GENERAL AGRICULTURE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

See accompanying notes to the unaudited condensed consolidated financial statements

GENERAL AGRICULTURE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying notes to the unaudited condensed consolidated financial statements

GENERAL AGRICULTURE CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

General Agriculture Corporation (“GELT” or the “Company”), formerly Geltology Inc., was established under the laws of the State of Delaware on March 24, 2010. On July 12, 2013, GELT filed with the Secretary of State of Delaware a Certificate of Amendment to change its name to General Agriculture Corporation. The Company, through its wholly owned operating subsidiary, Xingguo General Fruit Industry Development Co., Ltd. (“General Fruit”) and General Fruit’s wholly-owned subsidiary, Xingguo General Red Navel Orange Preservation Company, Ltd. (“General Preservation”), is primarily engaged in planting, preserving, packaging and marketing premium navel oranges for distribution and sale throughout the People’s Republic of China (“PRC”).

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The accompanying unaudited financial statements have been prepared in accordance with US GAAP applicable to interim financial information and the requirements of Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by US GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included.

These interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended September 30, 2015, included in the Company’s annual report on Form 10-K filed with the U.S. Securities Exchange Commission on December 29, 2015. The interim consolidated financial statements follow the same accounting policies and methods of computations as the audited consolidated financial statements for the year ended September 30, 2015. Operating results for the three and sixnine months ended March 31,June 30, 2016 may not be necessarily indicative of the results that may be expected for the full year.

The consolidated financial statements include the accounts of General Agriculture Corporation and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Seasonal Nature of Operations

The Company’s operations are seasonal based on the maturity stage of its products. Sales are concentrated during the months from October through March,corresponding to the Company’s product maturity cycle which begins in the month of October when the products mature and are ready for sale.

Foreign Currency Translation and Transactions

The accompanying unaudited consolidated financial statements are presented in U.S. dollars (“USD”). Great China International’s functional currency is Hong Kong Dollar (“HKD”) and Nanchang Hanxin Agriculture Technology Co., Ltd, General Fruit and General Preservation’s functional currency is Chinese Yuan Renminbi (���(“RMB”). All assets and liabilities were translated at the current exchange rate, at respective balance sheets dates, stockholders’ equity is translated at the historical rates and income statement items are translated at the average exchange rate for the reporting periods. The resulting translation adjustments are reported as other comprehensive income and accumulated other comprehensive income in stockholders’ equity in accordance with the Codification ASC 220, Comprehensive Income. The significant foreign translation losses reported in this quarter is a result of the recent sharp depreciation of the RMB to USD.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

All transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. There were no material transaction gains or losses in the periods presented.

The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the consolidated financial statements were as follows:

Use of Estimates

The preparation of unaudited consolidated financial statements in conformity with US GAAP 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 reporting periods presented. Actual results could differ from these estimates. Significant items subject to such estimates and assumptions include the recoverability of the carrying amounts of recorded assets and liabilities, estimated useful life of property and equipment, inventory obsolesce and the allowance for doubtful accounts.

Accounts Receivable

Accounts receivable are recorded net of allowance for doubtful accounts. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. Periodically, management assesses customer credit history and relationships as well as performs accounts receivable aging analysis. Based on the results, management determines whether certain balances are deemed uncollectible at the end of each period. The balance of allowance for doubtful accounts amounted to $21,415$20,781 and $21,705 as of March 31,June 30, 2016 and September 30, 2015, respectively.

Inventory

Inventory is stated at the lower of cost or market. Cost is determined using the weighted-average cost method. Provisions are made for excess, slow moving and obsolete inventory as well as inventory whose carrying value is in excess of net realizable values, if any. Management continually evaluates the recoverability based on assumptions about customer demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs may be required that could negatively impact ourthe Company’s gross margin and operating results. As of March 31,June 30, 2016 and September 30, 2015, no provisions were deemed necessary.

Revenue Recognition

The Company derives its revenue primarily from the sale of navel oranges. Revenue is recognized in accordance with the provisions of ASC Topic 605, which provides that revenue is recognized when products are shipped, title and risk of loss is passed to the customers and collection is reasonably assured. Payments received before the above criteria are satisfied are recorded as advances from customers.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

Advertising Expense

The Company expenses all advertising expenses as incurred. Advertising expenses included in selling expenses were $0$642 and $8,891$29,377 for the three months ended March 31,June 30, 2016 and 2015, and $329$971 and $37,134$66,511 for the sixnine month ended March 31,June 30, 2016 and 2015, respectively.

Shipping and Handling

All shipping and handling costs are expensed as incurred and included in selling expenses. Total shipping and handling expenses were $0 and $18,916$2,857 for the sixthree month ended March 31,June 30, 2016 and 2015, respectively, and noTotal shipping and handling expenses were $0 and $21,773 for the three monthsmonth ended March 31,June 30, 2016 and 2015.2015, respectively.

