0001062993-15-006745.txt : 20151218 0001062993-15-006745.hdr.sgml : 20151218 20151218124407 ACCESSION NUMBER: 0001062993-15-006745 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 59 CONFORMED PERIOD OF REPORT: 20151031 FILED AS OF DATE: 20151218 DATE AS OF CHANGE: 20151218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: XIANGTIAN (USA) AIR POWER CO., LTD. CENTRAL INDEX KEY: 0001472468 STANDARD INDUSTRIAL CLASSIFICATION: MOTORS & GENERATORS [3621] IRS NUMBER: 980632932 FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54520 FILM NUMBER: 151296081 BUSINESS ADDRESS: STREET 1: UNIT 602 CAUSEWAY BAY COMM BLDG 1 STREET 2: SUGAR STREET, CAUSEWAY BAY CITY: HONG KONG STATE: F4 ZIP: 000000 BUSINESS PHONE: 86-1085910261 MAIL ADDRESS: STREET 1: UNIT 602 CAUSEWAY BAY COMM BLDG 1 STREET 2: SUGAR STREET, CAUSEWAY BAY CITY: HONG KONG STATE: F4 ZIP: 000000 FORMER COMPANY: FORMER CONFORMED NAME: Goa Sweet Tours Ltd. DATE OF NAME CHANGE: 20090917 10-Q 1 form10q.htm FORM 10-Q Xiangtian Air Power Co., Ltd.: Form 10-Q - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2015

OR

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

For the transition period from __________ to __________

Commission File Number 333-161997

XIANGTIAN (USA) AIR POWER CO., LTD.
(Exact name of registrant as specified in its charter)

DELAWARE 98-0632932
(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation or organization)  

No. 6 Longda Road Yanjiao Development Zone
Sanhe City, Hebei Province, China 065201
(Address of principal executive offices)

001 240-252-1578
(Registrant’s telephone number)

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 past 90 days. Yes [X]     No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ]     No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.



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]

Indicate the number of outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: The registrant had 591,042,000 shares of common stock, $0.001 par value outstanding at December 14, 2015. The registrant has no other class of common equity.


TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION  
   
Item 1. Financial Statements  
             Condensed Consolidated Balance Sheets as of October 31, 2015 (Unaudited) and July 31, 2015 3
             Condensed Consolidated Statements of Operations for the Three Months Ended October 31, 2015 and 2014 (Unaudited) 4
             Condensed Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2015 and 2014 (Unaudited) 5
             Notes to Condensed Consolidated Financial Statements (Unaudited) 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 21
   
PART II. OTHER INFORMATION  
   
Item 1. Legal Proceedings 21
Item 1A. Risk Factors 21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Mine Safety Disclosures 21
Item 5. Other Information 21
Item 6. Exhibits 21
Signatures 22

2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Xiangtian (USA) Air Power Co., Ltd.
Consolidated Balance Sheets
(Stated in US Dollars)

    October 31,     July 31,  
    2015     2015  
    (Unaudited)        
ASSETS            
Current assets            
  Cash and cash equivalence $  314,011   $  502,029  
  Accounts receivable   4,463,797     4,720,093  
Other receivables   491,111     360,071  
Advances to suppliers   5,296,893     5,173,680  
Due from related parties   574,770     611,879  
Inventory   1,410,499     1,463,856  
Other current asset   853,440     721,868  
Total current assets $  13,404,521   $  13,553,476  
             
Non-current assets            
   Property, plant and equipment, net $  4,936,642   $  7,679,323  
   Deposit for property, plant and equipment   89,269     90,826  
Total non-current assets   5,025,911     7,770,149  
             
Total assets $  18,430,432   $  21,323,625  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
LIABILITIES            
Current liabilities            
   Accounts payable and accrued liabilities $ 3,402,645   $  3,534,973  
   Due to shareholders   18,629     18,954  
   Capital lease obligations - current   -     33,152  
   Due to director   419,442     417,770  
Due to related parties   1,203,067     1,056,568  
Advance from customers   415,011     451,962  
Deferred tax liabilities   -     83,101  
Billings in excess of costs   3,546,502     3,489,776  
Total current liabilities   9,005,296     9,086,256  
             
Non-current liabilities            
Capital lease obligations - non-current   -     2,687,887  
Total non-current liabilities   -     2,687,887  
             
Total liabilities $ 9,005,296   $  11,774,143  
             
Commitments and contingencies            
STOCKHOLDERS’ EQUITY            
Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued and outstanding   -     -  
Common stock: $0.001 par value, 1,000,000,000 shares authorized, 591,042,000 and 
       598,042,000 shares issued and outstanding, respectively
  591,042     591,042  
Additional paid-in capital   9,709,175     9,457,675  
Subscription receivable   (310,000 )   (310,000 )
Deficit accumulated   (417,094 )   (204,751 )
Accumulated other comprehensive gain   (147,987 )   15,516  
Total stockholders’ equity   9,425,136     9,549,482  
Total liabilities and stockholders’ equity $  18,430,432   $  21,323,625  

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

3



Xiangtian (USA) Air Power Co., Ltd.
Consolidated Statement of Operations and Comprehensive Loss
(Stated in US Dollars)
(Unaudited)

    For the     For the  
    Three     Three  
    Months     Months  
    Ended     Ended  
    October 31,     October 31,  
    2015     2014  
Revenue   66,610     -  
             
Cost of sales $  62,015   $  -  
             
Gross profit $  4,595   $  -  
             
Operating expenses:            
Selling expenses   4,510     5,335  
General and administrative expenses   359,142     339,716  
   Loss from operations   363,652     345,051  
             
Other (expense) income            
Interest expense   -     (37,865 )
Non-operating income   131,790        
Exchange loss   (17,928 )   (609 )
   Total other (expense) income, net   113,862     (38,474 )
             
         Net loss before taxes $  (245,195 )   (383,525 )
             
Income tax benefit   32,852     79,107  
             
         Net loss after taxes $  (212,343 )   (304,418 )
             
Foreign currency translation adjustment   (163,503 )   164,155  
             
Comprehensive loss   (375,846 )   (140,263 )
             
   Net loss per common share – basic and diluted $  (0.00 ) $  (0.00 )
             
Weighted average number of common shares outstanding - basic and diluted   591,042,000     598,042,000  

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

4


Xiangtian (USA) Air Power Co., Ltd.
Consolidated Statements of Cash Flows
(Stated in US Dollars)
(Unaudited)

    For the     For the  
    Three Months Ended     Three Months Ended  
    October 31,     October 31,  
    2015     2014  

Cash flows from operating activities:

           

Net loss

$  (212,343 ) $  (304,418 )

Adjustments to reconcile net loss to net cash used in operating activities:

           

Depreciation

  67,951     102,378  

Deferred tax asset

  -     (78,432 )

   Rent contributed by shareholders as paid-in capital

  1,500     1,500  

   Gain on termination of capital lease

  (130,960 )   -  

Changes in operating assets and liabilities:

           

Accounts receivable

  296,555        

Other receivables

  (127,161 )   (6,216 )

Prepayment

  (76,914 )   1,257,827  

Inventory

  3,100     (804,168 )

Due from related party

  9,988     -  

Other current asset

  (124,498 )   (1,230,110 )

   Accounts payable and accrued liabilities

  (148,282 )   75,680  

   Other payables and tax payables

  (15,095 )   17,852  

   Advance billings on contracts

  47,782     1,443,466  

Deferred tax liability

  (83,388 )   -  

   Capital lease interest payable to related parties

  -     30,150  

Net cash provided by (used in) operating activities

  (491,765 )   505,509  

 

           

Cash flows from investing activities:

           

Purchase of property and equipment

  -     (3,315 )

Loan made to related parties

  32,319     -  

Net cash provided by (used in) investing activities

  32,319     (3,315 )

 

           

Cash flows from financing activities:

           

Proceeds from/(Repayment of) advances from related parties

  142,298     (690,009 )

Advances from director

  1,712     -  

Advances from shareholders

  250,000     -  

Net cash provided by (used in)  financing activities

  394,010     (690,009 )

 

           

Effect of exchange rate change on cash

  (122,582 )   63,001  

 

           

Net change in cash and cash equivalents

  (188,018 )   (124,814 )

 

           

Cash and cash equivalents - beginning of period

  502,029     556,788  

 

           

Cash and cash equivalents - end of period

$  314,011   $  431,974  

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

5


Xiangtian (USA) Air Power Co., Ltd.
Notes to Consolidated Financial Statements
(Unaudited)

NOTE 1 - NATURE OF OPERATIONS

Xiangtian (USA) Air Power Co., Ltd. (the “Company”) was incorporated in the State of Delaware on September 2, 2008 as Goa Sweet Tours Ltd. The Company was originally formed to provide personalized concierge tour packages to tourists who visit the State of Goa, India. On April 17, 2012, the Company entered into Share Purchase Agreements, by and among, Luck Sky International Investment Holdings Limited (“Lucky Sky”), an entity owned and controlled by Zhou Deng Rong, and certain of our former stockholders who owned, in the aggregate, 7,200,000 shares of the Company’s common stock (90% of the then outstanding shares). Luck Sky purchased all 7,200,000 shares for an aggregate of $235,000. The sale was completed on May 15, 2012.

On May 25, 2012, the Company formed a corporation under the laws of the State of Delaware called Xiangtian (USA) Air Power Co., Ltd. ("Merger Sub") and on the same day, acquired one hundred shares of Merger Sub's common stock for cash. As such, Merger Sub became a wholly-owned subsidiary of the Company.

Effective as of May 29, 2012, Merger Sub was merged with and into the Company. As a result of the merger, the Company’s name was changed to “Xiangtian (USA) Air Power Co., Ltd.”. Prior to the merger, Merger Sub had no liabilities and nominal assets and, as a result of the merger, the separate existence of the Merger Sub ceased. The Company was the surviving corporation in the merger and, except for the name change provided for in the Agreement and Plan of Merger, there was no change in the directors, officers, capital structure or business of the Company.

Merger with LuckSky (Hong Kong) Shares Limited

On September 5, 2013, the Company entered into a business combination by means of merger of LuckSky (Hong Kong) Shares Limited (“HK Shares”), a Hong Kong corporation, for 250,000,000 shares of common stock of the Company. Prior to the merger, HK Shares had no liabilities and nominal assets. On September 23, 2013, the Company issued 250,000,000 shares of common stock to the shareholders of HK Shares. Effectively on September 24, 2013, the shareholders of HK Shares accepted the shares from the Company and surrendered its control of HK Shares to the Company in exchange of 250,000,000 shares of HK Shares to be issued to its shareholders. On October 16, 2013, HK Shares completed the issuance of its 250,000,000 shares accordingly. As of date, HK Shares is still a surviving company, and the management is expected to cancel HK Shares in October 2014.

Acquisition of Sanhe City Lucksky Electrical Engineering Co., Ltd.

On July 25, 2014, Luck Sky (Shen Zhen) Aerodynamic Electricity Limited (“Luck Sky Shen Zhen”), a corporation incorporated under the laws of the People Republic of China (“PRC”), an indirect wholly-owned subsidiary; Sanhe City Lucksky Electrical Engineering Co., Ltd. (“Sanhe”), a corporation incorporated under the laws of the PRC; and Mr. Zhou Jian and Mr. Zhou Deng Rong, the owners of 97% and 3%, respectively, of Sanhe; entered into a series of agreements known as variable interest agreements (the “VIE Agreements”) pursuant to which Sanhe became Luck Sky Shen Zhen’s contractually controlled affiliate. The purpose and effect of the VIE Agreements is to provide Luck Sky Shen Zhen (our indirect wholly-owned subsidiary) with all of the management, control and net profits of Sanhe.

Simultaneously, the Company entered into a common stock purchase agreement with Zhou Jian and Zhou Deng Rong, the owners of 97% and 3%, respectively, of Sanhe, in consideration for the execution of the VIE Agreements and the acquisition of Sanhe. Pursuant to the Stock Purchase Agreement, the Company issued Zhou Jian and Zhou Deng Rong 264,850,740 and 8,191,260 shares, respectively, of our common stock, representing 51.4% of our issued and outstanding shares of common stock.

6


NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s consolidated financial statements are expressed in U.S. dollars.

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates.

Interim Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosure required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. These interim financial statements should be read in conjunction with the audited financial statements for the year ended July 31, 2015, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the year ended July 31, 2015.

These interim financial statements should be read in conjunction with the audited financial statements for the year ended July 31, 2015, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the year ended July 31, 2015.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported net income or losses.

Principle of Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiaries and VIE for which it is deemed the primary beneficiary. All significant inter-company accounts and transactions have been eliminated in consolidation.

The Company evaluates the need to consolidate its VIE in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.

The VIE agreement was not consummated until July 25, 2014, however, the purpose and design of the establishment of VIE, Sanhe, was to consolidate common control under the Company. ASC 810-10-25-38F states that a reporting entity’s involvement in the design of a VIE may indicate that the reporting entity had the opportunity and the incentive to establish arrangements that result in the reporting entity being the variable interest holder with the power to direct the activities that most significantly impact the VIE’s economic performance. As both the Company and the acquired VIE, Sanhe, are under the common control of Zhou Dengrong and Zhou Jian immediately before and after the acquisition, this transaction was accounted for as a merger under common control, using merger accounting as if the merger had been consummated at the beginning of the earliest period presented, and no gain or loss was recognized. All the assets and liabilities of the VIE, Sanhe, are recorded at carrying value. Hence, Sanhe was consolidated under the Company since its inception due to the purpose and design of its establishment.

The following financial statement amounts and balances of the VIE, which is established on August 6, 2014, were included in the accompanying consolidated financial statements as of October 31, 2015 and July 31, 2015 and for the three months ended October 31, 2015 and 2014, respectively:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Total assets $  18,411,671   $  20,948,502  
Total liabilities   8,129,489     11,457,633  

    For the three        
    months     For the three months  
    Ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Net loss $ 125,656   $  242,971  

7


Fair Value Measurements

The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

[  ]     Level 1 inputs to the valuation methodologyare quoted prices (unadjusted) for identical assets or liabilities in active markets.

[  ]     Level 2 inputs to the valuation methodology includes 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.

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of October 31, 2015 and July 31, 2015.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Inventory

Inventory is stated at the lower of cost or market. Cost is principally determined using the weighted average basis. Construction costs incurred on contracts are included in inventories which consist of raw materials, accessory parts, and contracts work in progress.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and impairment losses. Gains or losses on dispositions of property and equipment are included in operating income (loss). Major additions, renewals and betterments are capitalized, while maintenance and repairs are expensed as incurred.

Depreciation and amortization are provided over the estimated useful lives of the assets using the straight-line method from the time the assets are placed in service. Estimated useful lives are as follows, taking into account the assets' estimated residual value:

Classification Estimated useful life
Machinery equipment 5-10 years
Computer and office equipment 3 years
Vehicle 5 years
Property under capital lease 20 years

8


Revenue Recognition

Sales of power generation system in conjunction of system installation are recognized under accounting for construction-type contracts, using the completed contract method. Accordingly, revenue is recognized upon the completion of the construction, provided persuasive evidence of an arrangement exists, title and risk of loss has transferred, the fee is fixed and determinable, and collection is reasonably assured. We provide for any loss that we expect to incur on these contracts when that loss is probable.

Warranty and Returns

The Company generally provides limited warranties for work performed under its contracts. The warranty periods typically extend for a limited duration following substantial completion of the Company's work on a project. At the time a sale is recognized, we record estimated future warranty costs. Such estimated costs for warranties are included in the individual project cost estimates for purposes of accounting for long-term contracts. Generally, the estimated claim rates of warranty are based on actual warranty experience or Company’s best estimate.

No right of return exists on sales of equipment. Replacement part returns are estimable and accrued at the time a sale is recognized.

Value added taxes

The Company is subject to VAT at a rate of 17% on proceeds received from customers, and are entitled to a refund for VAT already paid or borne on the goods purchased by it that have generated the gross sales proceeds. The VAT balance is recorded in other payables on the balance sheets.

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. 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 litigations 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. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred. No significant penalties or interest relating to income taxes have been incurred during the period from July 8, 2013 (inception) to December 31, 2013. US GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.

Comprehensive Loss

The Company follows the provisions of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 220 “Reporting Comprehensive Income”, and establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements.

9


Foreign Currency Translation

The Company’s functional currency is Chinese Renminbi (“RMB”) as substantially all of the Company’s PRC subsidiaries’ operations use this denomination. The consolidated financial statements are presented in U.S. dollars. Foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the exchange rates prevailing at the transaction date. Revenues and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.

For the purpose of presenting these financial statements of subsidiaries in PRC, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, which is 6.3180 and 6.2097 as of October 31, 2015 and July 31, 2015, respectively; stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period, which is 6.3521 and 6.1389 for the three months ended October 31, 2015 and October 31, 2014. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.

For the purpose of presenting these financial statements of subsidiaries in Hong Kong, PRC, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, which is 7.7496 and 7.7514 as of October 31, 2015 and July 31, 2015, respectively; stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period, which is 7.7510 and 7.7534 the three months ended October 31, 2015 and October 31, 2014, respectively. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.

Earnings (Loss) per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Earnings per share excludes all potential dilutive shares of common stock if their effect is anti-dilutive. There were no potential dilutive securities at October 31, 2015 or October 31, 2014.

Recent Accounting Pronouncements

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which modifies existing requirements regarding measuring inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (NRV), and NRV less an approximately normal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impacts on the Company’s consolidated results of operations and financial condition.

In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the consolidated financial statements.

In August 2014, the Financial Accounting Standards Board issued ASU No. 2014-15, Presentation of Financial Statements— Going Concern (Subtopic 205-40). This standard is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments contained in this ASU apply to all companies and not-for-profit organizations. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company adopted this ASU as early application for the financial statements of the period from July 8, 2013 (inception) to December 31, 2013.

10


In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle the ASU includes provisions within a five step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when (or as) an entity satisfies a performance obligation. The standard also specifies the accounting for some costs to obtain or fulfill a contract with a customer and requires expanded disclosures about revenue recognition. The standard provides for either full retrospective adoption or a modified retrospective adoption by which it is applied only to the most current period presented. This ASU is effective January 1, 2017. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

NOTE 3 - GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since its inception resulting in an accumulated deficit of $417,094 as of October 31, 2015 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

11



The Company expects to finance operations primarily through cash flow from revenue and capital contributions from principal shareholders. In the event that we require additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, our principal shareholders have indicated the intent and ability to provide additional equity financing.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on our ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 4 – INVENTORIES

Inventories consist of the following:

    October 31,     July 31,  
    2015     2015  
    (Unaudited)        
Raw materials $  359,823   $  365,248  
Accessory parts   834,337     848,887  
Contracts work in progress   216,339     249,721  
Total $  1,410,499   $  1,463,856  

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

    October 31,     July 31,  
    2015     2015  
    (Unaudited)        
Machinery equipment $  5,184,657   $  5,275,080  
Computer and office equipment   55,589     56,558  
Vehicle   72,841     74,111  
Property under capital lease   -     2,759,547  
Total property, plant and equipment   5,313,087     8,165,296  
Less: accumulated depreciation   (376,445 )   (485,973 )
Total $  4,936,642   $  7,679,323  

Total depreciation expenses for the three months ended October 31, 2015 and 2014 were $67,951 and $102,378, respectively. Depreciation relating to Contract work in progress for the three months ended October 31, 2015 and 2014 were $61,729 and $63,024, respectively, and depreciation relating to general and administrative expenses for the three months ended October 31, 2015 and 2014 were $6,222 and $39,354, respectively.

