China Modern Agricultural Information, Inc. - FORM 10-K/A

Attached files

file	filename
EX-32.2 - CERTIFICATION - China Modern Agricultural Information, Inc.	f10k2016a1ex32ii_china.htm
EX-32.1 - CERTIFICATION - China Modern Agricultural Information, Inc.	f10k2016a1ex32i_china.htm
EX-31.2 - CERTIFICATION - China Modern Agricultural Information, Inc.	f10k2016a1ex31ii_china.htm
EX-31.1 - CERTIFICATION - China Modern Agricultural Information, Inc.	f10k2016a1ex31i_china.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

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

For the fiscal year ended June 30, 2016

☐ 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 000-54510

China Modern Agricultural Information, Inc.

(Exact name of registrant as specified in its charter)

Nevada		27-2776002
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)

No.A09, Wuzhou Sun Town Limin Avenue, Limin Development District Harbin, Heilongjiang, China		150000
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (86) 0451-84800733

Securities registered pursuant to Section 12(b) of the Exchange Act: None.

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

Common Stock, par value $0.001 per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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

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

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

(Do not check if a smaller reporting company)

☐

Smaller reporting company

☒

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

The aggregate market value of the Company’s common stock held by non-affiliates computed by reference to the closing bid price of the Company’s common stock, as of the last business day of the registrant’s most recently completed second fiscal quarter: $9,867,225.84.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 53,100,000 shares of common stock, par value $0.001 per share, issued and outstanding as of November 14, 2016.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

		Page
	PART II

Item 7.	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	2
Item 8.	Financial Statements And Supplementary Data	12

	PART IV
Item 15.	Exhibits, Financial Statement Schedules	13
Signatures		14

EXPLANATORY NOTE

China Modern Agricultural Information, Inc. (the “Company”) is filing this Amendment No. 1 (the “Amendment No. 1”) to its Annual Report on Form 10-K for the fiscal year ended June 30, 2016, filed on September 29, 2016 (the “Original 10-K”). Company is filing this Amendment No. 1 to provide amended financial statements to reflect certain dividend distribution to shareholders of China Dairy Corporation Limited. Company also amends the disclosure within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to incorporate the dividend distribution.

In accordance with applicable SEC rules and as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this amendment includes new certifications from our Principal Executive Officer and Principal Financial Officer dated as of the date of filing of this amendment.

No changes have been made to the Original 10-K other than to Item 7 and 8 and to the four certification exhibits. This amendment speaks as of the date of the Original 10-K, does not reflect events that may have occurred after the date of the Original 10-K and does not modify or update in any way the disclosures made in the Original 10-K, except as required to reflect the revisions discussed above. This amendment should be read in conjunction with the Original 10-K and with our filings with the SEC filed subsequent to the filing of the Original 10-K.

PART II

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

This Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included in "Item 8. Financial Statements and Supplementary Data."

This annual report on Form 10-K contains or may contain forward-looking statements (collectively the "Filings") and information that are based upon beliefs of, and information currently available to, the Company's management as well as estimates and assumptions made by Company's management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words "anticipate," "believe," "estimate," "expect," "future," "intend," "plan," or the negative of these terms and similar expressions as they relate to the Company or the Company's management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management's judgment in its application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

Overview

We are a leading producer and distributor of raw fresh milk in China. We have two operating entities with an aggregate fresh milk production capacity of approximately 386 tons per day. We also have 63 exclusive individual partners on June 30, 2016 with an aggregate fresh milk production capacity of approximately 324 tons per day. We have four major customers, one of which is the leading dairy company in China. During the quarter ended December 31, 2015, we terminated the contracts with certain customers and entered into contracts with four new customers.

We were incorporated on December 22, 2008 under the laws of the State of Nevada. We were formerly known as Trade Link. On April 4, 2011, the Board of Directors of Trade Link filed an amendment to the Certificate of Incorporation with the State of Nevada and changed our name from Trade Link to China Modern Agricultural Information, Inc.

On January 28, 2011, we entered into a share exchange agreement by and among (i) Value Development Holding Limited, a British Virgin Islands company (“Value Development”), (ii) Value Development’s shareholders, (iii) us, and (iv) our former principal stockholders. Pursuant to the terms of the agreement, Value Development’s shareholders transferred to us all of the shares of Value Development in exchange for the issuance of 35,998,000 shares of our common stock. The shares issued to Value Development’s shareholders in the Securities Exchange constituted approximately 87.80% of our issued and outstanding shares of common stock as of and immediately after the consummation of the Securities Exchange. As a result of the Securities Exchange, Value Development became our wholly owned subsidiary and Value Development’s former principal shareholders became our principal shareholders.

On January 28, 2011, Value Development completed the acquisition of Jiasheng Consulting Managerial Co., Ltd., a PRC company (“Jiasheng Consulting”). Jiasheng Consulting entered into a series of contractual agreements with Heilongjiang Zhongxian Information Co., Ltd., a PRC company (“Zhongxian Information”), Mr. Zhengxin Liu, our Chief Human Resource Officer and holder of 62% the of equity interest in Zhongxian Information, and Mr. Youliang Wang, our Chief Executive Officer and holder of 38% of the equity interest of Zhongxian Information. Pursuant to the contractual arrangements, Jiasheng Consulting controls all managerial power of Zhongxian Information. The contractual arrangements include a shareholder voting rights proxy agreement, exclusive consulting and services agreement, exclusive call option agreement and equity pledge agreement, pursuant to which, Jiasheng Consulting shall provide exclusive and complete business support and technical and consulting service to Zhongxian Information in exchange for an annual fee in the amount of Zhongxian Information’s yearly net profits after tax, and Zhongxian Information’s stockholders pledged their rights, title and equity interest in Zhongxian Information as security for the collection of such consulting and service fees provided in the equity pledge agreement.

Zhongxian Information was incorporated in China in January 2005 with registered capital of RMB 10,000,000 or $1,206,800 US Dollars. In February 2006, it acquired 99% of the registered capital of Heilongjiang Xinhua Cattle Industry Co., Ltd., a PRC company (“Xinhua Cattle”), which was incorporated in China in December 2005 with registered capital of RMB 3,000,000 or $371,580 US Dollars. Xinhua Cattle is located in Qiqihar, Heilongjiang Province, in northeast China and is a livestock company that engages in cow breeding and fresh milk production and distribution.

On November 23, 2011, Zhongxian Information acquired 100% of the equity interest of Shangzhi Yulong Cattle Co., Ltd., a PRC company (“Yulong Cattle”), in exchange for (i) issuance of 9,000,000 shares of our common stock, and (ii) a cash payment of $4,396,000, to Yulong Cattle’s former shareholders. Yulong Cattle was incorporated on December 4, 2007 under the laws of the PRC. Yulong Cattle, located in Harbin, Heilongjiang, in northeast China, is a livestock company that engages in cow breeding and fresh milk distribution, and primarily generates its revenue from the sale of fresh milk.

On July 16, 2015, we transferred 100% of the issued and outstanding shares of Value Development to China Dairy Corporation Ltd., a Hong Kong company (“China Dairy”), which is 60% owned indirectly by the Company through the Company’s wholly-owned subsidiary, Hope Diary Holdings Ltd., a British Virgin Islands company (“Hope Diary”). These transactions involve no consideration received or paid as Value Development and China Dairy are under common control with us and this transaction is a restriction to our interests in Value Development.

China Dairy was newly incorporated in January 2015 and did not have any significant assets or liabilities, or business operations, which is 100% owned by Company’s PRC corporate advisor. Further, the sole shareholder transferred the 10,000 shares of China Dairy to Value Development 60% and various shareholder and consultants of the Company 40% at HK$1.00 per share.

The 40% of the 10,000 shares of China Dairy were transferred from the sole shareholder of China Dairy to the following entities at HK$1.00 per share, which has direct or indirect relationship with the shareholder and consultants of the Company: 3% to Beijing Ruihua Future, 4% to Donghe Group, 3% to Integral Capital, 20% to Dingxi Shanghai Fund and 10% to Zhiyuan International. Immediately after the transfer, 65,000 bonus shares were issued at no consideration for every existing share.

Value Development is the sole shareholder of Value Development Group Limited, which is the sole shareholder of Harbin Jiasheng Consulting Managerial Co. Ltd. (“Jiasheng Consulting”), which is our subsidiary in China, with respect to which the operating company, Zhongxian Information, is a variable interest entity. The effect of this transaction was to reduce the interest of ours in its operating company by 40%. We use the China Dairy’s offering price for the Proposed Offering to approximate the fair value of the 40% stock granted to the shareholder and consultants.

On September 16, 2015 our 60%-owned subsidiary, Jiasheng Consulting, exercised its option to purchase all of the registered equity of our operating subsidiary, Zhongxian Information from its stockholders Zhengxin Liu and Youliang Wang, who are also the members of our Board of Directors, for RMB10,000 (approximately $1,634). Prior to the acquisition, Jiasheng Consulting controlled Zhongxian Information through a series of contractual agreements, which made Zhongxian Information a variable interest entity, the effect of which was to cause the balance sheet and operating results of Zhongxian Information to be consolidated with those of Jiasheng Consulting in our financial statements. As a result of the acquisition by Jiasheng Consulting of the registered ownership of Zhongxian Information, the balance sheet and operating results of Zhongxian Information hereafter continues to be consolidated with those of Jiasheng Consulting as its 100% owned subsidiary. On April 8, 2016, our 60% owned subsidiary, China Dairy Corporation Limited issued 84,906,541 CDI shares at AUD $0.2 per share on ASX and raised total fund of AUD $16,981,308 (USD $13,021,267). After the IPO, our ownership was diluted to 53.07%.

Our current structure is set forth below:

Factors Affecting Our Results of Operations

Our operating results are primarily affected by the following present factors:

●

Dairy Industry Growth. We believe the market for dairy products in China for the long term will grow rapidly, driven by China’s economic growth, improved living quality and increased penetration of infant formula. Accordingly, we believe that the demand for fresh milk will increase rapidly.

●

Production Capacity. Our revenue largely depends on our production capacity. The production capacity in this industry is determined by the variety, aging and number of adult cows. Accordingly, we acquired Yulong Cattle in November 2011 which increased our number of cows by 3,800 and improved our production capacity by approximately 90 tons per day when acquired.

●

Raw Material Supplies and Prices. The per unit cost of fresh milk is affected by price volatility of our raw materials and feeding expenses in the China markets. In response to the increased cost, we leased 16,666,750 square meters of grassland in October 2011, 427,572 square meters grassland in February 2013, and 521,336 square meters of grassland in May 2015. We believe that the hay production of this grassland can satisfy our raw material demand and lower our feeding cost.