Value-added-tax

The Company is subject to a value added tax (“VAT”) of 13% for selling navel oranges that were bought from other farmers and 17% for processing navel oranges from General Fruits. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under the commercial practice of the PRC, the Company pays VAT based on tax invoices issued. The tax invoices may be issued subsequent to the date on which revenue is recognized, and there may be a considerable delay between the date on which the revenue is recognized and the date on which the tax Invoiceinvoice is issued. In the event that the PRC tax authorities dispute the date on which revenue is recognized for tax purposes, the PRC tax office has the right to assess a penalty based on the amount of the taxes which are determined to be late or deficient, and will be expensed in the period if and when a determination is made by the tax authorities that a penalty is due. The Company reports revenues net of PRC’s value added tax for all the periods presented in the consolidated statements of operations.income and comprehensive income.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash and accounts receivable arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company controls credit risk related to accounts

receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

As of March 31,June 30, 2016 and September 30, 2015, the Company’s cash was with banks in the PRC and Hong Kong, where there is currently no rule or regulation mandated on obligatory insurance of bank accounts.

For the three and sixnine months ended March 31,June 30, 2016, no customer accounted more than 10% of the Company’s total sales. For the three months ended March 31,June 30, 2015, threetwo customers accounted for 38%37% of the Company’s sales. For the sixnine months ended March 31,June 30, 2015, two customers accounted for 25%26% of the Company’s sales.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

For the three months ended March 31,June 30, 2016 and 2015,,the outsourced navel oranges accounted for 47%3% and 29%0% of the Company’s total purchase, respectively. The Company purchased 100% outsourced navel oranges from one vendor.

For the sixnine months ended March 31,June 30, 2016 and 2015, the outsourced navel oranges accounted for 37%31% and 25%23% of the Company’s total purchase, respectively. The Company purchased 100% outsourced navel oranges from one vendor.

Earnings Per share

The Company reports earnings per share in accordance with the provisions of ASC 260.10, "Earnings Per Share”. ASC 260.10 requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock using the treasury method. As of March 31,June 30, 2016 and September 30, 2015, there are no potentially dilutive securities outstanding.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." The purpose of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The amendments in ASU 2014-09 require a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016 (fiscal year 2018 for the Company) and early adoption is not permitted. Subsequently, in August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date," that moves the effective date out one year (fiscal 2019 for the Company). Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 and ASU 2015-14 on its Consolidated Financial Statements.consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes," which simplifies the presentation of deferred taxes by requiring that deferred tax assets and liabilities be presented as noncurrent on the balance sheet. ASU 2015-17 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2015 (fiscal year 2017 for the Company). The Company adopted this guidance, prospectively, as of November 30, 2015.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" to increase the transparency and comparability about leases among entities. The new guidance requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

GENERAL AGRICULTURE CORPORATIONNOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

Notes

In April 2016, FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarity the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of this new standard on its unaudited condensed consolidated financial statements.

In May 2016, FASB issued ASU No. 2016-12—Revenue from Contracts with Customers (Topic 606); Narrow-Scope Improvements and Practical Expedients, which is intended to Condensed Consolidated Financial Statementsnot change the core principle of the guidance in Topic 606, but rather affect only the narrow aspects of Topic 606 by reducing the potential for diversity in practice at initial application and by reducing the cost and complexity of applying Topic 606 both at transition and on an ongoing basis. The Company is assessing the impact of the adoption of the ASU on its unaudited condensed consolidated financial statements, disclosure requirements and methods of adoption.

(Unaudited)

Note 3 – Inventory

Inventory by major categories are summarized as follows:

Work in process consists of depreciation, amortization of prepaid leases of navel orange orchards, rental, salary, fertilizer, utility, and labor spent in cultivating and producing navel oranges. Work in process is reclassified to finished goods after the navel oranges are harvested. The harvest season of navel oranges usually starts in October.

Note 4 – ADVANCE PAYMENTS

Advance payments represent payments made to suppliers for goods and materials that have not been received. Advance payments are also reviewed periodically by the Company to determine whether their carrying value has become impaired. Historically, the Company has not experienced any losses as a result of these advances. As of March 31,June 30, 2016 and September 30, 2015, the Company had $597,549$430,131 and $4,778,733 of advance payments that related to payments for purchasing navel oranges from other parties as well as packaging materials and utilities.

Note 5 – Property and Equipment

Property and equipment consist of the following:

Depreciation expense was $266,311$269,912 and $326,852$288,675 for the three months ended March 31,June 30, 2016 and 2015, and $540,227$810,139 and $614,661$903,336 for the sixnine months ended March 31,June 30, 2016 and 2015, respectively.

Note 6 – Intangible Assets

Intangible assets consist of the following:

Amortization expense was $876$889 and $932$940 for the three months ended March 31,June 30, 2016 and 2015, and $1,774$2,663 and $1,867$2,807 for the sixnine months ended March 31,June 30, 2016 and 2015, respectively.

Note 7 –7– Prepaid Leases

On April 1, 2011, General Fruit entered into lease contracts with a group of individual orchard owners, pursuant to which General Fruit was authorized to operate the orchards for 10 years starting January 1, 2011. The lease terms are effective from January 1, 2011 through December 31, 2020. The aggregate lease amount is approximately RMB 98,553,600 ($16,123,369) and pursuant to the contract terms, as of September 30, 2012, the Company paid off the entire lease amount using cash generated from operations.

On December 30, 2012, January 1, 2013 and June 1, 2013, General Fruit entered into lease contracts with another group of individual orchard owners, pursuant to which General Fruit was authorized to operate the orchards for 10 years starting January 1, 2013. The lease terms are effective from January 1, 2013 through December 31, 2022. The aggregate lease amount is approximately RMB 57,847,300 ($9,463,818) and pursuant to the contract terms, as of June 30, 2013, the Company paid off the entire lease amount using cash generated from operations.