On August 1, 2015, the Company terminated the finance leasing with Sanhe Dong Yi Glass Machine Company Limited. The factory and office were returned to the lessor. The assets were no longer recorded as fixed assets, which lead to the decrease of Property, plant and equipment. The Company recognized $130,960 gain due to this termination.

NOTE 6 – BILLINGS IN EXCESS OF COSTS

Billings in excess of costs consist of the following:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Costs incurred on uncompleted contracts $  2,115,100   $  2,033,840  
             
Billings to date   (5,661,602 )   (5,523,616 )
             
  $  (3,546,502 ) $  (3,489,776 )
             
Included in the accompanying balance sheets as follows:            
Costs in excess of billings on uncompleted contracts $  -   $  -  
Billings on uncompleted contracts in excess of costs   (3,546,502 )   (3,489,776 )
             
  $  (3,546,502 ) $  (3,489,776 )

NOTE 7 - RELATED PARTY TRANSACTIONS

Since inception, Sanhe rented an office from Sanhe Dong Yi Glass Machine Company Limited (“Sanhe Dong Yi”), a Company owned by Zhou Deng Rong, our former general manager and former majority shareholder of the Company. The rental period was from June 15, 2013 to June 14, 2014, and the full rent amount of $3,965 (RMB 12,000) was paid in advance. The Company also paid $1,487 (RMB 9,000) to Sanhe Dong Yi to purchase several articles of furniture and computer equipment for its operation purpose in September 2014.

12


Prior to the incorporation of Sanhe, Kelitai Air Powered Machinery Co., Ltd. (“Kelitai”), a subsidiary of LuckSky Group, an entity owned by Zhou Deng Rong, former general manager and former majority shareholder of the Company, executed various purchase agreements (the “Agreements”) with Beijing Hengruier Machinery Company Limited (“Hengruier”) and made certain prepayments on behalf of the Company. On July 15, 2013, Kelitai, Hengruier and the Company executed a tripartite agreement to transfer the rights and obligations of the Agreements to the Company. As of October 31, 2014, Kelitai has paid $1,242,198 on behalf of the Company as prepayments to Hengruier. The outstanding amounts due to related parties were $1,263,334 (RMB 7,722,000) as of October 31, 2014. These amounts were unsecured, non-interest bearing, and due on demand.

In May 2014, Sanhe entered into an agreement with Kelitai, to purchase some of Keizai’s fixed assets for the use in its own production. The total amount for the fixed assets and inventory was $1,261,872 (RMB 7,844,300) and Sanhe paid $785,933 (RMB 4,512,900) for equipment and $21,000 (RMB 130,919) for inventory. The outstanding amount due to related party – Kelitai - was $544,958 (RMB 3,331,400) as of October 31, 2014. The amount was unsecured, non-interest bearing, and due on demand.

On July 25, 2014, Luck Sky Shen Zhen obtained an exclusive, worldwide, royalty free license from Zhou Deng Rong and Zhou Jian (his son) and a second exclusive, worldwide royalty free license from LuckSky Group to an aggregate of 48 Chinese patents and related know how and trade secrets, including the technology underlying 13 patent applications (the “Technology”). The Technology represents all of the patents, patent applications and related know how and trade secrets owned by the licensors with respect to PV installations and the air energy storage power generation technology as applied to commercial and residential buildings, but not wind towers. On July 25, 2014, Luck Sky Shen Zhen granted Sanhe an exclusive sublicense with respect to the use of the Technology for commercial and residential buildings, but not for other uses, including wind towers, vehicles and trains, which sublicense also provides for a royalty payment to Luck Sky Shen Zhen equal of five percent of Sanhe’s revenues.

Sanhe leases its principal office, factory and dormitory from LuckSky Group in Sanhe City, Hebei Province. LuckSky Group is owned by Zhou Deng Rong, our former CEO and Zhou Jian, our General Manager and Chairman of the Board. The space in the office, factory and dormitory being leased are 1296, 5160 and 1200 square meters, respectively. The office and factory space are leased for a rent of $113,492 (RMB 697,248) per year and the dormitory is leased for a rent of $21,095 (RMB 129,600) per year. The leases expire on April 30, 2024 and are subject to renewal with a prior two-month written notice. LuckSky Group is in the process of obtaining the land use approval and ownership certificate of the leased building.

On April 28, 2012, Zhou Jian obtained the right of usage of 44.3 acres agricultural land where our principal office, factory and dormitory are located for 18 years and 8 months, starting May 1, 2012. The annual price paid for such usage rights is $5,617 (RMB 34,510). On May 1, 2012, Zhou Jian signed a commitment letter that allowed Xiangtian Kelitai, Yanjiao Branch, a division of LuckSky Group to use this agricultural land. LuckSky Group constructed the buildings on such agricultural land. In the event we are unable to use our principal factory and office space as a result of this usage issue, the lease provides that LuckSky Group will use every effort to complete and perfect the ownership and usage rights, or provide Sanhe with equivalent space.

Sanhe also leases a second factory and office in Sanhe City from Sanhe Dong Yi Glass Machine Company Limited, which is owned by Zhou Deng Rong. A portion of this facility is currently used by Sanhe to demonstrate its products but the facility is primarily intended as a backup to the first facility in Sanhe City and/or for expansion. The factory and office are 4,748.96 square meters. The rent paid by Sanhe for the factory and the office is RMB1,306,500 per year. As of October 31, 2015 and July 31, 2015, the rental fee accrued but unpaid under the leases from LuckSky Group and Sanhe Dong Yi were $258,488 and $262,996, respectively. On August 1, 2015, the two parties entered into a termination of the finance leasing. As the Company no longer needs the factory and office, the assets were returned to the lessor on that day.

On July 25, 2014, prior to the Acquisition, Sanhe and LuckSky Shen Zhen and Sanhe’s shareholders entered into a series of VIE Agreements, pursuant to which Sanhe became LuckSky Shen Zhen’s contractually controlled affiliate. The VIE Agreements include the Framework Agreement on Business Cooperation, the Exclusive Management, Consulting and Training and Technical Services Agreement, the Exclusive Option Agreement, the Equity Pledge Agreement, the Know-How Sub-License Agreement and the Power-of-Attorney. The purpose and effect of the VIE Agreements is to provide LuckSky Shen Zhen (the Company’s indirect wholly-owned subsidiary) with all of the management and control of Sanhe and all of its net income. While LuckSky Shen Zhen does not actually own at present any of the equity and shares in Sanhe, the purpose and effect of the VIE Agreements is to instill in LuckSky Shen Zhen total management and voting control of Sanhe for all material purposes. The use of VIE agreements is a common structure used to acquire PRC corporations, particularly in certain industries in which foreign investment is restricted or forbidden by the PRC government.

13


On July 25, 2014, the Company entered into the Stock Purchase Agreement with Zhou Jian and Zhou Deng Rong, the owners of 97% and 3%, respectively, of Sanhe. The Company agreed to issue to Zhou Jian and Zhou Deng Rong 264,850,740 and 8,191,260 shares, respectively, of the Company’s common stock, representing 51.4% of the issued and outstanding shares of common stock.

Construction Project

On April 25, 2014, Sanhe entered into a construction project agreement with Xianning Lucksky Aerodynamic Electricity Ltd (“Xianning Lucksky”). Prior to April 10, 2014, Xianning Lucksky was majorly (70%) owned by Zhou Deng Rong, former majority shareholder and former CEO of the Company, and former general manager of Sanhe; where he has significant influence over Xianning Lucksky. As of October 31, 2015, the accumulated cost on the construction project was $2,115,100 and the accumulated billings was $5,661,602.

Due from related parties

On April 25, 2015, Sanhe entered into a loan agreement with Xiangtian Kelitai, Yanjiao Branch, a division of LuckSky Group, which is owned by Zhou Deng Rong, former CEO and Sanhe’s former general manager and former majority shareholder of the Company, with a total amount of $507,917 (RMB3,150,000). The loan is unsecured and matures on December 31, 2015. If the loan is not fully repaid on the maturity date, Sanhe will be entitled to receive an interest at 5% per annum. As of October 31, 2015 and July 31, 2015, the outstanding principal on the loan was $0 and $32,208.

Sanhe has been working on a construction project for Xiangtian Kelitai, which agreed to reimburse Sanhe for the cost of the project. The accumulated cost on the construction project was $574,770 and $579,671 as of October 31, 2015 and July 31, 2015.

Due to related parties

Until August 1, 2015, Sanhe leased a second factory and office in Sanhe City from Sanhe Dong Yi Glass Machine Company Limited, which is owned by Zhou Deng Rong. A portion of this facility was used by Sanhe to demonstrate its products but the facility was primarily intended as a backup to the first facility in Sanhe City and/or for expansion. The factory and office are 4,748.96 square meters. The rent paid by Sanhe for the factory and the office was RMB1, 306,500 per year. As of October 31, 2015 and July 31, 2015, the lease payable to Sanhe Dong Yi Glass Machine Company Limited were $258,488 and $262,996, respectively. On August 1, 2015, the two parties terminated the finance leasing. As the Company no longer needs the factory and office, the assets were returned to the lessor effective August 1, 2015

From time to time, Mr. Zhou Deng Rong prepaid some expenses for the company. As of October 31, 2015 and July 31, 3015, amounts due to related parties were as follows:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Rental fees:            
LuckSky Group   248,005     166,443  
Sanhe Dong Yi (Capital lease payable) $  258,488   $  262,996  
             
Prepaid expenses on behalf of the company:            
Zhou Deng Rong   696,574     627,129  
             
Total $  1,203,067   $  1,056,568  

Due to Shareholders

Since inception to April 2014, the Company’s shareholders have paid several employees’ salaries on behalf of the Company. As of October 31, 2015 and July 31, 2015, the amount due to shareholders was $18,629 and $18,954, respectively.

Due to Directors

From time to time, the Company receives advances from its directors. As of October 31, 2015 and July 31, 2015, the Company received $419,442 and $417,770, respectively. The Company used the funds for its operations. These advances are due on demand, unsecured and non-interest bearing.

NOTE 8 GOVERNMENT CONTRIBUTION PLAN

The Company participates in a government-mandated multi-employer defined contribution plan pursuant to which certain retirement, medical and other welfare benefits are provided to employees. Chinese labor regulations require the Company to pay to the local labor bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The relevant local labor bureau is responsible for meeting all retirement benefit obligations; the Company has no further commitments beyond its monthly contribution.

The outstanding amount was $70,239 and $62,846 as of October 31, 2015 and July 31, 2015, respectively.

NOTE 9. STATUTORY RESERVE

Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC ("PRC GAAP") at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss.

NOTE 10 - CAPITAL STOCK AND EQUITY TRANSACTIONS

Common Stock

The total number of common shares authorized that may be issued by the Company is 1,000,000,000 shares with a par value of $0.001 per share.

During the period ended July 31, 2009, the Company issued 5,000,000 shares of common stock for total cash proceeds of $25,000 to the Company’s sole director and officer. During the year ended July 31, 2010, the Company sold 3,000,000 shares of common stock for total cash proceeds of $30,000.

On September 23, 2013, the Company issued 250,000,000 shares of common stock to the shareholders of HK Shares, in exchange of 250,000,000 shares of HK Shares.

On September 23, 2013, the Company issued a total of 67,000,000 shares of restricted common stock at $0.001 per share, such that 60,000,000 shares were issued to Mr. Roy Thomas Phillips, who was then a consultant to the Company and later served as the acting CFO of the Company beginning July 29, 2014, and 7,000,000 shares were issued to two other non-related parties. The shares were issued in contemplation of a secondary offering. The Company takes the position that these shares should be cancelled since no secondary offering was consummated. The Company is taking steps to have these shares canceled. The Company valued the 67,000,000 shares of common stock issued at $67,000 as there was no market for the Company’s common stock and it has limited or no trading; and there is thought to be minimal value in the Company at the time of issuance, therefore the par value is thought to match the assumed market price of the Company’s common stock which is at $0.001 per share. On July 24, 2015, 7,000,000 shares issued to two other non-related parties were cancelled.

On July 25, 2014, we entered into the Stock Purchase Agreement in connection with the acquisition of Sanhe with Zhou Jian and Zhou Deng Rong, the owners of 97% and 3%, respectively, of Sanhe. We agreed to issue to Zhou Jian and Zhou Deng Rong 264,850,740 and 8,191,260 shares, respectively, of our common stock, representing 51.4% of the our issued and outstanding shares of common stock.

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Preferred Stock

The total number of preferred shares authorized that may be issued by the Company is 100,000,000 shares with a par value of $0.001 per share. The preferred stock may be issued in one or more series, from time to time, with each series to have such designation, relative rights, preference or limitations, as adopted by the Company’s Board of Directors. No preferred shares have been issued.

NOTE 11 - INCOME TAXES

United States

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The cumulative tax effect at the expected rate of 34% of significant items comprising the net deferred tax amount is at October 31, 2015 and July 31, 2015 as follows:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Deferred tax assets:            
Net operating losses $  23,040   $  78,278  
             
Total deferred tax assets   23,040     78,278  
Less: valuation allowance   (23,040 )   (78,278 )
             
Deferred tax assets, net $  -   $  -  

As of October 31, 2015, for U.S. federal income tax reporting purposes, the Company has approximately $799,618 of unused net operating losses (“NOLs”) available for carry forward to future years. The benefit from the carry forward of such NOLs will begin expiring during the year ended July 31, 2029. Because United States tax laws limit the time during which NOL carry forwards may be applied against future taxable income, the Company may be unable to take full advantage of its NOLs for federal income tax purposes should the Company generate taxable income. Further, the benefit from utilization of NOL carry forwards could be subject to limitations due to material ownership changes that could occur in the Company as it continues to raise additional capital. Based on such limitations, the Company has significant NOLs for which realization of tax benefits is uncertain.

Hong Kong

The Company’s subsidiaries established in HKSAR are subject to Hong Kong Profits Tax. However, these subsidiaries did not earn any income derived in Hong Kong from its date of incorporation to October 31, 2015, and therefore were not subject to Hong Kong Profits Tax.

PRC

The Company’s subsidiaries established in PRC are subject to income tax rate of 25%.

  1)

Luck Sky Shenzhen

For the three months ended October 31, 2015 and 2014, Luck Sky Shenzhen had $27,098 and $11,933 in net loss.

  2)

Sanhe

For the three months ended October 31, 2015, Sanhe had $98,557 in net loss. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The cumulative tax effect at the expected rate of 25% of significant items comprising the net deferred tax amount is at October 31, 2015 and July 31, 2015 as follows:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Deferred tax assets:            
Net operating losses $  -   $  -  
             
Total deferred tax assets   -     -  
Less: valuation allowance   -     -  
             
Deferred tax assets, net $  -   $  -  
             
Deferred tax liabilities:            
Timing differences of revenue recognition $  -   $  83,101  
             
Total deferred tax liabilities   -     83,101  

Significant components of income tax expense for the three months ended October 31, 2015 and 2014 are as follows:

    For the three months     For the three months  
    ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Current tax expense $ 48,386   $  -  
Deferred tax expense   (81,238 )   (79,107 )
Benefits of operating loss carryforwards   -     -  
Tax expense (benefit) $  (32,852 ) $  (79,107 )

Reconciliation of Effective Income Tax Rate

    For the three months     For the three months  
    ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Statutory U.S. tax rate   34.00%     34.00%  
PRC Statutory Tax Rate   25.00%     25.00%  
HK Statutory Tax Rate   15.00%     15.00%  
Less: Valuation Allowance   (27.47% )   (55.37% )
Deferred Tax   (33.13% )   -  
Tax expense (benefit)   13.40%     20.63%  

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NOTE 12. COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES

Capital Commitments

The Company purchased property, plant and equipment which the payment was due within one year. As of October 31, 2015 and July 31, 2015, the Company has a capital commitment of $18,237,303 and $17,697,627, respectively.

Operation Commitments

The total future minimum lease payments under the non-cancellable operating lease with respect to the office and the dormitory as of October 31, 2015 are payable as follows:

Year ending July 31, 2017   337,662  
Year ending July 31, 2018   337,662  
Year ending July 31, 2019   337,662  
Year ending July 31, 2020   337,662  
After 2020   5,402,035  
Total $  6,752,683  

Rental expense of the Company for the three months ended October 31, 2015 and 2014 were $83,962 and $35,318, respectively.

Credit risk

Cash deposits with banks are held in financial institutions in China, which are not federally insured deposit protection. Accordingly, the Company has a concentration of credit risk related to these uninsured bank deposits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.

Contingencies

On September 23, 2013, the Company issued 60,000,000 shares of restricted common stock at $0.001 per share to Mr. Roy Thomas Phillips, who was then a consultant to the Company and later served as the acting CFO of the Company beginning July 29, 2014, and two other non-related parties, obtained a total of 7,000,000 shares of restricted common stock. The shares were issued in contemplation of a secondary offering. The Company takes the position that these shares should be cancelled since no secondary offering was consummated. The Company is taking steps to have these shares canceled. The Company valued the 67,000,000 shares of common stock issued at $67,000 as there was no market for the Company’s common stock and it has limited or no trading; and there is thought to be minimal value in the Company at the time of issuance, therefore the par value is thought to match the assumed market price of the Company’s common stock which is at $0.001 per share. The issuance of these securities could result in further dilution to the Company’s stockholders which effects the earnings (loss) per share amount of the Company. The Company might incur additional expenses to have these shares canceled. On July 24, 2015, 7,000,000 shares issued to two other non-related parties were canceled. For the year ended July 31, 2015, the dilutive effect of not canceling the 60,000,000 shares is incorporated in the consolidated financial statements as the Company recorded such shares as issued and outstanding. The loss per share remained $0.00 with the dilutive effect of not canceling such shares. If the shares are not voluntarily returned for cancellation, the Company will need to commence litigation in Delaware to obtain a judgment to cancel the shares for lack of consideration. At this time, the Company is unable to estimate the cost such litigation if it takes place.

16


Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of

Overview

Xiangtian (USA) Air Power Co., Ltd. was originally incorporated as Goa Sweet Tours Ltd. in the State of Delaware on September 2, 2008. We were originally formed to provide personalized concierge tour packages to tourists who visit the State of Goa, India.

