for the Company's fiscal year ended June 30, 2009 is the achievement of
      after-tax net income of at least $9,000,000. The performance target for the
      Company's fiscal year ended June 30, 2010 is the achievement of after-tax net
      income equal to or greater than the Company’s after-tax net income for the
      fiscal year ended June 30, 2009.





Beijing
      Concrete Institute





We
      paid
      the Beijing Concrete Institute fees of $165,404 and $213,430 for the years
      ended
      June 30, 2007 and 2006, respectively. The Beijing Concrete Institute is 50%
      owned by our Chairman and CEO, Xianfu Han and 45% by our Vice-Chairman and
      COO,
      Weili He.





On
      January 1, 2008, we entered into a 6 year contract with the Beijing Concrete
      Institute with an expiration date of December 31, 2013, whereby we will
      compensate the Beijing Concrete Institute based on research and development
      projects they complete for us on an as-needed basis. The annual project-based
      payment is capped at RMB 1,000,000 (approximately US $140,000) and in return
      we
      will receive the exclusive right for technical procedures and findings as well
      as training for our employees. As of March 31, we have not referred any
      research and development projects, and have not provided any payment, to the
      Beijing Concrete Institute.


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Related
      Party Loans





During
      the years ended June 30, 2008 and 2007 we have received loans from a number
      of
      our employees, the proceeds of which are used for working capital and general
      corporate purposes. The principal amounts of the loans we received in each
      of
      2008 and 2007 and 2006 are $375,693 and $222,235, respectively. The current
      outstanding balances for these loans were $524,510 and $222,235 for the years
      ended June 30, 2008 and 2007. The effective annual interest rate on the loans
      is
      20%, and the loans mature at various times in 2007 and 2008. The employees
      from
      whom we received loans were Xueying Ma, Xue Zhang, Ying Zhang, Changjun Guo,
      Wenxiang Zhang, Jianguo Zhang, Li Geng, Junping Li, Xiangrong Mao, Fie Xia,
      Weihong Liu, Fang Cao, Liangcai Chen, and Shixun Xu and
      none
      of the employee held a management position at the company. No one
      individual loaned to us in excess of $120,000 except for Fang Cao, who loaned
      the Company $145,900. All the loans that matured have been extended and no
      principal have been paid on any of the loans to date. We have paid $51,625
      and
      $0 in interest for the years ended June 30, 2008 and 2007,
      respectively.




On
      October 1, 2007, the Company loaned to Beijing XinHang Construction Ltd, which
      is owned by our Vice-Chairman and Chief Operating Officer, Mr. He. The term
      of
      the loan was three months and carried an interest rate of 0.75%. As of December
      31, 2007, total receivables from Beijing Xinhang Construction Ltd amounted
      to
      $4,006,476. On March 18, 2008, the Company received the outstanding balance
      in
      full.





Reorganization
      Related Transactions





BVI-ACM
      owns 100% of the issued and outstanding capital stock of China-ACMH. On November
      28, 2007, China-ACMH entered into a series of contractual agreements with Xin
      Ao
      and its two shareholders pursuant to which China-ACMH effectively assumed
      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
      which include the following:





·
            Exclusive
                Technical Consulting and Services Agreement – through which China-ACMH
                will provide exclusive technical consulting and services to Xin Ao
                for an
                annual fee in an amount equal to Xin Ao’s yearly net income,


·
            Operating
                Agreement – through which China-ACMH has exclusive authority over all
                decision-making of ongoing major operations, including establishing
                compensation levels and hiring and firing of key personnel. In order
                to
                ensure Xin Ao’s normal operation, China-ACMH agrees to act as the
                guarantor and provide full guarantee for Xin Ao in entering and performing
                contracts, agreements or transactions in association with Xin Ao’s
                operation between Xin Ao and any other third parties. As a counter
                guarantee, Xin Ao agrees to mortgage all of its assets including
                receivables which have not been mortgaged to any third parties at
                the
                execution date of this agreement to China-ACMH.