On December 31, 2013, General Fruit entered into a lease contract with an orchard company, pursuant to which General Fruit was authorized to operate the orchard for 10 years starting January 1, 2014. The lease terms are effective from January 1, 2014 through December 31, 2023. The aggregate lease amount is approximately RMB 24,840,000 ($4,063,824) and pursuant to the contract terms, as of December 31, 2013, the Company paid off the entire lease amount using cash generated from operations.

Note 7– Prepaid Leases(Continued)

On March 26, 2014, General Fruit entered into a lease contract with Jinglin Agriculture Development Ltd. in Xingguo County. Pursuant to the contract, General Fruit was authorized to operate the orchard for 10 years starting January 1, 2014. The lease terms are effective from January 1, 2014 through December 31, 2023. The aggregate lease amount is approximately RMB27,360,000RMB 27,360,000 ($4,440,528). As of March 31, 2014, the Company paid off the entire lease amount using cash generated from operations.

On September 3, 2014, General Fruit entered into another lease contract with Jinglin Agriculture Development Ltd. in Xingguo County. Pursuant to the contract, General Fruit was authorized to operate the orchard for 10 years starting January 1, 2015. The lease terms are effective from January 1, 2015 through December 31, 2024. The aggregate lease amount is approximately RMB23,750,000RMB 23,750,000 ($3,857,000). As of December 31, 2014, the Company paid off the entire lease amount using cash generated from operations.

On December 18, 2014, General Fruit entered into a lease contract with an individual orchard owner, pursuant to which General Fruit was authorized to operate the orchards for 10 years starting January 1, 2015. The lease terms are effective from January 1, 2015 through December 31, 2024. The aggregate lease amount is approximately RMB 24,200,000 ($3,942,180) and pursuant to the contract terms, as of December 31, 2014, the Company paid off the entire lease amount using cash generated from operations.

In February 2015, General Fruit entered into lease contracts with three individual orchard owners. Pursuant to the contract, General Fruit was authorized to operate the orchard for 10 years starting January 1, 2015. The lease terms are effective from January 1, 2015 through December 31, 2024. The aggregate lease amount is approximately RMB20,860,000RMB 20,860,000 ($3,408,524). As of March 31, 2015, the Company paid off the entire lease amount using cash generated from operations.

Note 7 – Prepaid Leases(Continued)

These leases are accounted for as operating leases in accordance with ASC 840-20 and the aggregate lease amounts will be expensed each year on a straight-line basis over the lease terms. Lease expenses were approximately $1,060,403expense was$1,074,093 and $1,128,124$1,134,788 for the three months ended March 31,June 30, 2016 and 2015, and $2,146,145$3,220,238 and $1,978,068$3,112,856 for the sixnine months ended March 31,June 30, 2016 and 2015, respectively.

Lease expense attributable to future periods is as follows:

Note 8 – Short-Term Bank Loans

On September 29, 2014, the Company entered into a short-term bank loan agreement with Agricultural Development Bank of China, which allows the Company to borrow up to $5,521,600 (RMB34,000,000)(RMB 34,000,000). Pursuant to the loan agreement, the principal will bewas tobe repaid on July 28, 2015 and bearshad an interest rate of 6.6% per annum. The loan iswas secured by the Company’s real property, navel orange orchards and equipment, and guaranteed by Xingping Hou,XingpingHou, CEO of the Company.  The loan iswas also guaranteed by Ganzhou JinshengyuanGanzhouJinshengyuan Guarantee Co., Ltd., an unrelated party, with a maximum exposure limit of $4,547,200 (RMB28,000,000)(RMB 28,000,000). On September 30, 2014, Xingping Hou,XingpingHou, CEO of the Company and General Fruit and General Preservation, jointly entered into a cross-guarantee agreement with Ganzhou GuoruitaiGanzhouGuoruitai Guarantee Co, Ltd. Pursuant to the cross-guarantee agreements, the Company paid $90,945 (RMB560,000)(RMB 560,000) to the guarantor as a guarantee fee for the above bank loan.  On the maturity date of the loan, should the Company failhave failed to make their debt payment, General Fruit, General Preservation and Xingping Hou will beXingpingHouwould have been obligated to perform under the cross guarantees by making the required payments, including late fees and penalties. As of June 30, 2015, the Company hashad drawn down $4,583,600 (RMB 28,000,000) of the loan to use for working capital purposes. The loan was fully repaid on July 28, 2015.

On October 13, 2015, the Company entered into a new short-term bank loan agreement with Agricultural Development Bank of China for RMB 26 million (approximately $4,000,000)$4.1M). Pursuant to the Loan Agreement,loan agreement, the principal willwas to be repaid on August 8, 2016. The interest is beingwas calculated using an annual fixed interest rate of 5.28%. The loan iswas guaranteed by Xingping Hou,XingpingHou, CEO of the Company, and also guaranteed by Ganzhou JinshengyuanGanzhouJinshengyuan Guarantee Co., Ltd., an unrelated party. The Company paid 4% of total loan to the guarantor as a guarantee fee for the above bank loan. As of March 31,June 30, 2016, the Company hashad drawn down $1,551,000 (RMB10,000,000)$1,505,040 (RMB 10,000,000) of the loan to use for working capital purposes. The loan was fully repaid on August 8, 2016.

