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

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EX-32.2 - CERTIFICATION - China Modern Agricultural Information, Inc.	f10k2017ex32-2_chinamodern.htm
EX-32.1 - CERTIFICATION - China Modern Agricultural Information, Inc.	f10k2017ex32-1_chinamodern.htm
EX-31.2 - CERTIFICATION - China Modern Agricultural Information, Inc.	f10k2017ex31-2_chinamodern.htm
EX-31.1 - CERTIFICATION - China Modern Agricultural Information, Inc.	f10k2017ex31-1_chinamodern.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(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, 2017

☐ 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	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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 : $10,138,462.62.

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 September 29, 2016.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business	1
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	14
Item 4.	Mine Safety Disclosure	14
	PART II
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities	15
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	16
Item 7A.	Quantitative And Qualitative Disclosures About Market Risk	24
Item 8.	Financial Statements And Supplementary Data	25
Item 9.	Changes in and Disagreements With Accountants On Accounting And Financial Disclosure
Item 9A.	Controls And Procedures
Item 9B.	Other Information	26
	PART III
Item 10.	Directors, Executive Officers And Corporate Governance	27
Item 11.	Executive Compensation	30
Item 12.	Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters	32
Item 13.	Certain Relationships And Related Transactions, And Director Independence	33
Item 14.	Principal Accountant Fees And Services	34
	PART IV
Item 15.	Exhibits, Financial Statement Schedules	35

Signatures		36

PART I

Item 1. Business.

In this Annual Report on Form 10-K, references to “we,” “our,” “us,” “the Company,” refer to China Modern Agricultural Information, Inc. and its subsidiaries and variable interest entities on a consolidated basis.

In addition, unless the context otherwise requires and for the purposes of this report only

●	“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
●	“Jiasheng Consulting” refers to Jiasheng Consulting Managerial Co., Ltd., a PRC company;
●	“Operating Company or Operating Companies” refers to Value Development Holding, Value Development Group, Jiasheng Consulting, Zhongxian Information, Xinhua Cattle, and Yulong Cattle.
●	“PRC,” “China,” and “Chinese,” refer to the People’s Republic of China;
●	“Renminbi” and “RMB” refer to the legal currency of China;
●	“SEC” refers to the United States Securities and Exchange Commission;
●	“Securities Act” refers to the Securities Act of 1933, as amended;
●	“Yulong Cattle” refers to Shangzhi Yulong Cattle Co., Ltd., a PRC company;
●	“U.S. dollars,” “dollars” and “$” refer to the legal currency of the United States;
●	“Value Development Holding” refers to Value Development Holding Limited., a British Virgin Islands company;
●	“Value Development Group” refers to Value Development Group Limited, a Hong Kong company;
●	“Xinhua Cattle” refers to Heilongjiang Xinhua Cattle Industry Co., Ltd., a PRC company;
●	“Zhongxian Information” refers to Heilongjiang Zhongxian Information Co., Ltd., a PRC company;
●	“Hope Diary” refers to Hope Diary Holdings Ltd., a British Virgin Islands company;
●	“China Dairy” refers to China Dairy Corporation Ltd., a Hong Kong company;

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 500 tons per day. We also have 92 exclusive individual partners on June 30, 2017 with an aggregate fresh milk production capacity of approximately 445 tons per day. We have four major customers, one of which is the leading dairy company in China. During the three months ended December 31, 2015, we terminated the contracts with certain customers and entered into contracts with four new customers.

Corporate History

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:

Our Business Model

We generate revenues from three sources: sale of fresh milk, processing and sales of organic fertilizer, and assisting local farmers with their fresh milk sale efforts.

Fresh Milk

We exclusively use Holstein cows for our milk production. Holstein cows are well-regarded for their abundant milk production and high-quality milk. Our cows currently have an average milking period of 305 days and produce milk that contains approximately 3.5% fat. Each adult cow produces approximate 8,900 kilograms annually.

Our farmland is located in the Heilongjiang province which has a humid continental climate. This climate is ideal for the growth of grass, which in turn is essential in the grazing and feeding of our cattle that aids in our breeding of cows and calves, fresh milk production and organic fertilizer production. We maintain strict quality control and testing procedures to ensure our milk products are of high quality. The milk production and quality controls ensure that the milk produced is high in nutrients and active biological substances.

Cow Feeders

Xinhua Cattle outsources over 90% of the cow feeding to local farmers pursuant to a series of entrusting feeding agreements with the local farmers. Pursuant to these agreements, we pay for the fostering fees and feed costs. In return, the local farmers provide us with the fresh milk produced by the cows.

Pursuant to these entrust feeding agreements, we entrust our cattle to local farmers to assist in a more efficient means to produce fresh milk, as well as manure, used in our production of organic fertilizer. In that regard, we pay a monthly fee to local farmers that correlate to the number of calves, cattle, and cows that are placed in their care. Pursuant to the agreements, local farmers are responsible for the feeding and raising of the cattle as well as the fresh milk production. Additionally, these local farmers ensure that each cow produces a minimum of 20 kilograms of milk daily.

Between July and August 2015, monthly feeding fee to the local farmers is $7.77 per baby cow, $10.88 per pre-adult cow, $15.54 per young cow and $31.08 per adult cow, respectively; food costs every month to the local farmers is $51 per baby cow, $65 per pre-adult cow, $71 per young cow, and $106 per adult cow, respectively. Since August 2015, the monthly feeding fee remains the same while between September and November the food costs increased to $61 per baby cow, $76 per pre-adult cow, $85 per young cow, and $127 per adult cow, respectively. From November 2015, the food costs increased further to $70 per baby cow, $85 per pre-adult cow, $101 per young cow, and $233 per adult cow, respectively. The cost remained unchanged since November 2015 and through the fiscal year ended June 30, 2017.

Local farmers are responsible for milk production and are required to timely deliver the milk production daily. All of the raw milk produced by the cattle is owned by us. Additionally, the local farmers are contractually obligated to conduct periodic breeding for the young cattle and cows, at our expense. The breeding is overseen by veterinarians of our choosing. All calves produced by our entrusted cows are our property, and all calve births are overseen by veterinarians of our choosing. All cow waste produced by our entrusted cattle is owned by us. The local farmers are obligated to collect the waste and provide it to us for further processing, and eventual sale as organic fertilizer.

Fresh Milk Customers

Mengniu Dairy Co. Ltd.

Mengniu Dairy Co. Ltd. (“Mengniu”) has been a purchaser of our raw milk products since 2006. Our contractual arrangement provided for the purchase of our milk at the base price of RMB 3.45 or $0.55/kilogram. However, the base price is based on the quality of our raw milk, namely, fat percentage of 3.1%, protein percentage of 2.95%, and the Level One microorganism quality (less than 0.5 million / ml). We terminated the agreement with Mengniu on August 28, 2017.

Mengniu accounted for 7.9% of all milk sales for the fiscal year ended June 30, 2016 and 2.2 % of all milk sales for the fiscal year ended June 30, 2017.

Wandashan Harbin Dairy Co., Ltd.

Wandashan Harbin Dairy Co., Ltd. (“Wandashan Dairy”) has been a purchaser of our fresh milk products since October 26, 2015. Our current contractual arrangement provides for the purchase of our milk at the base price of RMB 3.80 or $0.57/kilogram. However, the base price is based on the quality of our fresh milk, namely, fat percentage of 3.1%, protein percentage of 2.95%, and the Level One microorganism quality (less than 0.5 million / ml). Our current contractual arrangement with Wandashan Dairy expires on October 25, 2017.

Wanjiabao Dairy Co., Ltd.

Wandashan Harbin Dairy Co., Ltd. (“Wanjiabao Dairy”) has been a purchaser of our fresh milk products since October 26, 2015. Our current contractual arrangement provides for the purchase of our milk at the base price of RMB 3.80 or $0.57/kilogram. However, the base price is based on the quality of our fresh milk, namely, fat percentage of 3.1%, protein percentage of 2.95%, and the Level One microorganism quality (less than 0.5 million / ml). Our current contractual arrangement with Wanjiabao Dairy expires on October 25, 2017.

Harbin Ruduobao Dairy Co., Ltd.

Harbin Ruduobao Dairy Co., Ltd. (“Ruduobao Dairy”) has been a purchaser of our fresh milk products since October 28, 2015. Our current contractual arrangement provides for the purchase of our milk at the base price of RMB 3.80 or $0.57/kilogram. However, the base price is based on the quality of our fresh milk, namely, fat percentage of 3.1%, protein percentage of 2.95%, and the Level One microorganism quality (less than 0.5 million / ml). Our current contractual arrangement with Ruduobao Dairy expires on October 27, 2017.

Organic Fertilizer

As a by-product of the fresh milk production, we use the resulting manure as a source of additional revenue. We combine the raw material, the manure, with inoculating complex microbial agents, and then ferment the product using biological and chemical processes and microbial fermentation technology, which produces the organic fertilizer.

Our fertilizer product is unique, in that it decomposes slowly, maintains long fertilizing effect and slow nutrient loss. It can effectively promote the proliferation of useful microorganisms and enhance soil fertility, resulting in more abundant crop growth.

Zhongxian Information has formed a livestock business system which integrates fresh milk production and organic fertilizer production for direct sale to suppliers.

The sale of organic fertilizer only makes up a very small amount of our total revenue. We generated USD $47,537 in revenue from our organic fertilizer sales in the fiscal year ended June 30, 2016 and USD $57,459 in revenue from our organic fertilizer sales in the fiscal year ended June 30, 2017. Jianfa Bio-Organic Fertilizer Plant was the sole customer for our organic fertilizer products from 2006 to June 2011. Since July 2011, we have been selling our organic fertilizer products to Heilongjiang Soyang Bio Energy Development Ltd.

Sales Commissions

In addition to selling fresh milk to Chinese manufacturing and distribution companies of dairy products, we started to sell our milk cows to local farmers in exchange for monthly payments from the local farmers on their monthly milk sales since June 2011. The monthly payments represent the monthly installments, including interest, for the purchase price of milk cows sold, or a mix of the purchase price and commissions for our assistance in arranging for their milk sales.

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.

By the end of June 30, 2017, we had 31,531 cows, among which, 24,127 cows continue to be fed by local farmers, 2,000 cows are maintained by Xinhua Cattle, and 5,404 cows are maintained by Yulong Cattle.

The increase in feeding costs was the main reason that we disposed of a large number of our cows. The bulk sales of milk cows provide us with a new revenue stream with relatively low direct costs as the local farmers assumed the milk production function.

Research and Development

We had no expenses on research and development activities during the fiscal years ended June 30, 2016 and 2015.

