Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jan. 31, 2018 | Mar. 13, 2018 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jan. 31, 2018 | |
Trading Symbol | goas | |
Entity Registrant Name | XIANGTIAN (USA) AIR POWER CO., LTD. | |
Entity Central Index Key | 1,472,468 | |
Current Fiscal Year End Date | --07-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 591,042,000 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well Known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jan. 31, 2018 | Jul. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 570,973 | $ 1,156,969 |
Accounts receivable, net | 46,081 | 1,142,631 |
Inventories | 1,222,951 | 550,413 |
Advances to suppliers | 933,599 | 1,168,867 |
Costs in excess of billings | 3,000,336 | 2,916,902 |
Note receivable | 159,132 | 0 |
Other receivables | 20,555 | 12,308 |
Total current assets | 5,953,627 | 6,948,090 |
Non-current assets | ||
Property, plant and equipment, net | 6,556,927 | 4,330,333 |
Deposit for property, plant and equipment | 95,321 | 2,080,436 |
Total non-current assets | 6,652,248 | 6,410,769 |
Total assets | 12,605,875 | 13,358,859 |
Current liabilities | ||
Accounts payable and accrued liabilities | 3,878,000 | 5,015,806 |
Note payable | 465,197 | 0 |
Advance from customers | 1,078,977 | 471,880 |
Due to related parties | 2,865,851 | 2,352,821 |
Due to director | 511,272 | 500,247 |
Income taxes payable | 566,465 | 544,508 |
Other payables | 349,612 | 467,463 |
Total current liabilities | 9,715,374 | 9,352,725 |
Non-current liabilities | ||
Commitments and contingencies | 0 | 0 |
STOCKHOLDERS' EQUITY | ||
Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock: $0.001 par value, 1,000,000,000 shares authorized, 591,042,000 shares issued and outstanding | 591,042 | 591,042 |
Additional paid-in capital | 9,965,555 | 9,962,555 |
Subscription receivable | (310,000) | (310,000) |
Accumulated deficit | (6,901,619) | (5,377,094) |
Accumulated other comprehensive loss | (454,477) | (860,369) |
Total stockholders' equity | 2,890,501 | 4,006,134 |
Total liabilities and stockholders' equity | $ 12,605,875 | $ 13,358,859 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jan. 31, 2018 | Jul. 31, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 591,042,000 | 591,042,000 |
Common stock, shares outstanding | 591,042,000 | 591,042,000 |
Consolidated Statement of Opera
Consolidated Statement of Operations and Comprehensive Income (Loss) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Revenue-products | $ 175,821 | $ 154,464 | $ 481,461 | $ 154,464 |
Revenue-installation of power systems (including $46,050, $154,464, $54,798 and $154,464 to related parties for the three and six months ended January 31, 2018 and 2017 respectively) | 56,422 | 811,432 | 105,976 | 898,192 |
Total revenue | 232,243 | 965,896 | 587,437 | 1,052,656 |
Cost of sales-products | 122,335 | 0 | 401,980 | 133,520 |
Cost of sales- installation of power systems | 53,106 | 834,113 | 91,105 | 772,192 |
Total cost of sales | 175,441 | 834,113 | 493,085 | 905,712 |
Gross profit | 56,802 | 131,783 | 94,352 | 146,944 |
Operating expenses: | ||||
Selling, general and administrative expenses (including $31,578, $30,659, $62,791 and $60,986 to related parties for the three and six months ended January 31, 2018 and 2017 respectively) | 725,489 | 479,365 | 1,611,640 | 1,186,217 |
Loss from operations | (668,687) | (347,582) | (1,517,288) | (1,039,273) |
Other (expenses) income | ||||
Other income (expenses) | 423 | 321 | (4,008) | 7,455 |
Interest income(expense) | 286 | (53) | 614 | (53) |
Total other (expenses) income, net | 709 | 268 | (3,394) | 7,402 |
Net loss before taxes | (667,978) | (347,314) | (1,520,682) | (1,031,871) |
Income tax (expense) benefit | (1,008) | 26,747 | (3,843) | 59,930 |
Net loss | (668,986) | (320,567) | (1,524,525) | (971,941) |
Foreign currency translation adjustment | 316,017 | (145,423) | 405,892 | (345,279) |
Comprehensive loss | $ (352,969) | $ (465,990) | $ (1,118,633) | $ (1,317,220) |
Net loss per common share - basic and diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average number of common shares outstanding - basic and diluted | 591,042,000 | 591,042,000 | 591,042,000 | 591,042,000 |