Note 9 – Due to Related Party

As of March 31,June 30, 2016 and September 30, 2015, the Company owed Hua Mei Investments Limited (“Hua Mei”), a related party (controlled by Mr. Hou Xingping,HouXingping, CEO of the Company), $412,723$448,451 and $154,571, respectively. These debts are non-interest bearing and payable on demand. The proceeds of these debts were utilized as working capital to primarily pay for the offshore service expenses.

Note 10 –10– Income Taxes

General Agriculture Corporation and its U.S. subsidiary, General Red Holding Inc., (collectively referred to as the “US entities”) are each subject to US tax and file US federal income tax returns. The US entities are Delaware corporations and conduct all of their businesses through their Chinese subsidiaries. No provision for US federal income taxes were made for the three and sixnine months ended March 31,June 30, 2016 and 2015 as the US entities incurred losses.

General Agriculture Corporation’s offshore subsidiary, Han Glory International, is not subject to tax on income or capital gains under the laws of the British Virgin Islands. Another offshore subsidiary, Greater China International, did not earn any income that was derived in Hong Kong for the three and sixnine months ended March 31,June 30, 2016 and 2015, and therefore was not subject to Hong Kong Profit tax.

Under the Corporate Income Tax Law of the PRC, the corporate income tax rate is 25%. However, as an agricultural company engaged in cultivation, General Fruit has been approved for a tax exemption since its formation. General Preservation was also approved for such exemption from income tax for the years 20152016 and 2014.2015. As a result, for the three and sixnine months ended March 31,June 30, 2016 and 2015, there was no income tax provision for the Company.

Note 10 – Income Taxes(Continued)

The US EntitiesGELT Company has net operating losses amounting to approximately $252,687$318,885 and $481,112$575,088 during sixthe nine months ended March 31,June 30, 2016 and 2015. These carryforwards will expire, if not utilized by December 2036 and September 2035, respectively. Management believes that it is more likely than not that the benefit from the NOL carryforwards will not be realized. In recognition of this risk, the Company has provided a 100% valuation allowance at March 31,June 30, 2016 and September 30, 2015, and no deferred tax asset benefit has been recorded. Management will review this valuation allowance periodically and make adjustments as needed.

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the:

ITEM 2. MANAGEMENT’SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of the financial condition and results of operation of General Agriculture Corp. for the three and sixnine months ended March 31,June 30, 2016 and 2015 should be read in conjunction with the unaudited consolidated financial statements and the notes to those statements that are included elsewhere in this report on Form 10-Q (the “ Report”“Report”). In addition to historical information, the following discussion contains certain forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements relate to our future plans, objectives, expectations and intentions. These statements may be identified by the use of words such as “may”, “will”, “could”, “expect”, “anticipate”, “intend”, “believe”, “estimate”, “plan”, “predict”, and similar terms or terminology, or the negative of such terms or other comparable terminology. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future.

Our financial statements are prepared in U.S. Dollars and in accordance with accounting principles generally accepted in the United States. They do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. See “Critical Accounting Policies and Estimates - Foreign Currency translation and Transactions” below for information concerning the exchanges rates at which Renminbi and Hong Kong Dollar were translated into U.S. Dollars at various pertinent dates and for pertinent periods.

COMPANY OVERVIEW

General Agriculture Corporation (“GELT”), formerly Geltology Inc., was incorporated under the laws of the State of Delaware on March 24, 2010. On July 12, 2013, GELT filed with the Secretary of State of the State of Delaware a Certificate of Amendment to change its name to General Agriculture Corporation. GELT, through its direct operating subsidiaries General Fruit and General Preservation, is primarily engaged in planting, preserving, packaging and marketing premium navel oranges for distribution and sale throughout the People’s Republic of China (“PRC”).

On July 11, 2012, GELT completed a reverse acquisition of General Red Holding, Inc. (“GRH”), which was established under the laws of the State of Delaware on January 18, 2011, entered into a share exchange agreement (the “Exchange Agreement”) with GRH and acquired all of the outstanding capital stock of GRH. Pursuant to the Exchange Agreement, GELT issued to GRH an aggregate of 125,112,803 shares of the common stock of GELT, at par value of $0.0001 per share (“Common Stock”) (such transaction is hereinafter referred to as the “Share Exchange”).

Immediately prior to the Share Exchange, GELT had 6,750,000 shares of Common Stock issued and outstanding. Simultaneously with the transaction, the two principal shareholders of GELT surrendered for cancellation an aggregate of 4,513,252 shares of Common Stock beneficially owned by them. The transaction was regarded as a reverse merger whereby GRH was considered to be the accounting acquirer. GELT was delivered with zero assets and zero liabilities at time of closing. Although the Company is the legal parent company, the share exchange was treated as a recapitalization of GRH. Thus, GRH is the continuing entity for financial reporting purposes. The financial statements have been prepared as if GRH had always been the reporting company and then on the share exchange date, had reorganized its capital stock.

Upon completion of the Share Exchange, the shareholders of GELT owned approximately 98.24% of the fully diluted outstanding shares of the Company. Accordingly, GRH became the wholly owned subsidiary of GELT.