Intellectual Property

We regard the protection of our copyrights, service marks, trademarks, trade secrets and other intellectual property rights as critical to our future success. We rely on contractual restrictions to protect our proprietary rights in products and services. We cannot assure you that these contractual arrangements or the other steps taken by us to protect our intellectual property will prove sufficient to prevent misappropriation of our technology or to deter independent third-party development of similar technologies.

Trademarks

Through Zhongxian Information, we have registered the following trademark with the Trademark Office, State Administration for Industry and Commerce in the PRC:

No.

Registration No.

Trademark

Registrant

Item Category

Expiration

Date

5980762

MANCUNXIANG

Zhongxian Information

Category No. 30 (Staple food): Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder, salt, mustard; vinegar, sauces (condiments); spices; ice.

December 13, 2019

4705072

ZHONGXIAN
PROPERTY

Zhongxian Information

Category No. 31 (Natural agricultural products): Agricultural, horticultural and forestry products and grains not included in other classes; live animals; fresh fruits and vegetables; seeds, natural plants and flowers; foodstuffs for animals, malt.

March 6,
2018

4705070

ZHONGXIAN
INFORMATION

Zhongxian Information

Category No. 38 (Communication services): Telecommunications.

January 6,
2019

4705071

ZHONGXIAN
TECHNOLOGY

Zhongxian Information

Category No. 42 (Scientific and technological services): Scientific and technological services and research and design relating thereto; industrial analysis and research services; design and development of computer hardware and software.

January 6,
2019

We plan to file for an extension with the Trademark Office of the above trademark prior to the expiration date.

Copyright

The Company currently does not own any copyrights. The copyright of Zhongxian Agricultural Economy Network Services System V1.0 and Zhongxian Agricultural Capital Information Services System V1.0 were previously contributed to the Company by its shareholders and have now been reverted back to such shareholders.

Domain Names

Zhongxian Information owns the domain name of www.hljzhongxian.com (Registration No.: Hei ICP Bei 10200342).

Government Regulation

We are subject to inspection of the Livestock and Veterinary Bureau each quarter for our breeder farms. We have never been penalized by the bureau.

China Regulations

This section sets forth a summary of the most significant Chinese regulations or requirements that may affect our business activities operated in China or our shareholders’ right to receive dividends and other distributions of profits from the PRC subsidiaries.

Foreign Investment in PRC Operating Companies

The Foreign Investment Industrial Catalogue jointly issued by the MOFCOM and the National Development and Reform Commission or the NDRC in 2007 classified various industries/business into three different categories: (i) encouraged for foreign investment; (ii) restricted to foreign investment; and (iii) prohibited from foreign investment. For any industry/business not covered by any of these three categories, they will be deemed industries/business permitted to have foreign investment. Except for those expressly provided restrictions, encouraged and permitted industries/business are usually 100% open to foreign investment and ownership. With regard to those industries/business restricted to or prohibited from foreign investment, there is always a limitation on foreign investment and ownership. The PRC Subsidiary’s business does not fall under the industry categories that are restricted to, or prohibited from foreign investment and is not subject to the limitation on foreign investment and ownership.

Regulation of Foreign Currency Exchange

Foreign currency exchange in the PRC is governed by a series of regulations, including the Foreign Currency Administrative Rules (1996), as amended, and the Administrative Regulations Regarding Settlement, Sale and Payment of Foreign Exchange (1996), as amended. Under these regulations, the Renminbi is freely convertible for trade and service-related foreign exchange transactions, but not for direct investment, loans or investments in securities outside the PRC without the prior approval of SAFE. Pursuant to the Administrative Regulations Regarding Settlement, Sale and Payment of Foreign Exchange (1996), Foreign Invested Enterprises (“FIEs”) may purchase foreign exchange without the approval of SAFE for trade and service-related foreign exchange transactions by providing commercial documents evidencing these transactions. They may also retain foreign exchange, subject to a cap approved by SAFE, to satisfy foreign exchange liabilities or to pay dividends. However, the relevant Chinese government authorities may limit or eliminate the ability of FIEs to purchase and retain foreign currencies in the future. In addition, foreign exchange transactions for direct investment, loan and investment in securities outside the PRC are still subject to limitations and require approvals from SAFE.

Regulation of FIEs’ Dividend Distribution

The principal laws and regulations in the PRC governing distribution of dividends by FIEs include:

(i)	The Sino-foreign Equity Joint Venture Law (1979), as amended, and the Regulations for the Implementation of the Sino-foreign Equity Joint Venture Law (1983), as amended;

(ii)	The Sino-foreign Cooperative Enterprise Law (1988), as amended, and the Detailed Rules for the Implementation of the Sino-foreign Cooperative Enterprise Law (1995), as amended;

(iii)	The Foreign Investment Enterprise Law (1986), as amended, and the Regulations of Implementation of the Foreign Investment Enterprise Law (1990), as amended.

Under these regulations, FIEs in the PRC may pay dividends only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, foreign-invested enterprises in the PRC are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds unless such reserve funds have reached 50% of their respective registered capital. These reserves are not distributable as cash dividends. The board of directors of a FIE has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

Regulation of a Foreign Currency’s Conversion into RMB and Investment by FIEs

On August 29, 2008, SAFE issued a Notice of the General Affairs Department of the State Administration of Foreign Exchange on the Relevant Operating Issues concerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises or Notice 142, to further regulate the foreign exchange of FIEs. According to the Notice 142, FIEs shall obtain verification report from a local accounting firm before converting its registered capital of foreign currency into Renminbi, and the converted Renminbi shall be used for the business within its permitted business scope. The Notice 142 explicitly prohibits FIEs from using RMB converted from foreign capital to make equity investments in the PRC, unless the domestic equity investment is within the approved business scope of the FIE and has been approved by SAFE in advance.

Regulation of Foreign Exchange in Certain Onshore and Offshore Transactions

In October 2005, SAFE issued the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Return Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies, or SAFE Notice 75, which became effective as of November 1, 2005, and was further supplemented by two implementation notices issued by SAFE on November 24, 2005 and May 29, 2007, respectively. SAFE Notice 75 states that PRC residents, whether natural or legal persons, must register with the relevant local SAFE branch prior to establishing or taking control of an offshore entity established for the purpose of overseas equity financing involving onshore assets or equity interests held by them. The term “PRC legal person residents” as used in SAFE Notice 75 refers to those entities with legal person status or other economic organizations established within the territory of the PRC. The term “PRC natural person residents” as used in SAFE Notice 75 includes all PRC citizens and all other natural persons, including foreigners, who habitually reside in the PRC for economic benefit. SAFE implementation notice of November 24, 2005 further clarifies that the term “PRC natural person residents” as used under SAFE Notice 75 refers to those “PRC natural person residents” defined under the relevant PRC tax laws and those natural persons who hold any interests in domestic entities that are classified as “domestic-funding” interests.

PRC residents are required to complete amended registrations with the local SAFE branch upon (i) injection of equity interests or assets of an onshore enterprise to the offshore entity, or (ii) subsequent overseas equity financing by such offshore entity. PRC residents are also required to complete amended registrations or filing with the local SAFE branch within 30 days of any material change in the shareholding or capital of the offshore entity, such as changes in share capital, share transfers, and long-term equity or debt investments and these changes do not relate to return investment activities. PRC residents who have already organized or gained control of offshore entities that have made onshore investments in the PRC before SAFE Notice 75 was promulgated must register their shareholdings in the offshore entities with the local SAFE branch on or before March 31, 2006.

Under SAFE Notice 75, PRC residents are further required to repatriate into the PRC all of their dividends, profits or capital gains obtained from their shareholdings in the offshore entity within 180 days of their receipt of such dividends, profits or capital gains. The registration and filing procedures under SAFE Notice 75 are prerequisites for other approval and registration procedures necessary for capital inflow from the offshore entity, such as inbound investments or shareholders loans, or capital outflow to the offshore entity, such as the payment of profits or dividends, liquidating distributions, equity sale proceeds, or the return of funds upon a capital reduction.

Government Regulations Relating to Taxation

On March 16, 2007, the National People’s Congress or NPC, approved and promulgated the PRC Enterprise Income Tax Law , which we refer to as the New EIT Law. The New EIT Law took effect on January 1, 2008. Under the New EIT Law, FIEs and domestic companies are subject to a uniform tax rate of 25%. The New EIT Law provides a five-year transition period starting from its effective date for those enterprises which were established before the promulgation date of the New EIT Law and which were entitled to a preferential lower tax rate under the then-effective tax laws or regulations.

On December 26, 2007, the State Council issued a Notice of Implementing Transitional Measures for Enterprise Income Tax, or the Notice, providing that the enterprises that have been approved to enjoy a low tax rate prior to the promulgation of the New EIT Law will be eligible for a five-year transition period since 1 January, 2008, during which time the tax rate will be increased step by step to the 25% unified tax rate set out in the New EIT Law. From 1 January, 2008, for the enterprises whose applicable tax rate was 15% before the promulgation of the New EIT Law, the tax rate will be increased to 18% for year 2008, 20% for year 2009, 22% for year 2010, 24% for year 2011, 25% for year 2012. For the enterprises whose applicable tax rate was 24%, the tax rate will be changed to 25% from January 1, 2008.

The New EIT Law provides that an income tax rate of 20% may be applicable to dividends payable to non-PRC investors that are “non-resident enterprises”. Non-resident enterprises refer to enterprises which do not have an establishment or place of business in the PRC, or which have such establishment or place of business in the PRC but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within the PRC. The income tax for non-resident enterprises shall be subject to withholding at the income source, with the payor acting as the obligatory withholder under the New EIT Law, and therefore such income taxes generally called withholding tax in practice. The State Council of the PRC has reduced the withholding tax rate from 20% to 10% through the Implementation Rules of the New EIT Law. It is currently unclear in what circumstances a source will be considered as located within the PRC. We are a U.S. holding company and substantially all of our income is derived from dividends we receive from our subsidiaries located in the PRC. Thus, if we are considered as a “non-resident enterprise” under the New EIT Law and the dividends paid to us by our subsidiary in the PRC are considered income sourced within the PRC, such dividends may be subject to a 10% withholding tax.

Such income tax may be exempted or reduced by the State Council of the PRC or pursuant to a tax treaty between the PRC and the jurisdictions in which our non-PRC shareholders reside. For example, the 10% withholding tax is reduced to 5% pursuant to the Double Tax Avoidance Agreement Between Hong Kong and Mainland China if the beneficial owner in Hong Kong owns more than 25% of the registered capital in a company in the PRC.

The new tax law provides only a framework of the enterprise tax provisions, leaving many details on the definitions of numerous terms as well as the interpretation and specific applications of various provisions unclear and unspecified. Any increase in the combined company’s tax rate in the future could have a material adverse effect on its financial conditions and results of operations.

