Unassociated Document

10-K 1 v237149_10k.htm FORM 10-K Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

ANNUAL REPORT

ON FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 2011

Commission File Number 001-34150

CHINA INFRASTRUCTURE

INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		88-0484183
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Room D, 2F, Building 12, Xinxin Huayuan, Jinshui Road, Zhengzhou, Henan Province, The People’s

Republic of China

(Address, including zip code, of principal executive offices)

(011) 86-375-2754377

(Registrants’ telephone number, including area code)

Securities Registered Under Section 12(b) of the Exchange Act: Common Stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No x

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ('232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller Reporting Company x

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

Aggregate market value of the voting stock held by non-affiliates of the registrant as of December 31, 2010 based upon the closing price was approximately $8,184,630.

The number of outstanding shares of the registrant’s Common Stock on October 13, 2011 was 80,000,000.

China Infrastructure Investment Corporation

Annual Report on Form 10-K

For the Year Ended June 30, 2011

Table of Contents

PART I DESCRIPTION OF BUSINESS
ITEM 1.	Business	1
ITEM 1A.	Risk Factors	7
ITEM 1B.	Unresolved Staff Comments	14
ITEM 2.	Properties	14
ITEM 3.	Legal Proceedings	14

PART II
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
ITEM 6.	Selected Financial Data	16
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk	26
ITEM 8.	Financial Statements and Supplementary Data	26
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	26
ITEM 9A.	Controls and Procedures	26
ITEM 9B.	Other Information	27

PART III
ITEM 10.	Directors, Executive Officers, and Corporate Governance	28
ITEM 11.	Executive Compensation	31
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	34
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	35
ITEM 14.	Principal Accountant Fees and Services	36

PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	36

PART I

DESCRIPTION OF BUSINESS

ITEM 1.

Business

Forward Looking Statements

This Report contains forward-looking statements. Generally, the words “believes”, ”anticipates”, “may”, “will”, “should”, “expect”, “intend”, “estimate”, “continue” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the SEC from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements. It is important to note that actual results could differ materially from historical results or those contemplated in the forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, and include risks associated with our target markets and risks pertaining to competition, other trend information and our ability to successfully enhance our operations. Factors that could cause actual results to differ materially include, but are not limited to, those identified in “Item 1A-Risk Factors” and in other of our filings with the U.S. Securities and Exchange Commission. All references to “China Infrastructure Investment Corporation”, “us”, “we” or the “Company” in this Annual Report on Form 10-K mean China Infrastructure Investment Corporation, a Nevada corporation, and all entities owned or controlled by China Infrastructure Investment Corporation, except where it is made clear that the term only means the parent company.

Prior Operations of the Company

China Infrastructure Investment Corporation (f/n/a Learning Quest Technologies, Inc. and hereinafter the “Company”) was formed as a Nevada corporation on January 11, 2001, originally under the name of “Learning Quest Technologies, Inc.” We were in the business of developing, licensing and marketing educational products and services. Our business model centered on the development and distribution of high quality, educational tools and solutions for creating, authoring, publishing, presenting and selling education and training materials and content via the Internet. We commenced limited operations but were unsuccessful in fully implementing our business plan. We ceased operations and focused our efforts on seeking a business opportunity.

On February 8, 2008, we entered into a Share Exchange Agreement with Color Man Holdings Limited, a British Virgin Islands company (“ CMH ”) and Joylink Holdings Limited, a British Virgin Islands company and the sole stockholder of CMH (“ Joylink ”). As a result of the share exchange, we acquired all of the issued and outstanding securities of CMH from Joylink in exchange for 54,400,000 newly–issued shares of our common stock (the “ Exchange ”).

Current Operations of The Company

History and Organizational Structure of CMH and Wise On China Limited

CMH was formed on April 11, 2005 as a British Virgin Islands company. Upon the consummation of the Exchange, the Company acquired ten (10) shares of CMH’s capital stock, representing one hundred percent (100%) of the total issued and outstanding shares of capital stock of CMH. Wise On China Limited (“ WOC ”) was established and incorporated on November 2, 2005. CMH’s sole business is to act as a holding company for WOC, and WOC’s sole business is to act as a holding company for Pingdingshan Pinglin Expressway Co., Ltd (“ Ping ”). CMH owns one (1) share of WOC. Neither CMH nor WOC have a Board of Directors, however each company has one (1) Executive Director that serves as the legal representative and which may appoint a General Manager to lead each company’s routine operations. CMH’s current Executive Director is RCD (Nominee) Limited and WOC’s current Executive Director is Siu Choi Fat. Both CMH and WOC have their office located at Room 42, 4F, New Henry House, 10 Ice House Street, Central, Hong Kong.