●

Change of operation method. We disposed a large number of adult cows to local farmers, introduced distribution channel to them and receive up to 30% of the farmers’ milk sales as a commission. It makes our performance is stably increased and we have enough production resources to feed more cows by ourselves. In addition, we signed with another 27 local farmers to feed 2,000 adult cows in May 2016 to increase our production resources.

Sale of Cows

In September 2011, August 2011, and June 2011, Xinhua Cattle sold 3,787, 5,635, and 2,000 of its cows to local farmers, respectively. In November and December 2014, Yulong sold 3,714 and 2,995 cows to local farmers respectively. 3,500 of the cows sold in 2014 were purchased from outside unrelated parties for $4,550,000. The remaining cows sold were raised by Yulong. According to the agreements signed with the local farmers in June 2011, the sales price will be collected over five years, with a minimum payment of 20% of the sales price to be paid each year. The related receivable is recorded at its present value at a discount rate of 12%, which is commensurate with interest rates for notes with similar risk. The Company also entered into agreements with these local farmers for a 30% commission of their monthly milk sales generated by the cows sold in exchange for the Company’s assistance in arranging for the sale of the milk.

Pursuant to the agreements signed in August 2011, September 2011, November 2014, and December 2014, the sales price will be collected in monthly installments plus interest at 7% on the outstanding balance, over the remaining useful lives of the cows, which range from one to eight years. Local farmers are required to pay 30% of monthly milk sales generated from the cows purchased by the farmers. The 30% monthly payments are to be applied first to the monthly installment of principal for the cows sold and the balance as commission income for the Company’s assistance in arranging for the sale of the milk. The 30% monthly payments will continue over the entire remaining life of the cows sold. While the 30% rate and the amount applied to monthly installments for the purchase price of the cows remain the same, the amount of sales commission income will vary depending on total monthly milk sales and the progress of repayments towards the purchase price.

In August 2015, Xinhua Cattle sold 200 cows to an outside party at a total price of RMB 160,000(US $24,861) including insurance of RMB 100,000 (US $ 15,540). The cows had a net book value approximately $43,000 as of the disposal date, which includes cost basis approximate $560,000 and accumulated depreciation approximately $516,000. In May 2016, Xinhua Cattle sold 904 cows to an outside party at a total price of RMB 3,616,000(US $561,854). The cows had a net book value approximately $564,000 as of the disposal date, which includes cost basis approximate $1,147,000 and accumulated depreciation approximately $583,000. In June 2016, Xinhua Cattle also sold 500 female calves to an outside party at a total price of RMB 2,000,000 (US $310,760). The cost of these female calves was approximate $322,000.

In November 2015, Yulong Cattle Sold 347 cows to an outside party at a total price of RMB 1,144,800 (US $177,879) including insurance of RMB 104,100 (US $ 16,175). The cows had a net book value approximately $254,000 as of the disposal date, which includes cost basis approximate $588,000 and accumulated depreciation approximately $335,000. In May 2016, Yulong Cattle sold 331 cows to an outside party at a total price of RMB 1,390,200 (US $216,009). The cows had a net book value approximately $324,000 as of the disposal date, which includes cost basis approximate $709,000 and accumulated depreciation approximately $385,000.

Increase in payment to local farmers

Due to the significant increase in forage price, our payment to local farmers was increased as well during last twelve months. Before March 2015, the payment which included feeding expense and forage cost was $51, $65, $75 and $115, respectively, which paid for calve, pre-adult cow, young cow and adult cow per month. Since April 2015, such expenses were increased to $59, $76, $87 and $137, respectively, paid for each type of cows. Since September 2015, such expenses were increased to $68, $87, $101 and $158, respectively. In the end of September 2015, we terminated the agreements with the original 200 local farmers and signed with new 179 local farmers near around Harbin city. However, it didn’t stop the increase in forage price. Since November 2015, the feeding expenses and forage costs were increased to $78, $96, $117 and $264 for each calve, pre-adult cow, young cow and adult cow, respectively.

Results of Operations

Comparison of years ended June 30, 2016 and 2015

The following table sets forth certain information regarding our results of operations for the years ended June 30, 2016 and 2015.

	For the Years ended June 30,
							Change
	2016			2015			Amount			%
Revenue	$	101,091,303		$	66,335,166		$	34,756,137			52	%
Cost of goods sold		57,626,223			20,229,296			37,396,927			185	%
Gross profit		43,465,080			46,105,870			(2,640,790	)		(6	%)
Operating expenses		43,803,797			1,930,266			41,873,531			2,169	%
Operating income/(loss)		(338,717	)		44,175,604			(44,514,321	)		(101	%)
Other income and (expenses)		538,667			(259,539	)		798,206			(308	%)
Income before income taxes		199,950			43,916,065			(43,716,115	)		(100	%)
Provision for income taxes		2,403,996			10,968,816			(8,564,820	)		(78	%)
Net income before noncontrolling interests		(2,204,046	)		32,947,249			(35,151,295	)		(107	%)
Noncontrolling interests		16,641,448			355,982			16,285,455			4,575	%
Net income attributable to controlling interests	$	(18,845,494	)	$	32,591,267		$	(51,436,761	)		(158	%)

Revenues

Our revenue was primarily generated from sales of fresh milk and commissions on fresh milk sales by farmers to whom we sold cows. We had total revenues of $101,091,303 for the year ended June 30, 2016, an increase of $34,756,137 or 52%, compared to $66,335,166 for the year ended June 30, 2015. There are three main reasons caused such increase: 1). approximately $8,900,000 commission revenue generated from the total 6,709 milk cows disposed of by Yulong in November and December 2014 for the year ended June 30, 2016; 2). Total average milk cows were increased from 9,831 to 16,459; 3). The milk sales price was increased from $0.54 per kg to $0.59 per kg since November 2015 for approximate 72% of total milk sales.

The following table shows a breakdown of revenue from natural milk sales and sales commission, respectively:

	For the Years Ended June 30,
					Change
	2016		2015		Amount		%
Sales of natural milk	$	81,604,871	$	48,441,505	$	33,163,366		68	%
Sales commissions		19,486,432		17,893,661		1,592,771		9	%
Total revenue	$	101,091,303	$	66,335,166	$	34,756,137		52	%

For the year ended June 30, 2016, our revenue generated from natural milk sales was $81,604,871 which represented an increase of $33,163,366 or 68% compared to $48,441,505 for the year ended June 30, 2015. The increase in the natural milk sales was primarily due to the increased number of milk cows compared to the same period of prior year.

The following table sets forth information regarding the number of milk cows and the revenue per cow:

	For the Years Ended June 30,
					Change
	2016		2015		Amount		%
Sales of natural milk	$	81,604,871	$	48,441,505	$	33,163,366		68	%
Average number of milk cows		16,459		9,831		6,628		67	%
Revenue from per milk cow	$	4,958	$	4,927	$	31		1	%

The revenue per milk cow increased to $4,958 for the year ended June 30, 2016 from $4,927 for the year ended June 30, 2015, an increase of $31 or 1%. Although the selling price of fresh milk was increased from $0.54 per kg to $0.59 per kg since November 30, 2015 for approximate 72% of total milk sales, we terminated the feeding agreements with the original 200 local farmers in Qiqihaer on September 25, 2015 and signed with 179 new farmers near to Harbin on September 29, 2015. The adult cows were transferred at the end of September 2015 and it slightly affected the daily production because of the traveling and new living conditions. That’s the reason caused only 1% increase in revenue per milk cow. In addition, the cold weather and increase in average age of milk cow slightly caused the decrease in production as well. The sales commissions from local farmers increased by $1,592,771 or 9% to $19,486,432 for the year ended June 30, 2016 from $17,893,661 for the year ended June 30, 2015. The average quantity of milk cows we now earn commission revenue increased by 7% or 1,033, to 16,517 for the year ended June 30, 2016 from 15,484 for the year ended June 30, 2015 due to an addition from the sale of 3,714 and 2,995 milk cows by Yulong in November and December 2014, respectively, and a deduction of 3,216 cows which had been fully depreciated from 13 farmers. The farmers started to pay the commission to Yulong since April 2015. In addition, the daily production of the cows sold by Yulong is also higher than the cows sold by Xinhua due to their younger age.

Gross profit

Our cost of goods sold consists of feeding food, feeding expenses and other direct production overhead which includes labor costs, depreciation, lease, water & electricity, etc. Because we started to use the two new farms in Shuangcheng district and Xiangfang District in Harbin, more direct production overhead was allocated to our costs of goods sold. In addition, the direct feeding expenses and food costs paid to local farmers were increased from $115 per cow since March 2015 to $264 per cow in November 2015. In December 2015, Xinhua entered into agreements with 179 local farmers to pay them additional feeding cost of RMB 600 (US$93) for each young cow and adult cow, which were transferred to the farmers for raise at the beginning of October 2015, for improving the feeding environment. The company paid 50% of the total amount RMB 6,795,000 (approximate US$1,056,000) in December 2015 and the remaining 50% was paid in January 2016. Because all the young cows we paid for additional feeding cost were transferred to adult cows, all the additional feeding cost of approximate $1,056,000 was allocated to cost of goods sold. As a result, we have seen a decrease in our margins compared with the same period in 2015.

	For the Year Ended June 30,
					Change
	2016		2015		Amount		%
Cost of goods sold	$	57,626,223	$	20,229,296	$	37,396,927		185	%
Average number of milk cows		16,459		9,831		6,628		67	%
Cost per milk cow	$	3,501	$	2,058	$	1,443		70	%

The cost per milk cow increased to $3,501 for the year ended June 30, 2016 which represented an increase of $1,443 or 70% compared to $2,058 for the year ended June 30, 2015. We described the reason for the increase as above.

Gross profit margin

Our gross profit margin was 43.0% for the year ended June 30, 2016 which decreased by 26.5% from the year ended June 30, 2015. The main reason for such a decrease was mainly due to the increase in feeding and food cost and directly production overhead.

Operating expenses

Our operating expenses sharply increased to $43,803,797 for the year ended June 30, 2016 from $1,930,226 for the year ended June 30, 2015, an increase of $41,873,531 or 2,169%. Our operating expenses primarily consist of human resource costs, depreciation, professional fees associated with filings required by the securities laws of the United States, consulting fees for a Chinese financial advisory company and business taxes, etc. We incurred total of $950,302 and $ 1,002,045 in business taxes and VAT for the year ended June 30, 2016 and 2015, respectively. We classified these business taxes and VAT as selling expenses. As we discussed above, we had been listed on ASX main board and were restructured since July 2015 and lose the interest of our operating company by 40%. We treated the reduce of our interest by 40% as a stock compensation to our shareholders and consultants for a total of $37,762,400 it was recorded under our G&A expenses. This is the main reason that caused such sharp increase in our operating expenses. In addition, because our two new farms in Harbin were started to be used for the year ended June 30, 2016, the expenses, such as human costs, depreciation, lease and water & electricity, incurred for our sales and admin departments for these two farms were recorded as our operating expenses. That’s another reason caused the increase in our operating expenses for the year ended June 30, 2016 by comparing with the same period in 2015.