Regulations of Overseas Investments and Listings

On August 8, 2006, six PRC regulatory agencies, including MOFCOM, CSRC, SASAC, SAT, SAIC and SAFE, jointly amended and released the M&A Rules, which became effective on September 8, 2006. This regulation, among other things, includes provisions that purport to require that an offshore SPV formed for purposes of overseas listing of equity interest in PRC companies and controlled directly or indirectly by PRC companies or individuals obtain the approval of CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, CSRC published on its official website procedures regarding its approval of overseas listings by SPVs. CSRC approval procedures require the filing of a number of documents with CSRC and it would take several months to complete the approval process. The application of the M&A Rules with respect to overseas listings of SPVs remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope of the applicability of CSRC approval requirement.

Regulations on Work Safety

On June 29, 2002, the Work Safety Law (“WSL”) of the PRC was adopted by the Standing Committee of the 9th National People’s Congress and came into effect on November 1, 2002, as amended on August 27, 2009. The WSL provides general work safety requirements for entities engaging in manufacturing and business activities within the PRC. Additionally, Regulation on Work Safety Licenses (“RWSL”), as adopted by the State Council on January 7, 2004 effective on January 13, 2004, requires enterprises engaging in the manufacture of dangerous chemicals to obtain a work safety license with a term of three years. If a work safety license needs to be extended, the enterprise must go through extension procedures with authorities three months prior to its expiration. In addition, on May 17, 2004, the Measures for Implementation of Work Safety Licenses of Dangerous Chemicals Production was promulgated as implementing measures to the Regulation on Work Safety Licenses which provides that entities producing dangerous chemicals are required to obtain work safety licenses pursuant to specific requirements. Without work safety licenses, no entity may engage in the formal manufacture of dangerous chemicals.

The Regulations on the Safety Administration of Dangerous Chemicals (“RSADC”) was promulgated by the State Council on January 26, 2002, effective as of March 15, 2002. It sets forth general requirements for manufacturing and the storage of dangerous chemicals in China. The RSADC requires that companies manufacturing dangerous chemicals establish and strengthen their internal regulations and rules on safety control and fulfill the national standards and other relevant provisions of the State. In addition, according to the RSADC, companies that manufacture, store, transport or use dangerous chemicals shall be required to obtain corresponding approvals or licenses with the State Administration of Work Safety and its local branches and other proper authorities. Companies that manufacture or store dangerous chemicals without approval or registration with the proper authorities can be shut down, ordered to stop manufacturing or ordered to destroy the dangerous chemicals. Such companies can also be subject to fines. If criminal law is violated, the persons chiefly liable, along with other personnel directly responsible for such impropriety, shall be subject to relevant criminal liability.

Regulations on Environmental Protection

According to the Prevention and Control of Water Pollution Law, as adopted by the Standing Committee of the 10th National People’s Congress on February 28, 2008 and effective on June 1, 2008, China adopted a licensing system for pollutant discharge. Companies directly or indirectly responsible for the discharge of industrial waste water or medical sewage to waters shall be required to obtain a pollutant discharge license. All companies are prohibited from discharging wastewater and sewage to waters without or in violation of the terms of the pollutant discharge license.

The Regulations on the Administration of Construction Projects Environmental Protection (“RACPEP”), as adopted by the State Council on November 18, 1998 and effective on November 29, 1998, governs construction projects and the impact such projects will have on the environment. Pursuant to the RACPEP, the governing body is responsible for supervising the implementation of a three-tiered system that includes (i) reviewing and approving a construction project, (ii) overseeing the construction project and (iii) to inspect the finished construction project and ensure that all harmful pollutants are disposed of correctly. Manufacturing companies are required to apply for inspection with environment protection authorities upon completion of a construction project.

Food Safety Law of the People’s Republic of China

The Food Safety Law of the People’s Republic of China (the “Food Safety Law”) as adopted at the 7th Session of the Standing Committee of the 11th National People’s Congress of the People’s Republic of China and effective on June 1, 2009, governs the food safety in food production and business operation activities. Pursuant to the Food Safety Law, food producers must establish an internal inspection and record system for raw materials and pre-delivery products, and food distributors must also establish internal systems to record and inspect food products procured from suppliers. In addition, any food additives that are not in the approved government catalog must not be used and no food products can be sold inspection-free.

Regulations on the Implementation of the Food Safety Law of the People’s Republic of China

The Regulations on the Implementation of the Food Safety Law of the People’s Republic of China (the “Regulations”) as adopted at the 73rd Standing Committee Meeting of the State Council on July 8, 2009 and effective on July 20, 2009, are promulgated in accordance with the Food Safety Law. The Regulations require that the local People’s Government at or above the country level shall perform the responsibility specified in the Food Safety Law, improve the ability for supervision and administration of food safety, ensure supervision and administration of food safety; establish and improve the coordination mechanism between food safety regulatory authorities, integrate and improve the food safety information network, and realize the sharing of food safety and food inspection information and other technical resources.

Law of the People’s Republic of China on Quality and Safety of Agricultural Products

The Law of the People’s Republic of China on Quality and Safety of Agricultural Products was adopted at the 21st Meeting of the Standing Committee of the Tenth National People’s Congress on April 29, 2006. This Law was enacted in order to ensure the quality and safety of agricultural products, maintain the health of the general public, and promote the development agriculture and rural economy. Pursuant to this Law, agricultural products distribution enterprises shall establish a sound system of inspection and acceptance for their purchases. In addition, agricultural products that fail to pass the inspection based on the quality and safety standards of agricultural products cannot be marketed.

Compliance with Environmental Laws

We strive to meet the requirements provided in environmental protection regulations, and regulations related to facility safety and quality control, throughout the design, maintenance and growth of our operation facilities and manufacturing process.

Employees

We currently have approximately 172 employees of which Zhongxian Information has 8 employees, Xinhua Cattle has 78 employees and Yulong Cattle has 86 employees and all of our employees are full-time employees.

Item 1A. Risk Factors.

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

Item 1B. Unresolved Staff Comments

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

Item 2. Properties.

Farmland

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, entered into an agreement with the municipality of Qiqihaer to obtain the “land use right” to use this land from May 1, 2013 to Apr 30, 2063. The Company recorded the prepayment of RMB 37,500,000 ($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. On June 22, 2017, the Company subleased 183,335 square meters land of the 250,000 square meter land to a forage production company at the price of RMB 25,300,000 (US $3,716,570). The remaining repayment of the 183,335 square meters land is RMB25,254,167 (US $3,709,837). There is a gain of the sublease of RMB 45,833 (US $6,733). The remaining prepayment of $1,352,083 and $5,285,680 is included in prepaid land lease in the consolidated balance sheets as of June 30, 2017 and 2016, 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 (US$4,686,000). The related prepayment of $1,880,625 and $2,370,092 is included in prepaid land lease in the consolidated balance sheets as of June 30, 2017 and 2016, 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 $10,378,572 and $10,820,258 is included in prepaid land lease in the consolidated balance sheets as of June 30, 2017 and 2016, respectively. The lease provides for renewal options.

On May 7, 2015, the Company obtained another “land use right” to use 238,001 square meters of land, from May 7, 2015 to May 6, 2045. In addition, the Company also leased all the constructions on the land which includes cowsheds at 35,808 square meters on top of the land leased, an office building at 3,500 square meters and a flat building at 3,500 square meters. The lease period of all these constructions is the same as the land. The Company recorded the prepayment of RMB 74,847,600 (US$12,215,000) 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 $10,242,686 and $10,825,203 is included in prepaid leases in the consolidated balance sheets as of June 30, 2017 and June 30, 2016, respectively.

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 $15,311,494 and $16,182,280 is included in prepaid lease in the consolidated balance sheets as of June 30, 2017 and 2016, respectively.

Rent expense charged to operations for the years ended June 30, 2016 and 2017 was $1,789,248 and $1,684,866, respectively.

Office Space

We have renewed our previous arrangements with an unrelated third party to use an office space at no cost from September 1, 2015, to August 31, 2020.

Item 3. Legal Proceedings.

There are no actions, suits, proceedings, inquiries or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 4. Mine Safety Disclosures.

Not Applicable.

PART II

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

Market Information

Our common stock began to be quoted on the OTC Bulletin Board on July 8, 2010 and is currently quoted on OTCQB under the symbol “CMCI”. There has been a very limited public market for our common stock. There can be no assurance that a liquid market for our securities will ever develop.

The following table sets forth the high and low bid quotations for our common stock as reported on the OTCQB for the periods indicated.

	High Bid* ($)		Low Bid* ($)
2017
April 1, 2017 – June 30, 2017	$	0.24		0.21
January 1, 2017 – March 31, 2017	$	0.26		0.20
October 1, 2017 – December 31, 2017	$	0.33		0.17
July 1, 2017 – September 30, 2017	$	0.29		0.20
2016
April 1, 2017 – June 30, 2017	$	0.34		0.15
January 1, 2017 – March 31, 2017	$	0.34		0.16
October 1, 2017 – December 31, 2017	$	0.63		0.46
July 1, 2017 – September 30, 2017	$	0.68		0.50

* The quotations of the closing prices reflect inter-dealer prices, without retail mark-up, markdown or commission.

Holders

As of September 28, 2017, there are 786 holders of record of the Company’s common stock.

Dividends

The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Company's business.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth securities authorized for issuance under any equity compensation plans approved by our stockholders as well as any equity compensation plans not approved by our stockholders as of June 30, 2017.

Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a)

Weighted- average exercise price of outstanding options, warrants, and rights (b)

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)

Plan category

Plans approved by our stockholders:

2012 Stock Incentive Plan (1)

(1)

On April 16, 2012, the Company granted 3,000,000 shares of restricted stock under the Plan to its employees and the shares were issued on April 26, 2012. The shares, with a fair value of $1,200,000 at the grant date, were fully vested on May 20, 2012 and the fair value of the shares was charged to operations for the fiscal year ended June 30, 2012. As of September 28, 2017, there are currently no shares available to be issued.

Item 6. Selected Financial Data.

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

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

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

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.

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 of 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

We had agreements with local farmers entered into June 2011, for their purchase of cows to be collected over five years, with a minimum payment of 20% of the sales price to be paid each year. The notes were recorded at their present value with a discount rate of 12%, which was commensurate with interest rates for notes with similar risk. We 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 our assistance in arranging for the sale of the milk. As of June 30, 2017, the farmers had fully repaid the principal payments.