Consolidated Statement of Oper5
Consolidated Statement of Operations and Comprehensive Income (Loss) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Revenue from Related Parties | $ 46,050 | $ 54,798 | $ 154,464 | $ 154,464 |
Selling, general and administrative expenses to related parties | $ 31,578 | $ 30,659 | $ 62,791 | $ 60,986 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders Equity (Deficit) - 6 months ended Jan. 31, 2018 - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Subscription Receivable [Member] | Deficit Accumulated [Member] | Other Comprehensive Income (Loss) [Member] | Total |
Beginning Balance at Jul. 31, 2017 | $ 591,042 | $ 9,962,555 | $ (310,000) | $ (5,377,094) | $ (860,369) | $ 4,006,134 |
Beginning Balance (Shares) at Jul. 31, 2017 | 591,042,000 | |||||
Rent contributed by shareholders | 3,000 | 3,000 | ||||
Other comprehensive income | 405,892 | 405,892 | ||||
Net loss | (1,524,525) | (1,524,525) | ||||
Ending Balance at Jan. 31, 2018 | $ 591,042 | $ 9,965,555 | $ (310,000) | $ (6,901,619) | $ (454,477) | $ 2,890,501 |
Ending Balance (Shares) at Jan. 31, 2018 | 591,042,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (1,524,525) | $ (971,941) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Allowance for doubtful accounts | (112,620) | 0 |
Depreciation | 195,881 | 200,697 |
Rent contributed by shareholders as paid-in capital | 3,000 | 3,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,111,483 | 2,547,156 |
Inventories | (379,861) | (2,072,414) |
Advances to suppliers | (200,208) | (1,524,233) |
Costs in excess of billings | (83,434) | 0 |
Other receivables | (8,247) | 444,105 |
Due from related party | 0 | (80,859) |
Other current assets | 0 | (344,492) |
Accounts payable and accrued liabilities | (1,137,806) | (1,217,262) |
Advances from customers | 607,097 | 0 |
Taxes payables | 21,957 | (4,918) |
Advance billings on contracts | 0 | 2,229,693 |
Other payables | (117,851) | 0 |
Deferred tax liability | 0 | (74,767) |
Net cash used in operating activities | (1,625,134) | (866,235) |
Cash flows from investing activities: | ||
Issuance of note receivable | (159,132) | 0 |
Purchase of property and equipment | 0 | (18,436) |
Loan made to related parties | 0 | (177,018) |
Net cash (used in) provided by investing activities | (159,132) | (195,454) |
Cash flows from financing activities: | ||
Advances from related parties | 356,474 | 445,447 |
Proceeds from notes payable | 465,197 | 0 |
Advances from director | 11,025 | 0 |
Net cash provided by financing activities | 832,696 | 445,447 |
Effect of exchange rate change on cash | 365,574 | (540,264) |
Net change in cash and cash equivalents | (585,996) | (1,156,506) |
Cash and cash equivalents - beginning of period | 1,156,969 | 1,226,220 |
Cash and cash equivalents - end of period | 570,973 | 69,714 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 0 | 0 |
Income tax paid | 19,268 | 0 |
Supplemental non-cash investing and financing information: | ||
Transfers from advances to suppliers to inventories | 316,591 | 0 |
Transfers from deposits to property, plant, and equipment | 2,033,664 | 0 |
Rent contributed by shareholders | $ 3,000 | $ 3,000 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jan. 31, 2018 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Text Block] | NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Xiangtian (USA) Air Power Co., Ltd. (the “Company”) was incorporated in the State of Delaware on September 2, 2008. The Company is in the field of Compressed Air Energy Storage in China and produces electricity generation systems that combine our compressed air storage technology with photovoltaic (PV) panels to achieve a continuous supply of power under weather conditions that are unfavorable to the generation of electricity from PV panels alone. All of the Company’s operations are through its variable interest entities located in the Peoples’ Republic of China (PRC). Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) applicable to interim financial information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosure required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. These financial statements should be read in conjunction with the financial statements and other information included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2017, as filed with the SEC. Going Concern The accompanying Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the period ended January 31, 2018, the Company incurred a net loss of $1,524,525 and used cash in operating activities of $1,625,134, and at January 31, 2018, the Company had a working capital deficit of $3,761,747. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on our July 31, 2017 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty be necessary should we be unable to continue as a going concern. The Company believes it will require additional funds to continue its operations through fiscal 2018 and to continue to develop its existing projects and expand into new projects. The Company plans to raise such funds by generating additional sales revenue, implementing cost reductions, and raising loans from major shareholders and directors, or a combination thereof, and the Company believes it is capable of raising such funds in the coming fiscal year. There are no assurances such funds will be available, and if available, at terms acceptable to the Company. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Significant accounting estimates include, among others, the allowance for doubtful accounts receivable, valuation of inventory, valuation of advances to suppliers, impairment analysis of long-term assets, valuation allowance on deferred income taxes, valuation of warranty reserves, and the accrual of potential liabilities. Actual results may differ materially from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of the Company, its subsidiaries and VIE for which it is deemed the primary beneficiary. All significant inter-company accounts and transactions have been eliminated in consolidation. The Company’s wholly owned subsidiary, Luck Sky Shen Zhen, through a series of agreements known as variable interest agreements (“VIE” agreements), controls Sanhe City Lucksky Electrical Engineering Co., Ltd. (“Sanhe”), a corporation incorporated under the laws of the PRC. As a result of these contractual arrangements, which obligates Luck Sky Shen Zhen to absorb a majority of the risk of loss from the activities of Sanhe and enables Luck Sky Shen Zhen to receive a majority of its expected residual returns, the Company accounts for Sanhe as a variable interest entity (VIE). The following financial statement amounts and balances of Sanhe are included in the accompanying condensed consolidated financial statements as of January 31, 2018 and July 31, 2017, and for the six months ended January 31, 2018 and 2017, respectively: January31, July 31, 2018 2017 Total assets $ 12,313,838 $ 13,070,348 Total liabilities 8,511,845 8,498,122 For the six For the six months months Ended ended January 31, January 31, 2018 2017 (Unaudited) (Unaudited) Net loss $ 1,040,623 $ 769,631 Fair Value Measurements Fair value measurements adopted by the Company are based on the authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. FASB authoritative guidance establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1 - Quoted prices in active markets for identical assets or liabilities. The carrying amounts reported in the Condensed Consolidated Balance Sheet for cash and cash equivalents, accounts receivable, inventory, notes receivables, accounts payable, notes payable, accrued liabilities and other payables approximate their fair values due to their short-term nature. Foreign Currency Translation The reporting currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. The Company’s functional currency is Chinese Renminbi (“RMB”) as substantially all of the Company’s PRC subsidiaries’ operations use this denomination. The consolidated financial statements are presented in U.S. dollars. Assets and Liabilities are translated at the exchange rate as of the balance sheet date. Income and expenses are translated at the average exchange rate for the period presented. Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred. The exchange rates for the applicable periods are as follows: As of and for As of and for the six As of and for the six months ended the year ended months ended January 31, July 31, January 31, 2018 2017 2017 Period end RMB: US$ exchange rate 6.28 6.72 6.63 Period average RMB: US$ exchange rate 6.58 6.82 6.62 RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollars at the rates used in translation. Earnings (Loss) per Share Basic earnings per share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method, and convertible debt or convertible preferred stock, using the if-converted method. Earnings per share excludes all potential dilutive shares of common stock if their effect is anti-dilutive. There were no potential dilutive securities at January 31, 2018 or January 31, 2017. Concentrations During the six months ended January 31, 2018, one customer represented 52% of the Company's revenue. During the six months ended January 31, 2017, other customer represented 73% of the Company's revenue. At January 31, 2018 and July 31, 2017, one customer accounted for 75% and 88%, respectively, of accounts receivable. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 6 Months Ended |
Jan. 31, 2018 | |
ACCOUNTS RECEIVABLE [Text Block] | NOTE 2 –ACCOUNTS RECEIVABLE January 31, July 31, 2018 2017 Accounts receivable $ 1,503,444 $ 2,614,927 Less: allowance for doubtful accounts (1,457,363 ) (1,472,296 ) Accounts receivable, net $ 46,081 $ 1,142,631 |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jan. 31, 2018 | |
INVENTORIES [Text Block] | NOTE 3 – INVENTORIES January 31, July 31, 2018 2017 Raw materials and parts $ 1,023,900 $ 801,437 Work in process 495,146 54,924 Finished goods 69,428 35,661 Total 1,588,474 892,022 Less: allowance for inventory reserve (365,523 ) (341,609 ) Inventories, net $ 1,222,951 $ 550,413 |
COSTS IN EXCESS OF BILLINGS
COSTS IN EXCESS OF BILLINGS | 6 Months Ended |
Jan. 31, 2018 | |
COSTS IN EXCESS OF BILLINGS [Text Block] | NOTE 4 – COSTS IN EXCESS OF BILLINGS Costs in excess of billings relate to certain contracts and consists of the following: January 31, July 31, 2018 2017 Billings in excess of costs on uncompleted contracts- related party $ (70,989 ) $ 46,510 Costs on contracts not yet recognized 3,071,325 2,870,392 Costs in excess of billings $ 3,000,336 $ 2,916,902 Contracts accounted for under the percentage-of- completion method: Costs incurred on uncompleted contracts-related party $ 73,598 $ 172,922 Billings to date (144,587 ) (126,412 ) $ (70,989 ) $ 46,510 At January 31, 2018 and July 31, 2017, $3,071,325 and $2,870,392 respectively, of inventory delivered in advance of revenue recognition was deferred and included with costs in excess of billings on the accompanying balance sheet. |
NOTES RECEIVABLE
NOTES RECEIVABLE | 6 Months Ended |
Jan. 31, 2018 | |
NOTES RECEIVABLE [Text Block] | NOTE 5 – NOTE RECEIVABLE On September 18, 2017, the Company entered into an agreement to loan Shenzhen Chun Fu Xin Trading Co. Ltd., an unrelated entity, $159,132 (RMB1,000,000). The loan is unsecured, earns interest at 5.4% per annum, and is due on September 17, 2018. In March 2018, the Company received a total payment of $163,430 (RMB1,027,000) as principal and interest payment of the note receivable. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended |
Jan. 31, 2018 | |
PROPERTY, PLANT AND EQUIPMENT [Text Block] | NOTE 6 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following: January 31, July 31, 2018 2017 Machinery equipment $ 7,505,466 $ 5,025,011 Computer and office equipment 73,212 68,422 Vehicle 73,234 68,442 Total property, plant and equipment 7,651,912 5,161,875 Less: accumulated depreciation (1,094,985 ) (831,542 ) Total $ 6,556,927 $ 4,330,333 Total depreciation expenses for the six months ended January 31, 2018 and 2017 was $195,881 and $200,697, respectively. At July 31, 2017, the balance of deposits for property, plant, and equipment was $2,080,436. The deposits were for the purchases of machinery equipment that had not been accepted or put into service. During the six months ended January 31, 2018, machinery in the amount of $2,033,664 was accepted and put into service, and the related deposit of $2,033,664 was transferred to machinery equipment. At January 31, 2018, the balance of deposits for property, plant, and equipment was $95,321. |