·
            Equity
                Pledge Agreement – through which Xin Ao’s Shareholders have pledged their
                rights, title and equity interest in Xin Ao as security for China-ACMH
                to
                collect technical consulting and services fees provided to China-ACMH.


·
            Option
                Agreement – through which Xin Ao’s shareholders have granted China-ACMH
                the exclusive right and option to acquire all of their equity interests
                in
                Xin Ao The option agreement is intended to further reinforce China-ACMH’s
                rights to control and operate Xin
                Ao.


·
            Power
                of Attorney – signed by Xin Ao’s 100% shareholders Mr. Han Xianfu and Mr.
                He Weili, which authorize the individuals appointed by China-ACMH
                to
                exercise all of their respective voting rights as a shareholder at
                Xin
                Ao’s shareholder meetings





The
      term
      of these agreements is for ten (10) years and shall terminate automatically
      upon
      expiration, and may be extended only if China-ACMH gives its written consent
      of
      the extension prior to expiration. The parties shall, through negotiations,
      determine the term of any extension. During the term of the agreements, Xin
      Ao
      may not terminate the agreements except in the case of gross negligence, fraud
      or other illegal acts or bankruptcy of China-ACMH. China-ACMH may terminate
      the
      agreement at any time with a written notice to Xin Ao thirty days prior to
      such
      termination. Additionally, without China-ACMH’s prior written consent, Xin Ao
      may not assign or otherwise transfer its rights and obligations under the
      agreements. Subject to compliance with the Laws of China, China-ACMH may assign
      the agreements to any affiliate or any other designated entity without the
      prior
      consent of Xin Ao.




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          -


As
      all of
      the companies are under common control, this has been accounted for as a
      reorganization of entities and the financial statements have been prepared
      as if
      the reorganization had occurred retroactively. The Company consolidates Xin
      Ao’s
      results, assets and liabilities in its financial statements.





Through
      China-ACMH, BVI-ACM operates and controls Xin Ao through the contractual
      arrangements discussed above. The reasons that BVI-ACM used these contractual
      arrangements to acquire control of Xin Ao, instead of using a complete
      acquisition of Xin Ao’s assets or equity to make Xin Ao a wholly-owned
      subsidiary of BVI-ACM, are that (i) new PRC laws governing share exchanges
      with
      foreign entities, which became effective on September 8, 2006, make the
      consequences of such acquisitions uncertain; and (ii) other than by share
      exchange transactions, PRC law requires Xin Ao to be acquired for cash and
      BVI-ACM was not able to raise sufficient funds to pay the full appraised value
      for Xin Ao’s assets or shares as required under PRC law.





**Policies
      and Procedures for Review, Approval or Ratification of Transactions with Related
      Persons**




We
      are in
      the process of adopting a written related-person transactions policy that sets
      forth our policies and procedures regarding the identification, review,
      consideration and approval or ratification of “related-persons transactions.” For purposes of our policy only,
      a “related-person transaction” will be a transaction, arrangement or
      relationship (or any series of similar transactions, arrangements or
      relationships) in which we and any “related person” are participants involving
      an amount that exceeds $50,000. Transactions involving compensation for services
      provided to us as an employee, director, consultant or similar capacity by
      a
      related person will not be covered by this policy. A related person will be
      any
      executive officer, director or a holder of more than five percent of our common
      stock, including any of their immediate family members and any entity owned
      or
      controlled by such persons.