In May 2017, December 2016, November 2016, September 2011, August 2011, and June 2011, Xinhua Cattle sold 2,511, 130, 4,000, 3,787, 5,635, and 2,000 of its cows to local farmers, respectively. 2,000 of the cows sold were purchased from outside parties for $4,407,000. The remaining cows sold were raised by Xinhua. In November 2016, November2014 and December 2014, Yulong sold 4,317, 3,714 and 2,995 cows to local farmers respectively. 5,500 of the cows sold were purchased from outside unrelated parties for $8,996,000. The remaining cows sold were raised by Yulong.

Pursuant to agreements for the sale of cows 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 our assistance in arranging for the sale of the milk. 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.

Pursuant to the agreements signed in November 2016, December 2016 and May 2017, the sales price will be collected in monthly installments plus interest at 5% 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 20% of monthly milk sales generated from the cows sold. The 20% monthly payments are to be applied first to the monthly installment of principal for the cows sold and the balance as commission income for our assistance in arranging for the sale of the milk. While the 20% 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.

Xinhua Cattle sold a total of 6,286 female calves to outside parties at a total price of RMB 27,137,500 (US $3,986,499 in the year ended June 30, 2017. The net value of these female calves was approximately RMB 39,135,557 (US $5,749,000). Xinhua Cattle also sold 473 pre-adult cows at RMB 3,216,400 (US$472,489) with a net value of RMB 9,650,258 (US$ 1,417,600) in the year ended June 30, 2017. On November 1, 2016, Xinhua Cattle sold 2,000 newly purchased adult cows to 6 local farmers at a total price of RMB 34,000,000 (US $4,994,600) with a net value of RMB 30,000,000 (US $4,407,000). On November 3, 2016, Xinhua Cattle sold 2,000 adult cows to another 6 local farmers at a total price of RMB 24,000,000 (US $3,525,600) with a net residual value of RMB 14,909,375 (US $2,190,187). On December 1, 2016, Xinhua Cattle sold 130 adult cows to one local farmer at a total price of RMB 1,040,000 (US $152,776) with a net residual value of RMB 717,556 (US $105,409). On May 2, 2017, Xinhua Cattle sold 2,511 adult cows to 8 local farmers at a total price of RMB 23,266,900 (US$ 3,417,908) with a net residual value of RMB 15,489,125 (US$ 2,275,352). On November 4, 2016, Xinhua Cattle also sold 1,542 adult cows to an outside party at a total price of RMB 6,915,550 (US $1,015,894) with a net residual value of RMB 7,892,837 (US $1,159,458).

Yulong Cattle sold 1,919 female calves to outside parties at a total price of RMB 8,320,000 (US $1,222,208) in the year ended June 30, 2017. The net value of these female calves was approximately RMB 7,742,000 (US $1,137,000). On November 1, 2016, Yulong Cattle sold 2,317 adult cows to 8 local farmers at a total price of RMB 19,033,000 (US $2,795,948) with a net value of RMB 18,650,864 (US $2,739,812. On November 2, 2016, Yulong Cattle sold 2,000 new purchased adult cows to another 8 local farmers at a total price of RMB 34,000,000 (US $4,994,600) with a net residual value of RMB 30,000,000 (US $4,407,000). Local farmers started to pay principle payment for the above disposal since the three months ended March 31, 2017. On November 2, 2016, Yulong Cattle sold 142 adult cows to an outside party at a total price of RMB 994,000 (US $146,019) with a net residual value of RMB 1,063,243(US $156,190). On May 26, 2017, Yulong Cattle sold 62 adult cows to an outside party at a total price of RMB 434,000 (63,755) with a net residual value of RMB 468,850 (US $68,874)

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 $48, $62, $71 and $109, respectively, which paid for calve, pre-adult cow, young cow and adult cow per month. Since April 2015, such expenses increased to $56, $72, $82 and $129, respectively, paid for each type of cows. Since September 2015, such expenses increased to $65, $82, $95 and $150, 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 increased to $73, $91, $110 and $250 for each calve, pre-adult cow, young cow and adult cow, respectively.

Results of Operations

Comparison of years ended June 30, 2017 and 2016

The following table sets forth certain information regarding our results of operations for the years ended June 30, 2017 and 2016.

	For the years ended June 30,
						Change
	2017		2016			Amount			%
Revenue	$	119,815,035	$	101,091,303		$	18,723,732			19	%
Cost of goods sold		74,262,475		57,626,223			16,636,252			29	%
Gross profit		45,552,560		43,465,080			2,087,480			5	%
Operating expenses		5,391,954		43,803,797			(38,411,843	)		(88	%)
Operating income/(loss)		40,160,606		(338,717	)		40,499,323			11,957	%
Other income and (expenses)		2,052,694		538,667			1,514,027			281	%
Income before income taxes		42,213,300		199,950			42,013,350			21,012	%
Provision for income taxes		-		2,403,996			(2,403,996	)		N/A
Net income before noncontrolling interests		42,213,300		(2,204,046	)		44,417,346			2,015	%
Noncontrolling interests		20,054,726		16,641,448			3,413,278			21	%
Net income attributable to controlling interests	$	22,158,674	$	(18,845,494	)	$	41,004,068			218	%

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 $119,815,035 for the year ended June 30, 2017, an increase of $18,723,732 or 19%, compared to $101,091,303 for the year ended June 30, 2016. There are two main reasons caused such increase: 1) total average milk cows increased from 16,459 to 20,375 and 2) milk’s sale price increased from $0.51 per kg to $0.56 per kg since November 2015 for approximately 98% 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
	2017		2016		Amount			%
Sales of natural milk	$	101,816,625	$	81,604,871	$	20,211,754			25	%
Sales commissions		17,998,410		19,486,432		(1,488,022	)		(8	%)
Total revenue	$	119,815,035	$	101,091,303	$	18,723,732			19	%

For the year ended June 30, 2017, our revenue generated from natural milk sales was $101,816,625 which represented an increase of $20,211,754 or 25% compared to $81,604,871 for the year ended June 30, 2016. 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
	2017		2016		Amount		%
Sales of natural milk	$	101,816,625	$	81,604,871	$	20,211,754		25	%
Average number of milk cows		20,375		16,459		3,916		24	%
Revenue from per milk cow	$	4,997	$	4,968	$	39		1	%

The revenue per milk cow increased to $4,997 for the year ended June 30, 2017 from $4,968 for the year ended June 30, 2016, an increase of $39 or 1%. After seeing above table, we can easily find the primary reason for the increase in sales of milk which is total average milk cows were increased from 16,459 to 20,375 which represented an increase by 24%.

The sales commissions from local farmers decreased by $1,488,022 or 8% to $17,998,410 for the year ended June 30, 2017 from $19,486,432 for the year ended June 30, 2016. The average quantity of milk cows we now earn commission on increased by 15% or 2,451, to 18,967 for the year ended June 30, 2017 from 16,517 for the year ended June 30, 2016 due to the new disposal of total 10,958 adult cows in May 2017, November 2016 and December 2016. However, per the new contract term, the sales commission was only deducted from 20% milk sales less principle payment but not 30% milk sales like before. The average quantity of milk cows from the disposal in May 2017, November 2016 and December 2016 covered approximately 32% of total average quantity of milk cows for the year ended June 30, 2017. Thus, the sales commission decreased for the year ended June 30, 2017 by comparing with prior period.

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 increased from $129 per cow before September 2015 to $250 per cow since September 2015. As a result, we saw a decrease in our margins compared with the same period in 2016.

	For the years ended June 30,
					Change
	2017		2016		Amount		%
Cost of goods sold	$	74,262,475	$	57,626,223	$	16,636,252		29	%
Average number of milk cows		20,375		16,459		3,916		24	%
Cost per milk cow	$	3,645	$	3,501	$	144		4	%

The cost per milk cow increased to $3,645 for the year ended June 30, 2017 which represented an increase of $144 or 4% compared to $3,501 for the year ended June 30, 2016. The average number of milk cows also increased by 3,916 or 24% from 16,459 for the year ended June 30, 2016 to 20,375 for the year ended June 30, 2017. These two reasons primarily caused the increase in cost of goods sold.

Gross profit margin

Our gross profit margin was 38.0% for the year ended June 30, 2017 which decreased by 5% from 43.0% for the year ended June 30, 2016. The main reason for such a decrease was the increase in feeding and food cost and direct production overhead. In addition, the increase in the portion of milk sales yield a lower gross profit margin than sales commission.

Operating expenses

Our operating expenses materially decreased to $5,391,954 for the year ended June 30, 2017 from $43,803,797 for the year ended June 30, 2016, a decrease of $38,411,843 or 88%. 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 a total of $129,588 and $950,302 in VAT surcharges and business taxes for the years ended June 30, 2017 and 2016, respectively. We classified these VAT surcharges and business taxes as selling expenses. As we discussed above, we restructured in July, 2015 and have been listed on the ASX main board. We lost 40% of the interest of our operating company as a result. We treated the reduction of our interest by 40% as a stock compensation to our shareholders and consultants for a total of $37,762,400 as it was recorded under our G&A expenses for the year ended June 30, 2016. This is the primary reason that caused such sharp decrease in our operating expenses.

Operating income (loss)

As a result of the foregoing, we had operating income of $40,160,606 for the years ended June 30, 2017, representing an increase of $40,499,323, as compared to operating loss of $338,717 for the year ended June 30, 2016.

Non-operating income (expenses)

For the year ended June 30, 2017, non-operating income consists primarily of interest income of $974,051 earned on the outstanding notes receivable from the farmers and other non-operating income of $135,365 which mainly consists of bank interest earned. We also had a net gain from disposal of biological properties of $943,278 for the year ended June 30, 2017. 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 biological properties of $224,957.

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 $0 and $2,403,996, respectively, for the years ended June 30, 2017 and 2016, primarily representing the enterprise income tax on the income of Zhongxian Information. We had a net income (loss) before non-controlling interests of $42,213,300 and $(2,204,046), respectively, which represented an increase in $44,417,346 or 2,015%, respectively, for the years ended June 30, 2017 and 2016. We initially owned 99% of Xinhua Cattle’s shares and our non-controlling interest was 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 we own 60% through our wholly owned subsidiary, Hope Diary. This transaction resulted a reduction of our 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 increased from 1% to 46.93%. $20,054,726 and $16,641,448, respectively, was attributed to non-controlling interest for the years ended June 30, 2017 and 2016. We had net income (loss) attributable to the common stockholders of the Company of $22,158,574 and $(18,845,494), respectively, representing $0.42 per share and $(0.35) per share, respectively, for the years ended June 30, 2017 and 2016.

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 years ended June 30, 2017 and 2016, we incurred foreign currency translation adjustments loss of $(2,520,763) and $(11,711,703), respectively. They are 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, 2017 and 2016, we had no bank debt but amounts owed to shareholders of $1,918,341 and $1,672,707, respectively. The amounts due to our stockholders were principally for the professional fees incurred for being a reporting company in the United States and in Australia because of the restriction of official bank transfers abroad. At the same time, we had $53,241,856 and $30,780,198 in cash at June 30, 2017 and 2016 as well as working capital of $ 84,708,423 and $56,811,959, respectively.