ADVANCES TO SUPPLIERS
ADVANCES TO SUPPLIERS | 6 Months Ended |
Jan. 31, 2018 | |
ADVANCES TO SUPPLIERS [Text Block] | NOTE 7 – ADVANCES TO SUPPLIERS At January 31, 2018 and July 31, 2017, the Company had $933,599 and $1,168,867, respectively of outstanding advances to suppliers, which mainly represent interest-free cash deposits paid to suppliers for future purchases of raw materials. At January 31, 2018 and July 31, 2017, the advances to suppliers were net of a reserve of $1,523,450 and $1,404,565, respectively. |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jan. 31, 2018 | |
NOTES PAYABLE [Text Block] | NOTE 8 - NOTES PAYABLE On December 22, 2017, the Company entered into a note payable agreement with Zheng Yong, an unrelated party, for $50,608 (RMB318,023). The note payable is unsecured, bears interest at 4.75% per annum, and is due on December 21, 2018. On January 26, 2018, the Company entered into a note payable agreement with Hubei Henghao Real Estate Development Co. LTD., an unrelated entity, for $413,743 (RMB2,600,000). The note payable is unsecured, bears interest at 4.75% per annum, and is due on January 25, 2019. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jan. 31, 2018 | |
RELATED PARTY TRANSACTIONS [Text Block] | NOTE 9 - RELATED PARTY TRANSACTIONS Sales to related party Due to related parties January 31, July 31, 2018 2017 Advances due to Zhou Deng Rong $ 2,372,434 $ 1,953,169 Lease payable to Lucksky Group 493,417 399,652 $ 2,865,851 $ 2,352,821 The advances due to Zhou Deng Rong, our former CEO, and immediate family member of our current CEO and current chairman are unsecured, non-interest bearing, and due on demand and primarily represent payment of professional and consulting fees incurred by the Company. Sanhe leases its principal office, factory and dormitory, and the related land use right, from Lucksky Group in Sanhe City, Hebei Province, PRC. Lucksky Group is owned by Zhou Deng Rong, our former CEO. For the six months ended January 31, 2018 and 2017, rent expense for the lease with Lucksky was $62,791 and $60,986, respectively. At January 31, 2018 and July 31, 2017, the amount due to Lucksky Group under the leases was $493,417 and $399,652, respectively. Due to Director |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jan. 31, 2018 | |
Basis of Presentation [Policy Text Block] | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) applicable to interim financial information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosure required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. These financial statements should be read in conjunction with the financial statements and other information included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2017, as filed with the SEC. |
Going Concern [Policy Text Block] | Going Concern The accompanying Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the period ended January 31, 2018, the Company incurred a net loss of $1,524,525 and used cash in operating activities of $1,625,134, and at January 31, 2018, the Company had a working capital deficit of $3,761,747. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on our July 31, 2017 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty be necessary should we be unable to continue as a going concern. The Company believes it will require additional funds to continue its operations through fiscal 2018 and to continue to develop its existing projects and expand into new projects. The Company plans to raise such funds by generating additional sales revenue, implementing cost reductions, and raising loans from major shareholders and directors, or a combination thereof, and the Company believes it is capable of raising such funds in the coming fiscal year. There are no assurances such funds will be available, and if available, at terms acceptable to the Company. |