Operating income (loss)

As a result of the foregoing, we had operating loss of $338,717 for the year ended June 30, 2016, representing a decrease of $44,514,321, as compared to operating income of $44,175,604 for the year ended June 30, 2015.

Non-operating income (expenses)

For the year ended June 30, 2016, non-operating income consists primarily of interest income of $588,822 earned on the outstanding notes receivable from the farmers and other non-operating income of $174,802 which mainly consists of bank interest earned. Non-operating expenses consist of the loss on the disposal of immature and mature biological assets of $224,957. For the year ended June 30, 2015, non-operating income consists primarily of interest income of $618,263 earned on the outstanding notes receivable from the farmers and other non-operating income of $226,543 which mainly consists of bank interest earned. Non-operating expenses consist of the loss on the disposal of mature biological assets of $1,104,345.

Net Income

Xinhua Cattle and Yulong Cattle are entitled to a tax exemption for the full Enterprise Income Tax in China due to a government tax preference policy for the dairy farming industry. Zhongxian Information is subject to an Enterprise Income Tax of 25% and files its own tax returns before January 16, 2015. On January 16, 2015, Zhongxian Information received a tax exemption notice from Harbin National Tax Bureau on its investment income from its subsidiaries. Jiasheng Consulting (the “WFOE”) is subject to an Enterprise Income Tax at 25% and files its own tax return before September 16, 2015. On September 16, 2015, Jiasheng Consulting purchased all of the registered equity of Zhongxian Information and the VIE structure was terminated. Under China tax law, Jiasheng Consulting is exempt from income tax on its investment income since September 16, 2015. The provision for income taxes was $2,403,996 and $10,968,816 for the years ended June 30, 2016 and 2015, respectively, primarily representing the enterprise income tax on the income of Zhongxian Information. Net income (loss) before noncontrolling interests was $(2,204,046) and $32,947,249 for the years ended June 30, 2016 and 2015, respectively, which represented a decrease in $35,151,295 or 107%. Originally we own 99% of Xinhua Cattle’s shares and our non-controlling interest is only 1% of Xinhua’s net income. On July 16, 2015, as we transferred 100% of the issued and outstanding shares of Value Development to China Dairy, which is 60% owned indirectly by us through our wholly owned subsidiary, Hope Diary. The effect of this transaction was to reduce the interest in our operating company by 40%. In addition, on April 8, 2016, our 60% owned subsidiary, China Dairy Corporation Limited issued 84,906,541 CDI shares at AUD $0.2 per share on ASX and after the IPO, our ownership was diluted to 53.07%. As a result, net income attributed to the non-controlling shareholders was increased from 1% to 46.93%. $16,641,448 and $355,982 was attributed to non-controlling interest for the years ended June 30, 2016 and 2015, respectively. Our net income (loss) attributable to the common stockholders of the Company was $(18,845,494) representing $(0.35) per share and $32,591,269 representing $0.61 per share for the years ended June 30, 2016 and 2015, respectively.

Foreign Currency Translation Adjustment

Our reporting currency is the U.S. dollar. Our local currency, Renminbi, is our functional currency. All asset and liability accounts have been translated using the exchange rate in effect at the balance sheet date. Equity accounts have been translated at their historical exchange rates when the capital transactions occurred. Statements of income and other comprehensive income and cash flows have been translated using the average exchange rate for the periods presented. Adjustments resulting from the translation of our consolidated financial statements are recorded as other comprehensive income (loss). Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. For the fiscal years ended June 30, 2016 and 2015, foreign currency translation adjustments of $(11,711,703) and $560,995, respectively, have been reported as other comprehensive income (loss) in the consolidated statements of income and other comprehensive income (loss), respectively.

Liquidity and Capital Resources

As of June 30, 2016 and 2015, we had no bank debt but amounts owed to shareholders of $1,672,707 and $937,524, respectively. The amounts due to our stockholders were principally for the professional fees incurred for being a reporting company in the United States and also will be in the Australian stock exchange from our stockholders’ personal bank accounts because of the restriction of official bank transfers abroad by the Bank of China. At the same time, we had $30,780,198 and $54,145,781 in cash at June 30, 2016 and 2015 as well as working capital of $55,157,784 and $64,685,249, respectively.

Operating activities

During the year ended June 30, 2016, our operating activities provided $26,179,444 in net cash, compared to $12,491,180 during the year ended June 30, 2015. The net cash provided in the year ended June 30, 2016 was significantly higher than our net income (loss) primarily due to the increase in deferred income tax liabilities of $2,403,996, depreciation on fixed assets and biological properties of $4,828,085 and amortization on lease of $1,789,248 and the stock compensation for shareholders and consultants of $37,762,400. However, the increase in accounts receivable of $18,408,219 caused the decrease in cash. The net cash provided in the year ended June 30, 2015 was much less than the net income primarily due to the increase in the deferred income tax liabilities of $10,968,816 and prepayment for the lease of the two new farms of total $33,431,988.

Investing activities

During the year ended June 30, 2016, our investing activities provided a cash outflow of $58,678,207 compared with a cash outflow of $17,186,113 for the year ended June 30, 2015. The food costs and feeding expenses for biological properties used cash of $18,090,592 and $10,741,615 for the years ended June 30, 2016 and 2015, respectively. For the years ended June 30, 2016 and 2015, we spent $15,623,459 and $4,555,600, respectively, for purchasing milk cows. Conversely, we received cash of $2,090,254 and $1,875,642 during the years ended June 30, 2016 and 2015, respectively, from the collection of notes receivable from the disposal of biological properties in 2011 and 2014. For the years ended June 30, 2016 and 2015, we also received $955,494 and $19,524 in cash from our disposal of biological properties, respectively. For the years ended June 30, 2016 and 2015, we spent $28,009,904 and $3,784,064, respectively, for the addition of PP&E for daily operations. The material additions during the year ended June 30, 2016 were the production facilities, office buildings, cow-houses, and forage storage built and refurbished on the new land, which mostly were completed and in service before June 30, 2016.

Financing activities

Our financing activities mainly included proceeds from shareholders and repayment to shareholders for the year ended June 30, 2015. For the years ended June 30, 2016 and 2015, we received $0 and $193,182 from shareholders, respectively. For the years ended June 30, 2016 and 2015, we repaid $0 and $99,316 to our shareholders, respectively. For the year ended June 30, 2016, our 53.07% owned subsidiary, China Dairy Corporation Limited issued 84,906,541 CDI shares at AUD $0.2 per share on ASX and raised a total net fund of $12,553,267.

We have historically financed our operations through cash generated from our fresh milk sales and commissions from milk sales from local farmers. Over the long term, it is our expectation to utilize our additional capital resources to expand our operating activities. At the present time, however, we are able to operate profitably without any significant additional investment. Moreover, our observation of the equity markets indicates that we would be unlikely to obtain financing, or if available, on favorable terms at this time. Accordingly, our near-term plan is to finance our operations with our current working capital and with the expected income from our ongoing operations.

Critical Accounting Policies and Estimates

Basis of Accounting and Presentation

The consolidated financial statements of the Company as of June 30, 2016 and 2015 for the years ended June 30, 2016 and 2015 have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the SEC.

Revenue Recognition

The Company’s primary sources of revenues are derived from (a) sale of fresh milk to Chinese manufacturing and distribution companies of dairy products and (b) commissions from local farmers on their monthly milk sales. The Company’s revenue recognition policies comply with SEC Staff Accounting Bulletin (“SAB”) 104. Revenues from the sale of milk are recognized when the milk is delivered and the title is transferred, the risks and rewards of ownership have been transferred to the customer, the price is fixed and determinable and collection of the related receivable is reasonably assured.

Milk sales revenue is recognized when the title to the goods has been passed to our customers, which is the date when the goods are delivered to designated locations and accepted by the customers and the previously discussed requirements are met. Fresh milk is delivered to our customers on a daily basis. The customers’ acceptance occurs upon inspection of quality and measurement of quantity at the time of delivery. The Company does not provide the customer with the right of return. Sales commission revenue is recognized on a monthly basis based on monthly sales reports received from the dairy companies.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

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

Smaller reporting companies are not required to provide the information required by this item.

Item 8. Financial Statements and Supplementary Data.

CHINA MODERN AGRICULTURAL INFORMATION, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FISCAL YEARS ENDED MAY 31, 2016 AND 2015

CONTENTS	PAGE

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-1

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets	F-2

Consolidated Statements of Income and Comprehensive Income	F-4

Consolidated Statements of Changes in Stockholders' Equity	F-6

Consolidated Statements of Cash Flows	F-8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	F-10

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of China Modern Agricultural Information, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of China Modern Agricultural Information, Inc. and Subsidiaries (the “Company”) as of June 30, 2016 and 2015 and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the two year period ended June 30, 2016. China Modern Agricultural Information, Inc. and Subsidiaries’ management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of China Modern Agricultural Information, Inc. and Subsidiaries as of June 30, 2016 and 2015, and the consolidated results of their operations and their cash flows for each of the years in two year period ended June 30, 2016, in conformity with accounting principles generally accepted in the United States of America.

/s/ Wei, Wei & Co., LLP

Wei, Wei, & Co., LLP

Flushing, New York

September 29, 2016

F-1

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED BALANCE SHEETS

june 30, 2016 AND 2015 (IN U.S. $)

ASSETS	June 30, 2016		June 30, 2015

Current assets
Cash	$	30,780,198	$	54,145,781
Accounts receivable		24,783,720		7,490,501
Inventories		1,122,843		759,628
Prepaid expenses		1,216,963		898,905
Interest receivable		474,803		182,422
Notes receivable, current portion		2,097,363		2,739,302

Total current assets		60,475,890		66,216,539

Property, plant and equipment, net		34,327,757		6,950,302

Other assets
Notes receivable		4,943,622		7,092,206
Prepaid leases		45,483,513		54,257,040
Biological assets, net		64,136,851		38,603,586

Total other assets		114,563,986		99,952,832

TOTAL ASSETS	$	209,367,633	$	173,119,673

See accompanying notes to the consolidated financial statements.

F-2

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED BALANCE SHEETS (CONTINUED)

JUNE 30, 2016 AND 2015 (IN U.S. $)

LIABILITIES AND stockholders’ EQUITY	June 30, 2016			June 30, 2015

Current liabilities
Accrued expenses and other payables	$	528,430			593,766
Dividend payable		1,462,794			-
Stockholder loans		1,672,707			937,524

Total current liabilities		3,663,931			1,531,290

Deferred income taxes		40,876,903			41,806,633

Total liabilities		44,540,834			43,337,923

Commitments and contingencies

Stockholders’ equity
Common stock, $0.001 par value; 75,000,000 shares authorized; 53,100,000 shares issued and outstanding		53,100			53,100
Additional paid-in capital		49,709,237			5,851,170
Retained earnings		42,410,980			117,035,653
Statutory reserve fund		420,406			792,174
Other comprehensive (loss) income		(6,881,547	)		4,772,880

Sub-total		85,712,176			128,504,977

Noncontrolling interests		79,114,623			1,276,773

Total stockholders’ equity		164,826,799			129,781,750

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	209,367,633		$	173,119,673

See accompanying notes to the consolidated financial statements.