Operating activities

During the year ended June 30, 2017, our operating activities provided $47,950,126 in net cash, compared to $26,179,444 during the year ended June 30, 2016.The net cash provided in the year ended June 30, 2017 was slightly higher than our net income primarily due to the depreciation on fixed assets and biological properties of $7,191,346 and amortization on lease of $1,684,865. The gain of disposal from biological properties and increase in accounts receivable reduced our cash provided by operating activities by $943,278 and $1,909,789, respectively, for the year ended June 30, 2017. The net cash provided in the year ended June 30, 2016 was materially higher than our net loss primarily due to the lack of deferred income tax liabilities of $2,403,996, increase in 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. In addition, the increase in accounts receivable reduced our cash provided by operating activities by $18,408,219.

Investing activities

During the year ended June 30, 2017, our investing activities provided a cash outflow of $20,763,914 compared with a cash outflow of $58,678,207 for the year ended June 30, 2016. The food costs and feeding expenses for biological properties used cash of $16,973,353 and $18,090,592 for the years ended June 30, 2017 and 2016, respectively. For the years ended June 30, 2017 and 2016, we spent $23,577,450 and $15,623,459, respectively, for purchasing milk cows. Conversely, we received cash of $2,996,733 and $2,090,254 during the years ended June 30, 2017 and 2016, respectively, from the collection of notes receivable from the disposal of biological properties in calendar year 2011, 2014 and 2016. For the years ended June 30, 2017 and 2016, we also received $8,091,913 and $955,494 in cash from our disposal of biological properties, respectively. For the years ended June 30, 2017 and 2016, we spent $2,510,227 and $28,009,904, 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. The material additions during the year ended June 30, 2017 were the production facilities and forage plant which were not completed and in service as of June 30, 2017. For the year ended June 30, 2017, we received $7,491,900 from the disposal of construction in progress of the forage plant and $3,716,570 from the sublease of farm land.

Financing activities

Our financing activities for the year ended June 30, 2017 mainly included proceeds from shareholders, dividends payment for our subsidiary and repayment for the loan from shareholder. For the years ended June 30, 2017 and 2016, we received $111,957 and $0 from shareholders, respectively. For the year ended June 30, 2017, we paid total dividends of $3,222,667 to our subsidiary’s shareholders. For the year ended June 30, 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 $12,553,266. For the year ended June 30, 2017, we also repaid $20,935 to our shareholder.

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, 2017 and 2016 for the years ended June 30, 2017 and 2016 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, 2017 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

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED BALANCE SHEETS

june 30, 2017 AND 2016 (IN U.S. $)

ASSETS	June 30, 2017		June 30, 2016

Current assets
Cash	$	53,241,856	$	30,780,198
Accounts receivable		26,170,771		24,783,720
Inventories		1,042,171		1,122,843
Prepaid expenses		1,374,693		1,216,963
Interest receivable		1,023,769		474,803
Notes receivable, current portion		4,661,775		2,097,363

Total current assets		87,515,035		60,475,890

Property, plant and equipment, net		26,622,562		34,327,757

Other assets
Notes receivable		19,193,347		4,943,622
Prepaid leases		39,165,460		45,483,513
Biological assets, net		73,112,101		64,136,851

Total other assets		131,470,908		114,563,986

TOTAL ASSETS	$	245,608,505	$	209,367,633

See accompanying notes to the consolidated financial statements.

F-1

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED BALANCE SHEETS (CONTINUED)

JUNE 30, 2017 AND 2016 (IN U.S. $)

LIABILITIES AND stockholders’ EQUITY	June 30, 2017			June 30, 2016

Current liabilities
Accrued expenses and other payables	$	888,271			528,430
Dividend payable		-			1,462,794
Stockholder loans		1,918,341			1,672,707

Total current liabilities		2,806,612			3,663,931

Deferred income taxes		40,066,873			40,876,903

Total liabilities		42,873,485			44,540,834

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			49,709,237
Retained earnings		62,878,009			42,410,980
Statutory reserve fund		420,406			420,406
Other comprehensive (loss)		(9,402,310	)		(6,881,547	)

Sub-total		103,658,442			85,712,176

Noncontrolling interests		99,076,578			79,114,623

Total stockholders’ equity		202,735,020			164,826,799

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	245,608,505		$	209,367,633

See accompanying notes to the consolidated financial statements.

F-2

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

AND OTHER COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED jUNE 30, 2017 and 2016 (IN U.S. $)

	2017			2016

Revenues
Milk sales	$	101,816,625		$	81,604,871
Sales commission		17,998,410			19,486,432

Total revenues		119,815,035			101,091,303
Cost of goods sold		(74,262,475	)		(57,626,223	)

Gross profit		45,552,560			43,465,080

Operating expenses
R&D expenses		869,648			306,616
Selling and marketing		1,085,297			1,889,864
General and administrative		3,437,009			41,607,317

Total operating expenses		5,391,954			43,803,797

Operating income (loss)		40,160,606			(338,717	)

Other income and (expenses)
Interest income on notes receivable		974,051			588,822
Gain on disposal of properties		943,278			-
Non-Operating (expense)		-			(224,957	)
Other non-operating income		135,365			174,802

Total other income		2,052,694			538,667

Income before provision for income taxes		42,213,300			199,950
Provision for income taxes		-			2,403,996

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) (CONTINUED)

FOR THE YEARS ENDED jUNE 30, 2017 and 2016 (IN U.S. $)

	2017			2016

Net income (loss) before noncontrolling interests		42,213,300			(2,204,046	)
Noncontrolling interests		(20,054,726	)		(16,641,448	)

Net income (loss) attributable to common stockholders		22,158,574			(18,845,494	)

Other comprehensive income
Foreign currency translation adjustment		(2,520,763	)		(11,711,703	)

Total comprehensive income (loss)	$	19,637,811		$	(30,557,197	)

Earnings (losses) per common share, basic and diluted	$	0.42		$	(0.35	)

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

See accompanying notes to the consolidated financial statements.

F-4

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF changes in Stockholders’ EQUITY

FOR THE YEARS ENDED JUNE 30, 2017 (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 (loss)		-		-			-			-			-			(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-5

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF changes in Stockholders’ EQUITY (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2017 (IN U.S. $)

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

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

Net income		-		-		22,158,574			-		20,054,726			-			42,213,300
Dividend distribution		-		-		(1,691,545	)		-		(92,771	)					(1,784,316	)
Other comprehensive (loss)		-		-		-			-		-			(2,520,763	)		(2,520,763	)

Balance June 30, 2017	$	53,100	$	49,709,237	$	62,878,009		$	420,406	$	99,076,578		$	(9,402,310	)	$	202,735,020

See accompanying notes to the consolidated financial statements.

F-6

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016 (IN U.S. $)

	2017			2016

Cash flows from operating activities
Net income (loss)	$	42,213,300		$	(2,204,046	)
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation		7,191,346			4,828,085
Amortization for prepaid land lease		1,684,865			1,789,248
Deferred income taxes		-			2,403,996
(Gain) loss from disposal from biological assets		(943,278	)		215,997
Stock compensation for shareholder and consultants		-			37,762,400
Change in operating assets and liabilities
(Increase) in accounts receivable		(1,909,789	)		(18,408,219	)
Decrease (increase) in inventories		80,672			(436,162	)
(Increase) in prepayment		(181,106	)		(179,941	)
(Increase) in interest receivable		(556,104	)		(316,576	)
Increase in accrued expenses and other payables		370,220			724,662

Net cash provided by operating activities		47,950,126			26,179,444

Cash flows from investing activities
Collection of notes receivable		2,996,733			2,090,254
Proceeds from sales of biological assets		8,091,913			955,494
Proceeds from sales of PP&E		7,491,900			-
Proceeds from sales of prepaid lease		3,716,570
Purchase of property, plant and equipment		(2,510,227	)		(28,009,904	)
(Increase) in Biological assets		(16,973,353	)		(18,090,592	)
Purchase of Biological property		(23,577,450	)		(15,623,459	)

Net cash (used in) investing activities		(20,763,914	)		(58,678,207	)

Cash flows from financing activities
Proceeds from sales of common stock by subsidiary		-			12,553,266
Dividends paid for subsidiary		(3,222,667	)		-
Proceeds from stockholder loans		111,957			-
Repayment of stockholder loans		(20,935	)		-

Net cash (used in) provided by financing activities		(3,131,645	)		12,553,266

See accompanying notes to the consolidated financial statements.

F-7

China Modern Agricultural Information, Inc.

and subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE years ENDED JUNE 30, 2017 AND 2016 (IN U.S. $)

	2017			2016

Effect of exchange rate changes on cash		(1,592,909	)		(3,420,086	)

Net increase (decrease) in cash		22,461,658			(23,365,583	)
Cash, beginning of year		30,780,198			54,145,781

Cash, end of year	$	53,241,856		$	30,780,198

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	$	154,000		$	789,998

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-8

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (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-9

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (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-10

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

1.	ORGANIZATION (CONTINUED)

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 Dairy 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 Diary 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-11

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

1.	ORGANIZATION (CONTINUED)

The 40% of the 10,000 shares of China Dairy were transferred from the sole shareholder of China Diary 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 Diary’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-12

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (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.

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

On April 8, 2016, the Company’s 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, the Company’s ownership was diluted to 53.07%.

F-13

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (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 Dairy, China Dairy (Hope Dairy’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, 2017 and for the years ended June 30, 2017 and 2016, 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.

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.

F-14

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Variable Interest Entity (continued)

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.

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”).

F-15

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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:

Foreign Currency Translations (continued)

June 30,

2017

June 30,
2016

RMB

Balance sheet items, except for stockholders’ equity, as of period end

0.1475

0.7678

0.1505

0.7441

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

0.1469

0.7538

0.1554

0.7283

Foreign currency translation adjustments of $(2,520,764) and $(11,711,703), respectively, for the years ended June 30, 2017 and 2016, 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.

F-16

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

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.

F-17

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

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.

F-18

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments (continued)

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.

Advertising Costs

Advertising costs are charged to operations when incurred. Advertising costs are $221,322 and $62,929, respectively, for the years ended June 30, 2017 and 2016.

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, 2017 and 2016, 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.

F-19

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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, 2017 and 2016.

Prepaid Expenses

Prepaid expenses as of June 30, 2017 and 2016 mainly represent the prepayments of approximately $1,375,000 and $1,216,900, respectively for prepaid cow insurance 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 expenditures 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-20

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (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, 2017 and 2016.