On April 17, 2012, Goa Sweet Tours, Ltd. entered into Share Purchase Agreements (the “Purchase Agreements”), with Luck Sky International Investment Holdings Limited, an entity owned and controlled by Zhou Deng Rong, and certain of our former stockholders who owned, in the aggregate, 7,200,000 shares of our common stock (90% of the then outstanding shares). Luck Sky International Investment Holdings Limited purchased such shares for an aggregate consideration of $235,000. The sale of such shares closed on May 15, 2012.

On May 25, 2012, Goa Sweet Tours, Ltd. formed a corporation under the laws of the State of Delaware called Xiangtian (USA) Air Power Co., Ltd. ("Merger Sub") for the purpose of changing its name. On the same day, we acquired one hundred percent of the total outstanding shares of Merger Sub's common stock for cash. As such, Merger Sub became our wholly-owned subsidiary.

Effective as of May 29, 2012, Merger Sub was merged with and into the Company. As a result of the merger, the Company’s corporate name was changed to “Xiangtian (USA) Air Power Co., Ltd.” Prior to the merger, Merger Sub had no liabilities and nominal assets and, as a result of the merger, the separate existence of the Merger Sub ceased. The Company was the surviving corporation in the merger and, except for the name change provided for in the Agreement and Plan of Merger, there was no change in the directors, officers, capital structure or business of the Company.

On September 24, 2013, the Company acquired all of the shares of common stock of Lucksky (Hong Kong) Shares Limited, a Hong Kong corporation, for 250,000,000 shares of common stock of the Company, and agreed to acquire 100% of the shares of Sanhe City LuckSky Electrical Engineering Limited (“Sanhe”) common stock for the Company’s common stock. As of the acquisition merger, Lucksky (Hong Kong) Shares Limited and Sanhe had no liabilities and nominal assets. Effective as of September 24, 2013, Lucksky (Hong Kong) Shares Limited was merged with and into the Company and the Company was the surviving entity. The Company acquired Sanhe in July 2014.

On May 30, 2014, the Company entered into the Stock Purchase Agreement with Zhou Jian, the sole shareholder of Luck Sky (Hong Kong) Aerodynamic Electricity Limited (LuckSky Aerodynamic”). Effective May 30, 2014 the Company purchased 100% of the issued and outstanding shares of common stock of Luck Sky Aerodynamic , and the Company paid Zhou Jian a purchase price in the amount of HKD $10,000.00 (approximately USD$1,289.98) in cash (the “Acquisition”). Neither Luck Sky Shen Zhen nor Luck Sky Aerodynamic had any operating business and nominal or liabilities and nominal assets as of the date of the Acquisition. As a result of the Acquisition, Luck Sky Aerodynamic became our wholly owned subsidiary and Luck Sky Shen Zhen became our indirect subsidiary through Luck Sky Aerodynamic.

LuckSky Group was established in 2000 by Zhou Deng Rong after he obtained a series of patents and developed the air compression and related technology. Sanhe was established in July 2013 and was under common control with LuckSky Group. Since inception, Sanhe served as a distributor of products of the LuckSky Group and its subsidiaries.

17


During the three months ended June 30, 2014, LuckSky Group provided Sanhe with additional working capital and transferred to Sanhe its assets and liabilities related to the compressed air energy storage power generation technology and PV panel installations, but retained its other assets. On April 1, 2014, LuckSky Group loaned Sanhe RMB3, 000,000. The equipment, including machinery, was sold to Sanhe for RMB7, 681,000, its book value, Xiangtian Kelitai, Yanjiao Branch, a division of LuckSky Group on May 26, 2014. On April 30, 2014, the inventory was sold to Sanhe by Xiangtian Kelitai, Yanjiao Branch, and a division of LuckSky Group for RMB 130,918.80, its historical value. On May 19, 2014, Sanhe entered into an office equipment transfer (purchase) agreement with Xiangtian Kelitai, Yanjiao Branch, a division of LuckSky Group for a purchase price of RMB162, 900. Sanhe entered into leases with LuckSky Group for a portion of the factory, office space and dormitory located in Sanhe City and a lease with Dong Yi Glass Machine Company Limited, which is owned by Deng Zhou Rong, our former CEO, for a second factory and office space. In addition, 48 employees transferred from LuckSky Group to Sanhe, including all personnel related to the projects under construction and development and administrative and fiancé personnel.

Acquisition of Sanhe

On July 25, 2014, Sanhe and Luck Sky Shen Zhen and Sanhe’s shareholders entered into a series of agreements known as variable interest agreements (the “VIE Agreements”) pursuant to which Sanhe became LuckSky Shen Zhen’s contractually controlled affiliate. The VIE Agreements include the Framework Agreement on Business Cooperation, the Exclusive Management Consulting and Training and Technical Services Agreement, the Exclusive Option Agreement, the Equity Pledge Agreement, the Know-How Sub-License Agreement and the Power-of-Attorney. The purpose and effect of the VIE Agreements is to provide LuckSky Shen Zhen (our indirect wholly-owned subsidiary) with all of the management and control of Sanhe and all of its net income. While LuckSky Shen Zhen does not actually own at present any of the equity and shares in Sanhe, the purpose and effect of the VIE Agreements is to instill in Luck Sky Shen Zhen total management and voting control of Sanhe for all material purposes. The use of VIE agreements is a common structure used to acquire PRC corporations, particularly in certain industries in which foreign investment is restricted or forbidden by the PRC government.

Results of Operations

The following discussion should be read in conjunction with the unaudited condensed consolidated Financial Statement of the Company for the three-month period ended October 31, 2015 and 2014 and related notes thereto.

Three-month period ended October 31, 2015 compared to three-month period ended October 31, 2014

Revenue

We have recognized $66,610 and $0 revenue for the three months ended October 31, 2015 and 2014. The revenue referred to selling air compression related machines in this period.

Cost of Sales

We have recognized $62,015 and $0 cost of revenue for the three months ended October 31, 2015 and 2014. The project related machines were the Company’s raw materials.

Gross Profit

Gross profit was $4,595 for the three months ended October 31, 2015, compared to $0 for the three months ended October 31, 2014.

18


Operating Expenses

For the three months ended October 31, 2015, we have incurred total operating expenses in the amount of $363,652, which mainly comprised selling expenses of $4,510, professional expenses of $89,544, salary expenses of $92,923, rental fees of $85,462, and general and administrative expenses totaling $91,213. For the three months ended October 31, 2014, we have incurred total operating expenses in the amount of $345,051, which mainly comprised selling expenses of $5,335, professional fees totaling $114,798, salary expenses of $133,894, rental fees of $33,672, and general and administrative expenses totaling $57,352. The increase in operating expenses by $18,601, or 5.39%, was primarily due to the increase of rental fees incurred by the operational entity Sanhe after it was acquired by the Company in July 2014.

Liquidity and Capital Resources

As of October 31, 2015, we had a cash balance of $314,011. During the three months ended October 31, 2015, net cash used in operating activities totaled $491,765. Net cash provided from investing activities totaled $32,319. Net cash provided by financing activities during the period totaled $394,010. The resulting change in cash for the period was a decrease of $188,018, which was primarily due to cash outflow to suppliers, albeit the cash inflow of the amounts due from related parties and shareholders.

As of October 31, 2014, we had a cash balance of $431,974. During the three months ended October 31, 2014, net cash used in operating activities totaled $505,509. Net cash used in investing activities totaled $3,315. Net cash provided by financing activities during the period totaled $690,009. The resulting change in cash for the period was an decrease of $124,814, which was primarily due to cash outflow for the purchase of inventory, acquiring raw material, incurring costs in the ongoing projects, purchasing property and equipment, increase in the amount due to related parties and other current assets, albeit the cash inflow from advance billings on contracts and decrease in prepayment.

As of October 31, 2015, we had current liabilities of $9,005,296, which was mainly comprised of accounts payable and accrued liabilities of $3,402,645, amount due to shareholders of $18,629, amount due to directors of $419,442, amount due to related parties of $1,203,067, advance from customers of $415,011, and net advance billings of $3,546,502. As of July 31, 2015, we had current liabilities of $9,086,256, which was mainly comprised of accounts payable and accrued liabilities of $3,534,973, amount due to shareholders of $18,954, current capital lease obligations of $33,152, amount due to directors of $417,770, amount due to related parties of $1,056,568, advance from customers of $451,962, deferred tax liabilities of $83,101 and net advance billings of $3,489,776.

We had a non-current liabilities balance of $0 as of October 31, 2015, compared with $2,687,887 as of July 31, 2015. The decrease of non-current liabilities due to the termination of finance leasing with Sanhe Dong Yi Glass Machine Company Limited.

We had net assets of $9,425,136 and $9,549,482 as of October 31, 2015 and July 31, 2015, respectively.

Sanhe signed a supplemental agreement with Shandong Thaidai Photovoltaic Technology Co., Ltd., the supplier of Shandong Binzhou project in January 2015. The Company paid a deposit of $2,579,896 (RMB 16,000,000) to third party Ni Baofeng, who is the guarantor of Sanhe’s obligations under the agreement with Shandong Thaidai. In order to help assure Sandong Thaidai’s fulfillment of its supply obligations and to facilitate completion of the project, Ni Baofeng agreed to not release the money to Shandong Thaidai without the consent of Sanhe. As of October 31, 2015, the remaining balance of the deposit is $322,077 (RMB 2,000,000).

As of October 31, 2015, we have eight project contracts. Three were completed; four of them are in process and one is being canceled. One of the three projects in Shandong province commenced operation in February 2015 and the other two projects commenced operation at the end of June 2015 and July 2015. The projects in Hubei province, Heilongjiang province and Zhejiang province are expected to commence operation in December 2015, respectively. The project in Shanxi has not started. d, We are negotiating to terminate the project in Sichuan province. We are dependent on these seven projects for all our projected revenue until we obtain additional customers and any material delay or reduction in the projected cash receipts will adversely affect our operations. While we expect to generate revenue on the completion of our projects to meet the liquidity and capital resources of our operations, delayed receipts may cause going concern issues.

We expect to finance operations from progress billings from ongoing projects and through non-interest bearing loans from the Company’s directors. We estimate that our cash and cash equivalents and projected cash receipts from operations are sufficient to fund operations for the next six months. When additional funds become required, the additional funding may come from equity financing from the sale of our common stock, but there can be no assurance that such financing will be available on acceptable terms. If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in our company.

The Company has incurred losses since its inception resulting in an accumulated deficit of $408,285 as of October 31, 2015 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. Our future financial results are also uncertain due to a number of factors, some of which are outside our control. These risk factors include, but are not limited to:

  our ability to raise additional funding;
     
  the results of our proposed operations.

19


Going Concern Consideration

Our operations and financial results are subject to numerous various risks and uncertainties that could adversely affect our business, financial condition and results of operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

Critical Accounting Policies and Estimates

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates.

Fair Value Measurements

The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

[  ]     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.

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of October 31, 2015 and July 31, 2015.

Billings in Excess of Costs

Billings in excess of costs is comprised of cash collected from customers and billings to customers on contracts in advance of work performed, including advance payments negotiated as a contract condition. Generally, unearned project-related costs will be earned over the next twelve months.

Revenue Recognition

Sales of power generation system in conjunction of system installation are recognized under accounting for construction-type contracts, using the completed contract method. Accordingly, revenue is recognized upon the completion of the construction, provided persuasive evidence of an arrangement exists, title and risk of loss has transferred, the fee is fixed and determinable, and collection is reasonably assured. We provide for any loss that we expect to incur on these contracts when that loss is probable.

20


Warranty and Returns

The Company generally provides limited warranties for work performed under its contracts. The warranty periods typically extend for a limited duration following substantial completion of the Company's work on a project. At the time a sale is recognized, we record estimated future warranty costs. Such estimated costs for warranties are included in the individual project cost estimates for purposes of accounting for long-term contracts. The warranty cost is estimated based on our experience with the type of work and any known risks relative to the project and was not material during the periods ended October 31, 2015 and July 31, 2015.

No right of return exists on sales of equipment. Replacement part returns are estimable and accrued at the time a sale is recognized.

Recent Accounting Pronouncements

In July 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which modifies existing requirements regarding measuring inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (NRV), and NRV less an approximately normal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impacts on the Company’s consolidated results of operations and financial condition.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements— Going Concern (Subtopic 205-40). This standard is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments contained in this ASU apply to all companies and not-for-profit organizations. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle the ASU includes provisions within a five step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when (or as) an entity satisfies a performance obligation. The standard also specifies the accounting for some costs to obtain or fulfill a contract with a customer and requires expanded disclosures about revenue recognition. The standard provides for either full retrospective adoption or a modified retrospective adoption by which it is applied only to the most current period presented. This ASU is effective January 1, 2017. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

21


PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company currently is not a party to any legal proceedings and, to the Company’s knowledge; no such proceedings are threatened or contemplated.

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Default Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit No.   Description
     
31.1   Certification of Chief Executive Officer pursuant to 13a-14 and 15d-14 of the Exchange Act. (Filed herewith)
     
31.2   Certification of Acting Chief Financial Officer pursuant to 13a-14 and 15d-14 of the Exchange Act. (Filed herewith)
     
32.1   Certificate pursuant to 18 U.S.C. ss. 1350 for Zhiqi Zhang, Chief Executive Officer. (Filed herewith)
     
32.2   Certificate pursuant to 18 U.S.C. ss. 1350 for Zhiqi Zhang, Acting Chief Financial Officer. (Filed herewith)

XBRL Exhibit

101.INS† XBRL Instance Document.
101.SCH† XBRL Taxonomy Extension Schema Document.
101.CAL† XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF† XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB† XBRL Taxonomy Extension Label Linkbase Document.
101.PRE† XBRL Taxonomy Extension Presentation Linkbase Document.

22



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

XIANGTIAN (USA) AIR POWER CO., LTD.  
   
By:  /s/ Zhiqi Zhang  
  Chief Executive Officer and  
  Acting Chief Financial Officer  
  (Principal Executive Officer  
  Principal Accounting Officer)  
     
  Date: December 18, 2015  

23


EX-31.1 2 exhibit31-1.htm EXHIBIT 31.1 Xiangtian Air Power Co., Ltd.: Exhibit 31.1 - Filed by newsfilecorp.com

Exhibits 31.1 and 31.2

Certification of Principal Executive Officer and Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Securities and Exchange Commission Release 34-46427

I, Zhiqi Zhang, certify that:

1. I have reviewed this annual report on Form 10-Q of Xiangtian (USA) Air Power Co., Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 18, 2015

  s/ Zhiqi Zhang
   
  Zhiqi Zhang
   
  Principal Executive Officer
   
  Principal Financial Officer


EX-32.2 3 exhibit32-1.htm EXHIBIT 32.2 Xiangtian Air Power Co., Ltd.: Exhibit 32.1 - Filed by newsfilecorp.com

Exhibits 32.1 and Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Xiangtian (USA) Air Power Co., Ltd. (the "Company") on Form 10-Q for the period ended October 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Zhiqi Zhang Rong, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: December 18, 2015