F-3

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

AND OTHER COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED jUNE 30, 2016 and 2015 (IN U.S. $)

	2016			2015

Revenues
Milk sales	$	81,604,871		$	48,441,505
Sales commission		19,486,432			17,893,661

Total revenues		101,091,303			66,335,166
Cost of goods sold		(57,626,223	)		(20,229,296	)

Gross profit		43,465,080			46,105,870

Operating expenses
R&D expenses		306,616			-
Selling and marketing		1,889,864			1,146,798
General and administrative		41,607,317			783,468

Total operating expenses		43,803,797			1,930,266

Operating income (loss)		(338,717	)		44,175,604

Other income and (expenses)
Interest income on notes receivable		588,822			618,263
Gain (loss) on disposal of properties		-			(1,104,345	)
Non-operating expense		(224,957	)
Other non-operating income		174,802			226,543

Total other income (expenses)		538,667			(259,539	)

Income before provision for income taxes		199,950			43,916,065
Provision for income taxes		2,403,996			10,968,816

See accompanying notes to the consolidated financial statements.

F-4

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

AND OTHER COMPREHENSIVE (LOSS) INCOME (CONTINUED)

FOR THE YEARS ENDED jUNE 30, 2016 and 2015 (IN U.S. $)

	2016			2015

Net (loss) income before noncontrolling interests		(2,204,046	)		32,947,249
Noncontrolling interests		(16,641,448	)		(355,982	)

Net (loss) income attributable to common stockholders		(18,845,494	)		32,591,267

Other comprehensive income
Foreign currency translation adjustment		(11,711,703	)		560,995

Total comprehensive (loss) income	$	(30,557,197	)	$	33,152,262

Earnings (losses) per common share, basic and diluted	$	(0.35	)	$	0.61

Weighted-average shares outstanding, basic and diluted		53,100,000			53,100,000

See accompanying notes to the consolidated financial statements.

F-5

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF changes in Stockholders’ EQUITY

FOR THE YEARS ENDED JUNE 30, 2016 (IN U.S. $)

	Common Stock		Additional Paid-in Capital		Retained Earnings		Statutory Reserve Fund		Noncontrolling Interests		Other Comprehensive Income		Total

Balance, June 30, 2014	$	53,100	$	5,851,170	$	84,444,386	$	792,174	$	920,791	$	4,211,885	$	96,273,506

Net income		-		-		32,591,267		-		355,982		-		32,947,249
Other comprehensive income		-		-		-		-		-		560,995		560,995

Balance June 30, 2015	$	53,100	$	5,851,170	$	117,035,653	$	792,174	$	1,276,773	$	4,772,880	$	129,781,750

See accompanying notes to the consolidated financial statements.

F-6

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF changes in Stockholders’ EQUITY (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2016 (IN U.S. $)

	Common Stock		Additional Paid-in Capital			Retained Earnings			Statutory Reserve Fund			Noncontrolling Interests		Other Comprehensive Income			Total

Balance June 30, 2015	$	53,100	$	5,851,170		$	117,035,653		$	792,174		$	1,276,773	$	4,772,880		$	129,781,750

Stock compensation		-		37,762,400			-			-			-		-			37,762,400
Net (loss) income		-		-			(18,845,494	)		-			16,641,448		-			(2,204,046	)
Dividend declared		-		-			-			-			(1,412,144)		-			(1,412,144	)
Reclassification for issuance of subsidiary stock for compensation		-		(482,720	)		(47,542,449	)		(316,870	)		48,342,039		-			-
Increase and reclassification in equity attributable to the sale of subsidiary stock				6,578,387			(8,236,730	)		(54,898	)		14,266,507					12,553,266
Other comprehensive income		-		-			-			-			-		(11,654,427	)		(11,654,427	)

Balance June 30, 2016	$	53,100	$	49,709,237		$	42,410,980		$	420,406		$	79,114,623	$	(6,881,547	)	$	164,826,799

See accompanying notes to the consolidated financial statements.

F-7

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 (IN U.S. $)

	2016			2015

Cash flows from operating activities
Net (loss) income	$	(2,204,046	)	$	32,947,249
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation		4,828,085			2,300,574
Amortization for prepaid land lease		1,789,248			1,029,601
Deferred income taxes		2,403,996			10,968,816
Loss from disposal biological assets		215,997			1,102,921
Loss from disposal from property, plant and equipment		-			3,244
Stock compensation for shareholder and consultants		37,762,400			-
Change in operating assets and liabilities
(Increase) in accounts receivable		(18,408,219	)		(2,148,610	)
(Increase) in inventories		(436,162	)		(84,086	)
(Increase) in prepayment		(179,941	)		(896,003	)
(Increase) in payment for lease		-			(33,431,988	)
(Increase) decrease in interest receivable		(316,576	)		241,987
Increase in accrued expenses and other payables		724,662			457,475

Net cash provided by operating activities		26,179,444			12,491,180

Cash flows from investing activities
Collection of notes receivable		2,090,254			1,875,642
Proceeds from sales of biological assets		955,494			19,524
Purchase of property, plant and equipment		(28,009,904	)		(3,784,064	)
(Increase) in biological assets		(18,090,592	)		(10,741,615	)
Purchase of biological property		(15,623,459	)		(4,555,600	)

Net cash (used in) investing activities		(58,678,207	)		(17,186,113	)

Cash flows from financing activities
Proceeds from sales of common stock by subsidiary		12,553,267			-
Proceeds from stockholder loans		-			193,182
Repayment of stockholder loans		-			(99,316	)

Net cash provided by financing activities		12,553,267			93,866

See accompanying notes to the consolidated financial statements.

F-8

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE years ENDED JUNE 30, 2016 AND 2015 (IN U.S. $)

	2016			2015

Effect of exchange rate changes on cash		(3,420,087	)		714,294

Net (decrease) in cash		(23,365,583	)		(3,886,773	)
Cash, beginning of year		54,145,781			58,032,554

Cash, end of year	$	30,780,198		$	54,145,781

Supplemental disclosure of cash flow information:

Cash paid for income taxes	$	-		$	-

Cash paid for interest	$	-		$	-

Supplemental disclosure of non-cash activities:

Payment of accrued expenses by shareholder	$	789,998		$	138,000

Construction in process transferred from prepayment	$	2,683,232		$	-

Construction in process not paid	$	84,837		$	-

Dividend declared not paid	$	1,462,794		$	-

See accompanying notes to the consolidated financial statements.

F-9

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

1.	ORGANIZATION

China Modern Agricultural Information, Inc. (the “Company”), formerly known as Trade Link Wholesalers, Inc. (“Trade Link”), was incorporated on December 22, 2008 under the laws of the State of Nevada. On April 4, 2011, the Board of Directors of Trade Link filed an amendment to the Certificate of Incorporation with the State of Nevada to effect the name change from Trade Link to China Modern Agricultural Information, Inc.

On January 28, 2011, Trade Link entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among (i) Value Development Holdings, Ltd. (“Value Development”), a British Virgin Islands company, (“BVI”) (ii) Value Development’s stockholders, (iii) Trade Link, and (iv) Trade Link’s principal stockholders. Pursuant to the terms of the Exchange Agreement, Value Development and the Value Development stockholders transferred to Trade Link all of the shares of Value Development in exchange for the issuance of 35,998,000 shares of Trade Link’s common stock as set forth in the Exchange Agreement, so that the Value Development stockholders owned 87.80% of Trade Link’s outstanding shares (the “Share Exchange”).

On January 28, 2011, Value Development through its wholly subsidiaries, Value Development Group Limited completed the acquisition of Harbin Jiasheng Consulting Managerial Co. Ltd. (“Jiasheng Consulting” or “WFOE”), a holding company. Jiasheng Consulting has Variable Interest Entity (“VIE”) agreements with Mr. Liu Zhengxin, the Company’s Chief HR Officer, and Mr. Wang Youliang, the Company’s Chief Executive Officer, as well as with Heilongjiang Zhongxian Information Co., Ltd. (“Zhongxian Information”). Mr. Zhengxin holds a 62% equity interest in Zhongxian Information and Mr. Youliang holds a 38% equity interest in Zhongxian Information. Pursuant to the VIE agreement signed by Mr. Zhengxin and Mr. Youliang, Jiasheng Consulting now controls and performs all management responsibilities for Zhongxian Information. The contractual arrangements are comprised of a series of agreements, including a shareholder voting rights proxy agreement, exclusive consulting and service agreement, exclusive call option agreement and equity pledge agreement, through which Jiasheng Consulting has the right to provide exclusive and complete business support and technical and consulting services to Zhongxian Information for an annual fee in the amount of Zhongxian Information’s yearly net profits after tax. Additionally, Zhongxian Information’s stockholders have pledged their rights, title and equity interests in Zhongxian Information as security for the collection of consulting and service fees provided through an Equity Pledge Agreement.

F-10

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

1.	ORGANIZATION (CONTINUED)

In order to further reinforce Jiasheng Consulting’s rights to control and operate Zhongxian Information, the stockholders of Zhongxian Information have granted Jiasheng Consulting the exclusive right and option to acquire all of their equity interests in Zhongxian Information through an Exclusive Option Agreement.

The exchange agreement transaction constituted a reverse takeover transaction. Accordingly, reverse takeover accounting was adopted for the preparation of the consolidated financial statements. As a result, the consolidated financial statements are issued under the name of China Modern Agricultural Information, Inc. (the legal acquirer), but are a continuation of the consolidated financial statements of Value Development (the accounting acquirer) and the VIE its subsidiaries. Before and after the Share Exchange, Value Development, Value Development Group Limited (a wholly-owned subsidiary of Value Development), Jiasheng Consulting, and Zhongxian Information and their 99% owned subsidiary, Heilongjiang Xinhua Cattle Industry Co., Ltd. (“Xinhua Cattle”) were under common control. Therefore, the reorganization was effectively a legal recapitalization accounted for as transactions between entities under common control at the carry over basis, in a manner similar to pooling-of-interests accounting.

Zhongxian Information and Xinhua Cattle are engaged in the acquisition, breeding and rearing of dairy cows, and production and sale of fresh milk to manufacturing and distribution companies. Zhongxian Information was established in China in January 2005 with registered capital of 10 million Renminbi (“RMB”). In February 2006, it acquired 99% of the registered capital of Xinhua Cattle, which was established in China in December 2005 with registered capital of three million RMB. Xinhua Cattle had no significant activities and its cost approximated the fair value at the date of acquisition.