Use of Estimates [Policy Text Block] | Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Significant accounting estimates include, among others, the allowance for doubtful accounts receivable, valuation of inventory, valuation of advances to suppliers, impairment analysis of long-term assets, valuation allowance on deferred income taxes, valuation of warranty reserves, and the accrual of potential liabilities. Actual results may differ materially from those estimates. |
Principle of Consolidation [Policy Text Block] | Principles of Consolidation The consolidated financial statements include the accounts of the Company, its subsidiaries and VIE for which it is deemed the primary beneficiary. All significant inter-company accounts and transactions have been eliminated in consolidation. The Company’s wholly owned subsidiary, Luck Sky Shen Zhen, through a series of agreements known as variable interest agreements (“VIE” agreements), controls Sanhe City Lucksky Electrical Engineering Co., Ltd. (“Sanhe”), a corporation incorporated under the laws of the PRC. As a result of these contractual arrangements, which obligates Luck Sky Shen Zhen to absorb a majority of the risk of loss from the activities of Sanhe and enables Luck Sky Shen Zhen to receive a majority of its expected residual returns, the Company accounts for Sanhe as a variable interest entity (VIE). The following financial statement amounts and balances of Sanhe are included in the accompanying condensed consolidated financial statements as of January 31, 2018 and July 31, 2017, and for the six months ended January 31, 2018 and 2017, respectively: January31, July 31, 2018 2017 Total assets $ 12,313,838 $ 13,070,348 Total liabilities 8,511,845 8,498,122 For the six For the six months months Ended ended January 31, January 31, 2018 2017 (Unaudited) (Unaudited) Net loss $ 1,040,623 $ 769,631 |
Fair Value Measurements [Policy Text Block] | Fair Value Measurements Fair value measurements adopted by the Company are based on the authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. FASB authoritative guidance establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1 - Quoted prices in active markets for identical assets or liabilities. The carrying amounts reported in the Condensed Consolidated Balance Sheet for cash and cash equivalents, accounts receivable, inventory, notes receivables, accounts payable, notes payable, accrued liabilities and other payables approximate their fair values due to their short-term nature. |
Foreign Currency Translation [Policy Text Block] | Foreign Currency Translation The reporting currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. The Company’s functional currency is Chinese Renminbi (“RMB”) as substantially all of the Company’s PRC subsidiaries’ operations use this denomination. The consolidated financial statements are presented in U.S. dollars. Assets and Liabilities are translated at the exchange rate as of the balance sheet date. Income and expenses are translated at the average exchange rate for the period presented. Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred. The exchange rates for the applicable periods are as follows: As of and for As of and for the six As of and for the six months ended the year ended months ended January 31, July 31, January 31, 2018 2017 2017 Period end RMB: US$ exchange rate 6.28 6.72 6.63 Period average RMB: US$ exchange rate 6.58 6.82 6.62 RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollars at the rates used in translation. |
Earnings (Loss) per Share [Policy Text Block] | Earnings (Loss) per Share Basic earnings per share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method, and convertible debt or convertible preferred stock, using the if-converted method. Earnings per share excludes all potential dilutive shares of common stock if their effect is anti-dilutive. There were no potential dilutive securities at January 31, 2018 or January 31, 2017. |
Concentrations [Policy Text Block] | Concentrations During the six months ended January 31, 2018, one customer represented 52% of the Company's revenue. During the six months ended January 31, 2017, other customer represented 73% of the Company's revenue. At January 31, 2018 and July 31, 2017, one customer accounted for 75% and 88%, respectively, of accounts receivable. |