/s/ Zhiqi Zhang  
   
Zhiqi Zhang  
   
Principal Executive Officer  
   
Principal Financial Officer  


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(the &#8220;Company&#8221;) was incorporated in the State of Delaware on September 2, 2008 as Goa Sweet Tours Ltd. The Company was originally formed to provide personalized concierge tour packages to tourists who visit the State of Goa, India. On April 17, 2012, the Company entered into Share Purchase Agreements, by and among, Luck Sky International Investment Holdings Limited (&#8220;Lucky Sky&#8221;), an entity owned and controlled by Zhou Deng Rong, and certain of our former stockholders who owned, in the aggregate, 7,200,000 shares of the Company&#8217;s common stock ( 90% of the then outstanding shares). Luck Sky purchased all 7,200,000 shares for an aggregate of $235,000. The sale was completed on May 15, 2012. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On May 25, 2012, the Company formed a corporation under the laws of the State of Delaware called Xiangtian (USA) Air Power Co., Ltd. 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The Company was the surviving corporation in the merger and, except for the name change provided for in the Agreement and Plan of Merger, there was no change in the directors, officers, capital structure or business of the Company.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Merger with LuckSky (Hong Kong) Shares Limited</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On September 5, 2013, the Company entered into a business combination by means of merger of LuckSky (Hong Kong) Shares Limited (&#8220;HK Shares&#8221;), a Hong Kong corporation, for 250,000,000 shares of common stock of the Company. Prior to the merger, HK Shares had no liabilities and nominal assets. On September 23, 2013, the Company issued 250,000,000 shares of common stock to the shareholders of HK Shares. Effectively on September 24, 2013, the shareholders of HK Shares accepted the shares from the Company and surrendered its control of HK Shares to the Company in exchange of 250,000,000 shares of HK Shares to be issued to its shareholders. On October 16, 2013, HK Shares completed the issuance of its 250,000,000 shares accordingly. 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The VAT balance is recorded in other payables on the balance sheets. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Income Taxes</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Under ASC 740, a tax position is recognized as a benefit only if it is &#8220;more likely than not&#8221; that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. 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 litigations 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. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred. No significant penalties or interest relating to income taxes have been incurred during the period from July 8, 2013 (inception) to December 31, 2013. 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The consolidated financial statements are presented in U.S. dollars. Foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the exchange rates prevailing at the transaction date. Revenues and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> For the purpose of presenting these financial statements of subsidiaries in PRC, the Company&#8217;s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, which is 6.3180 and 6.2097 as of October 31, 2015 and July 31, 2015, respectively; stockholder&#8217;s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period, which is 6.3521 and 6.1389 for the three months ended October 31, 2015 and October 31, 2014. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder&#8217;s equity section of the balance sheets. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> For the purpose of presenting these financial statements of subsidiaries in Hong Kong, PRC, the Company&#8217;s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, which is 7.7496 and 7.7514 as of October 31, 2015 and July 31, 2015, respectively; stockholder&#8217;s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period, which is 7.7510 and 7.7534 the three months ended October 31, 2015 and October 31, 2014, respectively. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder&#8217;s equity section of the balance sheets. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Earnings (Loss) per Share</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Earnings per share excludes all potential dilutive shares of common stock if their effect is anti-dilutive. There were no potential dilutive securities at October 31, 2015 or October 31, 2014.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Recent Accounting Pronouncements</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which modifies existing requirements regarding measuring inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (NRV), and NRV less an approximately normal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU&#8217;s impacts on the Company&#8217;s consolidated results of operations and financial condition.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the consolidated financial statements.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In August 2014, the Financial Accounting Standards Board issued ASU No. 2014-15, Presentation of Financial Statements&#8212; Going Concern (Subtopic 205-40). This standard is intended to define management&#8217;s responsibility to evaluate whether there is substantial doubt about an entity&#8217;s ability to continue as a going concern and to provide related footnote disclosures. The amendments contained in this ASU apply to all companies and not-for-profit organizations. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU&#8217;s impact on the Company&#8217;s consolidated results of operations and financial condition.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity&#8217;s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company adopted this ASU as early application for the financial statements of the period from July 8, 2013 (inception) to December 31, 2013.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> In May 2014, the FASB issued ASU No. 2014-09, <i>Revenue from Contracts with Customers</i> , which provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard&#8217;s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle the ASU includes provisions within a five step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when (or as) an entity satisfies a performance obligation. The standard also specifies the accounting for some costs to obtain or fulfill a contract with a customer and requires expanded disclosures about revenue recognition. The standard provides for either full retrospective adoption or a modified retrospective adoption by which it is applied only to the most current period presented. This ASU is effective January 1, 2017. The Company is currently assessing this ASU&#8217;s impact on the Company&#8217;s consolidated results of operations and financial condition. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Basis of Presentation</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company&#8217;s consolidated financial statements are expressed in U.S. dollars.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Use of Estimates and Assumptions</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The preparation of consolidated financial statements in conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Interim Financial Statements</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosure required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. These interim financial statements should be read in conjunction with the audited financial statements for the year ended July 31, 2015, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the year ended July 31, 2015.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">These interim financial statements should be read in conjunction with the audited financial statements for the year ended July 31, 2015, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the year ended July 31, 2015.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Reclassification</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported net income or losses.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Principle of Consolidation</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The consolidated financial statements include the accounts of the Company, its subsidiaries and VIE for which it is deemed the primary beneficiary. 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ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). 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Generally, the estimated claim rates of warranty are based on actual warranty experience or Company&#8217;s best estimate.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">No right of return exists on sales of equipment. Replacement part returns are estimable and accrued at the time a sale is recognized.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Value added taxes</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company is subject to VAT at a rate of 17% on proceeds received from customers, and are entitled to a refund for VAT already paid or borne on the goods purchased by it that have generated the gross sales proceeds. 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valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%">October 31,</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%">July 31,</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="center" bgcolor="#e6efff" nowrap="nowrap" valign="bottom">&#160;</td> <td align="center" bgcolor="#e6efff" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="center" bgcolor="#e6efff" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">2015</td> <td align="center" bgcolor="#e6efff" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" bgcolor="#e6efff" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" 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width="2%">&#160;</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 249,721 </td> <td align="left" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Total</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 1,410,499 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 1,463,856 </td> <td align="left" bgcolor="#e6efff" valign="bottom" 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31,</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="center" nowrap="nowrap" valign="bottom">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">2015</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">2015</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td bgcolor="#e6efff" style="text-align: center;" valign="bottom" width="12%">(Unaudited)</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Machinery equipment</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 5,184,657 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 5,275,080 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" valign="bottom">Computer and office 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align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> - </td> <td align="left" valign="bottom" width="2%">&#160;</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 2,759,547 </td> <td align="left" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Total property, plant and equipment</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 5,313,087 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 8,165,296 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" valign="bottom">Less: accumulated depreciation</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> (376,445 </td> <td align="left" valign="bottom" width="2%">)</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> (485,973 </td> <td align="left" valign="bottom" width="2%">)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Total</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 4,936,642 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 7,679,323 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Total depreciation expenses for the three months ended October 31, 2015 and 2014 were $67,951 and $102,378, respectively. Depreciation relating to Contract work in progress for the three months ended October 31, 2015 and 2014 were $61,729 and $63,024, respectively, and depreciation relating to general and administrative expenses for the three months ended October 31, 2015 and 2014 were $6,222 and $39,354, respectively. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On August 1, 2015, the Company terminated the finance leasing with Sanhe Dong Yi Glass Machine Company Limited. The factory and office were returned to the lessor. The assets were no longer recorded as fixed assets, which lead to the decrease of Property, plant and equipment.&#160; The Company recognized $130,960 gain due to this termination. </p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="center" nowrap="nowrap" valign="bottom">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%">October 31,</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%">July 31,</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="center" nowrap="nowrap" valign="bottom">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">2015</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">2015</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td bgcolor="#e6efff" style="text-align: center;" valign="bottom" width="12%">(Unaudited)</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Machinery equipment</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 5,184,657 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 5,275,080 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" valign="bottom">Computer and office equipment</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="right" valign="bottom" width="12%"> 55,589 </td> <td align="left" valign="bottom" width="2%">&#160;</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="right" valign="bottom" width="12%"> 56,558 </td> <td align="left" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Vehicle</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 72,841 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 74,111 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" valign="bottom">Property under capital lease</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> - </td> <td align="left" valign="bottom" width="2%">&#160;</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 2,759,547 </td> <td align="left" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Total property, plant and equipment</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 5,313,087 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 8,165,296 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" valign="bottom">Less: accumulated depreciation</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> (376,445 </td> <td align="left" valign="bottom" width="2%">)</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> (485,973 </td> <td align="left" valign="bottom" width="2%">)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Total</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 4,936,642 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 2px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 7,679,323 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> </table> 5184657 5275080 55589 56558 72841 74111 0 2759547 5313087 8165296 376445 485973 61729 63024 6222 39354 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>NOTE 6 &#8211; BILLINGS IN EXCESS OF COSTS</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Billings in excess of costs consist of the following:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="center" nowrap="nowrap" valign="bottom">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">October 31, 2015</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">July 31, 2015</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="center" nowrap="nowrap" valign="bottom">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%">(Unaudited)</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Costs incurred on uncompleted contracts</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 2,115,100 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 2,033,840 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr> <td align="left" valign="bottom">&#160;</td> <td align="right" valign="bottom" width="1%">&#160;</td> <td align="right" valign="bottom" width="12%">&#160;</td> <td align="right" valign="bottom" width="2%">&#160;</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="left" valign="bottom" width="12%">&#160;</td> <td align="left" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Billings to date</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> (5,661,602 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> (5,523,616 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> </tr> <tr> <td align="left" valign="bottom">&#160;</td> <td align="right" valign="bottom" width="1%">&#160;</td> <td align="right" valign="bottom" width="12%">&#160;</td> <td align="right" valign="bottom" width="2%">&#160;</td> <td align="right" valign="bottom" width="1%">&#160;</td> <td align="right" valign="bottom" width="12%">&#160;</td> <td align="right" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> (3,546,502 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> (3,489,776 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> </tr> <tr> <td align="left" valign="bottom">&#160;</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="left" valign="bottom" width="12%">&#160;</td> <td align="left" valign="bottom" width="2%">&#160;</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="left" valign="bottom" width="12%">&#160;</td> <td align="left" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Included in the accompanying balance sheets as follows:</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="12%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="12%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" valign="bottom">Costs in excess of billings on uncompleted contracts</td> <td align="left" valign="bottom" width="1%">$</td> <td align="right" valign="bottom" width="12%"> &#160; - 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valign="bottom">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">October 31, 2015</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">July 31, 2015</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="center" nowrap="nowrap" valign="bottom">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%">(Unaudited)</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Costs incurred on uncompleted contracts</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 2,115,100 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 2,033,840 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr> <td align="left" valign="bottom">&#160;</td> <td align="right" valign="bottom" width="1%">&#160;</td> <td align="right" valign="bottom" width="12%">&#160;</td> <td align="right" valign="bottom" width="2%">&#160;</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="left" valign="bottom" width="12%">&#160;</td> <td align="left" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Billings to date</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> (5,661,602 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> (5,523,616 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> </tr> <tr> <td align="left" valign="bottom">&#160;</td> <td align="right" valign="bottom" width="1%">&#160;</td> <td align="right" valign="bottom" width="12%">&#160;</td> <td align="right" valign="bottom" width="2%">&#160;</td> <td align="right" valign="bottom" width="1%">&#160;</td> <td align="right" valign="bottom" width="12%">&#160;</td> <td align="right" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> (3,546,502 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> (3,489,776 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">)</td> </tr> <tr> <td align="left" valign="bottom">&#160;</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="left" valign="bottom" width="12%">&#160;</td> <td align="left" valign="bottom" width="2%">&#160;</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="left" valign="bottom" width="12%">&#160;</td> <td align="left" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Included in the accompanying balance sheets as follows:</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="12%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="12%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" valign="bottom">Costs in excess of billings on uncompleted contracts</td> <td align="left" valign="bottom" width="1%">$</td> <td align="right" valign="bottom" width="12%"> &#160; - </td> <td align="left" valign="bottom" width="2%">&#160;</td> <td align="left" valign="bottom" width="1%">$</td> <td 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Machine Company Limited (&#8220;Sanhe Dong Yi&#8221;), a Company owned by Zhou Deng Rong, our former general manager and former majority shareholder of the Company. The rental period was from June 15, 2013 to June 14, 2014, and the full rent amount of $3,965 (RMB12,000) was paid in advance. The Company also paid $1,487 (RMB9,000) to Sanhe Dong Yi to purchase several articles of furniture and computer equipment for its operation purpose in September 2014. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Prior to the incorporation of Sanhe, Kelitai Air Powered Machinery Co., Ltd. (&#8220;Kelitai&#8221;), a subsidiary of LuckSky Group, an entity owned by Zhou Deng Rong, former general manager and former majority shareholder of the Company, executed various purchase agreements (the &#8220;Agreements&#8221;) with Beijing Hengruier Machinery Company Limited (&#8220;Hengruier&#8221;) and made certain prepayments on behalf of the Company. On July 15, 2013, Kelitai, Hengruier and the Company executed a tripartite agreement to transfer the rights and obligations of the Agreements to the Company. As of October 31, 2014, Kelitai has paid $1,242,198 on behalf of the Company as prepayments to Hengruier. The outstanding amounts due to related parties were $1,263,334 (RMB7,722,000) as of October 31, 2014. These amounts were unsecured, non-interest bearing, and due on demand. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> In May 2014, Sanhe entered into an agreement with Kelitai, to purchase some of Keizai&#8217;s fixed assets for the use in its own production. The total amount for the fixed assets and inventory was $1,261,872 (RMB7,844,300) and Sanhe paid $785,933 (RMB4,512,900) for equipment and $21,000 (RMB130,919) for inventory. The outstanding amount due to related party &#8211; Kelitai - was $544,958 (RMB3,331,400) as of October 31, 2014. The amount was unsecured, non-interest bearing, and due on demand. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On July 25, 2014, Luck Sky Shen Zhen obtained an exclusive, worldwide, royalty free license from Zhou Deng Rong and Zhou Jian (his son) and a second exclusive, worldwide royalty free license from LuckSky Group to an aggregate of 48 Chinese patents and related know how and trade secrets, including the technology underlying 13 patent applications (the &#8220;Technology&#8221;). The Technology represents all of the patents, patent applications and related know how and trade secrets owned by the licensors with respect to PV installations and the air energy storage power generation technology as applied to commercial and residential buildings, but not wind towers. On July 25, 2014, Luck Sky Shen Zhen granted Sanhe an exclusive sublicense with respect to the use of the Technology for commercial and residential buildings, but not for other uses, including wind towers, vehicles and trains, which sublicense also provides for a royalty payment to Luck Sky Shen Zhen equal of five percent of Sanhe&#8217;s revenues. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Sanhe leases its principal office, factory and dormitory from LuckSky Group in Sanhe City, Hebei Province. LuckSky Group is owned by Zhou Deng Rong, our former CEO and Zhou Jian, our General Manager and Chairman of the Board. The space in the office, factory and dormitory being leased are 1296, 5160 and 1200 square meters, respectively. The office and factory space are leased for a rent of $113,492 (RMB697,248) per year and the dormitory is leased for a rent of $21,095 (RMB129,600) per year. The leases expire on April 30, 2024 and are subject to renewal with a prior two-month written notice. LuckSky Group is in the process of obtaining the land use approval and ownership certificate of the leased building. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On April 28, 2012, Zhou Jian obtained the right of usage of 44.3 acres agricultural land where our principal office, factory and dormitory are located for 18 years and 8 months, starting May 1, 2012. The annual price paid for such usage rights is $5,617 (RMB34,510). On May 1, 2012, Zhou Jian signed a commitment letter that allowed Xiangtian Kelitai, Yanjiao Branch, a division of LuckSky Group to use this agricultural land. LuckSky Group constructed the buildings on such agricultural land. In the event we are unable to use our principal factory and office space as a result of this usage issue, the lease provides that LuckSky Group will use every effort to complete and perfect the ownership and usage rights, or provide Sanhe with equivalent space. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Sanhe also leases a second factory and office in Sanhe City from Sanhe Dong Yi Glass Machine Company Limited, which is owned by Zhou Deng Rong. A portion of this facility is currently used by Sanhe to demonstrate its products but the facility is primarily intended as a backup to the first facility in Sanhe City and/or for expansion. The factory and office are 4,748.96 square meters. The rent paid by Sanhe for the factory and the office is RMB1,306,500 per year. As of October 31, 2015 and July 31, 2015, the rental fee accrued but unpaid under the leases from LuckSky Group and Sanhe Dong Yi were $258,488 and $262,996, respectively. On August 1, 2015, the two parties entered into a termination of the finance leasing. As the Company no longer needs the factory and office, the assets were returned to the lessor on that day. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On July 25, 2014, prior to the Acquisition, Sanhe and LuckSky Shen Zhen and Sanhe&#8217;s shareholders entered into a series of VIE Agreements, pursuant to which Sanhe became LuckSky Shen Zhen&#8217;s contractually controlled affiliate. The VIE Agreements include the Framework Agreement on Business Cooperation, the Exclusive Management, Consulting and Training and Technical Services Agreement, the Exclusive Option Agreement, the Equity Pledge Agreement, the Know-How Sub-License Agreement and the Power-of-Attorney. The purpose and effect of the VIE Agreements is to provide LuckSky Shen Zhen (the Company&#8217;s indirect wholly-owned subsidiary) with all of the management and control of Sanhe and all of its net income. While LuckSky Shen Zhen does not actually own at present any of the equity and shares in Sanhe, the purpose and effect of the VIE Agreements is to instill in LuckSky Shen Zhen total management and voting control of Sanhe for all material purposes. The use of VIE agreements is a common structure used to acquire PRC corporations, particularly in certain industries in which foreign investment is restricted or forbidden by the PRC government.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On July 25, 2014, the Company entered into the Stock Purchase Agreement with Zhou Jian and Zhou Deng Rong, the owners of 97% and 3%, respectively, of Sanhe. The Company agreed to issue to Zhou Jian and Zhou Deng Rong 264,850,740 and 8,191,260 shares, respectively, of the Company&#8217;s common stock, representing 51.4% of the issued and outstanding shares of common stock. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Construction Project</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On April 25, 2014, Sanhe entered into a construction project agreement with Xianning Lucksky Aerodynamic Electricity Ltd (&#8220;Xianning Lucksky&#8221;). Prior to April 10, 2014, Xianning Lucksky was majorly ( 70%) owned by Zhou Deng Rong, former majority shareholder and former CEO of the Company, and former general manager of Sanhe; where he has significant influence over Xianning Lucksky. As of October 31, 2015, the accumulated cost on the construction project was $2,115,100 and the accumulated billings was $5,661,602. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Due from related parties</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On April 25, 2015, Sanhe entered into a loan agreement with Xiangtian Kelitai, Yanjiao Branch, a division of LuckSky Group, which is owned by Zhou Deng Rong, former CEO and Sanhe&#8217;s former general manager and former majority shareholder of the Company, with a total amount of $507,917 (RMB3,150,000). The loan is unsecured and matures on December 31, 2015. If the loan is not fully repaid on the maturity date, Sanhe will be entitled to receive an interest at 5% per annum. As of October 31, 2015 and July 31, 2015, the outstanding principal on the loan was $0 and $32,208. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Sanhe has been working on a construction project for Xiangtian Kelitai, which agreed to reimburse Sanhe for the cost of the project. The accumulated cost on the construction project was $574,770 and $579,671 as of October 31, 2015 and July 31, 2015. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Due to related parties</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Until August 1, 2015, Sanhe leased a second factory and office in Sanhe City from Sanhe Dong Yi Glass Machine Company Limited, which is owned by Zhou Deng Rong. A portion of this facility was used by Sanhe to demonstrate its products but the facility was primarily intended as a backup to the first facility in Sanhe City and/or for expansion. 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Inventories [Table Text Block] Property, Plant and Equipment [Table Text Block] Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block] Billings in Excess of Costs [Table Text Block] Related Party Transactions [Table Text Block] Subsidiaries in PRC [Member] Subsidiaries in PRC [Member] Schedule of Deferred Tax Assets and Liabilities [Table Text Block] Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] Commitments, Contingencies, Risks and Uncertainties [Table Text Block] Business Acquisition [Axis] Business Acquisition, Acquiree [Domain] Lucksky Hong Kong Shares Limited [Member] Lucksky Hong Kong Shares Limited [Member] Luck Sky International Investment Holding Limited [Member] Luck Sky International Investment Holding Limited [Member] Related Party [Axis] Related Party [Domain] Mr. Zhou Jian [Member] Mr. Zhou Jian [Member] Mr. Zhou Deng Rong [Member] Mr. Zhou Deng Rong [Member] LuckSky Group [Member] LuckSky Group Ownership Percentage The percentage of ownership of common stock purchased by the related party. Shares issued Shares Purchased Value Value of shares purchased by related party. Proceeds from Divestiture of Interest in Consolidated Subsidiaries Equity Method Investment Ownership Percentage Stock Issued During Period, Shares, Acquisitions Percentage of Common Stock Issued and Outstanding It percentage of Common Stock Issued and Outstanding. Subsidiaries in Hong Kong [Member] Subsidiaries in Hong Kong Percentage of VAT, Proceeds Received from Customers Percentage of vat to be paid on proceeds received from customers. Foreign Currency Exchange Rate, Translation Foreign Currency Weighted Average Exchange Rate, Translation Foreign exchange weighted average rate used to translate income and expenses amounts denominated in functional currency to reporting currency. Percentage Of Service Fees Payable Percentage of service fee payable based on net income. Accumulated deficit Property, Plant and Equipment, Type [Axis] Property, Plant and Equipment, Type [Domain] Construction in Progress [Member] Income Statement Location [Axis] Income Statement Location [Domain] General and Administrative Expense [Member] Depreciation Gain on termination of capital lease Property Subject to or Available for Operating Lease [Axis] Property Subject to or Available for Operating Lease [Domain] Office And Factory [Member] Office And Factory [Member] Dormitory [Member] Dormitory Agricultural Land [Member] Agricultural Land [Member] Luck Sky Hong Kong Aerodynamic Electricity Limited [Member] Luck Sky Hong Kong Aerodynamic Electricity Limited [Member] 24 Shareholders [Member] 24 Shareholders [Member] Kelitai Air Powered Machinery Co Ltd [Member] Kelitai Air Powered Machinery Co Ltd [Member] Sanhe Dong Yi Glass Machine Company Limited [Member] Sanhe Dong Yi Glass Machine Company Limited [Member] Zhou Deng Rong [Member] Zhou Deng Rong [Member] Zhou Jian [Member] Zhou Jian [Member] Directors [Member] Directors [Member] Hengruier Machinery Company Limited [Member] Hengruier Machinery Company Limited [Member] Related Party Transaction [Axis] Related Party Transaction [Domain] Loan Agreement [Member] Construction Loans [Member] Prepaid Rent Payments to Acquire Furniture and Fixtures Business Combination, Step Acquisition, Equity Interest in Acquiree, Percentage Business Acquisition, Equity Interest Issued or Issuable, Number of Shares Sale of Stock, Price Per Share Business Acquisition, Equity Interest Issued or Issuable, Value Assigned Business Acquisition, Percentage of Voting Interests Acquired Business Combination, Consideration Transferred, Total Rental Income, Nonoperating Payments for Rent Business Acquisition Percentage Of Issued And Outstanding Shares Percentage of stock issued and outstanding shares acquired during the acquisition. Costs in Excess of Billings Contract Receivable Short-term Debt Short-term Debt, Percentage Bearing Fixed Interest Rate Due from Related Parties, Current Due to Related Parties, Current Related Party Transaction, Purchases from Related Party Payments to Acquire Machinery and Equipment Payments to Acquire Other Productive Assets Operating Lease Expiration Period Represents the operating lease expiration period. Accrued Rent, Current Due to Related Parties, Noncurrent Defined Contribution Plan, Employer Discretionary Contribution Amount Geographical [Axis] Geographical [Domain] CHINA [Member] HONG KONG [Member] Income Tax Authority [Axis] Income Tax Authority [Domain] Foreign Tax Authority [Member] Statutory Surplus Reserve Fund Percentage Represents the percentage of After Tax Profits which can be transferred to statutory surplus reserve fund. Registered Capital Appropriation Percentage Represents the percentage of After Tax Profits which can be transferred to reserve fund. Title of Individual [Axis] Relationship to Entity [Domain] Chief Financial Officer [Member] Fresh-Start Adjustments [Axis] Type of Fresh-Start Adjustment [Domain] Exchange of Stock for Stock [Member] Sale of Stock [Axis] Sale of Stock [Domain] Secondary Offering [Member] Secondary Offering [Member] Non Related Party [Axis] Non Related Party [Axis] Non Related Party [Domain] Non Related Party [Domain] Non Related Party [Member] Non Related Party [Member] Common Stock Shares Authorized Common Stock Par Or Stated Value Per Share Stock Issued During Period, Shares, New Issues Stock Issued During Period, Value, New Issues Stock Issued During Period, Shares, Restricted Stock Award, Forfeited Stock Issued During Period, Shares, Issued for Services Stock Issued During Period, Value, Issued for Services Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures Preferred Stock Par Or Stated Value Per Share Luck Sky Shenzhen [Member] Luck Sky Shenzhen [Member] Sanhe [Member] Sanhe [Member] Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Percent Operating Profit Operating Profit Operating Loss Carryforwards Deferred Tax Assets, Net Operating Loss Carry forwards Expiration Term Expiration date of each operating loss carryforward included in operating loss carryforward, in PnYnMnDTnHnMnS format, for example, P1Y5M13D represents the reported fact of one year, five months, and thirteen days. Income Tax Expense (Benefit) Non-Related Parties [Member] Non-Related Parties [Member] Antidilutive Securities [Axis] Antidilutive Securities, Name [Domain] Restricted Stock [Member] Capital Lease Obligations Operating Leases, Rent Expense, Net Stock Issued During Period, Shares, Restricted Stock Award, Gross Sale of Stock, Price Per Share Stock Issued During Period, Value, Restricted Stock Award, Gross Stock Issued During Period, Shares, Restricted Stock Award, Forfeited Weighted Average Number of Shares Outstanding, Diluted Earnings Per Share, Diluted Total assets Total liabilities Net loss Machinery and Equipment [Member] Computer And Office Equipment [Member] Computer And Office Equipment [Member] Vehicles [Member] Assets Held under Capital Leases [Member] Range [Axis] Range [Domain] Minimum [Member] Maximum [Member] Property, Plant and Equipment, Useful Life Raw materials Accessory parts Work in process Total Total property, plant and equipment Less: accumulated depreciation Total Year ending July 31, 2016 Year ending July 31, 2017 Year ending July 31, 2018 Year ending July 31, 2019 Year ending July 31, 2020 Later years Total minimum lease payments Less: Amount representing interest Total Costs incurred on uncompleted contracts Billings to date Billings in Excess of Cost Included in the accompanying balance sheets as follows: Costs in excess of billings on uncompleted contracts Billings on uncompleted contracts in excess of costs Liabilities attributable to billings in excess of costs on uncompleted contracts due within one year. Billings in Excess of Cost, Current Rental fees Rental fees (Capital lease interest payable) Payments to Acquire Productive Assets Prepaid expenses on behalf of the company Total Net operating losses Total deferred tax assets Less: valuation allowance Deferred tax assets, net Timing differences of revenue recognition Total deferred tax liabilities Current tax expense Deferred tax expense Benefits of operating loss carryforwards Statutory Tax Rate Less: Valuation Allowance Deferred Tax Tax expense (benefit) Year ending July 31, 2017 Year ending July 31, 2018 Year ending July 31, 2019 Year ending July 31, 2020 After 2020 Total ASSETS Current assets Cash and cash equivalence Accounts receivable Other receivables Advances to suppliers Inventory Other current asset Total current assets Non-current assets Property, plant and equipment, net Deposit For Property Plant And Equipment Total non-current assets Total assets LIABILITIES Current liabilities Accounts payable and accrued liabilities Due to shareholders Capital lease interest payable to related parties Capital lease obligations - current Amount Due To Director Due to related parties Advance from customers Billings in excess of costs Total current liabilities Non-current liabilities Capital lease obligations - non-current Total non-current liabilities Total liabilities Commitments and contingencies STOCKHOLDERS EQUITY Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued and outstanding Common stock: $0.001 par value, 1,000,000,000 shares authorized, 598,042,000 shares issued and outstanding as of April 30, 2015 and July 31, 2014 Additional paid-in capital Subscription receivable Deficit accumulated Accumulated other comprehensive gain Total stockholders equity Total liabilities and stockholders equity Preferred stock, par value (in dollars per share) Preferred stock, shares authorized Preferred stock, shares issued Preferred stock, shares outstanding Common stock, par value (in dollars per share) Common stock, shares authorized Common stock, shares issued Common stock, shares outstanding Revenue Cost of sales Sales Tax Gross profit Operating expenses: Selling expenses General and administrative expenses Loss from operations Other (expense) income Interest expense Other expense Exchange loss Total other expense, net Net loss before taxes Income tax benefit Net loss after taxes Foreign currency translation adjustment Comprehensive loss Net loss per common share basic and diluted Weighted average number of common shares outstanding - basic and diluted Cash flows from operating activities: Gain on termination of capital lease Changes in operating assets and liabilities: Accounts receivable (IncreaseDecreaseInAccountsReceivable) Other receivables (IncreaseDecreaseInOtherReceivables) Prepayment Inventory (IncreaseDecreaseInInventories) Due from related party Deferred tax asset (IncreaseDecreaseInDeferredIncomeTaxes) Other current asset (IncreaseDecreaseInOtherCurrentAssets) Accounts payable and accrued liabilities (IncreaseDecreaseInAccountsPayableAndAccruedLiabilities) Other payables and tax payables Advance billings on contracts Advance from customers (IncreaseDecreaseInCustomerAdvances) Advance from shareholders Capital lease interest payable to related parties (IncreaseDecreaseInInterestPayableNet) Net cash provided by (used in) operating activities Cash flows from investing activities: Purchase of property and equipment Loan made to related parties Net cash used in investing activities Cash flows from financing activities: Proceeds From Repayments Of Advances From Related Parties Repayment made to related parties Advances from director Proceeds From Shareholders Capital contribution from shareholders Net cash (used in)/provided by financing activities Effect of exchange rate change on cash Net change in cash and cash equivalents Discontinued operations: Supplemental disclosure of cash flow information Going Concern Disclosure Text Block [Text Block] Statutory Reserve Disclosure Abstract [Text Block] Value Added Tax Policy [Text Block] Related Party Policy [Text Block] Schedule Of Useful Lives Of Property Plant And Equipment Tabl [Table Text Block] Subsidiaries In P R C [Member] Shares Purchased Value Proceeds from Divestiture of Interest in Consolidated Subsidiaries Equity Method Investment Ownership Percentage Twenty Four Shareholdes [Member] Payments to Acquire Furniture and Fixtures Costs in Excess of Billings Contract Receivable Payments to Acquire Machinery and Equipment Payments to Acquire Other Productive Assets Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate Operating Profit For Tax Purposes Nonrelated Parties [Member] Capital Lease Obligations Stock Issued During Period, Value, Restricted Stock Award, Gross Total assets (VariableInterestEntityConsolidatedCarryingAmountAssets) Total liabilities (VariableInterestEntityConsolidatedCarryingAmountLiabilities) Net loss Raw materials Accessory parts Work in process Total property, plant and equipment Less: accumulated depreciation Year ending July 31, 2016 Year ending July 31, 2017 Year ending July 31, 2018 Year ending July 31, 2019 Year ending July 31, 2020 Later years Less: Amount representing interest Total Billings in Excess of Cost Included in the accompanying balance sheets as follows: Costs in excess of billings on uncompleted contracts Billings In Excess Of Costs On Uncompleted Contracts Current Rental fees (Capital lease interest payable) Payments to Acquire Productive Assets Prepaid expenses on behalf of the company Total (RelatedPartyTransactionAmountsOfTransaction) Net operating losses Total deferred tax assets Less: valuation allowance Deferred tax assets, net (DeferredTaxAssetsNet) Timing differences of revenue recognition Benefits of operating loss carryforwards Less: Valuation Allowance (EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance) Deferred Tax Tax expense (benefit) Year ending July 31, 2017 (OperatingLeasesFutureMinimumPaymentsDueCurrent) Year ending July 31, 2018 (OperatingLeasesFutureMinimumPaymentsDueInTwoYears) Year ending July 31, 2019 (OperatingLeasesFutureMinimumPaymentsDueInThreeYears) Year ending July 31, 2020 (OperatingLeasesFutureMinimumPaymentsDueInFourYears) After 2020 Total (OperatingLeasesFutureMinimumPaymentsDue) EX-101.PRE 9 goas-20151031_pre.xml XBRL PRESENTATION FILE XML 10 R1.htm IDEA: XBRL DOCUMENT v3.3.1.900
Document and Entity Information - shares
3 Months Ended
Oct. 31, 2015
Dec. 14, 2015
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Oct. 31, 2015  
Trading Symbol goas  
Entity Registrant Name XIANGTIAN (USA) AIR POWER CO., LTD.  
Entity Central Index Key 0001472468  
Current Fiscal Year End Date --07-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   591,042,000
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Well Known Seasoned Issuer No  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
XML 11 R2.htm IDEA: XBRL DOCUMENT v3.3.1.900
Consolidated Balance Sheets - USD ($)
Oct. 31, 2015
Jul. 31, 2015
Current assets    
Cash and cash equivalence $ 314,011 $ 502,029
Accounts receivable 4,463,797 4,720,093
Other receivables 491,111 360,071
Advances to suppliers 5,296,893 5,173,680
Due from related parties 574,770 611,879
Inventory 1,410,499 1,463,856
Other current asset 853,440 721,868
Total current assets 13,404,521 13,553,476
Non-current assets    
Property, plant and equipment, net 4,936,642 7,679,323
Deposit for property, plant and equipment 89,269 90,826
Total non-current assets 5,025,911 7,770,149
Total assets 18,430,432 21,323,625
Current liabilities    
Accounts payable and accrued liabilities 3,402,645 3,534,973
Due to shareholders 18,629 18,954
Capital lease obligations - current 0 33,152
Due to director 419,442 417,770
Due to related parties 1,203,067 1,056,568
Advance from customers 415,011 451,962
Deferred tax liabilities 0 83,101
Billings in excess of costs 3,546,502 3,489,776
Total current liabilities 9,005,296 9,086,256
Non-current liabilities    
Capital lease obligations - non-current 0 2,687,887
Total non-current liabilities 0 2,687,887
Total liabilities 9,005,296 11,774,143
Commitments and contingencies 0 0
STOCKHOLDERS' EQUITY    
Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued and outstanding 0 0
Common stock: $0.001 par value, 1,000,000,000 shares authorized, 591,042,000 and 598,042,000 shares issued and outstanding, respectively 591,042 591,042
Additional paid-in capital 9,709,175 9,457,675
Subscription receivable (310,000) (310,000)
Deficit accumulated (417,094) (204,751)
Accumulated other comprehensive gain (147,987) 15,516
Total stockholders' equity 9,425,136 9,549,482
Total liabilities and stockholders' equity $ 18,430,432 $ 21,323,625
XML 12 R3.htm IDEA: XBRL DOCUMENT v3.3.1.900
Consolidated Balance Sheets (Parenthetical) - $ / shares
Oct. 31, 2015
Jul. 31, 2015
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized 100,000,000 100,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 1,000,000,000 1,000,000,000
Common stock, shares issued 591,042,000 598,042,000
Common stock, shares outstanding 591,042,000 598,042,000
XML 13 R4.htm IDEA: XBRL DOCUMENT v3.3.1.900
Consolidated Statement of Operations and Comprehensive Loss - USD ($)
3 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Revenue $ 66,610 $ 0
Cost of sales 62,015 0
Gross profit 4,595 0
Operating expenses:    
Selling expenses 4,510 5,335
General and administrative expenses 359,142 339,716
Loss from operations 363,652 345,051
Other (expense) income    
Interest expense 0 (37,865)
Non-operating income 131,790 0
Exchange loss (17,928) (609)
Total other (expense) income, net 113,862 (38,474)
Net loss before taxes (245,195) (383,525)
Income tax benefit 32,852 79,107
Net loss after taxes (212,343) (304,418)
Foreign currency translation adjustment (163,503) 164,155
Comprehensive loss $ (375,846) $ (140,263)
Net loss per common share - basic and diluted $ 0.00 $ 0.00
Weighted average number of common shares outstanding - basic and diluted 591,042,000 598,042,000
XML 14 R5.htm IDEA: XBRL DOCUMENT v3.3.1.900
Consolidated Statements of Cash Flows - USD ($)
3 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Cash flows from operating activities:    
Net loss $ (212,343) $ (304,418)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 67,951 102,378
Rent contributed by shareholders as paid-in capital 1,500 1,500
Gain on termination of capital lease (130,960) 0
Changes in operating assets and liabilities:    
Accounts receivable 296,555 0
Other receivables (127,161) (6,216)
Prepayment (76,914) 1,257,827
Inventory 3,100 (804,168)
Due from related party 9,988 0
Deferred tax asset 0 (78,432)
Other current asset (124,498) (1,230,110)
Accounts payable and accrued liabilities (148,282) 75,680
Other payables and tax payables (15,095) 17,852
Advance billings on contracts 47,782 1,443,466
Deferred tax liability (83,388) 0
Capital lease interest payable to related parties 0 30,150
Net cash provided by (used in) operating activities (491,765) 505,509
Cash flows from investing activities:    
Purchase of property and equipment 0 (3,315)
Loan made to related parties 32,319 0
Net cash provided by (used in) investing activities 32,319 (3,315)
Cash flows from financing activities:    
Proceeds from/(Repayment of) advances from related parties 142,298 (690,009)
Advances from director 1,712 0
Advances from shareholders 250,000 0
Net cash provided by (used in) financing activities 394,010 (690,009)
Effect of exchange rate change on cash (122,582) 63,001
Net change in cash and cash equivalents (188,018) (124,814)
Cash and cash equivalents - beginning of period 502,029 556,788
Cash and cash equivalents - end of period $ 314,011 $ 431,974
XML 15 R6.htm IDEA: XBRL DOCUMENT v3.3.1.900
NATURE OF OPERATIONS
3 Months Ended
Oct. 31, 2015
NATURE OF OPERATIONS [Text Block]

