3 Going Concern	3 Months Ended
Sep. 30, 2015
Notes
3 Going Concern	3 GOING CONCERN We had an accumulated deficit of $57.1 million as of September 30, 2015. In addition, we had negative working capital of $14.3 million as of September 30, 2015. Currently and historically, the Company has managed to operate the business with negative net working capital. The Company’s negative working capital is primarily due to our accumulated deficit, which we funded by short-term bank loans, and the sale of common stock of the Company. The Company is able to operate with a negative net working capital because of loans from banks and related parties. The Company believes future positive operating cash flows, continued support from related parties, and the ability to continue to roll over short-term debt, taken together, provide adequate resources to fund ongoing operations in the foreseeable future. The Company may also seek equity financing to replace both short-term and long-term debts. The Company believes that the increased market demand for its main product in the near term and the sales from several new products in future years will produce substantial positive cash flow. If the Company’s short-term cash flows decrease significantly and the Company is unable to pay its short-term liabilities, the Company’s business, financial condition and results of operations could be materially affected. Management of the Company believes that the Company's large negative working capital will improve gradually during fiscal year 2016. Management expects the improvement to come from improved operating results, by extending short term into longer term loans, and by selling equity and converting debt to equity. Management anticipates that these improvements will enable the Company to reduce current high interest expenses and fund on-going operations. The management of the Company has taken a number of actions and will continue to address this situation in order to restore the Company to a sound financial position going forward. In September 2015, the Company sold 2,352,941 shares of common stock and 1,764,706 common stock purchase warrants to an institutional investor and also issued 141,176 shares of common stock to the placement agent and its affiliates warrants to purchase. The company received a net proceed of $2,739,000. Each warrant will permit the holder to purchase one share of common stock from the Company at $1.74 per share. If the warrants were exercised, the Company can receive approximately another $3 million. Revenue for the year ended September 30, 2015 was significantly higher than revenue during the prior year, an improvement that was primarily attributable to the changes in our marketing program. Management believes the net profit and positive operating cash flows generated in this year will continue in the coming years due to the increased market demand for its main product. Management also believes that the Company will have continued support from related parties, and will have the ability to continue to roll over short-term debt. Lastly, the Company also started the process of securing additional funds through long term debt financing.

3 Going Concern

3 Months Ended

Sep. 30, 2015

3 GOING CONCERN

We had an accumulated deficit of $57.1 million as of September 30, 2015. In addition, we had negative working capital of $14.3 million as of September 30, 2015. Currently and historically, the Company has managed to operate the business with negative net working capital. The Company’s negative working capital is primarily due to our accumulated deficit, which we funded by short-term bank loans, and the sale of common stock of the Company.

The Company is able to operate with a negative net working capital because of loans from banks and related parties. The Company believes future positive operating cash flows, continued support from related parties, and the ability to continue to roll over short-term debt, taken together, provide adequate resources to fund ongoing operations in the foreseeable future. The Company may also seek equity financing to replace both short-term and long-term debts. The Company believes that the increased market demand for its main product in the near term and the sales from several new products in future years will produce substantial positive cash flow. If the Company’s short-term cash flows decrease significantly and the Company is unable to pay its short-term liabilities, the Company’s business, financial condition and results of operations could be materially affected.

Management of the Company believes that the Company's large negative working capital will improve gradually during fiscal year 2016. Management expects the improvement to come from improved operating results, by extending short term into longer term loans, and by selling equity and converting debt to equity. Management anticipates that these improvements will enable the Company to reduce current high interest expenses and fund on-going operations.

The management of the Company has taken a number of actions and will continue to address this situation in order to restore the Company to a sound financial position going forward. In September 2015, the Company sold 2,352,941 shares of common stock and 1,764,706 common stock purchase warrants to an institutional investor and also issued 141,176 shares of common stock to the placement agent and its affiliates warrants to purchase. The company received a net proceed of $2,739,000. Each warrant will permit the holder to purchase one share of common stock from the Company at $1.74 per share. If the warrants were exercised, the Company can receive approximately another $3 million.

Revenue for the year ended September 30, 2015 was significantly higher than revenue during the prior year, an improvement that was primarily attributable to the changes in our marketing program. Management believes the net profit and positive operating cash flows generated in this year will continue in the coming years due to the increased market demand for its main product. Management also believes that the Company will have continued support from related parties, and will have the ability to continue to roll over short-term debt. Lastly, the Company also started the process of securing additional funds through long term debt financing.