Under
      the
      policy, we expect that where a transaction has been identified as a
      related-person transaction, management must present information regarding the
      proposed related-person transaction to our audit committee (or, where approval
      by our audit committee would be inappropriate, to another independent body
      of
      our board of directors) for consideration and approval or ratification. The
      presentation will be expected to include a description of, among other things,
      the material facts, and the direct and indirect interests of the related
      persons, the benefits of the transaction to us and whether any alternative
      transactions are available. To identify related-person transactions in advance,
      we will rely on information supplied by our executive officers, directors and
      certain significant stockholders. In considering related-person transactions,
      our audit committee will take into account the relevant available facts and
      circumstances including, but not limited to:




·
              the
                  risks, costs and benefits to
                  us;
  ·
              the
                  impact on a director’s independence in the event the related person is a
                  director, immediate family member
                  of a director or an entity with which a director is
                  affiliated;
 ·
              the
                  terms of the transaction;
 ·
              the
                  availability of other sources for comparable services or products;
                  and
 ·
              the
                  terms available to or from, as the case may be, unrelated third
                  parties or
                  to or from our employees
                  generally.




In
      the
      event a director has an interest in the proposed transaction, the director
      must
      excuse himself or herself form the deliberations and approval. Our policy will
      require that, in determining whether to approve, ratify or reject a
      related-person transaction, our audit committee must consider, in light of
      known
      circumstances, whether the transaction is in, or is not inconsistent with,
      the
      best interests of our company and our stockholders, as our audit committee
      determines in the good faith exercise of its discretion. We did not previously
      have a formal policy concerning transactions with related
      persons.


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          -


**Promoters
      and Certain Control Persons**




We
      did
      not have any promoters at any time during the past five fiscal
      years.




Except
      as
      set forth in our discussion above, none of our directors, director nominees
      or
      executive officers has been involved in any transactions with us or any of
      our
      directors, executive officers, affiliates or associates which are required
      to be
      disclosed pursuant to the rules and regulations of the SEC.




**Item
      14.      Principal Accounting Fees and Services**




The
      aggregate fees billed for the most recently completed fiscal year ended June
      30,
      2008 and for fiscal year ended June 30, 2007 for professional services rendered
      by the principal accountant for the audit of our annual financial statements
      and
      review of the financial statements included in our quarterly reports on Form
      10-QSB and services that are normally provided by the accountant in connection
      with statutory and regulatory filings or engagements for these fiscal periods
      were as follows:




**Years Ended****June 30, 2008**
            
            **June 30, 2007**Audit
                Fees
            
            $
            100,000
            
            $
            110,000Audit
                Related Fees
            
            
            0
            
            
            0Tax
                Fees
            
            
            0
            
            
            0All
                Other Fees
            
            
            0
            
            
            0Total
            
            $
            100,000
            
            $
            110,000




Our
      board
      of directors pre-approves all services provided by our independent auditors.
      All
      of the above services and fees were reviewed and approved by the board of
      directors either before or after the respective services were rendered.




Our
      board
      of directors has considered the nature and amount of fees billed by our
      independent auditors and believes that the provision of services for activities
      unrelated to the audit is compatible with maintaining our independent auditors’
independence.




**PART
      IV**




**Item
      15.      Exhibits, Financial Statement Schedules**




(a)
            Financial
                Statements(1)
            Financial
                statements for our company are listed in the index under Item 8 of
                this
                document(2)
            All
                financial statement schedules are omitted because they are not applicable,
                not material or the required information is shown in the financial
                statements or notes thereto.(b)
            Exhibits




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          -





**Exhibit**
            
            
            
            **Filed****Index**
            
            **Description of Document**
            
            **Herewith**
            
            **Incorporated by Reference To:**2.1
            
            Share
                Exchange Agreement by and among TJS Wood Flooring, Inc.; Xin Ao
                Construction Materials, Inc.; and each of the equity owners of Xin
                Ao
                Construction Materials, Inc. Shareholders, dated April 29,
                2008
            
            
            
            Exhibit
                2.1 to the Registrant’s Current Report on Form 8-K filed on May 5,
                2008.3.1
            
            Articles
                of Incorporation of the Registrant as filed with the Secretary of
                State of
                Delaware****on
                February 13, 2007, as amended to date.
            