History of Ping and the Pinglin Expressway

In accordance with the PRC’s National Expressway Network Plan formulated by the State and “the Tenth Five-Year Plan” of Henan Province on the Comprehensive Traffic System Development Plan formulated by the Henan provincial government for the purpose of completing the Pingdingshan-Linru portion of the Nanjing-Luoyang expressway (also referred to herein as the “ Nanluo Expressway ”), Ping competed in and won an open bid to fund, operate and manage such Pingdingshan-Linru portion in early 2003.

Thereafter, Ping was incorporated under the laws of the People’s Republic of China (the “PRC”) on May 12, 2003 by four (4) investors, Henan Shengrun Venture Investment Management Co., Ltd. (“HSV”), Henan Pingdingshan Zhongya Road and Bridge Construction Co., Ltd. (“HPZ”), Pingdingshan Expressway Construction Co., Ltd. (“PECC”) and Zhongyuan Trust & Investment Co., Ltd. (“ZTI”). At establishment, the percentage of each party’s equity interest was 46%, 18%, 18% and 18%, respectively. In May 21, 2007, PECC, HPZ and ZTI transferred all of their shares to HSV and Li Xipeng. After the transfer, Ping was held by HSV and Li Xipeng with equity interests of 95% and 5%, respectively. On June 18, 2007 (effective July 30, 2007), HSV and Li Xipeng entered into an equity transfer agreement pursuant to which they transferred all of their shares to WOC. the Company’s approved operation tenure is thirty (30) years.

Currently, Ping is wholly-owned by WOC. WOC has contributed RMB 260,000,000 (US$33,090,802) in registered capital of Ping with a total investment equal to RMB 750,000,000 (US$95,454,237). Ping’s office is located at Pinglin Toll Road Station, New District, Pingdingshan City, Henan Province, the PRC.

VIE Arrangements with Zhengzhou Simian Real Estate Co., Ltd. (“Simian”)

In connection with a loan set-off agreement the Company entered into on October 10, 2011, the Company entered into VIE arrangements with Zhengzhou Simian and Zhengzhou Simian’s stockholder which allow us, among other things, to secure significant rights to influence Zhengzhou Simian’s business operations, policies and management, to approve all matters requiring stockholder approvals, and give us the right to include 51% of the annual net income earned by Zhengzhou Simian as part of our consolidated financial statements. In addition, to ensure that Zhengzhou Simian perform its obligations under these contractual arrangements, the stockholder of Zhengzhou Simian has pledged to us its equity interests in Zhengzhou Simian. We have a right of option to purchase the 51% of the equity interests in Zhengzhou Simian. A description of the loan set-off agreement and the VIE arrangements was disclosed in the Company’s Current Report on Form 8-K filed with the SEC on October 13, 2011.

Current Business of Ping

Ping was founded with the purpose of providing to society high quality infrastructure services and to promote regional economic development by investing in, constructing, operating and managing an expressway property from the cities of Linru to Pingdingshan in Luoyang-Nanjing, the PRC, and the rental of petrol stations and service districts along the toll roads thereon. Such expressway is referred to hereinafter as the “Pinglin Expressway” or the “Expressway.”

With the approval from Henan Communications Bureau and the State Development and Reform Committee of China [NO. 2003-1784], the Company is permitted to construct and operate the Pinglin Expressway in Henan Province for thirty (30) years from 2003. Pursuant to the permission from Henan Communications Bureau and Henan Development and Reform Committee [NO. 2005-1885], the Company is entitled to operate six (6) toll gates. All the rates applicable to the automobiles are defined by the Henan Communications Bureau and Henan Development and Reform Committee.

The location of the Expressway is in Henan Province in central China, and is a hinge terminal of the traffic backbone throughout China. The “five (5) longitudinal roads and seven (7) transverse roads” in the national expressway network plan are intercrossed with each other in Henan, extending more than 1,000 km, and more than sixty percent (60%) of vehicles are those passing through Henan from other provinces.