NOTE 1 - NATURE OF OPERATIONS

Xiangtian (USA) Air Power Co., Ltd. (the “Company”) was incorporated in the State of Delaware on September 2, 2008 as Goa Sweet Tours Ltd. The Company was originally formed to provide personalized concierge tour packages to tourists who visit the State of Goa, India. On April 17, 2012, the Company entered into Share Purchase Agreements, by and among, Luck Sky International Investment Holdings Limited (“Lucky Sky”), an entity owned and controlled by Zhou Deng Rong, and certain of our former stockholders who owned, in the aggregate, 7,200,000 shares of the Company’s common stock ( 90% of the then outstanding shares). Luck Sky purchased all 7,200,000 shares for an aggregate of $235,000. The sale was completed on May 15, 2012.

On May 25, 2012, the Company formed a corporation under the laws of the State of Delaware called Xiangtian (USA) Air Power Co., Ltd. ("Merger Sub") and on the same day, acquired one hundred shares of Merger Sub's common stock for cash. As such, Merger Sub became a wholly-owned subsidiary of the Company.

Effective as of May 29, 2012, Merger Sub was merged with and into the Company. As a result of the merger, the Company’s name was changed to “Xiangtian (USA) Air Power Co., Ltd.”. Prior to the merger, Merger Sub had no liabilities and nominal assets and, as a result of the merger, the separate existence of the Merger Sub ceased. The Company was the surviving corporation in the merger and, except for the name change provided for in the Agreement and Plan of Merger, there was no change in the directors, officers, capital structure or business of the Company.

Merger with LuckSky (Hong Kong) Shares Limited

On September 5, 2013, the Company entered into a business combination by means of merger of LuckSky (Hong Kong) Shares Limited (“HK Shares”), a Hong Kong corporation, for 250,000,000 shares of common stock of the Company. Prior to the merger, HK Shares had no liabilities and nominal assets. On September 23, 2013, the Company issued 250,000,000 shares of common stock to the shareholders of HK Shares. Effectively on September 24, 2013, the shareholders of HK Shares accepted the shares from the Company and surrendered its control of HK Shares to the Company in exchange of 250,000,000 shares of HK Shares to be issued to its shareholders. On October 16, 2013, HK Shares completed the issuance of its 250,000,000 shares accordingly. As of date, HK Shares is still a surviving company, and the management is expected to cancel HK Shares in October 2014.

Acquisition of Sanhe City Lucksky Electrical Engineering Co., Ltd.

On July 25, 2014, Luck Sky (Shen Zhen) Aerodynamic Electricity Limited (“Luck Sky Shen Zhen”), a corporation incorporated under the laws of the People Republic of China (“PRC”), an indirect wholly-owned subsidiary; Sanhe City Lucksky Electrical Engineering Co., Ltd. (“Sanhe”), a corporation incorporated under the laws of the PRC; and Mr. Zhou Jian and Mr. Zhou Deng Rong, the owners of 97% and 3%, respectively, of Sanhe; entered into a series of agreements known as variable interest agreements (the “VIE Agreements”) pursuant to which Sanhe became Luck Sky Shen Zhen’s contractually controlled affiliate. The purpose and effect of the VIE Agreements is to provide Luck Sky Shen Zhen (our indirect wholly-owned subsidiary) with all of the management, control and net profits of Sanhe.