On September 30, 2011, GRH entered into a Share Transfer and Issuance Agreement with Han Glory International Investment Limited (“Han Glory International”), a company incorporated on April 28, 2011 under the laws of British Virgin Islands and Hua Mei Investments Limited (“Hua Mei”), a company incorporated on April 26, 2011 under the laws of the British Virgin Islands. Under the agreement, GRH issued 74,814,862 shares to Hua Mei, the sole stockholder of Han Glory International, in exchange for all shares and beneficial interest of Han Glory International. This transaction is treated as a reverse merger, and therefore, after the share exchange, Han Glory International became the wholly owned subsidiary of GRH.

On May 18, 2011, Han Glory International purchased all shares of Greater China International Investment Limited (“Greater China International”), a company incorporated on December 4, 2009 under the laws of Hong Kong, from Zhihao Zhang, the sole stockholder of Greater China International, for $1,290 (HK$10,000). As a result, Greater China International became the wholly owned subsidiary of Han Glory International.

On January 13, 2010, Greater China International formed Nanchang Hanxin Agriculture Technology Co., Ltd (“WFOE”) in the city of Nanchang, Jiangxi Province, the PRC. On February 5, 2010, WFOE purchased all shares of Xingguo General Fruit Industry Development Co., Ltd (“General Fruit”) from Jiangjun Hong Group Co., Ltd., Xingping Hou and Jiefeng Ren for $293,400. As a result, WFOE acquired 100% interest in General Fruit. This transaction was a capital transaction in substance. That is, the transaction was a reverse recapitalization, equivalent to the issuance of stock by General Fruit for the net monetary assets of WFOE accompanied by a recapitalization.

General Fruit was formed in Xingguo County, Jiangxi Province, under the corporate laws of the PRC on March 5, 2003. The primary business of General Fruit is to grow and sell navel oranges. On July 14, 2008, after a series of equity transfer agreements, General Fruit acquired 90% interest in Xingguo General Red Navel Orange Preservation Company, Ltd. (“General Preservation”). On July 25, 2010, General Fruit purchased the remaining 10% interest in General Preservation from Xingping Hou, the minority stockholder, for $295,000 (RMB 2,000,000) and owns 100% of General Preservation thereafter.

General Preservation, a citrus fruits company primarily engaged in preserving, packaging and marketing premium navel oranges, was formed as a limited liability company in Xingguo County, Jiangxi Province under PRC laws on November 22, 2005. General Preservation provides wholesale, retail, and institutional customers in China and several other countries with premium navel orange fruits under the trademark of “General Red”.

On September 26, 2011, GRH purchased all shares of Sheng Da Holding Limited (“Sheng Da BVI”), a company incorporated on May 18, 2011 under the laws of the British Virgin Islands, from General Red Company, Ltd (“General Red BVI”), a limited liability company incorporated on August 28, 2008 under the laws of British Virgin Islands, for $23,000. As a result, Sheng Da BVI became the wholly owned subsidiary of GRH. On September 29, 2011, Sheng Da BVI entered into a series of new agreements to terminate the old agreements with General Preservation, which were originally signed between General Red BVI and General Preservation on November 17, 2008, amended on June 10, 2011, and transferred to Sheng Da BVI by General Red BVI on June 30, 2011. The old agreements included a Consultation Agreement, an Operating Agreement, a Share Pledge Agreement, a Proxy Agreement and an Option Agreement. Upon the entry of these new agreements, General Preservation is no longer the Variable Interest Entity of Sheng Da BVI.

On June 28, 2013, at the Annual Meeting of stockholders, the stockholders of the Company approved an amendment to the Company’s Certificate of Incorporation. On June 28, 2013, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate of Incorporation (the “Charter Amendment”). Pursuant to the Charter Amendment, the Company’s Certificate of Incorporation was amended, effective as of July 12, 2013, to effect a reverse stock split of the Company’s shares of common stock. On July 12, 2013, the Company effected the 1 for 8 reverse split of the Company’s issued and outstanding common stock, decreasing the number of outstanding shares from 127,349,551 to 15,918,940. These statements in this Report have been retroactively adjusted to reflect this reverse split.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, inventories, recovery of long-lived assets, income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements. While our significant accounting policies are fully described in Note 2 to our audited consolidated financial statements, for the three and six months ended March 31, 2016 and 2015, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management’s discussion and analysis.analysis for the three and nine months ended June 30, 2016 and 2015.

Seasonal nature of operations

The Company’s operations are seasonal based on the maturity stage of its products. Sales are concentrated during the months from November through March, corresponding to the Company’s product maturity cycle which begins in the month of October when the products mature and are ready for sale.

Inventories

Inventory is stated at the lower of cost or market. Cost is determined using the weighted-average cost method. Provisions are made for excess, slow moving and obsolete inventory as well as inventory whose carrying value is in excess of net realizable values, if any. Management continually evaluates the recoverability based on assumptions about customer demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs may be required that could negatively impact our gross margin and operating results.

Revenue recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. The Company recognizes revenues from the sale of navel oranges upon shipment and transfer of title.

Impairment of Long-Lived Assets

Long-lived assets, including property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Intangible Assets

Intangible assets are amortized using the straight-line method over their estimated period of benefit. Evaluation of the recoverability of intangible assets is made to take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization. No impairments of intangible assets have been identified during any of the periods presented. Land use rights with a finite useful life are amortized on a straight-line basis over their estimated useful life of 50 years.