The Pinglin Expressway is a significant part of the Nanluo Expressway, a national trunk in the expressway network in China. The Nanluo Expressway links the northwestern regions to the southeastern coastal regions of the PRC. The construction of Pinglin Expressway started from October 23, 2003 and completed in two (2) phases. The first phase of the construction which covered the part with a length of approximately 86 kilometers, linking Ruzhou and Pingdingshan in Henan Province, commercially opened on December 31, 2005. On May 31, 2006, the second phase of the construction, with the length of approximately 21 kilometers, linking Pingdingshan and Yexian in Henan Province was completed. With the operation of Pinglin Expressway, the key transport artery, national trunk Nanluo Expressway was entirely opened to traffic.

Today, the Pinglin Expressway is a dual carriageway four (4) lane expressway, the toll section of which is 106 km in length. Toll revenue from the passing vehicles through the Expressway’s six (6) toll gates (South Pingdingshan, Pingdingshan New Town, Baofeng, Xiaotun, Ruzhou and Wenquan) is the primary source of the Company’s earnings. The Expressway is also located between two (2) key cities, Luoyang and Luohe. The Expressway extends from east to west, from Shilipu (the end of the Luohe-Pingdingshan expressway), through Yexian and Pingdingshan and then to New Xiying village at the joint of Pingdingshan and Luoyang. The road is lined with the Lianhuo (Lianyungang-Huoerguosi) national highway through the ringroad in Luoyang, and then extends to the southeast of Luohe City and connects with the Beijing-Zhuhai national highway into a network to form a convenient channel between Luoyang and Luohe. In addition to the traffic flow of the line itself, we believe it also attracts the traffic flow from the Lianhuo highway to Zhengzhou then to the Beijing-Zhuhai national highway to alter to Luoyang-Luohe section of the Luonan route. Furthermore, the Expressway extends east to link the highway network of the Jiangsu and Anhui Provinces and also links the seaports, including Shanghai.

The Company’s operating income is primarily achieved through toll charges on vehicles passing through the Expressway’s toll gates. The standard of toll charges is approved and set by the provincial price administrative bureau. The Company's revenue equals the relevant standard toll rate of the type of vehicles multiplied by the relative miles of travel through the Expressway, and is cleared by the Henan Expressway System Toll Collection Center each month (the Expressway has a charge system and clearing center which calculates and allocates toll charge income according to the charge standards and the miles of travel of vehicles on the Expressway). The Company is specialized in the operation and management of expressways. The maintenance projects are outsourced to professional road construction enterprises.

The Company began generating operating revenue in January 2006. The Expressway was not fully operational until June 2006, therefore our operating income was low and growth was moderate. After several years of operations, awareness of the Expressway has gradually increased, and passenger and commercial vehicle traffic continues to increase. We believe that along with income growth in the future, the profit earning capacity of the Company will improve steadily.

Enterprise Strategy

Henan is the province with the largest population in China. However, its urbanization rate is far below the national average level. With rapid economic and social development and the accelerated process of urbanization in Henan, demand is growing rapidly for infrastructure, such as the Expressway and other transportation infrastructure, urban facilities such as heating, water supply, and sewerage treatment. The existing infrastructure can no longer meet the needs of the region’s social development.

Because the Chinese government’s financial revenue growth is limited, its investment alone is unable to build huge infrastructure projects in a relatively short period of time. In order to attract other funding, local governments are willing to grant to commercial companies the right to invest in the construction and operation of projects, or directly sell the equity of the established enterprises to recover their early input.

The Company plans to invest in the construction and purchase of additional expressways, thermoelectricity, water supply, sewage treatment facilities and other infrastructure assets with good profit prospects in the next few years. In doing so, it intends to seize the current historic opportunity of rapid development of infrastructure in China and Henan. We believe that this will rapidly strengthen and expand the Company’s place in infrastructure industries. This should also create advantages of scale thereby further reducing costs of operation. The amount of investment in infrastructure is often relatively large, and investment funds need to be in position within two (2) or three (3) years in advance, therefore the amount of capital from the Company’s operations alone cannot meet the demand for investment in the future. The Company desires to actively participate in the capital markets and to use various channels of financing to enhance its ability to raise funds, thereby promoting and achieving its long-term development strategies.

