Going Concern
As shown in the accompanying consolidated financial statements, the Company had negative cash flows from operations for the year ended September 30, 2013 and the Company’s current liabilities exceed its current assets by $13.2 million 13200000at September 30, 2013. The Company suspended manufacturing operations in May 2011 as part of an effort to relocate the production facilities. The Company resumed limited production on January 2, 2012. The current cash and inventory level will not be sufficient to support the Company’s resumption of its normal operations and repayments of its loans. In addition, the Company has suffered negative cash flows for past two years. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company will need additional funds to meet its operating and financing obligations until sufficient cash flows are generated from anticipated production to sustain operations and to fund future development and financing obligations. We expect, but provide no assurance, that the affiliate companies owned by the Company’s largest shareholder and President, Mr. Pu Fachun, will continue providing necessary funding for the Company’s normal operations. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.