Recent Accounting Pronouncements [Policy Text Block] | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
NATURE OF OPERATIONS AND SUMM18
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Schedule of Variable Interest Entities [Table Text Block] | January31, July 31, 2018 2017 Total assets $ 12,313,838 $ 13,070,348 Total liabilities 8,511,845 8,498,122 For the six For the six months months Ended ended January 31, January 31, 2018 2017 (Unaudited) (Unaudited) Net loss $ 1,040,623 $ 769,631 |
Schedule of Foreign Currency Translation [Table Text Block] | As of and for As of and for the six As of and for the six months ended the year ended months ended January 31, July 31, January 31, 2018 2017 2017 Period end RMB: US$ exchange rate 6.28 6.72 6.63 Period average RMB: US$ exchange rate 6.58 6.82 6.62 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | January 31, July 31, 2018 2017 Accounts receivable $ 1,503,444 $ 2,614,927 Less: allowance for doubtful accounts (1,457,363 ) (1,472,296 ) Accounts receivable, net $ 46,081 $ 1,142,631 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Inventories [Table Text Block] | January 31, July 31, 2018 2017 Raw materials and parts $ 1,023,900 $ 801,437 Work in process 495,146 54,924 Finished goods 69,428 35,661 Total 1,588,474 892,022 Less: allowance for inventory reserve (365,523 ) (341,609 ) Inventories, net $ 1,222,951 $ 550,413 |
COSTS IN EXCESS OF BILLINGS (Ta
COSTS IN EXCESS OF BILLINGS (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Costs in excess of billings [Table Text Block] | January 31, July 31, 2018 2017 Billings in excess of costs on uncompleted contracts- related party $ (70,989 ) $ 46,510 Costs on contracts not yet recognized 3,071,325 2,870,392 Costs in excess of billings $ 3,000,336 $ 2,916,902 Contracts accounted for under the percentage-of- completion method: Costs incurred on uncompleted contracts-related party $ 73,598 $ 172,922 Billings to date (144,587 ) (126,412 ) $ (70,989 ) $ 46,510 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Property, Plant and Equipment [Table Text Block] | January 31, July 31, 2018 2017 Machinery equipment $ 7,505,466 $ 5,025,011 Computer and office equipment 73,212 68,422 Vehicle 73,234 68,442 Total property, plant and equipment 7,651,912 5,161,875 Less: accumulated depreciation (1,094,985 ) (831,542 ) Total $ 6,556,927 $ 4,330,333 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Related Party Transactions [Table Text Block] | January 31, July 31, 2018 2017 Advances due to Zhou Deng Rong $ 2,372,434 $ 1,953,169 Lease payable to Lucksky Group 493,417 399,652 $ 2,865,851 $ 2,352,821 |
NATURE OF OPERATIONS AND SUMM24
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Net loss | $ 668,986 | $ 320,567 | $ 1,524,525 | $ 971,941 | |
Cash used in operating activities | 1,625,134 | ||||
Working capital deficit | $ 3,761,747 | $ 3,761,747 | |||
One customer [Member] | |||||
Concentration risk, percentage of revenue | 52.00% | ||||
Concentration risk, percentage of accounts receivable | 75.00% | 75.00% | 88.00% | ||
Another customer [Member] | |||||
Concentration risk, percentage of revenue | 73.00% |
COSTS IN EXCESS OF BILLINGS (Na
COSTS IN EXCESS OF BILLINGS (Narrative) (Details) - USD ($) | Jan. 31, 2018 | Jul. 31, 2017 |
Inventory delivered in advance of revenue recognition | $ 3,071,325 | $ 2,870,392 |
NOTES RECEIVABLE (Narrative) (D
NOTES RECEIVABLE (Narrative) (Details) | 1 Months Ended | |||||
Mar. 31, 2018USD ($) | Mar. 31, 2018CNY (¥) | Jan. 31, 2018USD ($) | Sep. 18, 2017USD ($) | Sep. 18, 2017CNY (¥) | Jul. 31, 2017USD ($) | |
Note receivable | $ 159,132 | $ 0 | ||||
Shenzhen Chun Fu Xin Trading Co. Ltd. [Member] | ||||||
Note receivable | $ 159,132 | ¥ 1,000,000 | ||||
Debt Instrument, Interest Rate | 5.40% | 5.40% | ||||
Proceeds from Collection of Notes Receivable | $ 163,430 | ¥ 1,027,000 |
PROPERTY, PLANT AND EQUIPMENT27
PROPERTY, PLANT AND EQUIPMENT (Narrative) (Details) - USD ($) | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Depreciation | $ 195,881 | $ 200,697 | |
Deposit for property, plant and equipment | 95,321 | $ 2,080,436 | |
Transfers from deposits to property, plant, and equipment | $ 2,033,664 | $ 0 |