            
            
            Exhibits
                3.1 and 3.1a to the Registrant’s Registration Statement on Form SB-2 filed
                on March 26, 2007.3.2
            
            Amended
                and Restated Bylaws of the registrant.
            
            
            
            Exhibit
                3.2 to the Registrant’s Registration Statement on Form SB-2 filed on March
                26, 2007.4.1
            
            Certificate
                of Designation for Series A Convertible Preferred Stock
            
            
            
            Exhibit
                4.1 to the Registrant’s Current Report on Form 8-K filed on June 13,
                2008.4.2
            
            Lock-Up
                Agreement amongst Registrant, Xianfu Han and Weili He dated June
                11,
                2008
            
            
            
            Exhibit
                4.2 to the Registrant’s Current Report on Form 8-K filed on June 13,
                2008.10.1
            
            Employment
                Agreement with Xiangsheng Xu
            
            
            
            Exhibit
                10.1 to the Registrant’s Current Report on Form 8-K filed on May 5,
                2008.10.2
            
            Employment
                Agreement with Weili He
            
            
            
            Exhibit
                10.2 to the Registrant’s Current Report on Form 8-K filed on May 5,
                2008.10.3
            
            Employment
                Agreement with Xianfu Han
            
            
            
            Exhibit
                10.3 to the Registrant’s Current Report on Form 8-K filed on May 5,
                2008.10.4
            
            Employment
                Agreement with Alex Yao
            
            
            
            Exhibit
                10.1 to the Registrant’s Current Report on Form 8-K filed on May 7,
                2008.10.5
            
            Subscription
                Escrow Agreement between the Registrant, Maxim Group, LLC and American
                Stock Transfer & Trust Company as Escrow Agent dated June 11,
                2008.
            
            
            
            Exhibit
                10.1 to the Registrant’s Current Report on Form 8-K filed on June 13,
                2008.10.6
            
            Make
                Good Escrow Agreement by and among the Registrant, the Investors,
                the
                Investor Representative, Xianfu Han and Weili He, and American Stock
                Transfer & Trust Company as Escrow Agent, dated June 11,
                2008
            
            
            
            Exhibit
                10.2 to the Registrant’s Current Report on Form 8-K filed on June 13,
                2008.




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          -





10.7
            
            Form
                of Common Stock Purchase Warrant
            
            
            
            Exhibit
                10.3 to the Registrant’s Current Report on Form 8-K filed on June 13,
                2008.10.8
            
            Form
                of Placement Agent Stock Purchase Warrant
            
            
            
            Exhibit
                10.4 to the Registrant’s Current Report on Form 8-K filed on June 13,
                2008.10.9
            
            Escrow
                Agreement for IR and Dividends by and among the Registrant, the Investor
                Representative, Maxim Group, LLC and Anslow + Jaclin, LLP as Escrow
                Agent
            
            
            
            Exhibit
                10.5 to the Registrant’s Current Report on Form 8-K filed on June 13,
                2008.31.1
            
            Section
                302 Certification
            
            ü32.1
            
            Section
                906 Certification
            
            ü




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          82
          -




**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized, on September 29, 2008.




**CHINA
      ADVANCED CONSTRUCTION MATERIALS GROUP, INC.**





By:
            /s/
                Xianfu HanXianfu
                Han
              *Prinicipal
                Executive Officer and*
              *Interim
                Principal Financial *and**
              **Accounting*Officer*




In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.




Signature
            
            **Title**
            
            **Date**/s/
                Xianfu Han
            
            Chief
                Executive Officer and Chairman of
            
            September
                29, 2008Xianfu
                Han
            
            the
                Board (Principal Executive Officer and Interim Principal Financial
and
                AccountingOfficer)/s/Weili
                He
            
            Vice
                Chairman and Chief Operating Officer
            
            September
                29, 2008Weili
                He/s/Xiangsheng
                Xu
            
            President
                and Director
            
            September
                29, 2008Xiangsheng
                Xu




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