Simultaneously, the Company entered into a common stock purchase agreement with Zhou Jian and Zhou Deng Rong, the owners of 97% and 3%, respectively, of Sanhe, in consideration for the execution of the VIE Agreements and the acquisition of Sanhe. Pursuant to the Stock Purchase Agreement, the Company issued Zhou Jian and Zhou Deng Rong 264,850,740 and 8,191,260 shares, respectively, of our common stock, representing 51.4% of our issued and outstanding shares of common stock.

XML 16 R7.htm IDEA: XBRL DOCUMENT v3.3.1.900
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Oct. 31, 2015
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Text Block]

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s consolidated financial statements are expressed in U.S. dollars.

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates.

Interim Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosure required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. These interim financial statements should be read in conjunction with the audited financial statements for the year ended July 31, 2015, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the year ended July 31, 2015.

These interim financial statements should be read in conjunction with the audited financial statements for the year ended July 31, 2015, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the year ended July 31, 2015.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported net income or losses.

Principle of Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiaries and VIE for which it is deemed the primary beneficiary. All significant inter-company accounts and transactions have been eliminated in consolidation.

The Company evaluates the need to consolidate its VIE in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.

The VIE agreement was not consummated until July 25, 2014, however, the purpose and design of the establishment of VIE, Sanhe, was to consolidate common control under the Company. ASC 810-10-25-38F states that a reporting entity’s involvement in the design of a VIE may indicate that the reporting entity had the opportunity and the incentive to establish arrangements that result in the reporting entity being the variable interest holder with the power to direct the activities that most significantly impact the VIE’s economic performance. As both the Company and the acquired VIE, Sanhe, are under the common control of Zhou Dengrong and Zhou Jian immediately before and after the acquisition, this transaction was accounted for as a merger under common control, using merger accounting as if the merger had been consummated at the beginning of the earliest period presented, and no gain or loss was recognized. All the assets and liabilities of the VIE, Sanhe, are recorded at carrying value. Hence, Sanhe was consolidated under the Company since its inception due to the purpose and design of its establishment.

The following financial statement amounts and balances of the VIE, which is established on August 6, 2014, were included in the accompanying consolidated financial statements as of October 31, 2015 and July 31, 2015 and for the three months ended October 31, 2015 and 2014, respectively:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Total assets $ 18,411,671   $ 20,948,502  
Total liabilities   8,129,489     11,457,633  
    For the three        
    months     For the three months  
    Ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Net loss $ 125,656   $ 242,971  

 

Fair Value Measurements

The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

[  ]     Level 1 inputs to the valuation methodologyare quoted prices (unadjusted) for identical assets or liabilities in active markets.

[  ]     Level 2 inputs to the valuation methodology includes 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.

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of October 31, 2015 and July 31, 2015.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Inventory

Inventory is stated at the lower of cost or market. Cost is principally determined using the weighted average basis. Construction costs incurred on contracts are included in inventories which consist of raw materials, accessory parts, and contracts work in progress.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and impairment losses. Gains or losses on dispositions of property and equipment are included in operating income (loss). Major additions, renewals and betterments are capitalized, while maintenance and repairs are expensed as incurred.

Depreciation and amortization are provided over the estimated useful lives of the assets using the straight-line method from the time the assets are placed in service. Estimated useful lives are as follows, taking into account the assets' estimated residual value:

Classification Estimated useful life
Machinery equipment 5 - 10 years
Computer and office equipment 3 years
Vehicle 5 years
Property under capital lease 20 years

Revenue Recognition

Sales of power generation system in conjunction of system installation are recognized under accounting for construction-type contracts, using the completed contract method. Accordingly, revenue is recognized upon the completion of the construction, provided persuasive evidence of an arrangement exists, title and risk of loss has transferred, the fee is fixed and determinable, and collection is reasonably assured. We provide for any loss that we expect to incur on these contracts when that loss is probable.

Warranty and Returns

The Company generally provides limited warranties for work performed under its contracts. The warranty periods typically extend for a limited duration following substantial completion of the Company's work on a project. At the time a sale is recognized, we record estimated future warranty costs. Such estimated costs for warranties are included in the individual project cost estimates for purposes of accounting for long-term contracts. Generally, the estimated claim rates of warranty are based on actual warranty experience or Company’s best estimate.

No right of return exists on sales of equipment. Replacement part returns are estimable and accrued at the time a sale is recognized.

Value added taxes

The Company is subject to VAT at a rate of 17% on proceeds received from customers, and are entitled to a refund for VAT already paid or borne on the goods purchased by it that have generated the gross sales proceeds. The VAT balance is recorded in other payables on the balance sheets.

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. 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 litigations 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. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred. No significant penalties or interest relating to income taxes have been incurred during the period from July 8, 2013 (inception) to December 31, 2013. US GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.

Comprehensive Loss

The Company follows the provisions of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 220 “Reporting Comprehensive Income”, and establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements.

Foreign Currency Translation

The Company’s functional currency is Chinese Renminbi (“RMB”) as substantially all of the Company’s PRC subsidiaries’ operations use this denomination. The consolidated financial statements are presented in U.S. dollars. Foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the exchange rates prevailing at the transaction date. Revenues and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.

For the purpose of presenting these financial statements of subsidiaries in PRC, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, which is 6.3180 and 6.2097 as of October 31, 2015 and July 31, 2015, respectively; stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period, which is 6.3521 and 6.1389 for the three months ended October 31, 2015 and October 31, 2014. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.

For the purpose of presenting these financial statements of subsidiaries in Hong Kong, PRC, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, which is 7.7496 and 7.7514 as of October 31, 2015 and July 31, 2015, respectively; stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period, which is 7.7510 and 7.7534 the three months ended October 31, 2015 and October 31, 2014, respectively. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.

Earnings (Loss) per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Earnings per share excludes all potential dilutive shares of common stock if their effect is anti-dilutive. There were no potential dilutive securities at October 31, 2015 or October 31, 2014.

Recent Accounting Pronouncements

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which modifies existing requirements regarding measuring inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (NRV), and NRV less an approximately normal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impacts on the Company’s consolidated results of operations and financial condition.

In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the consolidated financial statements.

In August 2014, the Financial Accounting Standards Board issued ASU No. 2014-15, Presentation of Financial Statements— Going Concern (Subtopic 205-40). This standard is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments contained in this ASU apply to all companies and not-for-profit organizations. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company adopted this ASU as early application for the financial statements of the period from July 8, 2013 (inception) to December 31, 2013.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle the ASU includes provisions within a five step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when (or as) an entity satisfies a performance obligation. The standard also specifies the accounting for some costs to obtain or fulfill a contract with a customer and requires expanded disclosures about revenue recognition. The standard provides for either full retrospective adoption or a modified retrospective adoption by which it is applied only to the most current period presented. This ASU is effective January 1, 2017. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

XML 17 R8.htm IDEA: XBRL DOCUMENT v3.3.1.900
GOING CONCERN
3 Months Ended
Oct. 31, 2015
GOING CONCERN [Text Block]

NOTE 3 - GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since its inception resulting in an accumulated deficit of $417,094 as of October 31, 2015 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company expects to finance operations primarily through cash flow from revenue and capital contributions from principal shareholders. In the event that we require additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, our principal shareholders have indicated the intent and ability to provide additional equity financing.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on our ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

XML 18 R9.htm IDEA: XBRL DOCUMENT v3.3.1.900
INVENTORIES
3 Months Ended
Oct. 31, 2015
INVENTORIES [Text Block]

NOTE 4 – INVENTORIES

Inventories consist of the following:

    October 31,     July 31,  
    2015     2015  
    (Unaudited)        
Raw materials $ 359,823   $ 365,248  
Accessory parts   834,337     848,887  
Contracts work in progress   216,339     249,721  
Total $ 1,410,499   $ 1,463,856  
XML 19 R10.htm IDEA: XBRL DOCUMENT v3.3.1.900
PROPERTY, PLANT AND EQUIPMENT
3 Months Ended
Oct. 31, 2015
PROPERTY, PLANT AND EQUIPMENT [Text Block]

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

    October 31,     July 31,  
    2015     2015  
    (Unaudited)        
Machinery equipment $ 5,184,657   $ 5,275,080  
Computer and office equipment   55,589     56,558  
Vehicle   72,841     74,111  
Property under capital lease   -     2,759,547  
Total property, plant and equipment   5,313,087     8,165,296  
Less: accumulated depreciation   (376,445 )   (485,973 )
Total $ 4,936,642   $ 7,679,323  

Total depreciation expenses for the three months ended October 31, 2015 and 2014 were $67,951 and $102,378, respectively. Depreciation relating to Contract work in progress for the three months ended October 31, 2015 and 2014 were $61,729 and $63,024, respectively, and depreciation relating to general and administrative expenses for the three months ended October 31, 2015 and 2014 were $6,222 and $39,354, respectively.

On August 1, 2015, the Company terminated the finance leasing with Sanhe Dong Yi Glass Machine Company Limited. The factory and office were returned to the lessor. The assets were no longer recorded as fixed assets, which lead to the decrease of Property, plant and equipment.  The Company recognized $130,960 gain due to this termination.

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BILLINGS IN EXCESS OF COSTS
3 Months Ended
Oct. 31, 2015
BILLINGS IN EXCESS OF COSTS [Text Block]

NOTE 6 – BILLINGS IN EXCESS OF COSTS

Billings in excess of costs consist of the following:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Costs incurred on uncompleted contracts $ 2,115,100   $ 2,033,840  
             
Billings to date   (5,661,602 )   (5,523,616 )
             
  $ (3,546,502 ) $ (3,489,776 )
             
Included in the accompanying balance sheets as follows:            
Costs in excess of billings on uncompleted contracts $   -   $   -  
Billings on uncompleted contracts in excess of costs   (3,546,502 )   (3,489,776 )
             
  $ (3,546,502 ) $ (3,489,776 )
XML 21 R12.htm IDEA: XBRL DOCUMENT v3.3.1.900
RELATED PARTY TRANSACTIONS
3 Months Ended
Oct. 31, 2015
RELATED PARTY TRANSACTIONS [Text Block]

NOTE 7 - RELATED PARTY TRANSACTIONS

Since inception, Sanhe rented an office from Sanhe Dong Yi Glass Machine Company Limited (“Sanhe Dong Yi”), a Company owned by Zhou Deng Rong, our former general manager and former majority shareholder of the Company. The rental period was from June 15, 2013 to June 14, 2014, and the full rent amount of $3,965 (RMB12,000) was paid in advance. The Company also paid $1,487 (RMB9,000) to Sanhe Dong Yi to purchase several articles of furniture and computer equipment for its operation purpose in September 2014.

Prior to the incorporation of Sanhe, Kelitai Air Powered Machinery Co., Ltd. (“Kelitai”), a subsidiary of LuckSky Group, an entity owned by Zhou Deng Rong, former general manager and former majority shareholder of the Company, executed various purchase agreements (the “Agreements”) with Beijing Hengruier Machinery Company Limited (“Hengruier”) and made certain prepayments on behalf of the Company. On July 15, 2013, Kelitai, Hengruier and the Company executed a tripartite agreement to transfer the rights and obligations of the Agreements to the Company. As of October 31, 2014, Kelitai has paid $1,242,198 on behalf of the Company as prepayments to Hengruier. The outstanding amounts due to related parties were $1,263,334 (RMB7,722,000) as of October 31, 2014. These amounts were unsecured, non-interest bearing, and due on demand.

In May 2014, Sanhe entered into an agreement with Kelitai, to purchase some of Keizai’s fixed assets for the use in its own production. The total amount for the fixed assets and inventory was $1,261,872 (RMB7,844,300) and Sanhe paid $785,933 (RMB4,512,900) for equipment and $21,000 (RMB130,919) for inventory. The outstanding amount due to related party – Kelitai - was $544,958 (RMB3,331,400) as of October 31, 2014. The amount was unsecured, non-interest bearing, and due on demand.

On July 25, 2014, Luck Sky Shen Zhen obtained an exclusive, worldwide, royalty free license from Zhou Deng Rong and Zhou Jian (his son) and a second exclusive, worldwide royalty free license from LuckSky Group to an aggregate of 48 Chinese patents and related know how and trade secrets, including the technology underlying 13 patent applications (the “Technology”). The Technology represents all of the patents, patent applications and related know how and trade secrets owned by the licensors with respect to PV installations and the air energy storage power generation technology as applied to commercial and residential buildings, but not wind towers. On July 25, 2014, Luck Sky Shen Zhen granted Sanhe an exclusive sublicense with respect to the use of the Technology for commercial and residential buildings, but not for other uses, including wind towers, vehicles and trains, which sublicense also provides for a royalty payment to Luck Sky Shen Zhen equal of five percent of Sanhe’s revenues.

Sanhe leases its principal office, factory and dormitory from LuckSky Group in Sanhe City, Hebei Province. LuckSky Group is owned by Zhou Deng Rong, our former CEO and Zhou Jian, our General Manager and Chairman of the Board. The space in the office, factory and dormitory being leased are 1296, 5160 and 1200 square meters, respectively. The office and factory space are leased for a rent of $113,492 (RMB697,248) per year and the dormitory is leased for a rent of $21,095 (RMB129,600) per year. The leases expire on April 30, 2024 and are subject to renewal with a prior two-month written notice. LuckSky Group is in the process of obtaining the land use approval and ownership certificate of the leased building.

On April 28, 2012, Zhou Jian obtained the right of usage of 44.3 acres agricultural land where our principal office, factory and dormitory are located for 18 years and 8 months, starting May 1, 2012. The annual price paid for such usage rights is $5,617 (RMB34,510). On May 1, 2012, Zhou Jian signed a commitment letter that allowed Xiangtian Kelitai, Yanjiao Branch, a division of LuckSky Group to use this agricultural land. LuckSky Group constructed the buildings on such agricultural land. In the event we are unable to use our principal factory and office space as a result of this usage issue, the lease provides that LuckSky Group will use every effort to complete and perfect the ownership and usage rights, or provide Sanhe with equivalent space.

Sanhe also leases a second factory and office in Sanhe City from Sanhe Dong Yi Glass Machine Company Limited, which is owned by Zhou Deng Rong. A portion of this facility is currently used by Sanhe to demonstrate its products but the facility is primarily intended as a backup to the first facility in Sanhe City and/or for expansion. The factory and office are 4,748.96 square meters. The rent paid by Sanhe for the factory and the office is RMB1,306,500 per year. As of October 31, 2015 and July 31, 2015, the rental fee accrued but unpaid under the leases from LuckSky Group and Sanhe Dong Yi were $258,488 and $262,996, respectively. On August 1, 2015, the two parties entered into a termination of the finance leasing. As the Company no longer needs the factory and office, the assets were returned to the lessor on that day.

On July 25, 2014, prior to the Acquisition, Sanhe and LuckSky Shen Zhen and Sanhe’s shareholders entered into a series of VIE Agreements, pursuant to which Sanhe became LuckSky Shen Zhen’s contractually controlled affiliate. The VIE Agreements include the Framework Agreement on Business Cooperation, the Exclusive Management, Consulting and Training and Technical Services Agreement, the Exclusive Option Agreement, the Equity Pledge Agreement, the Know-How Sub-License Agreement and the Power-of-Attorney. The purpose and effect of the VIE Agreements is to provide LuckSky Shen Zhen (the Company’s indirect wholly-owned subsidiary) with all of the management and control of Sanhe and all of its net income. While LuckSky Shen Zhen does not actually own at present any of the equity and shares in Sanhe, the purpose and effect of the VIE Agreements is to instill in LuckSky Shen Zhen total management and voting control of Sanhe for all material purposes. The use of VIE agreements is a common structure used to acquire PRC corporations, particularly in certain industries in which foreign investment is restricted or forbidden by the PRC government.

On July 25, 2014, the Company entered into the Stock Purchase Agreement with Zhou Jian and Zhou Deng Rong, the owners of 97% and 3%, respectively, of Sanhe. The Company agreed to issue to Zhou Jian and Zhou Deng Rong 264,850,740 and 8,191,260 shares, respectively, of the Company’s common stock, representing 51.4% of the issued and outstanding shares of common stock.

Construction Project

On April 25, 2014, Sanhe entered into a construction project agreement with Xianning Lucksky Aerodynamic Electricity Ltd (“Xianning Lucksky”). Prior to April 10, 2014, Xianning Lucksky was majorly ( 70%) owned by Zhou Deng Rong, former majority shareholder and former CEO of the Company, and former general manager of Sanhe; where he has significant influence over Xianning Lucksky. As of October 31, 2015, the accumulated cost on the construction project was $2,115,100 and the accumulated billings was $5,661,602.

Due from related parties

On April 25, 2015, Sanhe entered into a loan agreement with Xiangtian Kelitai, Yanjiao Branch, a division of LuckSky Group, which is owned by Zhou Deng Rong, former CEO and Sanhe’s former general manager and former majority shareholder of the Company, with a total amount of $507,917 (RMB3,150,000). The loan is unsecured and matures on December 31, 2015. If the loan is not fully repaid on the maturity date, Sanhe will be entitled to receive an interest at 5% per annum. As of October 31, 2015 and July 31, 2015, the outstanding principal on the loan was $0 and $32,208.

Sanhe has been working on a construction project for Xiangtian Kelitai, which agreed to reimburse Sanhe for the cost of the project. The accumulated cost on the construction project was $574,770 and $579,671 as of October 31, 2015 and July 31, 2015.

Due to related parties

Until August 1, 2015, Sanhe leased a second factory and office in Sanhe City from Sanhe Dong Yi Glass Machine Company Limited, which is owned by Zhou Deng Rong. A portion of this facility was used by Sanhe to demonstrate its products but the facility was primarily intended as a backup to the first facility in Sanhe City and/or for expansion. The factory and office are 4,748.96 square meters. The rent paid by Sanhe for the factory and the office was RMB1, 306,500 per year. As of October 31, 2015 and July 31, 2015, the lease payable to Sanhe Dong Yi Glass Machine Company Limited were $258,488 and $262,996, respectively. On August 1, 2015, the two parties terminated the finance leasing. As the Company no longer needs the factory and office, the assets were returned to the lessor effective August 1, 2015

From time to time, Mr. Zhou Deng Rong prepaid some expenses for the company. As of October 31, 2015 and July 31, 3015, amounts due to related parties were as follows:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Rental fees:            
LuckSky Group   248,005     166,443  
Sanhe Dong Yi (Capital lease payable) $ 258,488   $ 262,996  
             
Prepaid expenses on behalf of the company:            
Zhou Deng Rong   696,574     627,129  
             
Total $ 1,203,067   $ 1,056,568  

Due to Shareholders

Since inception to April 2014, the Company’s shareholders have paid several employees’ salaries on behalf of the Company. As of October 31, 2015 and July 31, 2015, the amount due to shareholders was $18,629 and $18,954, respectively.