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, 2017 and 2016, a gain (loss) of $3,579,816 and $(373,108), respectively, on the sale of the adult cows is included in non-operating income (expenses) in the accompanying consolidated statements of income and other comprehensive income. (See Note 5)

F-21

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (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, 2017 and 2016.

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, 2017 and 2016, undistributed earnings allocated to Zhongxian Information were approximately $224,700,000 and $192,800,000, respectively.

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, 2017 and 2016, the Company does not have a liability for any uncertain tax positions.

F-22

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes (Continued)

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, 2017 and 2016.

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.

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 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.

F-23

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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, 2017 and 2016.

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, 2017 and 2016, the required statutory reserve funds have been fully funded.

3.	Recently Issued Accounting Standards

In August 2016, the FASB issued new guidance which clarifies the classification of certain cash receipts and cash payments in the statement of cash flows, including debt prepayment or extinguishment costs, settlement of contingent consideration arising from a business combination, insurance settlement proceeds, and distributions from certain equity method investees. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on our consolidated financial statements.

F-24

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

Recently Issued Accounting Standards (CONTINUED)

In June 2016, the FASB issued new authoritative accounting guidance on credit losses on financial instruments which replaces the incurred-loss impairment methodology. The new guidance requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments. The standard is effective for the Company in the first quarter of 2020; however early adoption is permitted beginning in the first quarter of 2019. The Company is currently evaluating whether this standard will have a material impact on its financial statements.

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.

F-25

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

Recently Issued Accounting Standards (CONTINUED)

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.

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.

F-26

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

4.	Property, plant and equipment

Property, plant and equipment are summarized as follows:

	June 30, 2017			June 30, 2016

Machinery and equipment	$	3,789,997		$	3,866,619
Automobiles		2,209,169			2,253,832
Building and building improvements		26,333,608			26,865,993

		32,332,774			32,986,444
Less: accumulated depreciation		(5,710,212	)		(3,354,779	)
Construction in process		-			4,696,092

Property, plant and equipment, net	$	26,622,562		$	34,327,757

Construction in Progress (“CIP”) contains amounts paid and accrued for completed new construction which has not been placed into service as of June 30, 2016. No depreciation has been taken on CIP as of June 30, 2016. Depreciation expense charged to operations for the years ended June 30, 2017 and 2016 was $2,412,060 and $1,950,157, 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 $ 6,864,387). Per the agreement, the company is required to pay according to progress completion for different parts of the plant. As of June 22, 2017, the company paid RMB 48,295,000 (US $ 7,094,536). On June 22, 2017, the Company signed a disposal agreement with a forage production company to sell the CIP at $7,491,900 including VAT (RMB 51,000,000). The net book value of the CIP at the date of the disposal was $7,094,516. The total VAT and surcharges on the selling price was $399,568. There was a loss of $2,204 on the disposal. The Company fully received the sales consideration of $7,491,900 as of June 30, 2017.

F-27

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

5.	Biological assets

Biological assets consist of the following:

	June 30, 2017			June 30, 2016

Immature biological assets	$	33,409,704		$	32,518,050
Mature biological assets		45,460,518			36,660,416

		78,870,222			69,178,466
Less: accumulated depreciation		(5,758,121	)		(5,041,615	)

Biological assets, net	$	73,112,101		$	64,136,851

On November 1, 2016, Xinhua Cattle purchased 3,000 adult cows at a total price of RMB 45,000,000 (US $6,37,500). On May 2, 2017, Xinhua Cattle also purchased 2,500 adult cows at a total price of RMB 37,500,000 ($5,531,250).

On November 1, 2016, Xinhua Cattle sold 2,000 newly purchased adult cows to 6 local farmers at a total price of RMB 34,000,000 (US $4,994,600) with a net value of RMB 30,000,000 (US $4,407,000). On November 3, 2016, Xinhua Cattle sold 2,000 adult cows to another 6 local farmers at a total price of RMB 24,000,000 (US $3,525,600) with a net residual value of RMB 14,909,375 (US $2,190,187). On December 1, 2016, Xinhua Cattle sold 130 adult cows to one local farmer at a total price of RMB 1,040,000 (US $152,776) with a net residual value of RMB 717,556 (US $105,409). On May 2, 2017, Xinhua Cattle sold 2,511 adult cows to 8 local farmers at a total price of RMB 23,266,900 (US$ 3,417,908) with a net residual value of RMB 15,489,125 (US$ 2,275,352). On November 4, 2016, Xinhua Cattle also sold 1,542 adult cows to an outside party at a total price of RMB 6,915,550 (US $1,015,894) with a net residual value of RMB 7,892,837 (US $1,159,458).

F-28

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

5.	Biological assets (continued)

On November 2, 2016, Yulong Cattle purchased 5,000 adult cows at a total price of RMB 75,000,000 (US $10,882,500). On June 1, 2017, Yulong Cattle also purchased 200 adult cows at a total price of RMB 3,000,000 (US $442,500).

On November 1, 2016, Yulong Cattle sold 2,317 adult cows to 8 local farmers at a total price of RMB 19,033,000 (US $2,795,948) with a net value of RMB 18,650,864 (US $2,739,812. On November 2, 2016, Yulong Cattle sold 2,000 new purchased adult cows to another 8 local farmers at a total price of RMB 34,000,000 (US $4,994,600) with a net residual value of RMB 30,000,000 (US $4,407,000). Local farmers started to pay principle payment for the above disposal sinche the three months ended March 31, 2017. On November 2, 2016, Yulong Cattle sold 142 adult cows to an outside party at a total price of RMB 994,000 (US $146,019) with a net residual value of RMB 1,063,243(US $156,190). On May 26, 2017, Yulong Cattle sold 62 adult cows to an outside party at a total price of RMB 434,000 (63,755) with a net residual value of RMB 468,850 (US $68,874)

Depreciation expense for the years ended June 30, 2017 and 2016 was $4,779,286 and $2,878,298, 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 May 2017, December 2016, November 2016, September 2011, August 2011 and June 2011, Xinhua Cattle sold 2,511, 130, 4,000, 3,787, 5,635, and 2,000 respectively of its cows to local farmers. 2,000 of the cows sold were purchased from outside parties for $4,407,000. The remaining cows sold were raised by Xinhua.

In November 2016, November 2014 and December 2014, Yulong sold 4,317, 3,714 and 2,955 cows respectively, to local farmers. 5,500 of the cows sold were purchased from outside parties for $8,996,000. The remaining cows sold were raised by Yulong.

F-29

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

6.	Notes Receivable (continued)

The company had agreements with local farmers entered into June 2011, for their purchase of cows to be collected over five years, with a minimum payment of 20% of the sales price to be paid each year. The notes were recorded at their present value with a discount rate of

12%, which was 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. As of June 30, 2017, the farmers had fully repaid the principal payments.

Pursuant to agreements for the sale of cows 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. 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.

Pursuant to the agreements signed in November 2016, December 2016 and May 2017, the sales price will be collected in monthly installments plus interest at 5% 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 20% of monthly milk sales generated from the cows sold. The 20% 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. While the 20% 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, 2017 and 2016, the Company received principal and interest payments of $3,403,678 and $2,300,347, respectively. Commission income for the years ended June 30, 2017 and 2016, was $17,998,410 and $19,486,432, respectively, under these agreements.

F-30

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

6.	Notes Receivable (continued)

The receivable related to the sales of cows is included in notes receivable in the consolidated balance sheets as of June 30, 2017 and 2016. The related commission receivable of $7,206,564 and $6,962,080 at June 30, 2017 and 2016, respectively, is included in accounts receivable in the consolidated balance sheets.

Notes receivable at June 30, 2017 and 2016 consists of the following:

	June 30, 2017			June 30, 2016

Notes receivable	$	23,855,122		$	7,052,255
Less: discount for interest		-			(11,270	)

		23,855,122			7,040,985
Less: current portion		(4,661,775	)		(2,097,363	)

Non-current portion	$	19,193,347		$	4,943,622

Future maturities of notes receivable as of June 30, 2017 are as follows:

Year Ending June 30,

2018	$	4,662,000
2019		4,359,000
2020		3,676,000
2021		3,542,000
2022		2,826,000
Thereafter		4,790,000

	$	23,855,000

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.

F-31

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

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. On June 22, 2017, the Company subleased 183,335 square meters land of the 250,000 square meter land to a forage production company at the price of RMB 25,300,000 (US $3,716,570). The remaining repayment of the 183,335 square meters land is RMB25,254,167 (US $3,709,837). There is a gain of the sublease of RMB 45,833 (US $6,733). The remaining prepayment of $1,352,083 and $5,285,680 is included in prepaid land lease in the consolidated balance sheets as of June 30, 2017 and 2016, 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 $10,378,572 and $10,820,258 is included in prepaid land lease in the consolidated balance sheets as of June 30, 2016 and 2016, respectively. The lease provides for renewal options.

F-32

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

7.	LeaseS (CONTINUED)

On May 7, 2015, the Company obtained another “land use right” for 250,000 square meters of land, from May 7, 2015 to May 6, 2045. In addition, the Company also leased buildings on the land which includes cowsheds, an office building and a flat building. The lease period for these buildings is the same as the land. The Company recorded the prepayment of RMB 74,847,600 (US$12,058,000) as prepaid leases. The prepaid lease is being amortized over the lease term of 30 years using the straight-line method. The unamortized balance of $10,242,686 and $10,825,203 is included in prepaid leases in the consolidated balance sheets as of June 30, 2017 and June 30, 2016, respectively.

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 $15,311,494 and $16,182,280 is included in prepaid lease in the consolidated balance sheets as of June 30, 2017 and 2016, respectively.

Rent expense charged to operations for the years ended June 30, 2017 and 2016 was $1,684,866 and $1,789,248, 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 on June and August, 2017. For the years ended June 30, 2017 and 2016, compensation under these agreements was $276,343 and $187,000, respectively.

At June 30, 2017, the future commitment under these agreements is approximate $96,000.

F-33

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

9.	Related party transactions

In July 2016 and April 2017, Xinhua Cattle contributed total net profit of $6,491,798 and $92,772, 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, January 2016 and February 2016.

In March 2015, Zhongxian Information and the Executive Chairman of the Company entered into a loan agreement pursuant to which the 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). The loans outstanding were $1,918,341 and $1,672,707 as of June 30, 2017 and 2016, respectively.

In 2012, CMCI issued 9,000,000 shares of common stock, valued at $0.34 per share, for a total of RMB 19,428,571 (US $3,060,000) to the shareholder of Yulong on behalf Zhongxian Information for the acquisition of Yulong. Zhongxian Information recorded the value of these shares as due to CMCI. China Dairy paid CMCI on June 29, 2016.

10.