On November 23, 2011, Zhongxian Information acquired 100% of the equity interest of Shangzhi Yulong Co., Ltd. (“Yulong”) from Yulong’s original stockholders for consideration of 9,000,000 shares of the Company’s common stock and cash consideration of $4,396,000.

Yulong was a privately held company in China engaged in the acquisition, breeding and rearing of dairy cows, and production and sale of fresh milk to manufacturing and distribution companies.

F-11

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

1.	ORGANIZATION (CONTINUED)

Our corporate structure pre-restructure is set forth below

On July 16, 2015, the Company, transferred 100% of the issued and outstanding shares of Value Development Holdings, Ltd. (“Value Development”) to China Dairy Corporation Ltd. (“China Dairy,” a Hong Kong company), which is 60% owned indirectly by the Company through the Company’s wholly-owned subsidiary, Hope Diary Holdings Ltd. (“Hope Diary,” a British Virgin Islands company). China Dairy was newly incorporated in January 2015 and did not have any significant assets or liabilities, or business operations, which was 100% owned by Company’s PRC corporate advisor, who formed China Dairy on behalf of the Company. Further, the sole shareholder transferred 60% of the total outstanding shares of China Dairy to Hope Diary and 40% to various shareholders and consultants of the Company (as described below) for nominal consideration.

These transactions involve no consideration received or paid as Value Development and China Dairy are under common control by the Company and this transaction is a restriction to the Company’s interests in Value Development.

F-12

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

1.	ORGANIZATION (CONTINUED)

The 40% of the 10,000 shares of China Dairy were transferred from the sole shareholder of China Dairy to the following entities for nominal consideration, which has direct or indirect relationship with the shareholder and consultants of the Company: 3% to Beijing Ruihua Future, 4% to Donghe Group, 3% to Integral Capital, 20% to Dingxi Shanghai Fund and 10% to Zhiyuan International. Immediately after the transfer, 65,000 bonus shares were issued at no consideration for every existing share held by the following entities:

	Original Shares		After bonus shares issued

Hope Diary Holdings Ltd.		6,000		390,000,000
Beijing Ruihua Future Investment Management Co. Ltd.		300		19,500,000
Donghe Group Limited		400		26,000,000
Integral Capital Group Pty Ltd.		300		19,500,000
Dingxi (Shanghai ) Equity Investment Fund		2,000		130,000,000
Zhiyuan International Holding Co. Limited		1,000		65,000,000

Total		10,000		650,000,000

Value Development is the sole owner of Value Development Group Limited, which is the sole owner of Harbin Jiasheng Consulting Managerial Co. Ltd., which is the Company’s subsidiary in China, with respect to which the operating company, Heilongjiang Zhongxian Information Co. Ltd., is a variable interest entity. The effect of this transaction was to reduce the interest of the Company in its operating company by 40%. The Company uses the China Dairy’s offering price for IPO to approximate the fair value of the 40% stock granted to the shareholder and consultants. The Company recognized a stock compensation to the shareholder and consultants of approximately $32,098,000 and $5,664,000, respectively, during the three months ended September 30, 2015 in general and administrative expense.

On September 16, 2015 the Company’s 60%-owned subsidiary, Harbin Jiasheng Consulting Management Co., Ltd. ("Jiasheng Consulting"), exercised its option to purchase all of the registered equity of the Company’s operating subsidiary, Heilongjiang Zhongxian Information Co., Ltd. ("Zhongxian Information") from its stockholders Zhengxin Liu and Youliang Wang, who are also the members of the Company’s Board of Directors, for RMB10, 000 (approximately $1,554).

F-13

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

1.	ORGANIZATION (CONTINUED)

Prior to the acquisition, Jiasheng Consulting controlled Zhongxian Information through a series of contractual agreements, which made Zhongxian Information a variable interest entity, the effect of which was to cause the balance sheet and operating results of Zhongxian Information to be consolidated with those of Jiasheng Consulting in the Company’s financial statements. As a result of the acquisition by Jiasheng Consulting of the registered ownership of Zhongxian Information, the balance sheet and operating results of Zhongxian Information will hereafter continue to be consolidated with those of Jiasheng Consulting as its 100% owned subsidiary. On April 8, 2016, the Company’s 60% owned subsidiary, China Dairy Corporation Limited issued 84,906,541 CDI shares at Australian Dollar (“AUD”) $0.2 per share on ASX and raised total fund of AUD $16,981,308 (USD $13,021,267). After the IPO, the Company’s ownership was diluted to 53.07%.

As a result of the entry into the foregoing agreements, the Company has a corporate structure as set forth below:

F-14

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the financial statements of China Modern Agricultural Information, Inc. and its subsidiaries, Hope Diary, China Dairy (Hope Diary’s 53.07% owned subsidiary), Value Development, Value Development Group Limited, Jiasheng Consulting, and, Zhongxian Information and Zhongxian Information’s 99% owned subsidiary, Xinhua Cattle and its 100% owned subsidiary, Yulong. All significant intercompany accounts and transactions have been eliminated in consolidation.

The audited consolidated financial statements of the Company as of June 30, 2016 and for the years ended June 30, 2016 and 2015, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the SEC which apply to interim financial statements.

F-15

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis of Accounting and Presentation (continued)

Variable Interest Entity

Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation” (“ASC 810”), the Company is required to include in its consolidated financial statements the financial statements of its VIE’s. ASC 810 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns. VIEs are those entities in which a company, through contractual arrangements, bears the risk of, and enjoys the rewards normally associated with ownership of the entity, and therefore the company is the primary beneficiary of the entity.

Zhongxian Information and its subsidiaries (collectively, the “Chinese VIE”) have no assets that are collateral for or restricted solely to settle their obligations. The creditors of the Chinese VIE and its subsidiaries do not have recourse to the Company’s general credit. Because Value Development, Value Development Group Limited and Jiasheng Consulting are established for the sole purpose of holding ownership interest and do not have any operations, the financial statement amounts and balances are principally those of the Chinese VIE and its subsidiaries.

Under ASC 810, an enterprise has a controlling financial interest in a VIE, and must consolidate that VIE, if the enterprise has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The Company’s determination of whether it has this power is not affected by the existence of kick-out rights or participating rights, unless a single enterprise, including its related parties and de facto agents, has the unilateral ability to exercise those rights. The Chinese VIE’s actual stockholders do not hold any kick-out rights that will affect the consolidation determination.

On September 16, 2015 the VIE structure was terminated when Jiasheng Consulting exercised its option to purchase all of the registered equity of Zhongxian Information. Jiasheng Consulting became the sole owner of Zhongxian Information.

F-16

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currency Translations

All Company assets are located in the People’s Republic of China (“PRC”). The functional currency for the majority of the Company’s operations is the Renminbi (“RMB”). The Company uses the United States dollar (“US Dollar” or “US$” or “$”) for financial reporting purposes. The consolidated financial statements of the Company have been translated into US dollars in accordance with FASB ASC 830, “Foreign Currency Matters.” All asset and liability accounts have been translated using the exchange rate in effect at the balance sheet date. Equity accounts have been translated at their historical exchange rates when the capital transactions occurred. Statements of income and other comprehensive income amounts have been translated using the average exchange rate for the periods presented. Adjustments resulting from the translation of the Company’s consolidated financial statements are recorded as other comprehensive income (“OCI”).

The exchange rates used to translate amounts in RMB and Australian dollars (the “A$”) into US dollars for preparing the consolidated financial statements are as follows:

	June 30, 2016				June 30, 2015
	RMB		A$		RMB		A$
Balance sheet items, except for stockholders’ equity, as of period end		0.1505		0.7441		0.1632		0.7687

Amounts included in the statements of income, statement of changes in stockholders’ equity and statements of cash flows for the period		0.1554		0.7283		0.1627		0.8364

F-17

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currency Translations (continued)

Foreign currency translation adjustments of $(11,711,703) and $560,995, respectively, for the years ended June 30, 2016 and 2015, have been reported as other comprehensive income (loss) in the consolidated statements of income and other comprehensive income (loss). Other comprehensive income (loss) of the Company consists entirely of foreign currency translation adjustments. Pursuant to ASC 740-30-25-17, “Exceptions to Comprehensive Recognition of Deferred Income Taxes,” the Company does not recognize deferred U.S. taxes related to the undistributed earnings of its foreign subsidiaries and, accordingly, recognizes no income tax expense or benefit from foreign currency translation adjustments.

Although government regulations now allow convertibility of the RMB for current account transactions, significant restrictions still remain. Hence, such translations should not be construed as representations that the RMB could be converted into US dollars at that rate or any other rate.

The value of the RMB against the US dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. Any significant revaluation of the RMB could materially affect the Company’s consolidated financial condition in terms of US dollar reporting.

Revenue Recognition

The Company’s primary sources of revenues are derived from (a) sale of fresh milk to Chinese manufacturing and distribution companies of dairy products and (b) commissions from local farmers on their monthly milk sales. The Company’s revenue recognition policies comply with FASB ASC 605, “Revenue Recognition.” Revenues from the sale of goods are recognized when the goods are delivered and the title is transferred, the risks and rewards of ownership have been transferred to the customer, the price is fixed and determinable and collection of the related receivable is reasonably assured.

F-18

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (continued)

Milk sales revenue is recognized when the title has been passed to the customers, which is the date when the milk is delivered to designated locations and accepted by the customers and the previously discussed requirements are met. Fresh milk is delivered to its customers on a daily basis. The customers’ acceptance occurs upon inspection of the quality and measurement of quantity at the time of delivery. The Company does not provide the customer with the right of return. Sales commission revenue is recognized on a monthly basis based on monthly sales reports received.

Vulnerability Due to Operations in PRC

The Company’s operations may be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than twenty years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC’s political, economic and social conditions. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective.

Use of Estimates

F-19

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments

FASB ASC 820, “Fair Value Measurement” specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based on market data obtained from independent sources (observable inputs). In accordance with ASC 820, the following summarizes the fair value hierarchy:

	Level 1 Inputs –	Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

	Level 2 Inputs –	Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

	Level 3 Inputs –	Inputs based on valuation techniques that are both unobservable and significant to the overall fair value measurements.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurements. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company did not identify any assets or liabilities that are required to be presented at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash, accounts receivable, interest receivable, accrued expenses, and other payables, and stockholder loans, approximated their fair values due to the short maturity of these financial instruments. The carrying value of notes receivable is valued at their net realizable value which approximates the fair value. There were no changes in methods or assumptions during the periods presented.

F-20

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising Costs

Advertising costs are charged to operations when incurred. Advertising costs are $62,929 and $814, respectively, for the years ended June 30, 2016 and 2015.