Due to Directors

From time to time, the Company receives advances from its directors. As of October 31, 2015 and July 31, 2015, the Company received $419,442 and $417,770, respectively. The Company used the funds for its operations. These advances are due on demand, unsecured and non-interest bearing.

XML 22 R13.htm IDEA: XBRL DOCUMENT v3.3.1.900
GOVERNMENT CONTRIBUTION PLAN
3 Months Ended
Oct. 31, 2015
GOVERNMENT CONTRIBUTION PLAN [Text Block]

NOTE 8 GOVERNMENT CONTRIBUTION PLAN

The Company participates in a government-mandated multi-employer defined contribution plan pursuant to which certain retirement, medical and other welfare benefits are provided to employees. Chinese labor regulations require the Company to pay to the local labor bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The relevant local labor bureau is responsible for meeting all retirement benefit obligations; the Company has no further commitments beyond its monthly contribution.

The outstanding amount was $70,239 and $62,846 as of October 31, 2015 and July 31, 2015, respectively.

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STATUTORY RESERVE
3 Months Ended
Oct. 31, 2015
STATUTORY RESERVE [Text Block]

NOTE 9. STATUTORY RESERVE

Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC ("PRC GAAP") at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss.

XML 24 R15.htm IDEA: XBRL DOCUMENT v3.3.1.900
CAPITAL STOCK AND EQUITY TRANSACTIONS
3 Months Ended
Oct. 31, 2015
CAPITAL STOCK AND EQUITY TRANSACTIONS [Text Block]

NOTE 10 - CAPITAL STOCK AND EQUITY TRANSACTIONS

Common Stock

The total number of common shares authorized that may be issued by the Company is 1,000,000,000 shares with a par value of $0.001 per share.

During the period ended July 31, 2009, the Company issued 5,000,000 shares of common stock for total cash proceeds of $25,000 to the Company’s sole director and officer. During the year ended July 31, 2010, the Company sold 3,000,000 shares of common stock for total cash proceeds of $30,000.

On September 23, 2013, the Company issued 250,000,000 shares of common stock to the shareholders of HK Shares, in exchange of 250,000,000 shares of HK Shares.

On September 23, 2013, the Company issued a total of 67,000,000 shares of restricted common stock at $0.001 per share, such that 60,000,000 shares were issued to Mr. Roy Thomas Phillips, who was then a consultant to the Company and later served as the acting CFO of the Company beginning July 29, 2014, and 7,000,000 shares were issued to two other non-related parties. The shares were issued in contemplation of a secondary offering. The Company takes the position that these shares should be cancelled since no secondary offering was consummated. The Company is taking steps to have these shares canceled. The Company valued the 67,000,000 shares of common stock issued at $67,000 as there was no market for the Company’s common stock and it has limited or no trading; and there is thought to be minimal value in the Company at the time of issuance, therefore the par value is thought to match the assumed market price of the Company’s common stock which is at $0.001 per share. On July 24, 2015, 7,000,000 shares issued to two other non-related parties were cancelled.

On July 25, 2014, we entered into the Stock Purchase Agreement in connection with the acquisition of Sanhe with Zhou Jian and Zhou Deng Rong, the owners of 97% and 3%, respectively, of Sanhe. We agreed to issue to Zhou Jian and Zhou Deng Rong 264,850,740 and 8,191,260 shares, respectively, of our common stock, representing 51.4% of the our issued and outstanding shares of common stock.

Preferred Stock

The total number of preferred shares authorized that may be issued by the Company is 100,000,000 shares with a par value of $0.001 per share. The preferred stock may be issued in one or more series, from time to time, with each series to have such designation, relative rights, preference or limitations, as adopted by the Company’s Board of Directors. No preferred shares have been issued.

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INCOME TAXES
3 Months Ended
Oct. 31, 2015
INCOME TAXES [Text Block]

NOTE 11 - INCOME TAXES

United States

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The cumulative tax effect at the expected rate of 34% of significant items comprising the net deferred tax amount is at October 31, 2015 and July 31, 2015 as follows:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Deferred tax assets:            
Net operating losses $ 23,040   $ 78,278  
             
Total deferred tax assets   23,040     78,278  
Less: valuation allowance   (23,040 )   (78,278 )
             
Deferred tax assets, net $   -   $   -  

As of October 31, 2015, for U.S. federal income tax reporting purposes, the Company has approximately $799,618 of unused net operating losses (“NOLs”) available for carry forward to future years. The benefit from the carry forward of such NOLs will begin expiring during the year ended July 31, 2029. Because United States tax laws limit the time during which NOL carry forwards may be applied against future taxable income, the Company may be unable to take full advantage of its NOLs for federal income tax purposes should the Company generate taxable income. Further, the benefit from utilization of NOL carry forwards could be subject to limitations due to material ownership changes that could occur in the Company as it continues to raise additional capital. Based on such limitations, the Company has significant NOLs for which realization of tax benefits is uncertain.

Hong Kong

The Company’s subsidiaries established in HKSAR are subject to Hong Kong Profits Tax. However, these subsidiaries did not earn any income derived in Hong Kong from its date of incorporation to October 31, 2015, and therefore were not subject to Hong Kong Profits Tax.

PRC

The Company’s subsidiaries established in PRC are subject to income tax rate of 25%.

  1)

Luck Sky Shenzhen

For the three months ended October 31, 2015 and 2014, Luck Sky Shenzhen had $27,098 and $11,933 in net  loss.

  2)

Sanhe

For the three months ended October 31, 2015, Sanhe had $98,557 in net loss. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The cumulative tax effect at the expected rate of 25% of significant items comprising the net deferred tax amount is at October 31, 2015 and July 31, 2015 as follows:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Deferred tax assets:            
Net operating losses $   -   $   -  
             
Total deferred tax assets   -     -  
Less: valuation allowance   -     -  
             
Deferred tax assets, net $   -   $   -  
             
Deferred tax liabilities:            
Timing differences of revenue recognition $   -   $ 83,101  
             
Total deferred tax liabilities   -     83,101  

Significant components of income tax expense for the three months ended October 31, 2015 and 2014 are as follows:

    For the three months     For the three months  
    ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Current tax expense $ 48,386   $   -  
Deferred tax expense   (81,238 )   (79,107 )
Benefits of operating loss carryforwards   -     -  
Tax expense (benefit) $ (32,852 ) $ (79,107 )

Reconciliation of Effective Income Tax Rate

    For the three months     For the three months  
    ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Statutory U.S. tax rate   34.00%     34.00%  
PRC Statutory Tax Rate   25.00%     25.00%  
HK Statutory Tax Rate   15.00%     15.00%  
Less: Valuation Allowance   (27.47%)     (53.37%)  
Deferred Tax   (33.13%)     -  
Tax expense (benefit)   13.40%     20.63%  
XML 26 R17.htm IDEA: XBRL DOCUMENT v3.3.1.900
COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES
3 Months Ended
Oct. 31, 2015
COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES [Text Block]

NOTE 12. COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES

Capital Commitments

The Company purchased property, plant and equipment which the payment was due within one year. As of October 31, 2015 and July 31, 2015, the Company has a capital commitment of $18,237,303 and $17,697,627, respectively.

Operation Commitments

The total future minimum lease payments under the non-cancellable operating lease with respect to the office and the dormitory as of October 31, 2015 are payable as follows:

Year ending July 31, 2017   337,662  
Year ending July 31, 2018   337,662  
Year ending July 31, 2019   337,662  
Year ending July 31, 2020   337,662  
After 2020   5,402,035  
Total $ 6,752,683  

Rental expense of the Company for the three months ended October 31, 2015 and 2014 were $83,962 and $35,318, respectively.

Credit risk

Cash deposits with banks are held in financial institutions in China, which are not federally insured deposit protection. Accordingly, the Company has a concentration of credit risk related to these uninsured bank deposits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.

Contingencies

On September 23, 2013, the Company issued 60,000,000 shares of restricted common stock at $0.001 per share to Mr. Roy Thomas Phillips, who was then a consultant to the Company and later served as the acting CFO of the Company beginning July 29, 2014, and two other non-related parties, obtained a total of 7,000,000 shares of restricted common stock. The shares were issued in contemplation of a secondary offering. The Company takes the position that these shares should be cancelled since no secondary offering was consummated. The Company is taking steps to have these shares canceled. The Company valued the 67,000,000 shares of common stock issued at $67,000 as there was no market for the Company’s common stock and it has limited or no trading; and there is thought to be minimal value in the Company at the time of issuance, therefore the par value is thought to match the assumed market price of the Company’s common stock which is at $0.001 per share. The issuance of these securities could result in further dilution to the Company’s stockholders which effects the earnings (loss) per share amount of the Company. The Company might incur additional expenses to have these shares canceled. On July 24, 2015, 7,000,000 shares issued to two other non-related parties were canceled. For the year ended July 31, 2015, the dilutive effect of not canceling the 60,000,000 shares is incorporated in the consolidated financial statements as the Company recorded such shares as issued and outstanding. The loss per share remained $0.00 with the dilutive effect of not canceling such shares. If the shares are not voluntarily returned for cancellation, the Company will need to commence litigation in Delaware to obtain a judgment to cancel the shares for lack of consideration. At this time, the Company is unable to estimate the cost such litigation if it takes place.

XML 27 R18.htm IDEA: XBRL DOCUMENT v3.3.1.900
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Oct. 31, 2015
Basis of Presentation [Policy Text Block]

Basis of Presentation

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s consolidated financial statements are expressed in U.S. dollars.

Use of Estimates and Assumptions [Policy Text Block]

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates.

Interim Financial Statements [Policy Text Block]

Interim Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosure required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. These interim financial statements should be read in conjunction with the audited financial statements for the year ended July 31, 2015, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the year ended July 31, 2015.

These interim financial statements should be read in conjunction with the audited financial statements for the year ended July 31, 2015, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the year ended July 31, 2015.

Reclassification [Policy Text Block]

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported net income or losses.

Principle of Consolidation [Policy Text Block]

Principle of Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiaries and VIE for which it is deemed the primary beneficiary. All significant inter-company accounts and transactions have been eliminated in consolidation.

The Company evaluates the need to consolidate its VIE in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.

The VIE agreement was not consummated until July 25, 2014, however, the purpose and design of the establishment of VIE, Sanhe, was to consolidate common control under the Company. ASC 810-10-25-38F states that a reporting entity’s involvement in the design of a VIE may indicate that the reporting entity had the opportunity and the incentive to establish arrangements that result in the reporting entity being the variable interest holder with the power to direct the activities that most significantly impact the VIE’s economic performance. As both the Company and the acquired VIE, Sanhe, are under the common control of Zhou Dengrong and Zhou Jian immediately before and after the acquisition, this transaction was accounted for as a merger under common control, using merger accounting as if the merger had been consummated at the beginning of the earliest period presented, and no gain or loss was recognized. All the assets and liabilities of the VIE, Sanhe, are recorded at carrying value. Hence, Sanhe was consolidated under the Company since its inception due to the purpose and design of its establishment.

The following financial statement amounts and balances of the VIE, which is established on August 6, 2014, were included in the accompanying consolidated financial statements as of October 31, 2015 and July 31, 2015 and for the three months ended October 31, 2015 and 2014, respectively:

    October 31, 2015     July 31, 2015  
    (Unaudited)        
Total assets $ 18,411,671   $ 20,948,502  
Total liabilities   8,129,489     11,457,633  
    For the three        
    months     For the three months  
    Ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Net loss $ 125,656   $ 242,971  
Fair Value Measurements [Policy Text Block]

Fair Value Measurements

The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

[  ]     Level 1 inputs to the valuation methodologyare quoted prices (unadjusted) for identical assets or liabilities in active markets.

[  ]     Level 2 inputs to the valuation methodology includes 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.

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of October 31, 2015 and July 31, 2015.

Cash and Cash Equivalents [Policy Text Block]

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Inventory [Policy Text Block]

Inventory

Inventory is stated at the lower of cost or market. Cost is principally determined using the weighted average basis. Construction costs incurred on contracts are included in inventories which consist of raw materials, accessory parts, and contracts work in progress.

Property and equipment [Policy Text Block]

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and impairment losses. Gains or losses on dispositions of property and equipment are included in operating income (loss). Major additions, renewals and betterments are capitalized, while maintenance and repairs are expensed as incurred.

Depreciation and amortization are provided over the estimated useful lives of the assets using the straight-line method from the time the assets are placed in service. Estimated useful lives are as follows, taking into account the assets' estimated residual value:

Classification Estimated useful life
Machinery equipment 5 - 10 years
Computer and office equipment 3 years
Vehicle 5 years
Property under capital lease 20 years
Revenue Recognition [Policy Text Block]

Revenue Recognition

Sales of power generation system in conjunction of system installation are recognized under accounting for construction-type contracts, using the completed contract method. Accordingly, revenue is recognized upon the completion of the construction, provided persuasive evidence of an arrangement exists, title and risk of loss has transferred, the fee is fixed and determinable, and collection is reasonably assured. We provide for any loss that we expect to incur on these contracts when that loss is probable.

Warranty and Returns [Policy Text Block]

Warranty and Returns

The Company generally provides limited warranties for work performed under its contracts. The warranty periods typically extend for a limited duration following substantial completion of the Company's work on a project. At the time a sale is recognized, we record estimated future warranty costs. Such estimated costs for warranties are included in the individual project cost estimates for purposes of accounting for long-term contracts. Generally, the estimated claim rates of warranty are based on actual warranty experience or Company’s best estimate.

No right of return exists on sales of equipment. Replacement part returns are estimable and accrued at the time a sale is recognized.

Value added taxes [Policy Text Block]

Value added taxes

The Company is subject to VAT at a rate of 17% on proceeds received from customers, and are entitled to a refund for VAT already paid or borne on the goods purchased by it that have generated the gross sales proceeds. The VAT balance is recorded in other payables on the balance sheets.

Income Taxes [Policy Text Block]

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. 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 litigations 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. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred. No significant penalties or interest relating to income taxes have been incurred during the period from July 8, 2013 (inception) to December 31, 2013. US GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.

Comprehensive Loss [Policy Text Block]

Comprehensive Loss

The Company follows the provisions of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 220 “Reporting Comprehensive Income”, and establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements.

Foreign Currency Translation [Policy Text Block]

Foreign Currency Translation

The Company’s functional currency is Chinese Renminbi (“RMB”) as substantially all of the Company’s PRC subsidiaries’ operations use this denomination. The consolidated financial statements are presented in U.S. dollars. Foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the exchange rates prevailing at the transaction date. Revenues and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.

For the purpose of presenting these financial statements of subsidiaries in PRC, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, which is 6.3180 and 6.2097 as of October 31, 2015 and July 31, 2015, respectively; stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period, which is 6.3521 and 6.1389 for the three months ended October 31, 2015 and October 31, 2014. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.

For the purpose of presenting these financial statements of subsidiaries in Hong Kong, PRC, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, which is 7.7496 and 7.7514 as of October 31, 2015 and July 31, 2015, respectively; stockholder’s equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period, which is 7.7510 and 7.7534 the three months ended October 31, 2015 and October 31, 2014, respectively. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholder’s equity section of the balance sheets.

Earnings (Loss) per Share [Policy Text Block]

Earnings (Loss) per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Earnings per share excludes all potential dilutive shares of common stock if their effect is anti-dilutive. There were no potential dilutive securities at October 31, 2015 or October 31, 2014.

Recent Accounting Pronouncements [Policy Text Block]

Recent Accounting Pronouncements

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which modifies existing requirements regarding measuring inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (NRV), and NRV less an approximately normal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impacts on the Company’s consolidated results of operations and financial condition.

In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the consolidated financial statements.

In August 2014, the Financial Accounting Standards Board issued ASU No. 2014-15, Presentation of Financial Statements— Going Concern (Subtopic 205-40). This standard is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments contained in this ASU apply to all companies and not-for-profit organizations. The amendments are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company adopted this ASU as early application for the financial statements of the period from July 8, 2013 (inception) to December 31, 2013.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle the ASU includes provisions within a five step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when (or as) an entity satisfies a performance obligation. The standard also specifies the accounting for some costs to obtain or fulfill a contract with a customer and requires expanded disclosures about revenue recognition. The standard provides for either full retrospective adoption or a modified retrospective adoption by which it is applied only to the most current period presented. This ASU is effective January 1, 2017. The Company is currently assessing this ASU’s impact on the Company’s consolidated results of operations and financial condition.