Foreign Currency Translation and Transactions

The accompanying consolidated financial statements are presented in U.S. Dollars (“$”). Greater China International’s functional currency is the Hong Kong Dollar (“HKD”) and Nanchang Hanxin Agriculture Technology Co., Ltd, General Fruit and General Preservation’s functional currency is the Chinese Yuan Renminbi (“RMB”). All assets and liabilities were translated at the current exchange rate, at respective balance sheet dates, stockholders’ equity is translated at the historical rates and income statement items are translated at the average exchange rate for the reporting periods. The resulting translation adjustments are reported as other comprehensive income and accumulated other comprehensive income in stockholders’ equity in accordance with the Codification ASC 220, Comprehensive Income.

Cash flows from the Company’s operations included in the statement of cash flows is calculated based upon the functional currency using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with arithmetical changes in the corresponding balances on the consolidated balance sheets. No presentation is made that the RMB amounts could have been, or could be, converted into $ at the rates used in translation.

Transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. There were no material transaction gains or losses in the periods presented.

The exchange rates used to translate amounts in RMB into $ for the purposes of preparing the consolidated financial statements were as follows:

Results of Operations for the Three and sixnine Months Ended March 31,June 30, 2016 Compared to the Three and sixnine Months Ended March 31,June 30, 2015

Revenues

For the three months ended March 31,June 30, 2016, we had net revenues of $11,804,858,$5,154,493, as compared to those of $11,599,290$2,123,558 for the three months ended March 31,June 30, 2015, an increase of approximately $205,568$3,030,935 or 1.8%142.7%. For the sixnine months ended March 31,June 30, 2016, we had net revenues of $22,554,976,$27,709,469, as compared to those of $20,464,449$22,588,007 for the sixnine months ended March 31,June 30, 2015, an increase of approximately $2,090,527$5,121,462 or 10.2%22.7%. Both the increases in net revenue are mainly because the quantity of navel oranges sold increased as compared to last same period. In January 2015, we have leased four new orchards, and these new orchards have yielded significant more oranges for sale for this harvest season, as compared to the previous harvest season.

Our sales volume increased by approximately 7.2%165% for the three months ended March 31,June 30, 2016, and the average unit sales price decreased by approximately 5.1%8.6%, as shown below: 

Our sales volume increased by approximately 9.1%21.5% for the sixnine months ended March 31,June 30, 2016, and the average unit sales price increased by approximately 1.3%,keeps same, as shown below: 

Cost of sales

Cost of sales increased by $781,682,$1,143,729, or 15.3%128.8%, from $5,117,471$887,888 for the three months ended March 31,June 30, 2015 to $5,899,153$2,031,617 for the three months ended March 31,June 30, 2016. Cost of sales increased by $1,063,937$2,207,666 or 11.6%21.9%, from $9,175,852$10,063,740 for the sixnine months ended March 31, 2016June 30, 2015 to $10,239,789$12,271,406 for the sixnine months ended March 31,June 30, 2016. The increase is attributable to the combination of the following factors: 1) the increase in the volume of oranges sold; 2) the increase in the unit price of navel orange outsourced as the market demand increases; 3) offset by a decrease in the average cost of navel orange we produce resulting from additional navel oranges orchard we leased during fiscal year 2015.

Gross profit

Our gross profit was $5,905,705$3,122,876 for the three months ended March 31,June 30, 2016 as compared to $6,481,819$1,235,670 for the three months ended March 31,June 30, 2015, representing a gross margin of 50.0%60.6% and 55.9%58.2%, respectively. Our gross profit was $12,315,187$15,438,063 for the sixnine months ended March 31,June 30, 2016 as compared to $11,288,597$12,524,267 for the sixnine months ended March 31,June 30, 2015, representing a gross margin of 54.6%55.7% and 55.2%55.4%, respectively. The decreaseincrease in our gross profit margin for the three and sixnine months ended March 31,June 30, 2016 was mainly attributable to (1) the increase in unit sales price; 2) the decrease in the average cost price of navel orange outsourced.oranges we produce resulting from production of more oranges this harvest with the same overhead costs..

Selling expenses

Selling expenses were $251,990 and $40,582 for the three months ended June 30, 2016 and 2015, and $285,790 and 119,972 for the nine months ended June 30, 2016 and 2015, respectively, the increases mainly due to an increase of expenses in marketing activities since the Company want to expand the market and establish good relationship with distributors.

Selling expenses

Selling expenses were $11,252 and $17,352 for the three months ended March 31, 2016 and 2015, and $33,800 and 79,390 for the six months ended March 31, 2016 and 2015, respectively, the decreases mainly due to decrease in advertising and marketing activities since our sales network have been well established and our product has a good reputation on the market.