ADVANCES TO SUPPLIERS (Narrativ
ADVANCES TO SUPPLIERS (Narrative) (Details) - USD ($) | Jan. 31, 2018 | Jul. 31, 2017 |
Advances to suppliers | $ 933,599 | $ 1,168,867 |
Reserve on advances to suppliers | $ 1,523,450 | $ 1,404,565 |
NOTES PAYABLE (Narrative) (Deta
NOTES PAYABLE (Narrative) (Details) | Jan. 31, 2018USD ($) | Jan. 26, 2018USD ($) | Jan. 26, 2018CNY (¥) | Dec. 22, 2017USD ($) | Dec. 22, 2017CNY (¥) | Jul. 31, 2017USD ($) |
Note payable | $ 465,197 | $ 0 | ||||
Zheng Yong [Member] | ||||||
Note payable | $ 50,608 | ¥ 318,023 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 4.75% | 4.75% | ||||
Hubei Henghao Real Estate Development Co. LTD [Member] | ||||||
Note payable | $ 413,743 | ¥ 2,600,000 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 4.75% | 4.75% |
RELATED PARTY TRANSACTIONS (Nar
RELATED PARTY TRANSACTIONS (Narrative) (Details) - USD ($) | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Costs in Excess of Billings | $ 3,000,336 | $ 2,916,902 | |
Due to director | $ 511,272 | 500,247 | |
Zhou Deng Rong [Member] | |||
Business Combination, Step Acquisition, Equity Interest in Acquiree, Percentage | 95.00% | ||
LuckSky Group [Member] | |||
Accrued Rent, Current | $ 493,417 | $ 399,652 | |
Rent Expense | 62,791 | $ 60,986 | |
Sanhe Keilitai [Member] | |||
Construction Revenue | 54,798 | ||
Contract Revenue Cost | 47,434 | ||
Costs in Excess of Billings | 3,000,336 | ||
Construction and Development Costs | 661,217 | ||
Gross Billings | $ 2,329,572 |
Schedule of Variable Interest E
Schedule of Variable Interest Entities (Details) - USD ($) | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Total assets | $ 12,313,838 | $ 13,070,348 | |
Total liabilities | 8,511,845 | $ 8,498,122 | |
Net loss | $ 1,040,623 | $ 769,631 |
Schedule of Foreign Currency Tr
Schedule of Foreign Currency Translation (Details) | 6 Months Ended | 12 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Period end RMB: US$ exchange rate | 6.28 | 6.63 | 6.72 |
Period average RMB: US$ exchange rate | 6.58 | 6.62 | 6.82 |
Schedule of Accounts, Notes, Lo
Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) | Jan. 31, 2018 | Jul. 31, 2017 |
Accounts receivable | $ 1,503,444 | $ 2,614,927 |
Less: allowance for doubtful accounts | (1,457,363) | (1,472,296) |
Accounts receivable, net | $ 46,081 | $ 1,142,631 |
Inventories (Details)
Inventories (Details) - USD ($) | Jan. 31, 2018 | Jul. 31, 2017 |
Raw materials and parts | $ 1,023,900 | $ 801,437 |
Work in process | 495,146 | 54,924 |
Finished goods | 69,428 | 35,661 |
Total | 1,588,474 | 892,022 |
Less: allowance for inventory | (365,523) | (341,609) |
Inventories | $ 1,222,951 | $ 550,413 |
Costs in excess of billings (De
Costs in excess of billings (Details) - USD ($) | Jan. 31, 2018 | Jul. 31, 2017 |
Billings in excess of costs on uncompleted contracts- related party | $ (70,989) | |
Costs in excess of billings on uncompleted contracts- related party | $ 46,510 | |
Costs on contracts not yet recognized | 3,071,325 | 2,870,392 |
Costs in excess of billings | 3,000,336 | 2,916,902 |
Percentage-of Completion Method [Member] | ||
Costs incurred on uncompleted contracts-related party | 73,598 | 172,922 |
Billings to date | (144,587) | (126,412) |
Billings in excess of costs on uncompleted contracts- related party | $ (70,989) | |
Costs in excess of billings | $ 46,510 |
Property, Plant and Equipment36
Property, Plant and Equipment (Details) - USD ($) | Jan. 31, 2018 | Jul. 31, 2017 |
Total property, plant and equipment | $ 7,651,912 | $ 5,161,875 |
Less: accumulated depreciation | (1,094,985) | (831,542) |
Total | 6,556,927 | 4,330,333 |
Machinery and Equipment [Member] | ||
Total property, plant and equipment | 7,505,466 | 5,025,011 |
Computer And Office Equipment [Member] | ||
Total property, plant and equipment | 73,212 | 68,422 |
Vehicles [Member] | ||
Total property, plant and equipment | $ 73,234 | $ 68,442 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jan. 31, 2018 | Jul. 31, 2017 |
Due to related parties | $ 2,865,851 | $ 2,352,821 |
LuckSky Group [Member] | ||
Lease payable | 493,417 | 399,652 |
Zhou Deng Rong [Member] | ||
Due to related parties | $ 2,372,434 | $ 1,953,169 |