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

XML 28 R19.htm IDEA: XBRL DOCUMENT v3.3.1.900
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
3 Months Ended
Oct. 31, 2015
Schedule of Variable Interest Entities [Table Text Block]
    October 31, 2015     July 31, 2015  
    (Unaudited)        
Total assets $ 18,411,671   $ 20,948,502  
Total liabilities   8,129,489     11,457,633  
    For the three        
    months     For the three months  
    Ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Net loss $ 125,656   $ 242,971  
Schedule of Useful Lives of Property, Plant and Equipment [Table Text Block]
Classification Estimated useful life
Machinery equipment 5 - 10 years
Computer and office equipment 3 years
Vehicle 5 years
Property under capital lease 20 years
XML 29 R20.htm IDEA: XBRL DOCUMENT v3.3.1.900
INVENTORIES (Tables)
3 Months Ended
Oct. 31, 2015
Inventories [Table Text Block]
    October 31,     July 31,  
    2015     2015  
    (Unaudited)        
Raw materials $ 359,823   $ 365,248  
Accessory parts   834,337     848,887  
Contracts work in progress   216,339     249,721  
Total $ 1,410,499   $ 1,463,856  
XML 30 R21.htm IDEA: XBRL DOCUMENT v3.3.1.900
PROPERTY, PLANT AND EQUIPMENT (Tables)
3 Months Ended
Oct. 31, 2015
Property, Plant and Equipment [Table Text Block]
    October 31,     July 31,  
    2015     2015  
    (Unaudited)        
Machinery equipment $ 5,184,657   $ 5,275,080  
Computer and office equipment   55,589     56,558  
Vehicle   72,841     74,111  
Property under capital lease   -     2,759,547  
Total property, plant and equipment   5,313,087     8,165,296  
Less: accumulated depreciation   (376,445 )   (485,973 )
Total $ 4,936,642   $ 7,679,323  
XML 31 R22.htm IDEA: XBRL DOCUMENT v3.3.1.900
BILLINGS IN EXCESS OF COSTS (Tables)
3 Months Ended
Oct. 31, 2015
Billings in Excess of Costs [Table Text Block]
    October 31, 2015     July 31, 2015  
    (Unaudited)        
Costs incurred on uncompleted contracts $ 2,115,100   $ 2,033,840  
             
Billings to date   (5,661,602 )   (5,523,616 )
             
  $ (3,546,502 ) $ (3,489,776 )
             
Included in the accompanying balance sheets as follows:            
Costs in excess of billings on uncompleted contracts $   -   $   -  
Billings on uncompleted contracts in excess of costs   (3,546,502 )   (3,489,776 )
             
  $ (3,546,502 ) $ (3,489,776 )
XML 32 R23.htm IDEA: XBRL DOCUMENT v3.3.1.900
RELATED PARTY TRANSACTIONS (Tables)
3 Months Ended
Oct. 31, 2015
Related Party Transactions [Table Text Block]
    October 31, 2015     July 31, 2015  
    (Unaudited)        
Rental fees:            
LuckSky Group   248,005     166,443  
Sanhe Dong Yi (Capital lease payable) $ 258,488   $ 262,996  
             
Prepaid expenses on behalf of the company:            
Zhou Deng Rong   696,574     627,129  
             
Total $ 1,203,067   $ 1,056,568  
XML 33 R24.htm IDEA: XBRL DOCUMENT v3.3.1.900
INCOME TAXES (Tables)
3 Months Ended
Oct. 31, 2015
Schedule of Deferred Tax Assets and Liabilities [Table Text Block]
    October 31, 2015     July 31, 2015  
    (Unaudited)        
Deferred tax assets:            
Net operating losses $ 23,040   $ 78,278  
             
Total deferred tax assets   23,040     78,278  
Less: valuation allowance   (23,040 )   (78,278 )
             
Deferred tax assets, net $   -   $   -  
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]
    For the three months     For the three months  
    ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Current tax expense $ 48,386   $   -  
Deferred tax expense   (81,238 )   (79,107 )
Benefits of operating loss carryforwards   -     -  
Tax expense (benefit) $ (32,852 ) $ (79,107 )
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]
    For the three months     For the three months  
    ended     ended  
    October 31, 2015     October 31, 2014  
    (Unaudited)     (Unaudited)  
Statutory U.S. tax rate   34.00%     34.00%  
PRC Statutory Tax Rate   25.00%     25.00%  
HK Statutory Tax Rate   15.00%     15.00%  
Less: Valuation Allowance   (27.47%)     (53.37%)  
Deferred Tax   (33.13%)     -  
Tax expense (benefit)   13.40%     20.63%  
Subsidiaries in PRC [Member]  
Schedule of Deferred Tax Assets and Liabilities [Table Text Block]
    October 31, 2015     July 31, 2015  
    (Unaudited)        
Deferred tax assets:            
Net operating losses $   -   $   -  
             
Total deferred tax assets   -     -  
Less: valuation allowance   -     -  
             
Deferred tax assets, net $   -   $   -  
             
Deferred tax liabilities:            
Timing differences of revenue recognition $   -   $ 83,101  
             
Total deferred tax liabilities   -     83,101  
XML 34 R25.htm IDEA: XBRL DOCUMENT v3.3.1.900
COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES (Tables)
3 Months Ended
Oct. 31, 2015
Commitments, Contingencies, Risks and Uncertainties [Table Text Block]
Year ending July 31, 2017   337,662  
Year ending July 31, 2018   337,662  
Year ending July 31, 2019   337,662  
Year ending July 31, 2020   337,662  
After 2020   5,402,035  
Total $ 6,752,683  
XML 35 R26.htm IDEA: XBRL DOCUMENT v3.3.1.900
NATURE OF OPERATIONS (Narrative) (Details) - USD ($)
1 Months Ended 3 Months Ended
Jul. 25, 2014
Sep. 15, 2013
Oct. 31, 2015
Jul. 31, 2015
May. 15, 2012
Shares issued     591,042,000 598,042,000  
Percentage of Common Stock Issued and Outstanding     51.40%    
Mr. Zhou Jian [Member]          
Equity Method Investment Ownership Percentage 97.00%        
Stock Issued During Period, Shares, Acquisitions 264,850,740        
Mr. Zhou Deng Rong [Member]          
Equity Method Investment Ownership Percentage 3.00%        
Stock Issued During Period, Shares, Acquisitions 8,191,260        
Lucksky Hong Kong Shares Limited [Member]          
Stock Issued During Period, Shares, Acquisitions   250,000,000      
Luck Sky International Investment Holding Limited [Member]          
Ownership Percentage         90.00%
Shares issued         7,200,000
Shares Purchased Value         $ 235,000
XML 36 R27.htm IDEA: XBRL DOCUMENT v3.3.1.900
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details)
Oct. 31, 2015
Jul. 31, 2015
Oct. 31, 2014
Percentage of VAT, Proceeds Received from Customers 17.00%    
Subsidiaries in PRC [Member]      
Foreign Currency Exchange Rate, Translation 6.3180 6.2097  
Foreign Currency Weighted Average Exchange Rate, Translation 6.3521   6.1389
Subsidiaries in Hong Kong [Member]      
Foreign Currency Exchange Rate, Translation 7.7496 7.7514  
Foreign Currency Weighted Average Exchange Rate, Translation 7.7510   7.7534
XML 37 R28.htm IDEA: XBRL DOCUMENT v3.3.1.900
GOING CONCERN (Narrative) (Details) - USD ($)
Oct. 31, 2015
Jul. 31, 2015
Accumulated deficit $ 417,094 $ 204,751
XML 38 R29.htm IDEA: XBRL DOCUMENT v3.3.1.900
PROPERTY, PLANT AND EQUIPMENT (Narrative) (Details) - USD ($)
3 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Depreciation $ 67,951 $ 102,378
Gain on termination of capital lease 130,960 0
General and Administrative Expense [Member]    
Depreciation 6,222 39,354
Construction in Progress [Member]    
Depreciation $ 61,729 $ 63,024
XML 39 R30.htm IDEA: XBRL DOCUMENT v3.3.1.900
RELATED PARTY TRANSACTIONS (Narrative) (Details)
1 Months Ended 3 Months Ended 16 Months Ended
Sep. 30, 2014
USD ($)
Sep. 30, 2014
CNY (¥)
Jul. 25, 2014
shares
May. 31, 2014
USD ($)
May. 31, 2014
CNY (¥)
Sep. 15, 2013
shares
Oct. 31, 2015
USD ($)
Oct. 31, 2015
CNY (¥)
Oct. 31, 2014
USD ($)
Oct. 31, 2015
CNY (¥)
Jul. 31, 2015
USD ($)
Apr. 25, 2015
USD ($)
Apr. 25, 2015
CNY (¥)
Oct. 31, 2014
CNY (¥)
Apr. 10, 2014
Sep. 23, 2013
$ / shares
Sale of Stock, Price Per Share | $ / shares                               $ 0.001
Business Acquisition Percentage Of Issued And Outstanding Shares     51.40%                          
Costs in Excess of Billings             $ 2,115,100       $ 2,033,840          
Contract Receivable             5,661,602       5,523,616          
Due from Related Parties, Current             574,770       611,879          
Due to Related Parties, Current             18,629       18,954          
Sanhe Dong Yi Glass Machine Company Limited [Member]                                
Prepaid Rent             3,965     ¥ 12,000            
Payments to Acquire Furniture and Fixtures $ 1,487 ¥ 9,000                            
Related Party Transaction, Purchases from Related Party       $ 1,261,872 ¥ 7,844,300                      
Payments to Acquire Machinery and Equipment       785,933 4,512,900                      
Payments to Acquire Other Productive Assets       $ 21,000 ¥ 130,919                      
Kelitai Air Powered Machinery Co Ltd [Member]                                
Short-term Debt                       $ 507,917 ¥ 3,150,000      
Short-term Debt, Percentage Bearing Fixed Interest Rate                       5.00% 5.00%      
Due to Related Parties, Current                 $ 544,958         ¥ 3,331,400    
Kelitai Air Powered Machinery Co Ltd [Member] | Loan Agreement [Member]                                
Due from Related Parties, Current             0       32,208          
Kelitai Air Powered Machinery Co Ltd [Member] | Construction Loans [Member]                                
Due from Related Parties, Current             574,770       579,671          
Zhou Jian [Member]                                
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares     264,850,740                          
Business Acquisition, Percentage of Voting Interests Acquired     97.00%                          
Zhou Deng Rong [Member]                                
Business Combination, Step Acquisition, Equity Interest in Acquiree, Percentage                             70.00%  
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares     8,191,260                          
Business Acquisition, Percentage of Voting Interests Acquired     3.00%                          
Directors [Member]                                
Due to Related Parties, Noncurrent             419,442       417,770          
Hengruier Machinery Company Limited [Member]                                
Due to Related Parties, Current                 1,263,334         ¥ 7,722,000    
Related Party Transaction, Purchases from Related Party                 $ 1,242,198              
LuckSky Group [Member]                                
Accrued Rent, Current             248,005       166,443          
Lucksky Hong Kong Shares Limited [Member]                                
Stock Issued During Period, Shares, Acquisitions | shares           250,000,000                    
Luck Sky Hong Kong Aerodynamic Electricity Limited [Member]                                
Costs in Excess of Billings             2,115,100                  
Contract Receivable             5,661,602                  
Office And Factory [Member]                                
Rental Income, Nonoperating             113,492 ¥ 697,248                
Office And Factory [Member] | Sanhe Dong Yi Glass Machine Company Limited [Member]                                
Payments for Rent | ¥               1,306,500                
Accrued Rent, Current             258,488       $ 262,996          
Dormitory [Member]                                
Rental Income, Nonoperating             21,095 129,600                
Agricultural Land [Member]                                
Payments for Rent             $ 5,617 ¥ 34,510                
XML 40 R31.htm IDEA: XBRL DOCUMENT v3.3.1.900
GOVERNMENT CONTRIBUTION PLAN (Narrative) (Details) - USD ($)
3 Months Ended 12 Months Ended
Oct. 31, 2015
Jul. 31, 2015
Defined Contribution Plan, Employer Discretionary Contribution Amount $ 70,239 $ 62,846
XML 41 R32.htm IDEA: XBRL DOCUMENT v3.3.1.900
STATUTORY RESERVE (Narrative) (Details)
3 Months Ended
Oct. 31, 2015
Foreign Tax Authority [Member]  
Statutory Surplus Reserve Fund Percentage 10.00%
Registered Capital Appropriation Percentage 50.00%
CHINA [Member]  
Statutory Surplus Reserve Fund Percentage 10.00%
Registered Capital Appropriation Percentage 50.00%
XML 42 R33.htm IDEA: XBRL DOCUMENT v3.3.1.900
CAPITAL STOCK AND EQUITY TRANSACTIONS (Narrative) (Details) - USD ($)
1 Months Ended 12 Months Ended
Jul. 24, 2015
Jul. 25, 2014
Sep. 23, 2013
Jul. 31, 2010
Jul. 31, 2009
Oct. 31, 2015
Jul. 31, 2015
Common Stock Shares Authorized           1,000,000,000 1,000,000,000
Common Stock Par Or Stated Value Per Share           $ 0.001 $ 0.001
Stock Issued During Period, Shares, New Issues       3,000,000 5,000,000    
Stock Issued During Period, Value, New Issues       $ 30,000 $ 25,000    
Business Acquisition Percentage Of Issued And Outstanding Shares   51.40%          
Sale of Stock, Price Per Share     $ 0.001        
Preferred stock, shares authorized           100,000,000 100,000,000
Preferred Stock Par Or Stated Value Per Share           $ 0.001 $ 0.001
Zhou Jian [Member]              
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares   264,850,740          
Business Acquisition, Percentage of Voting Interests Acquired   97.00%          
Zhou Deng Rong [Member]              
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares   8,191,260          
Business Acquisition, Percentage of Voting Interests Acquired   3.00%          
Non Related Party [Member]              
Stock Issued During Period, Shares, Restricted Stock Award, Forfeited 7,000,000            
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures     7,000,000        
Secondary Offering [Member]              
Sale of Stock, Price Per Share     $ 0.001        
Stock Issued During Period, Shares, Issued for Services     67,000,000        
Stock Issued During Period, Value, Issued for Services     $ 67,000        
Exchange of Stock for Stock [Member]              
Stock Issued During Period, Shares, Acquisitions     250,000,000        
Chief Financial Officer [Member]              
Sale of Stock, Price Per Share     $ 0.001        
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures     60,000,000        
XML 43 R34.htm IDEA: XBRL DOCUMENT v3.3.1.900
INCOME TAXES (Narrative) (Details) - USD ($)
3 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate 34.00% 34.00%
Operating Loss Carryforwards $ 799,618  
Income Tax Expense (Benefit) $ (32,852) $ (79,107)
CHINA [Member]    
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Percent 25.00% 25.00%
Luck Sky Shenzhen [Member]    
Operating Loss Carryforwards $ 27,098 $ 11,933
Sanhe [Member]    
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Percent 25.00%  
Operating Loss Carryforwards $ 98,557  
XML 44 R35.htm IDEA: XBRL DOCUMENT v3.3.1.900
COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES (Narrative) (Details) - USD ($)
1 Months Ended 3 Months Ended
Jul. 24, 2015
Sep. 23, 2013
Oct. 31, 2015
Oct. 31, 2014
Jul. 31, 2015
Capital Lease Obligations     $ 18,237,303   $ 17,697,627
Operating Leases, Rent Expense, Net     $ 83,962 $ 35,318  
Stock Issued During Period, Shares, Restricted Stock Award, Gross   67,000,000      
Sale of Stock, Price Per Share   $ 0.001      
Stock Issued During Period, Value, Restricted Stock Award, Gross   $ 67,000      
Earnings Per Share, Diluted     $ 0.00    
Chief Financial Officer [Member]          
Stock Issued During Period, Shares, Restricted Stock Award, Gross   60,000,000      
Sale of Stock, Price Per Share   $ 0.001      
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures   60,000,000      
Non-Related Parties [Member]          
Stock Issued During Period, Shares, Restricted Stock Award, Gross   7,000,000      
Stock Issued During Period, Shares, Restricted Stock Award, Forfeited 7,000,000        
XML 45 R36.htm IDEA: XBRL DOCUMENT v3.3.1.900
Schedule of Variable Interest Entities (Details) - USD ($)
3 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Jul. 31, 2015
Total assets $ 18,411,671   $ 20,948,502
Total liabilities 8,129,489   $ 11,457,633
Net loss $ 125,656 $ 242,971  
XML 46 R37.htm IDEA: XBRL DOCUMENT v3.3.1.900
Schedule of Useful Lives of Property, Plant and Equipment (Details)
3 Months Ended
Oct. 31, 2015
Machinery and Equipment [Member] | Minimum [Member]  
Property, Plant and Equipment, Useful Life 5 years
Machinery and Equipment [Member] | Maximum [Member]  
Property, Plant and Equipment, Useful Life 10 years
Computer And Office Equipment [Member]  
Property, Plant and Equipment, Useful Life 3 years
Vehicles [Member]  
Property, Plant and Equipment, Useful Life 5 years
Assets Held under Capital Leases [Member]  
Property, Plant and Equipment, Useful Life 20 years
XML 47 R38.htm IDEA: XBRL DOCUMENT v3.3.1.900
Inventories (Details) - USD ($)
Oct. 31, 2015
Jul. 31, 2015
Raw materials $ 359,823 $ 365,248
Accessory parts 834,337 848,887
Work in process 216,339 249,721
Total $ 1,410,499 $ 1,463,856
XML 48 R39.htm IDEA: XBRL DOCUMENT v3.3.1.900
Property, Plant and Equipment (Details) - USD ($)
Oct. 31, 2015
Jul. 31, 2015
Total property, plant and equipment $ 5,313,087 $ 8,165,296
Less: accumulated depreciation (376,445) (485,973)
Total 4,936,642 7,679,323
Machinery and Equipment [Member]    
Total property, plant and equipment 5,184,657 5,275,080
Computer And Office Equipment [Member]    
Total property, plant and equipment 55,589 56,558
Vehicles [Member]    
Total property, plant and equipment 72,841 74,111
Assets Held under Capital Leases [Member]    
Total property, plant and equipment $ 0 $ 2,759,547
XML 49 R40.htm IDEA: XBRL DOCUMENT v3.3.1.900
Billings in Excess of Costs (Details) - USD ($)
Oct. 31, 2015
Jul. 31, 2015
Costs incurred on uncompleted contracts $ 2,115,100 $ 2,033,840
Billings to date (5,661,602) (5,523,616)
Billings in Excess of Cost (3,546,502) (3,489,776)
Included in the accompanying balance sheets as follows:    
Costs in excess of billings on uncompleted contracts 0 0
Billings on uncompleted contracts in excess of costs (3,546,502) (3,489,776)
Billings in Excess of Cost, Current $ (3,546,502) $ (3,489,776)
XML 50 R41.htm IDEA: XBRL DOCUMENT v3.3.1.900
Related Party Transactions (Details) - USD ($)
3 Months Ended 12 Months Ended
Oct. 31, 2015
Jul. 31, 2015
Total $ 1,203,067 $ 1,056,568
LuckSky Group [Member]    
Rental fees 248,005 166,443
Sanhe Dong Yi Glass Machine Company Limited [Member]    
Rental fees (Capital lease interest payable) 258,488 262,996
Zhou Deng Rong [Member]    
Prepaid expenses on behalf of the company $ 696,574 $ 627,129
XML 51 R42.htm IDEA: XBRL DOCUMENT v3.3.1.900
Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)
Oct. 31, 2015
Jul. 31, 2015
Net operating losses $ 23,040 $ 78,278
Total deferred tax assets 23,040 78,278
Less: valuation allowance 23,040 78,278
Deferred tax assets, net 0 0
Subsidiaries in PRC [Member]    
Net operating losses 0 0
Total deferred tax assets 0 0
Less: valuation allowance 0 0
Deferred tax assets, net 0 0
Timing differences of revenue recognition 0 83,101
Total deferred tax liabilities $ 0 $ 83,101
XML 52 R43.htm IDEA: XBRL DOCUMENT v3.3.1.900
Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($)
3 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Current tax expense $ 48,386 $ 0
Deferred tax expense (81,238) (79,107)
Benefits of operating loss carryforwards 0 0
Income Tax Expense (Benefit) $ (32,852) $ (79,107)
XML 53 R44.htm IDEA: XBRL DOCUMENT v3.3.1.900
Schedule of Effective Income Tax Rate Reconciliation (Details)
3 Months Ended
Oct. 31, 2015
Oct. 31, 2014
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate 34.00% 34.00%
Less: Valuation Allowance (27.47%) (53.37%)
Deferred Tax (33.13%) 0.00%
Tax expense (benefit) 13.40% 20.63%
CHINA [Member]    
Statutory Tax Rate 25.00% 25.00%
HONG KONG [Member]    
Statutory Tax Rate 15.00% 15.00%
XML 54 R45.htm IDEA: XBRL DOCUMENT v3.3.1.900
Commitments, Contingencies, Risks and Uncertainties (Details)
Oct. 31, 2015
USD ($)
Year ending July 31, 2017 $ 337,662
Year ending July 31, 2018 337,662
Year ending July 31, 2019 337,662
Year ending July 31, 2020 337,662
After 2020 5,402,035
Total $ 6,752,683
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