Cash and Cash Equivalents

The Company considers all demand and time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable is stated at cost, net of an allowance for doubtful accounts if required. Receivables outstanding longer than the payment terms are considered past due. The Company maintains an allowance for doubtful accounts for estimated losses when necessary resulting from the failure of customers to make required payments. The Company reviews the accounts receivable on a periodic basis and makes allowances where there is doubt as to the collectability of individual balances.

In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, the customer’s payment history, its current credit-worthiness and current economic trends. The Company has 30 days credit term for its milk sales and usually receives the payment in the following month. The Company considers all accounts receivable at June 30, 2016 and 2015, to be fully collectible and, therefore, did not provide an allowance for doubtful accounts. For the periods presented, the Company did not write off any accounts receivable as bad debts.

Inventories

Inventories, comprised principally of livestock feed, are valued at the lower of cost or market value. The value of inventories is determined using the weighted average cost method.

The Company estimates an inventory allowance for excessive or unusable inventories. Inventory amounts are reported net of such allowances if any. There was no allowance for excessive or unusable inventories as of June 30, 2016 and 2015.

F-21

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Prepaid Expenses

Prepaid expenses as of June 30, 2016 and 2015 mainly represent the prepayments of approximately $1,217,000 and $898,900, respectively for prepaid cow insurance expenses and for heating expenses.

Prepaid Land Leases

Prepaid land leases represent the prepayment for grassland rental (see Note 7).

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, less accumulated depreciation. Cost includes the price paid to acquire or construct the asset, including capitalized interest during the construction period, and any expenditure that substantially increase the assets value or extends the useful life of an existing asset. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the periods benefited. Maintenance and repairs are generally expensed as incurred.

The estimated useful lives for property, plant and equipment categories are as follows:

	Machinery and equipment	3 to 10 years
	Automobiles	4 to 10 years
	Building and building improvements	10 to 20 years
	Leasehold improvements	Lesser of the remaining term or useful life

F-22

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of Long-lived Assets

The Company utilizes FASB ASC 360, “Property, Plant and Equipment” (“ASC 360”), which addresses the financial accounting and reporting for the recognition and measurement of impairment losses for long-lived assets. In accordance with ASC 360, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company may recognize an impairment of a long-lived asset in the event the net book value of such asset exceeds the estimated future undiscounted cash flows attributable to the asset. No impairment of long-lived assets was recognized for the years ended June 30, 2016 and 2015.

Biological Assets

Biological assets consist of dairy cows for milking purposes and breeding.

Immature Biological Assets

Immature biological assets are recorded at cost, including acquisition costs, transportation costs, insurance expenses, and feeding costs, incurred in raising the cows. Once the cow is able to produce milk, the cost of the immature biological asset is transferred to mature biological assets using the weighted average cost method.

Mature Biological Assets

Mature biological assets are recorded at their original purchase price or the weighted average immature biological asset transfer cost. Depreciation is provided over the estimated useful life of eight years using the straight-line method. The estimated residual value is 10%. Feeding and management costs incurred on mature biological assets are included as cost of goods sold. When biological assets, including male cows, are retired or otherwise disposed of in the normal course of business, the cost and accumulated depreciation will be removed from the accounts and any resulting gain or loss will be included in the results of operations for the respective period. For the years ended June 30, 2016 and 2015, a loss of $373,108 and $1,104,345, respectively, on the sale of the adult cows is included in non-operating expenses in the accompanying consolidated statements of income and other comprehensive income. (See Note 5)

F-23

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Biological Assets (continued)

The Company reviews the carrying value of its biological assets for impairment at least annually or whenever events and circumstances indicate that their carrying value may not be recoverable from the estimated future cash flows expected from their use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss will be recognized equal to an amount by which the carrying value exceeds the fair value of the asset. The factors considered by management in performing this assessment include current health status and production capacity. There were no impairment losses recorded during the years ended June 30, 2016 and 2015.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes” (“ASC 740”), which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate principally to the undistributed earnings of the Company’s subsidiary under PRC law. Deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. At June 30, 2016 and 2015, undistributed earnings allocated to Zhongxian Information were approximately $192,800,000 and $160,600,000, respectively.

F-24

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes (Continued)

ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with uncertain tax positions. As of June 30, 2016 and 2015, the Company does not have a liability for any uncertain tax positions.

The income tax laws of various jurisdictions in which the Company and its subsidiaries operate are summarized as follows:

United States

The Company is subject to United States tax at graduated rates from 15% to 35%. No provision for income tax in the United States has been made as the Company had no U.S. taxable income for the years ended June 30, 2016 and 2015.

BVI

Value Development and Hope Diary are incorporated in the BVI and is governed by the income tax laws of the BVI. According to current BVI income tax law, the applicable income tax rate for the Company is 0%.

Hong Kong

Value Development Group Limited and China Dairy are incorporated in Hong Kong. Pursuant to the income tax laws of Hong Kong, the Company is not subject to tax on non-Hong Kong source income.

F-25

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes (Continued)

PRC

Xinhua Cattle and Yulong are entitled to a tax exemption for the full Enterprise Income Tax in China due to a government tax preferential policy for the dairy farming industry. In January 2015, Zhongxian Information obtained an income tax exemption notice from the tax authority to exempt the income tax on its investment income from its subsidiaries Xinhua Cattle and Yulong.

Net Income (Loss) Per Share

The Company computes net income (loss) per common share in accordance with FASB ASC 260, “Earnings Per Share” (“ASC 260”). Under the provisions of ASC 260, basic net income (loss) per common share is computed by dividing the amount available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted income per common share is computed by dividing the amount available to common stockholders by the weighted average number of shares of common stock outstanding plus the effect of any dilutive shares outstanding during the period. Accordingly, the number of weighted average shares outstanding as well as the amount of net income per share are presented for basic and diluted per share calculations for all periods reflected in the accompanying consolidated statements of income and other comprehensive income. There were no dilutive shares outstanding during the years ended June 30, 2016 and 2015.

Statutory Reserve Fund

Pursuant to the corporate law of the PRC, Jiasheng Consulting and the Company’s Chinese VIE and its subsidiaries are required to transfer 10% of their net income, as determined under PRC accounting rules and regulations, to a statutory reserve fund until such reserve balance reaches 50% of its registered capital. The statutory reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or used to increase registered capital, provided that the remaining reserve balance after such use is not less than 25% of the registered capital. As of June 30, 2016 and 2015, the required statutory reserve funds have been fully funded.

F-26

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

3.	Recently Issued Accounting Standards

In April 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers. In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606).'' This guidance supersedes current guidance on revenue recognition in Topic 605, "Revenue Recognition.'' In addition, there are disclosure requirements related to the nature, amount, timing, and uncertainty of revenue recognition. In August 2015, the FASB issued ASU No.2015-14 to defer the effective date of ASU No. 2014-09 for all entities by one year. For public business entities that follow U.S. GAAP, the deferral results in the new revenue standard are being effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for interim and annual periods beginning after December 15, 2016. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. This accounting standard update is not expected to have a material impact on the Company’s financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure. The update to the standard is effective for the Company beginning June 1, 2018. The Company is currently evaluating the effect the guidance will have on the Consolidated Financial Statements.

F-27

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

Recently Issued Accounting Standards (CONTINUED)

In September 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-16: Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”), which eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. ASU 2015-16 is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment is effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact of this standard on its Consolidated Financial Statements.

In May 2015, the FASB issued ASU No. 2015-09, “Financial Services-Insurance (Topic 944): Disclosures about Short-Duration Contracts.” This guidance requires insurance entities to disclose for annual reporting periods incurred and paid claims development information by accident year, after reinsurance, for the number of years for which claims typically remain open. Disclosures should also include quantitative information about claim frequency and a qualitative description of methodologies used for determining claim frequency information. This guidance is effective for annual reporting periods, including interim periods, beginning after December 15, 2015, and is applicable to the Company's fiscal year beginning June 1, 2016. Early and retrospective application is permitted. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.

F-28

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

3.	Recently Issued Accounting Standards (CONTINUED)

In May 2015, the FASB issued ASU No. 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (a consensus of the FASB Emerging Issues Task Force).” This guidance removes the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the net asset value per share practical expedient and removes certain related disclosure requirements. This guidance is effective for annual reporting periods, including interim periods, beginning after December 15, 2015, and is applicable to the Company's fiscal year beginning June 1, 2016. Early adoption is permitted. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This guidance clarifies the accounting treatment for fees paid in cloud computing arrangements, including the determination of whether a cloud computing arrangement includes a software license. This guidance is effective for annual reporting periods, including interim periods, beginning after December 15, 2015, and is applicable to the Company's fiscal year beginning June 1, 2016. Early adoption is permitted. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This Guidance requires debt issuance costs to be presented in the balance sheet as a reduction of the related debt liability rather than an asset. This guidance is effective for annual reporting periods, including interim periods, beginning after December 15, 2015, and is applicable to the Company's fiscal year beginning June 1, 2016. Early adoption is permitted for financial statements not previously issued. This accounting standard update is not expected to have a material impact on the Company’s consolidated financial statements.

F-29

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

4.	Property, plant and equipment

Property, plant and equipment are summarized as follows:

	June 30, 2016			June 30, 2015

Machinery and equipment	$	3,866,619		$	222,147
Automobiles		2,253,832			2,071,656
Building and building improvements		26,865,993			6,246,503

		32,986,444			8,540,306
Less: accumulated depreciation		(3,354,779	)		(1,590,004	)
Construction in process		4,696,092			-

Property, plant and equipment, net	$	34,327,757		$	6,950,302

The increase was the office buildings, cow-houses, and forage storage built and refurbished on the new land, which are completed and in service before June 30, 2016. Construction in Progress (the “CIP”) contains amount paid and accrued for completed new construction but has not been placed into service as of June 30, 2016. No depreciation on those CIP as of June 30, 2016. In addition, a significant amount of production facilities and automobiles were purchased. Depreciation expense charged to operations for the years ended June 30, 2016 and 2015 were $1,950,157 and $339,274, respectively.

On January 20, 2016, the Company signed an agreement with Harbin Donghui Architecture Co., Ltd to construct a new forage production plant. The total agreement amount is RMB 45,615,000 (US $ 6,864,237). Per the agreement, the company is required to pay according to progress completion for different parts at the plant. As of June 30, 2016, the company paid RMB 28,321,000 (US $ 4,261,801) and committed to pay RMB 17,294,000 (US $ 2,602,436) after the construction is completed.

F-30

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

5.	Biological assets

Biological assets consist of the following:

	June 30, 2016			June 30, 2015

Immature biological assets	$	32,518,050		$	24,555,303
Mature biological assets		36,660,416			18,271,485

		69,178,466			42,826,788
Less: accumulated depreciation		(5,041,615	)		(4,223,202	)

Biological assets, net	$	64,136,851		$	38,603,586

In July 2015, Xinhua Cattle and Yulong purchased 2,000 and 2,300 adult cows, respectively at a price RMB 8,500 (US $1,321) per cow from an outside party. In February and April 2016, Xinhua Cattle purchased 2,000 adult cows, respectively, at a price RMB 16,000 (US $2,486) per cow from an outside party.