Income taxes

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

	2017		2016

Current	$	-	$	-
Deferred		-		2,403,996

	$	-	$	2,403,996

F-34

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

10.

Income taxes (continued)

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

	2017			2016

Statutory rate		25.00	%		25.00	%
Allowance		0.08	%		0.32	%
Other		(25.08	%)		1176.98	%

Effective income tax rate		-			1202.30	%

The stock compensation of approximately $37,762,400 in the year ended June 30, 2016 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.

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.

F-35

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

10.

Income taxes (continued)

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

	June 30, 2017			June 30, 2016

Net operating loss carryforwards	$	520,965		$	497,542
Bargain purchase gain		(1,430,399	)		(1,430,399	)
Undistributed earnings of subsidiaries under PRC law upon VIE structure terminated		(38,636,474	)		(39,446,504	)

		(39,545,908	)		(40,379,361	)
Less valuation allowance		(520,965	)		(497,542	)

Net deferred tax (liabilities)	$	(40,066,873	)	$	(40,876,903	)

At June 30, 2017 and 2016, Zhongxian Information had unused operating loss carry-forwards of approximately $2,084,000 and $1,990,000, respectively, expiring in various years through 2020. The Company has established a valuation allowance of approximately $521,000 and $498,000 against the deferred tax asset related to the net operating loss carry forward at June 30, 2017 and 2016, due to the uncertainty of realizing the benefit.

The Company’s tax filings are subject to examination by the tax authorities. The tax years from 2010 to 2016 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 2014, 2015 and 2016. The year ended June 30, 2013 was examined by the Internal Revenue Service and resulted in no adjustment.

F-36

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

11.

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 terminate the contracts with the original four customers. In February 2016, the Company entered into a new milk sale agreement with one customer after terminating the contract with the original customer.

Three customers accounted for approximately 98% and 72% of milk sales for the years ended June 30, 2017 and 2016, respectively. Three and four customers accounted for approximately 72% and 71% of accounts receivable at June 30, 2017 and 2016, respectively.

Ninety-two farmers and seventy-six farmers accounted for the notes receivable at June 30, 2017 and 2016, respectively.

F-37

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

12.

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, 2017 and 2016, statements of income for the years ended June 30, 2017 and 2016, and statements of cash flows for the years ended June 30, 2017 and 2016:

Condensed Balance Sheets

ASSETS	June 30, 2017		June 30, 2016

Cash	$	3,481,282	$	3,067,131
Loan Receivable		-		-
Investment in subsidiaries		109,159,064		90,778,893

TOTAL ASSETS	$	112,640,346	$	93,846,024

LIABILITIES AND stockholders’ EQUITY

Stockholder loans	$	1,918,341	$	1,672,707

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		49,709,237
Retained earnings		62,878,009		42,410,980

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	112,640,346		93,846,024

F-38

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

12.

Parent company only condensed financial information (CONTINUED)

Condensed Statements of Income

	For the years ended June 30,
	2017		2016

Revenues
Share of earnings from investment in subsidiaries	$	22,336,574	$	18,935,506

Operating expenses
General and administrative		178,000		37,781,000

Net income (loss)	$	22,158,574	$	(18,845,494	)

F-39

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

12.

Parent company only condensed financial information (CONTINUED)

Condensed Statements of Cash Flows

	For the years ended June 30,
	2017			2016

Cash flows from operating activities
Net income (loss)	$	22,158,574		$	(18,845,494	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Share of earnings from investment in subsidiaries and VIE		(22,336,574	)		(18,935,506	)
Stock compensation for shareholder and consultants		-			37,781,000
Decrease in loan receivable		-			3,208,151
Increase in loan from shareholder		245,634

Net cash provided by operating activities		67,634			3,208,151

Bank interests income		7,627			-
Effect of exchange rate changes on cash		338,890			(141,020	)

Net change in cash		414,151			3,067,131
Cash, beginning of period		3,067,131			-

Cash, end of period	$	3,481,282		$	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-40

China Modern Agricultural Information, Inc.

and subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ended JUNE 30, 2017 AND 2016 (IN U.S. $)

12.

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, 2017 and 2016.

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 $155,919,882 and $92,173,317 as of June 30, 2017 and 2016, 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.

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.

13.

Subsequent event

On June 29, 2017, Xinhua Cattle signed with Longing Xiandai Farm to purchase 4,000 adult cows at RMB 15,000 (approximately $2,211) each for a total price of RMB 60,000,000 (approximately $8,844,000). Xinhua Cattle fully paid the purchase consideration on July 3, 2017 and all the cows were delivered at the same day.

On August 28, 2017, Yulong Cattle signed with Mengniu to terminate fresh milk purchase agreement. The agreement will be effective in September 1, 2017.

F-41

Item 9B. Other Information.

There is no other information required to be disclosed under this item which was not previously disclosed.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Set forth below is information regarding our directors and executive officers.

Name	Age	Position
Liu Enjia	80	Chairman of the Board of Directors
Wang Youliang	49	Chief Executive Officer, Director
Shan Yanqin	70	Director
Liu Yanyan	43	Chief Financial Officer
Qin Libei	65	Chief Operating Officer
Liu Zhengxin	44	Chief Human Resource Officer

A brief description of the background and business experience of our sole executive officer and director for the past five years is as follows:

Mr. Liu Enjia

Mr. Liu Enjia is the Chairman of the Company. In 1985, Mr. Liu Enjia served as the Chairman of the Board for Hong Kong Yunli Development (Heilongjiang) Co. Thereafter, in 1991, Mr. Liu Enjia served as the Chairman and President of Hong Kong Yunli Group. Mr. Liu Enjia has also served as faculty member and lecturer at numerous Chinese universities. In 1994, he was a guest lecturer and Visiting Professor at the Social Development Institute at Peking University. Also, in 1994, he served as a Visiting Professor at Shenzhen University. In 1995, he was a guest researcher with the State Economic System Reform Committee. Also in 1995, Mr. Liu Enjia served as consultant for the Heilongjiang Provincial Government System, as well as the Honorary President of Chamber of Commerce of the Heilongjiang Province.

In 1996, at the National Agricultural Conference, Mr. Liu Enjia proposed the business model for agricultural enterprise, which was published in the People’s Forum. Mr. Liu Enjia also established the “Zhongxian Agriculture” theory and the harmonious ecological agricultural practice model which has been implemented in the Heilongjiang Province, winning high praise from State leaders and the State Council.

Mr. Liu Enjia is a dedicated researcher of China’s economic behavior and reform. To that end, he currently serves as the Director of China’s Economic Behavior Research Center. Mr. Liu Enjia is credited with advancing the “Zhongxian” model and business commercialization theory, which brought about entrusted operations in state-owned enterprises, attracting the eye of the international community.

We believe that Mr. Liu Enjia is qualified to serve on our Board of Directors because he brings a broad base of knowledge and experience in the agriculture industry.

Mr. Wang Youliang

Mr. Youliang is the Chief Executive Officer and a Director of the Company. From 1991 to 1997, Mr. Youliang was a staff member of the Tonghua Branch of China Construction Bank. Thereafter, from 1997 to 2006, he was the founder and President of TonghuaHongyuan Trading Co., Ltd. From 2006 to 2008, Mr. Youliang served as the CMO of Yunnan NanyaoJiaoxiong Pharmaceutical Co., Ltd. From 2008 to 2010 he served as the Vice President of Guofa Venture Investment Co., Ltd. Currently, Mr. Youliang is the General Manager, Chief Executive Officer and Director of Heilongjiang Zhongxian Information Co., Ltd. Mr. Youliang graduated from Jilin University with a degree in Finance.

We believe that Mr. Wang Youliang is qualified to serve on our Board of Directors because he brings a broad base of knowledge and experience in business administration and management.

Ms. Shan Yanqin

Ms. Shan Yangin serves as a Director. While working with Harbin Thermodynamic Company from 1990-2000, she served as the office director and manager of the company. Thereafter, from 2000-2005, Ms. Yangin was the founder and Vice President of Daqing Sunlight Terrestrial Heat Tubing Sales Co., Ltd. From 2005 to the present, Ms. Yangin serves as a Director for Heilongjiang Zhongxian Information Co., Ltd. Ms. Shan Yangin graduated from the Harbin University of Commerce with a Business Administration degree.

We believe that Ms. Shan Yanqin is qualified to serve on our Board of Directors because she brings a broad base of knowledge and experience in business administration and management.

Ms. Liu Yanyan

Ms. Liu Yanyan serves as the Chief Financial Officer of the company. Ms. Yanyan has over a decade of experience in accounting and financial management. From 1995-2000 she served as a staff member of the Harbin Decorative Advertisement Design Corporation. Thereafter, she served as a staff member of Baixin Shoes Co., Ltd from 2000-2001. More recently, from 2002 to May 2010, Ms. Yanyan was a member of Harbin CaiyunTradings Company. Ms. Liu Yanyan graduated from the Heilongjiang College of Commerce with an accounting degree.

Mr. Qin Libei

Mr. Qin Libei serves as the Chief Operating Officer of the company. Mr. Libei has significant experience in the agricultural and livestock field. From 1981 to 1986, he was the Chief Secretary of Heilongjiang Bureau of Animal Husbandry. From 1986 to 1990 he was the Deputy Chief of Heilongjiang Livestock Breeding Guidance Station. Then, from 1991 to 1994, he served as the Deputy Chief of Heilongjiang Grassland Fodder Center experiment station. Additionally, from 1995 to 2000 he served as the Chairman of Heilongjiang Grassland Fodder Development Co., Ltd. and President of Heilongjiang Caiyuan Information Co. Ltd. More recently, from 2001 to 2010 Mr. Libei was a researcher with the Heilongjiang Grassland Fodder Center experimentation station. Currently, Mr. Libei also serves as the Chief Operating Officer for Heilongjiang Zhongxian Information Co., Ltd. Mr. Libei graduated from Heilongjiang University with a degree in Economics and Management.

Mr. Liu Zhengxin

Mr. Lin Zhengxin serves as the Chief Human Resource Officer of the company. From 1992 to 1993, Mr. Zhengxin was a sales representative with Yunli Development (Heilongjiang) Co., Ltd. Then, from 1993 to 2005, he serves as sales director for Yunli Development (Heilongjiang) Co., Ltd. More recently, from 2005 to 2010, Mr. Zhengxin was the Assistant President of Heilongjiang Zhongxian Information Co. Ltd. From 2008 to the present, Mr. Zhengxin also serves as the CHO for Heilongjiang Zhongxian Information Co. Ltd. Mr. Zhengxin holds an accounting degree from Heilongjiang Institute of Economic Management, and a minor in Human Resource Management.

Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the Board of Directors.