Selling expenses for the three months ended March 31,June 30, 2016 and 2015 consisted of the following:

Selling expenses for the sixnine months ended March 31,June 30, 2016 and 2015 consisted of the following:

General and administrative expenses

General and administrative expenses amounted to $142,337$137,715 for the three months ended March 31,June 30, 2016, as compared to $437,896$172,213 for the same period in 2015, a decrease of $295,559$34,498 or 67.5%20.0%. General and administrative expenses consisted of the following:

General and administrative expenses amounted to $582,703 for the nine months ended June 30, 2016, as compared to $904,662 for the same period in 2015, a decrease of $321,959 or 35.6%. General and administrative expenses consisted of the following:

General

Professional service fees were $29,015 and administrative expenses amounted to $444,988 for the six$218,756 during three and nine months ended March 31,June 30, 2016, as compared to $732,449$64,502 and $498,124 for the same period in 2015, a decrease of $287,461 or 39.2%. General$35,487 and administrative expenses consisted of the following:

Professional service fees were $24,800 and $189,741 during three and six months ended March 31, 2016, as compared to $307,540 and $433,622 for the same period in 2015, a decrease of $282,740 and $243,881,$279,368, which mainly consisted of legal and other expenses in connection with the Company’s proposed public offering incurred during the three and sixnine months ended March 31,June 30, 2015.

Income from operations

For the three and sixnine months ended March 31,June 30, 2016, income from operations was $5,752,116$2,733,171 and $11,836,399,$14,569,570, as compared to $6,026,571$1,022,875 and $10,476,758$11,499,633 for the three and sixnine months ended March 31,June 30, 2015, a decreasean increase of $274,455$1,710,296 or 4.6%167.2% during three months ended period and an increase of $1,359,641 or13.0%$3,069,937 or 26.7% during sixnine months ended period, mainly due to the reasons we discussed above.

Other income (expenses)

For the three and sixnine months ended March 31,June 30, 2016, other income is $12,873 and other expense were $2,857 and $54,328,is $41,455, respectively, as compared to $52,956other expenses of $41,957 and $106,751$148,708 for the three and sixnine months ended March 31,June 30, 2015. The decreases in other expense were attributed to the decreases in interest expense. The Company only borrowed $1,551,000 of short-term bank loan as of March 31,June 30, 2016 as compared to $4,575,200$4,853,600 of short-term bank loan as of March 31,June 30, 2015.

Income tax expense

For the three and sixnine months ended March 31,June 30, 2016 and 2015, the Company did not incur any income tax expense. General Agriculture Corporation and General Red Holding Inc. (collectively referred to as the “US entities”) are each subject to US tax and file US federal income tax returns. No provision for US federal income taxes were made for the three and sixnine months ended March 31,June 30, 2016 and 2015 as the US entities incurred losses. Han Glory International is not subject to tax on income or capital gains under the laws of the British Virgin Islands. Greater China International did not earn any income that was derived in Hong Kong for the three and sixnine months ended March 31,June 30, 2016 and 2015, and therefore was not subject to Hong Kong Profit tax. Under the Corporate Income Tax Law of the PRC, the corporate income tax rate is 25%. However, as an agricultural company engaged in cultivation, General Fruit has been approved for a tax exemption since its formation. General Preservation was also approved for such exemption from income tax for the years 2016 and 2015. As a result, for the three and sixnine months ended March 31,June 30, 2016 and 2015, there was no income tax provision for the Company.

Net income

Our net income for the three and sixnine months ended March 31,June 30, 2016 was $5,749,259$2,746,044 and $11,782,071,$14,528,115, as compared to $5,973,615$980,918 and $10,370,007$11,350,925 for the three and sixnine months ended March 31,June 30, 2015, a decreasean increase of $224,356,$1,765,126, or 3.8%179.9% for the three months ended period and an increase of $1,412,064,$3,177,190, or 13.6%28.0% for the sixnine month ended period. The changes in net income were a result of the factors described above.

Foreign currency translation gain

The functional currency of our subsidiaries operating in the PRC is the Chinese Yuan or Renminbi (“RMB”). The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange translation are included in the consolidated statements of operations. As a result of these translations, which are a non-cash adjustment, we reported foreign currency translation gain of $474,859 for the three months ended March 31, 2016 and foreign currency translation loss of $699,408 for the six month ended March 31, 2016,$2,037,795 and foreign currency translation gain of $186,601 and $328,731$2,737,204 for the three and sixnine months ended March 31,June 30, 2016, respectively, and foreign currency gain of $90,504 and 419,235 for the three and nine month ended June 30, 2015, respectively. The significant foreign translation losses for the sixthree and nine months ended March 31,June 30, 2016 was due to the sharp depreciation of Chinese RMB to USD during the last two months of 2015.

Comprehensive income

For the three and sixnine months ended March 31,June 30, 2016, comprehensive income of $6,224,118$708,249 and $11,082,663$11,790,911 were derived from the sum of our net income of $5,749,259$2,746,044 and $11,782,071$14,528,115 plus foreign currency translation gain of $474,859 and foreign currency translation loss of $699,048,$2,037,795 and $2,737,204, respectively.

For the three and sixnine months ended March 31,June 30, 2015, comprehensive income of $6,160,216$1,071,422 and $10,698,738$11,770,160 were derived from the sum of our net income of $5,973,615$980,918 and $10,370,007$11,350,925 plus foreign currency translation gain of $186,601$90,504 and $328,73,$419,235, respectively.

LIQUIDITY AND CAPITAL RESOURCES

We have historically funded our operations primarily through paid-in capital, sales of goods, loans from our stockholders and short term loans from financial institutions in China. The Company currently generates its cash flow through operations, which it believes will be sufficient to sustain current level operations for at least the next twelve months.

As of March 31,June 30, 2016 and September 30, 2015, our balance of cash and cash equivalents was $15,338,348$24,419,304 and $464,046, respectively, an increase of $14,874,302,$23,955,258, mainly due to net cash provided by operating activities and financing activities.