In August 2015, Xinhua Cattle sold 200 cows to an outside party at a total price of RMB 160,000(US $24,861) including insurance of RMB 100,000 (US $ 15,540). The cows had a net book value of approximately $43,000 as of the disposal date, which includes cost basis approximately $560,000 and accumulated depreciation of approximately $516,000. In May 2016, Xinhua Cattle sold 904 cows to an outside party at a total price of RMB 3,616,000(US $561,854). The cows had a net book value approximately $564,000 as of the disposal date, which includes cost basis approximately $1,147,000 and accumulated depreciation approximately $583,000. In June 2016, Xinhua Cattle also sold 500 female calves to an outside party at a total price of RMB 2,000,000 (US $310,760). The cost of these female calves was approximate $322,000.

In November 2015, Yulong Cattle sold 347 cows to an outside party at a total price of RMB 1,144,800 (US $177,879) including insurance of RMB 104,100 (US $ 16,175). The cows had a net book value of approximately $254,000 as of the disposal date, which includes cost basis approximately $588,000 and accumulated depreciation approximately $335,000. In May 2016, Yulong Cattle sold 331 cows to an outside party at a total price of RMB 1,390,200 (US $216,009). The cows had a net book value approximately $324,000 as of the disposal date, which includes cost basis approximately $709,000 and accumulated depreciation approximately $385,000.

F-31

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

5.	Biological assets (continued)

In December 2015, Xinhua Cattle entered into agreements with 179 local farmers to pay them additional feeding cost of RMB 600 (US$93) for each young cow and adult cow, which were transferred to the farmers for feeding at the beginning of October 2015, for improving the feeding environment. The company paid 50% of the total amount RMB 6,795,000 (US$1,056,000) in December 2015 and the remaining 50% was paid in January 2016. 100% of the additional cost for mature cows was included as cost of goods sold as incurred and the remaining are capitalized for immature cows.

Depreciation expense for the years ended June 30, 2016 and 2015 was $2,878,298 and $1,961,300, respectively, all of which was included in cost of goods sold in the consolidated statements of income and other comprehensive income.

6.	Notes Receivable

Notes receivable are related to sales of cows (mature biological assets) to local farmers.

In September 2011, August 2011, and June 2011, Xinhua Cattle sold 3,787, 5,635, and 2,000 of its cows to local farmers, respectively.

In November and December 2014, Yulong sold 3,714 and 2,955 cows respectively, to local farmers. 3,500 of the cows sold were purchased from outside parties for $4,550,000. The remaining cows sold were raised by Yulong.

According to the agreements signed with the local farmers in June 2011, the sales price will be collected over five years, with a minimum payment of 20% of the sales price to be paid each year. The related receivable is recorded at its present value at a discount rate of 12%, which is commensurate with interest rates for notes with similar risk. The Company also entered into agreements with these local farmers for a 30% commission of their monthly milk sales generated by the cows sold in exchange for the Company’s assistance in arranging for the sale of the milk.

F-32

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

6.	Notes Receivable (continued)

Pursuant to the agreements signed in August 2011, September 2011, November 2014, and December 2014, the sales price will be collected in monthly installments plus interest at 7% on the outstanding balance, over the remaining useful lives of the cows, which range from one to eight years. Local farmers are required to pay a 30% of monthly milk sales generated from the cows purchased by the farmers. The 30% monthly payments are to be applied first to the monthly installment of principal for the cows sold and the balance as commission income for the Company’s assistance in arranging for the sale of the milk. The 30% monthly payments will continue over the entire remaining life of the cows sold. While the 30% rate and the amount applied to monthly installments for the purchase price of the cows remain the same, the amount of sales commission income will vary depending on total monthly milk sales and the progress of repayments towards the purchase price.

During the years ended June 30, 2016 and 2015, the Company received principal and interest payments of $2,300,347 and $2,681,845, respectively. Commission income for the years ended June 30, 2016 and 2015, was $19,486,432 and $17,893,661, respectively, under these agreements.

The receivable related to the sales of cows is included in notes receivable in the consolidated balance sheets as of June 30, 2016 and 2015. The related commission receivable of $6,962,080 and $3,408,759 at June 30, 2016 and 2015, respectively, is included in accounts receivable in the consolidated balance sheets.

Notes receivable at June 30, 2016 and 2015 consists of the following:

	June 30, 2016			June 30, 2015

Notes receivable	$	7,052,255		$	9,873,474
Less: discount for interest		(11,270	)		(41,966	)

		7,040,985			9,831,508
Less: current portion		(2,097,363	)		(2,739,302	)

Non-current portion	$	4,943,622		$	7,092,206

F-33

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

6.	Notes Receivable (continued)

Future maturities of notes receivable as of June 30, 2016 are as follows:

Year Ending June 30,

2017	$	2,097,000
2018		1,621,000
2019		1,319,000
2020		618,000
2021		527,000
Thereafter		859,000

	$	7,041,000

The Company considers these notes to be fully collectible and, therefore, did not provide an allowance for doubtful accounts. The Company will continue to review the notes receivable on a periodic basis and where there is doubt as to the collectability of individual balances, it will provide an allowance, if necessary.

7.	LeaseS

All land in China is government owned and cannot be sold to any individual or company. The Company obtained a “land use right” to use a track of land of 250,000 square meters at no cost through December 1, 2015. On May 10, 2013, the Company, however, entered into an agreement with the municipality of Qiqihaer to obtain the “land use right” to use this land from May 1, 2013 to April 30, 2063. The Company recorded the prepayment of RMB 37,500,000 (US$6,060,000) as prepaid land lease. The prepaid lease is being amortized over the land use term of 50 years using the straight-line method. The remaining prepayment of $5,285,680 and $5,854,800 is included in prepaid land lease in the consolidated balance sheets as of June 30, 2016 and 2015, respectively. The lease provides for renewal options.

On October 9, 2011, the Company entered into an operating lease, from October 9, 2011 to October 8, 2021, with the municipality of Heilongjiang to lease 16,666,750 square meters of land. The lease required the Company to prepay the ten-year rental of RMB 30,000,000

F-34

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

7.	LeaseS (CONTINUED)

(US $4,686,000). The related prepayment of $2,370,092 and $3,060,000 is included in prepaid land lease in the consolidated balance sheets as of June 30, 2016 and 2015, respectively. The lease provides for renewal options.

On February 25, 2013, the Company obtained another “land use right” to use 427,572 square meters of land, from March 1, 2013 to February 28, 2063. The Company recorded the prepayment of RMB 77,040,000 (US $12,450,000) as prepaid land lease. The prepaid lease is being amortized over the land use term of 50 years using the straight-line method. The remaining prepayment of $10,820,258 and $11,986,191 is included in prepaid land lease in the consolidated balance sheets as of June 30, 2016 and 2015, respectively. The lease provides for renewal options.

The Company leases an office at no cost from an unrelated third party. On September 1, 2010, the Company entered into an operating lease agreement expiring on August 31, 2015. The lease agreement does not provide for payment of rent and it was not subsequently renewed.

On May 14, 2015, the Company obtained another “land use right” to use 283,335 square meters of land, from May 14, 2015 to May 13, 2045. In addition, the Company also leased all the constructions on the land which includes cowsheds at 42,100 square meters, an office building at 3,000 square meters and a flat building at 3,000 square meters. The lease period of all these constructions is the same as the land. The Company recorded the prepayment of RMB 111,887,500 (US $18,260,000) as prepaid lease. The prepaid lease is being amortized over the lease term of 30 years using the straight-line method. The remaining prepayment of $16,182,280 and $18,158,595 is included in prepaid lease in the consolidated balance sheets as of June 30, 2016 and 2015, respectively.

Rent expense charged to operations for the years ended June 30, 2016 and 2015 was $1,789,248 and $1,029,601, respectively.

8.	EMPLOYMENT AGREEMENTS

The Company had Employment Agreements with its executive officers and directors for a one-year period with renewal options after expiration, with the current agreements expiring in June and August, 2017. For the years ended June 30, 2016 and 2015, compensation under these agreements was $187, 000 and $33,923, respectively.

At June 30, 2016, the future commitment under these agreements is approximate $283, 000.

F-35

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

9.	Related party transactions

In March 2015, Zhongxian Information and the Executive Chairman of the Company entered into a loan agreement pursuant to which Executive Chairman provides a loan facility to Zhongxian Information, which is non-interest bearing and due on demand. The maximum amount of the loan is RMB 50,000,000 (US $7,845,000). Any borrowings in excess of this amount may be negotiated between the parties. The loans outstanding were $1,655,744 and $937,524 as of June 30, 2016 and 2015, respectively.

In 2012, CMCI issued 9,000,000 shares of common stock, par value of $0.001 at $0.34 per share, totaled of RMB 19,428,571 (US $3,060,000) to the shareholder of Yulong on behalf Zhongxian Information for the acquisition of Yulong by Zhongxian Information. The loan was fully paid off by China Dairy to CMCI on June 29, 2016.

10.

interim dividend

On May 24, 2016, the Board of China Dairy Corporation Limited (“CDC”), the Company’s 53.07% owned subsidiary, has approved an announced an interim dividend for its shareholders in line with CDC’s dividend policy. An unfranked interim dividend of AUD $0.0057 per CDI is to be paid to both China and Australia shareholders.

F-36

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

11.

Income taxes

The provision for income taxes consisted of the following for the years ended June 30:

	2016		2015

Current	$	-	$	-
Deferred		2,403,996		10,968,816

	$	2,403,996	$	10,968,816

The following table reconciles the effective income tax rates with the statutory rates for the years ended June 30:

	2016			2015

Statutory rate		25.00	%		25.00	%
Allowance		0.32	%		0.00	%
Other		1176.98	%		(0.02	%)

Effective income tax rate		1202.30	%		24.98	%

The stock compensation of approximately $37,762,400 would be deductible only to the U.S. parent company and accordingly, there is no deferred tax benefit to be recognized.

Deferred tax assets and liabilities are recognized for expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effects for the year in which the differences are expected to reverse.

F-37

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

11.

Income taxes (continued)

The tax laws of China permit the carry forward of net operating losses for a period of five years. Undistributed earnings from Xinhua Cattle and Yulong are not taxable until such earnings are actually distributed to Jiasheng Consulting. A deferred tax liability was provided for the tax to be paid when these earnings are distributed. On September 16, 2015 due to the termination of VIE structure (Note 1), Jiasheng Consulting would not be taxable in the future undistributed earnings from Xinhua Cattle and Yulong under the Enterprise Income Tax Law that Chinese resident enterprise is an exemption of dividend income received from another Chinese resident enterprise.