There are no agreements or understandings among Mr. Liu Enjia, Mr. Wang Youliang, Ms. Shan Yanqin, Ms. Liu Yanyan, Mr. Qin Libei, and Mr. Liu Zhengxin and any other person pursuant to which Mr. Liu Enjia, Mr. Wang Youliang, Ms. Shan Yanqin, Ms. Liu Yanyan, Mr. Qin Libei, and Mr. Liu Zhengxin were selected as a director or executive officer.

Family Relationships

Mr. Liu Enjia and Mr. Liu Zhengxin are father and son. There are no other family relationships between our director and executive officers.

Involvement in Legal Proceedings

To the best of our knowledge, our director or executive officer has not, during the past ten years:

●	been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

●	had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

●

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

●	been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

●

been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

●

been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” our director or executive officer has not been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Potential Conflicts of Interest

We are not aware of any current or potential conflicts of interest with our directors or executive officers.

Board Committees

We have not formed an Audit Committee, Compensation Committee or Nominating and Corporate Governance Committee as of the filing of this Annual Report. Our Board of Directors performs the principal functions of an Audit Committee. We currently do not have an audit committee financial expert on our Board of Directors. We believe that an audit committee financial expert is not required because the cost of hiring an audit committee financial expert to act as one of our directors and to be a member of an Audit Committee outweighs the benefits of having an audit committee financial expert at this time.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, officers and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and are required to furnish us with copies of these reports. Based solely on our review of the reports filed with the SEC, we believe that all persons subject to Section 16(a) of the Exchange Act timely filed all required reports in fiscal year ended June 30, 2017.

Code of Ethics

We have not adopted a Code of Ethics that is applicable to our Chief Executive Officer and chief financial and principal accounting officer. We are in the process of formulating a code of ethics and intend to adopt one in the future.

Item 11. Executive Compensation.

The following table sets forth the compensation paid or accrued by us to our President, Chief Executive Officer, Chief Financial Officer and each of our other officers for the fiscal year ended June 30, 2015.

Name and Principal Position	Fiscal Year	Salary (USD $)		Bonus (USD $)		Option Awards (USD $)		All Other Compensation (USD $)		Total (USD $)
Wang Youliang	2017		21,154		-		-		-		21,154
Chief Executive Officer	2016		21,442		-		-		-		21,442

Liu Yanyan	2017		17,628		-		-		-		17,628
Chief Financial Officer	2016		18,646		-		-		-		18,646

Liu Pingzhi	2017		17,628		-		-		-		17,628
Chief Human Resource Officer	2016		18,646		-		-		-		18,646

Narrative Disclosure to Summary Compensation Table

Mr. Wang Youliang

For the fiscal years ended June 30, 2016 and 2017, Mr. Wang Youliang received annual compensation of RMB 144,000, or USD $21,442 and $21,154 respectively due to the fluctuating currency exchange rate between USD and RMB in the respective year.

We entered into an Employment Agreement with Wang Youliang (the “Youliang Agreement”). Pursuant to the Youliang Agreement, Mr. Wang will serve as our Chief Executive Officer. The current term of the agreement starts on July 1, 2017 and expires on June 30, 2018. The Youliang Agreement provides that Mr. Wang’s base salary during the term shall be RMB 144,000, or approximately USD $21,154 per annum. Mr. Wang’s salary shall be paid on monthly basis, payable on the 30th day of each following month. If the Company unilaterally terminates the employment within the term of the agreement, the Company shall, on the termination date, make a lump-sum salary payment of the immediately preceding month to Mr. Wang plus compensation equal to three (3) months of Mr. Wang’s salary.

The agreement provides that it will automatically terminate upon either the expiration of the term of the Youliang Agreement or the occurrence of events authorizing such termination or the dissolution of the Company. The Youliang Agreement may also be terminated upon the occurrence of either a serious violation of company policy by Mr. Wang or by any major damages to the Company resulting from Mr. Wang’s failure to duly perform his duties.

Ms. Liu Yanyan

For the fiscal year ended June 30, 2016 and 2017, Ms. Liu Yanyan received annual compensation of RMB 120,000 , or USD $ 18,646 and $17,628 respectively due to the fluctuating currency exchange rate between USD and RMB in the respective year.

We entered into an Employment Agreement with Liu Yanyan (the “Yanyan Agreement”). Pursuant to the Yanyan Agreement, Ms. Liu serves as our Chief Financial Officer. The current term of the agreement starts on July 1, 2017 and expires on June 30, 2018. The Yanyan Agreement provides that Ms. Liu’s base salary during the term shall be RMB 120,000, or approximately $17,628 per annum. Ms. Liu’s salary shall be paid on monthly basis, payable on the 30th day of each following month. If the Company unilaterally terminates Ms. Liu within the term of the agreement, the Company shall, on the termination date, make a lump-sum salary payment of the immediately preceding month to Ms. Liu plus compensation equal to three (3) months of Ms. Liu’s salary.

The agreement provides that it will automatically terminate upon either the expiration of the term of the Yanyan Agreement or the occurrence of events authorizing such termination or the dissolution of the Company. The Yanyan Agreement may also be terminated upon the occurrence of either a serious violation of the company policy by Ms. Liu or by any major damages to the Company resulting from Ms. Liu’s failure to duly perform her duties.

Mr. Liu Zhengxin

For the fiscal year ended June 30, 2016 and 2017, Mr. Liu Zhengxin received annual compensation of RMB 120,000 , or USD $18,646 and $17,628 respectively due to the fluctuating currency exchange rate between USD and RMB in the respective fiscal year.

We entered into an Employment Agreement with Liu Zhengxin (the “Zhengxin Agreement”). Pursuant to the Zhengxin Agreement, Mr. Liu serves as our Chief HR Officer. The current term of the agreement starts on July 1, 2017 and expires on June 30, 2018. The Zhengxin Agreement provides that Mr. Liu’s base salary during the term shall be 120,000 RMB or USD $17,628 per annum. Mr. Liu’s salary shall be paid on monthly basis, payable on the 30th day of each following month. If the Company unilaterally terminates Ms. Zhengxin within the term of the agreement, the Company shall, on the termination date, make a lump-sum salary payment of the immediately preceding month to Mr. Liu plus compensation equal to three (3) months of Mr. Liu’s salary.

The agreement provides that it will automatically terminate upon either the expiration of the term of the Zhengxin Agreement or the occurrence of events authorizing such termination or the dissolution of the Company. The Zhengxin Agreement may also be terminated upon the occurrence of either a serious violation of the company policy by Mr. Liu or by any major damages to the Company resulting from Mr. Liu’s failure to duly perform his duties.

Outstanding Equity Awards at Fiscal Year-End Table

None.

Director Compensation

The members of our board of directors are not compensated for serving on the board.

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

The following table shows the number of our securities beneficially owned by our named executive officers, our director, our executive officers and directors as a group, and each person known to us to own more than 5% of our outstanding shares of common stock as of September 28, 2017. Except as otherwise indicated, all shares are owned directly and the shareholders possess sole voting and investment power with respect to the shares listed below. As of September 28, 2017, 53,100,000 shares of our common stock were issued and outstanding. Unless otherwise stated, the business address of the person listed below is c/o No.A09, Wuzhou Sun Town Limin Avenue, Limin Development District Harbin, Heilongjiang, China.

Name and Address	Amount and Nature of Beneficial Ownership (1)		Percentage of Class (2)
Youliang Wang, Chief Executive Officer and Director		4,049,775		7.63	%
Yanyan Liu, Chief Financial Officer		0		0	%
Libei Qin, Chief Operating Officer		0		0	%
Zhengxin Liu, Chief Human Resource Officer		7,936,784		14.95	%
Enjia Liu, Chairman of the Board of Directors		0		0	%
Yanqin Shan, Director		0		0	%
All officers and directors as group (6)		11,986,559		22.88	%

(1)

A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through such as exercise of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers are exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.

(2)

For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of September 28, 2017. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of September 28, 2017 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.

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

The Company obtained demand and non-interest bearing loans from an affiliated party. The following sets forth the name and affiliation of such affiliated party, the aggregate amount of principal loaned during 2016 and 2015, the amount of principal paid during 2016 and 2015, and the outstanding balance as of June 30, 2016 and 2015.

Name of		Aggregate Amount of Principal Loaned				Amount of Principal Paid				Outstanding Balance as of June 30,
Related Party	Affiliation	2016		2017		2016		2017		2016		2017
Liu Enjia	Director	$	104,000	$	154,000	$	0	$	0	$	1,672,707	$	1,918,341

Director Independence

Mr. Liu Enjia, Mr. Wang Youliang, and Ms. Shan Yanqin, the members of our Board of Directors, are not independent using the definition of independence under the rules of the SEC.

Item 14. Principal Accounting Fees and Services.

The following table shows the aggregate fees billed for professional services provided to us by Wei, Wei & Co., LLP for 2016 and 2017:

	2016		2017
Audit Fees	$	130,000	$	130,000
Audit-Related Fees		-		-
Tax Fees		4,500		4,500
All Other Fees		-		-
		-		-
Total	$	134,500	$	134,500

For the fiscal years ended June 30, 2016 and 2017, the aggregate fees billed for professional services rendered for the audit and review of our financial statements were approximate $130, 000 and $[*], respectively.

There were no fees for other audit-related services for the fiscal years ended June 30, 2016 and 2017.

For our fiscal years ended June 30, 2016 and 2017, the aggregate fees billed for professional services rendered for tax compliance, tax advice, and tax planning were approximate $4,500 and $[*], respectively.

All Other Fees

We did not incur any other fees related to services rendered by our independent registered public accounting firm for the fiscal years ended June 30, 2016 and 2017.

The SEC requires that before our independent registered public accounting firm is engaged by us to render any auditing or permitted non-audit related service, the engagement be either: (i) approved by our Audit Committee or (ii) entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided that the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service, and such policies and procedures do not include delegation of the Audit Committee’s responsibilities to management.

We do not have an Audit Committee. Our Board of Directors pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees during 2015 and 2014 were reviewed and approved by our Board of Directors either before or after the respective services were rendered.

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 2.6 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: September 29, 2017	By:	/s/ Youliang Wang
		Youliang Wang
		Chief Executive Officer (Principal Executive Officer)

Dated: September 29, 2017	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	Chairman of the Board of Directors
Enjia Liu		September 29, 2017

/s/ Youliang Wang	Chief Executive Officer and Director
Youliang Wang	(Principal Executive Officer)	September 29, 2017

/s/ Yanqin Shan	Director
Youqin Shan		September 29, 2017

/s/ Yanyan Liu	Chief Financial Officer
Yanyan Liu	(Principal Financial Officer)	September 29, 2017

Attached files

China Modern Agricultural Information, Inc. Reports

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