The following summarizes the key components of the Company’s cash flows for the sixnine months ended March 31,June 30, 2016 and 2015:

In summary, our cash flows were:

Net cash provided by operating activities increased in the sixnine months ended March 31,June 30, 2016 by $11,075,071$17,184,212 to $13,037,134,$22,808,687, from net cash used inprovided by operating activities of $1,962,063$5,624,475 for the sixnine months ended March 31,June 30, 2015. These changes were mainly due to by the following factors: a change in net income of $1,412,064,$3,177,190, a change in prepaid lease of $9,655,276,$9,672,872, a change in advance payments of 2,509,5862,615,051 and a change in customer deposits of $1,774,520.$1,777,790.

Net cash used in investing activity decreased by $55,684,$55,397, from $56,908$57,013 to $1,224$1,616 in the sixnine months ended March 31,June 30, 2016 compared to the same period ended in 2015, which is mainly due to less cash expenditures on property and equipment.

Net cash provided by financing activities increased by $1,276,643$1,233,010 to $1,806,143$1,843,993 in the sixnine months ended March 31,June 30, 2016 compared to $529,500$610,983 provided by financing activities at the same period ended in 2015. In October 2015, we received $1,551,000$1,547,490 of proceeds from short-term bank loan.

Working capital increased by $14,307,093$17,403,477 to $29,110,447$32,206,831 as of March 31,June 30, 2016 from working capital of $14,803,354 as of September 30, 2015. In order to stay cost competitive in the long-run, we leased 112,650 additional orange trees in the fiscal year ended September 30, 2015. Based on the lease rate of approximately $64.88 (RMB400)(RMB 400) per tree in 2015, the total lease amounts paid were $7,350,704 (RMB 45,060,000) during the year ended September 30, 2015.

As we are listed by the lending bank as a good credit customer, we believe that our short-term bank loans will be renewed at their maturity dates if needed.

On September 29, 2014, the Company entered into short-term bank loan agreement with Agricultural Development Bank of China, which allows the Company to borrow up to $5,521,600 (RMB34,000,000)(RMB 34,000,000). Pursuant to the loan agreement, the maturity date was July 28, 2015 and the annual interest was 6.6%. The loan was secured by the Company’s real property, navel orange orchards and equipment, and guaranteed by Xingping Hou, CEO of the Company.  The loan was also guaranteed by Ganzhou Jinshengyuan Guarantee Co., Ltd., an unrelated party, with a maximum exposure limit of $4,547,200 (RMB28,000,000)(RMB 28,000,000). As of June 30, 2015, the Company had drawn down $4,583,600 (RMB 28,000,000) of the loan to use for working capital purposes. The loan was fully repaid on July 28, 2015.

On October 13, 2015, the Company entered into a new short-term bank loan agreement with Agricultural Development Bank of China for RMB 26 million (about(approximately $4.1M). Pursuant to the Loan Agreement,loan agreement, the principal willwas to be repaid on August 8, 2016. The interest is beingwas calculated using an annual fixed interest rate of 5.28%. The loan iswas guaranteed by Xingping Hou, CEO of the Company, and also guaranteed by Ganzhou Jinshengyuan Guarantee Co., Ltd., an unrelated party. The Company paid 4% of total loan to the guarantor as a guarantee fee for the above bank loan. As of March 31,June 30, 2016, the Company hashad drawn down $1,551,000 (RMB10,000,000)$1,505,040 (RMB 10,000,000) of the loan to use for working capital purposes. The loan was fully repaid on August 8, 2016. 

As of March 31,June 30, 2016 and September 30, 2015, the Company had outstanding debts from a related party, Hua Mei Investments Limited (“Hua Mei”), of $412,723$448,451 and $154,571, respectively. These debts are non-interest bearing and payable on demand. The proceeds of these debts were utilized as working capital.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial assets.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to respond to this Item.

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure material information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluating the disclosure controls and procedures, we recognized that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31,June 30, 2016 in ensuring that information required to be disclosed by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the Exchange Act rules and forms due to the material weaknesses described below. As a result, we performed additional analysis and other post-closing procedures to ensure our consolidated financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, management believes the consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

In this quarter, the Company held regular seminars, briefings and training sessions to help employees stay current on recent developments of internal control procedure and new SEC rules and regulations and accounting pronouncements.

Additionally, in the third and fourth quarters of 2015 management established a formal process for closing the Company’s books and preparing and reviewing its financial statements, which includes all the appropriate closing and consolidating entries, as well as the preparation of the appropriate disclosures. In furtherance of this process, on a monthly basis the Company’s controller and manager of the accounting department execute financial statements, review the adjusted entries and the closing entries and add accounting memos, if necessary. Testing of the effectiveness of the new process is planned in the fiscal year ending September 30, 2016.

Changes in Internal Control over Financial Reporting

Except as discussed in this Item 4 there were no changes in our internal control over financial reporting that occurred during the quarter ended March 31,June 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION  

ITEM 1.    LEGAL PROCEEDINGS

None.

ITEM 1A.   RISK FACTORS

As a smaller reporting company, we are not required to respond to this Item.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.      DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4.      MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5.    OTHER INFORMATION

None.

ITEM 6.   EXHIBITS

SIGNATURES

Pursuant to the requirements 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.

EXHIBIT INDEX