Deferred tax assets (liabilities) are comprised of the following:

	June 30, 2016			June 30, 2015

Net operating loss carryforwards	$	497,542		$	458,947
Bargain purchase gain		(1,430,399	)		(1,430,399	)
Undistributed earnings of subsidiaries under PRC law upon VIE structure terminated		(39,446,504	)		(40,376,234	)

		(40,379,361	)		(41,347,686	)
Less valuation allowance		(497,542	)		(458,947	)

Net deferred tax (liabilities)	$	(40,876,903	)	$	(41,806,633	)

At June 30, 2016 and 2015, Zhongxian Information had unused operating loss carry-forwards of approximately $1,990,000 and $1,836,000, respectively, expiring in various years through 2020. The Company has established a valuation allowance of approximately $498,000 and $460,000 against the deferred tax asset related to the net operating loss carry forward at June 30, 2016 and 2015, due to the uncertainty of realizing the benefit.

F-38

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

11.

Income taxes (continued)

The Company’s tax filings are subject to examination by the tax authorities. The tax years from 2009 to 2015 remain open to examination by tax authorities in the PRC. The Company’s U.S. tax returns are subject to examination by the tax authorities for tax years 2012, 2014 and 2015. The year ended June 30, 2013 was examined by the Internal Revenue Service and resulted in no adjustment.

12.

CONCENTRATION OF CREDIT RISK

Substantially all of the Company’s bank accounts are located in The People’s Republic of China and are not covered by protection similar to that provided by the FDIC on funds held in United States banks.

In November 2015, the Company entered milk sale agreement with another three customers and terminated the contracts with the original four customers. In February 2016, the Company entered into a new milk sale agreement with one customer after terminated the contract with the original customer.

Three customers accounted for approximately 72% and four customers accounted approximately 100% of milk sales for the years ended June 30, 2016 and 2015, respectively. Three customers and four customers also accounted for approximately 71% and 48% of accounts receivable at June 30, 2016 and 2015, respectively.

Seventy-six farmers and thirty-nine farmers accounted for the notes receivable at June 30, 2016 and 2015, respectively.

13.

Parent company only condensed financial information

The following is the condensed financial information of China Modern Agricultural Information, Inc. only, the US parent, balance sheets as of June 30, 2016 and 2015, statements of income for the years ended June 30, 2016 and 2015, and statements of cash flows for the years ended June 30, 2016 and 2015:

F-39

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

13.

Parent company only condensed financial information (CONTINUED)

Condensed Balance Sheets

ASSETS	June 30, 2016		June 30, 2015

Cash	$	3,067,131	$	-
Loan Receivable		-		3,208,151
Investment in subsidiaries		90,778,893		126,051,350

TOTAL ASSETS	$	93,846,024	$	129,259,501

LIABILITIES AND STOCKHOLDERS’ EQUITY

Stockholder loans	$	1,672,707	$	937,524

Stockholders’ equity
Common stock, $0.001 par value; 75,000,000 shares authorized; 53,100,000 shares issued and outstanding		53,100		53,100
Additional paid-in capital		49,709,237		5,851,170
Retained earnings		42,410,980		122,417,707

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	93,846,024	$	129,259,501

F-40

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

13.

Parent company only condensed financial information ( CONTINUED)

Condensed Statements of Income

	For the years ended June 30,
	2016			2015

Revenues
Share of earnings (loss) from investment in subsidiaries and VIE	$	18,935,506		$	32,408,267

Operating expenses
General and administrative		37,781,000			183,000

Net (loss) income	$	(18,845,494	)	$	32,225,267

Condensed Statements of Cash Flows

	For the years ended June 30,
	2016			2015

Cash flows from operating activities
Net (loss) income	$	(18,845,494	)	$	32,225,267
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Share of earnings from investment in subsidiaries and VIE		(18,935,506	)		32,225,267
Stock compensation for shareholder and consultants		37,781,000
Decrease in loan receivable		3,208,151

Net cash provided by (used in) operating Activities		3,208,151			-

Effect of exchange rate changes on cash		(141,020	)

Net change in cash		3,067,131			-
Cash, beginning of period		-			-

Cash, end of period	$	3,067,131		$	-

Basis of Presentation

The Company records its investment in its subsidiaries under the equity method of accounting. Such investments are presented as “Investment in subsidiaries” on the condensed balance sheets and the subsidiaries and VIE profits upon September 16, 2015 (the date of VIE structure dissolved - Note 1)) are presented as “Share of earnings from the investment in subsidiaries” in the condensed statements of income.

F-41

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

13.

Parent company only condensed financial information ( CONTINUED)

Basis of Presentation (continued)

Certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted. The parent-only financial information has been derived from the Company’s consolidated financial statements and should be read in conjunction with the Company’s consolidated financial statements.

There were no cash transactions in the US parent company during the years ended June 30, 2016 and 2015.

Restricted Net Assets

Under PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the Company in the form of dividend payments, loans or advances. The restricted net assets of the Company’s PRC subsidiaries and amounted to $ 92,173,317 and $ 128,321,977 as of June 30, 2016 and 2015, respectively.

The Company’s operations and revenues are conducted and generated in the PRC, and all of the Company’s revenues being earned and currency received are denominated in RMB. RMB is subject to the foreign exchange control regulation in China, and, as a result, the Company may be unable to distribute any dividends outside of China due to PRC foreign exchange control regulations that restrict the Company’s ability to convert RMB into US Dollars.

F-42

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2016 AND 2015 (IN U.S. $)

13.

Parent company only condensed financial information ( CONTINUED)

Restricted Net Assets (continued)

Schedule I of Article 5-04 of Regulation S-X requires the condensed financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the Company’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by its subsidiaries in the form of loans, advances or cash dividends without the consent of a third party. The condensed parent company only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the Company’s PRC subsidiaries exceed 25% of the consolidated net assets of the Company.

14.

Subsequent event

In July 2016, Xinhua Cattle contributed the net profit of $6,225,856 and $99,923, respectively, to Zhongxian Information and the 1% owned minority shareholder. The total represents the net profit of Xinhua Cattle for the years ended June 30, 2008 and 2007.

In July 2016, CDC paid the dividend declared at AUD $0.0057 per share, a total of AUD 1,965,967 to its minority shareholders.

F-43

PART IV

Item 15. EXHIBITS

(a) Exhibits

Exhibit Number		Description

2.1		Share Exchange Agreement between Trade Link Wholesalers, Inc. and Value Development Holdings Limited, dated January 28, 2011, incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on February 3, 2011, as amended.
2.2		Letter of Intent dated as of July 10, 2011, by and between Heilongjiang Zhongxian Information Co., Ltd. and Harbin JinShangjing Technology Investment Co., Ltd. (English Translation), incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on July 14, 2011.
2.3		Letter of Intent, dated as of July 10, 2011, by and between Heilongjiang Zhongxian Information Co., Ltd. and Harbin JinShangjing Technology Investment Co., Ltd. (English Translation), incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on September 30, 2011.
2.4		Equity Transfer Agreement, dated November 23, 2011, among China Modern Agricultural Information, Inc., Heilongjiang Zhongxian Information Co., Ltd., ShangzhiYulong Co., Ltd., and ShangzhiYulong Shareholders, incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on November 30, 2011.
2.5		Share Transfer Agreement dated July 16, 2015 between the Company and Youliang Wang, incorporated by reference to Exhibit 2.5 to the Annual Report on Form 10-K filed on October 13, 2015.
2.6		Share Transfer Agreement, dated July 16, 2015, by and between the Company and China Dairy Corporation Limited, incorporated by reference to Exhibit 2.5 to the Annual Report on Form 10-K filed on October 13, 2015.
10.1		Exclusive Consulting and Service Agreement between Harbin Jiasheng Consulting Managerial Co., Ltd. and Heilongjiang Zhongxian Information Co., LTD., dated December 21, 2010, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on February 3, 2011, as amended.
10.2		Shareholders Voting Right Proxy Agreement between Mr. Wang Youliang, Mr. Liu Zhengxin, Harbin Jiasheng Consultation & Management Co., LTD. and Heilongjiang Zhongxian Information Co., LTD., dated December 21, 2010, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on February 3, 2011, as amended.
10.3		Exclusive Call Options Agreement between Mr. Wang Youliang, Mr. Liu Zhengxin, Harbin Jiasheng Consultation & Management Co., LTD. and Heilongjiang Zhongxian Information Co., LTD., dated December 21, 2010, incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on February 3, 2011, as amended.
10.4		Equity Pledge Agreement between Mr. Wang Youliang, Mr. Liu Zhengxin, Harbin Jiasheng Consultation & Management Co., LTD. and Heilongjiang Zhongxian Information Co., LTD., dated December 21, 2010, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on February 3, 2011, as amended.
10.5		Form Employment Agreement, incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K filed on February 3, 2011, as amended.
10.6		Land Use Right Purchase Agreement dated May 10, 2013, incorporated by reference to Exhibit 10.6 to the Annual Report on Form 10-K filed on October 9, 2013.
10.7		Land Use Right Purchase Agreement dated February 25, 2013, incorporated by reference to Exhibit 10.7 to the Annual Report on Form 10-K filed on October 9, 2013.
10.8		Land Use Transfer Agreement (as amended) dated May 14, 2015 by and between Heilongjiang Xinhua Cattle Co., Ltd. and the People’s Government of Shuangcheng District of Harbin, incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K filed on October 13, 2015.
31.1*		Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2+		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
		XBRL Instance Document.
101. SCH		XBRL Taxonomy Extension Schema Document
101. CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101. LAB		XBRL Taxonomy Extension Label Linkbase Document.
101. PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
101. DEF		XBRL Taxonomy Extension Definition Linkbase Document.

*	Filed herewith
+	In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

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.

	CHINA MODERN AGRICULTURAL INFORMATION, INC.

Dated: November 14, 2016	By:	/s/ Youliang Wang
		Youliang Wang
		Chief Executive Officer (Principal Executive Officer)

Dated: November 14, 2016	By:	/s/ Yanyan Liu
		Yanyan Liu
		Chief Financial Officer (Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date

/s/ Enjia Liu
Enjia Liu	Chairman of the Board of Directors	November 14, 2016

/s/ Youliang Wang	Chief Executive Officer and Director
Youliang Wang	(Principal Executive Officer)	November 14, 2016

/s/ Yanqin Shan
Youqin Shan	Director	November 14, 2016

/s/ Yanyan Liu	Chief Financial Officer
Yanyan Liu	(Principal Financial Officer)	November 14, 2016

China Modern Agricultural Information, Inc. - FORM 10-K/A - November 14, 2016

Attached files

China Modern Agricultural Information, Inc. Reports