Based on the operation and management of the Expressway, the Company desires to take full advantage of free cash flow and capital market instruments to invest in the construction or purchase of infrastructure assets and to exploit all the advantages in management, government relationships and stockholder support to make the Company a professional, continuously-growing infrastructure investment operator.

In addition, the Company intends to energetically push forward its standard management, human-based services, establish an information management platform and continue to improve the road conditions and traffic capacity so as to provide travelers with a smooth, safe and comfortable traveling environment. With the increasing influence of the Expressway on the substitution and division of other transportation lines in the context of the great macroeconomic environment which is resulting in continuous and rapid growth in China and given the specific area where the roads are located, we believe that the Company’s income from toll and profits will continue to increase.

General Overview on Industry and Market

General

With efforts to advance China’s expressway system out of the developmental stage, the PRC issued a series of polices to encourage the development of expressways. China’s main objectives with respect to road construction during the “Tenth Five-Year Plan” are (a) that total road mileage will reach 2.1~2.3 million km in 2010, (b) that the main national highways with “five (5) in longitudinal direction and seven (7) in transverse” will be built across China, (c) that eight (8) interprovincial roads will be built in the western areas where the expressway will connect ninety percent (90%) of the cities with more than 200,000 in population and (d) that the expressway network will be developed in the eastern parts of China. In 2020, the PRC estimates that China’s total road mileage will extend more than 70,000 km, connecting all cities with more than 200,000 in population and forming a nationwide expressway network.

As compared with common roads, the expressways have distinct economic and technical characteristics and are indicative of the advanced productivity in road transportation. According to the Pingdingshan-Linru Expressway Project Feasibility Study Report, although expressways only account for approximately 1.72% of the total road mileage in China, the traffic volume undertaken thereby is a quarter of the total volume. At present, the running speed of China’s motor vehicles in the expressways are two times that of secondary roads; a two-way expressway with four (4) lanes covers an area 2.5 times that of a common secondary road, and its traffic capacity is eight (8) to ten (10) times that of the latter (as such figures are represented in the aforementioned PL Report). We believe that once the expressways are connected with each other, it will have an immense opportunity for economic growth.

We believe that as a result of recent progress in the social and economic development in China, road transportation has taken on an important position among the five (5) areas constituting the comprehensive transportation system (road, railway, airway, watercourse and pipeline). We believe that the expressway as a modern traffic infrastructure have become a backbone channel due to its many characteristics such as large traffic volume, high speed, far-reaching influence and extensive penetration, thus establishing its crucial position in China’s comprehensive transportation system. We believe that expressways highlight the road grade standard and running speed and thus effectively improve the “bottleneck” situation with traffic transportation in some areas as well as promote the optimization and upgrade of the road network. Along with national economic development, we believe China’s passenger and freight transportation will continue to rise. We believe that demand for special transportation, land development, regional economic development and an increase in people’s travel demands have resulted from an increase in economic income and a change in life style, and that such demands will require continued development of expressways to satisfy such demands.

Socio-Economic Conditions of Henan Province and Pingdingshan

Henan Province has the largest population in China and its GDP in 2010 ranked fifth (5th) in the whole country. In 2010, Henan’s GDP growth increased by 12% up from the previous year, higher than the national growth rate of 9.5%. Pingdingshan is an important energy base and industrial city in Henan Province, which has abundant coal and salt resources. Coal mining, electricity, chemicals, and the steel and mechanical industries are the pillar industries of the city. In 2010, Pingdingshan’s GDP ranked fifth in Henan Province and its growth rate was 12.1%, which was higher than the average level of the whole province. Pingdingshan had a population of 5.06 million in 2006.

The Road Network Conditions of Henan Province and Pingdingshan City

Henan Province, which we believe has unique road advantages, is located in the central part of China. There are nine (9) national expressways including Lianhuo and Beijing-Hong Kong-Macao, and nine (9) national ways including No. 107 and No. 310, both of which pass through Henan. At the end of 2009, the total provincial traffic mileage and expressway traffic mileage ranked first in the country (these figures have been quoted from the 2009 Annual Report of the PRC listed company Central Expressway, Symbol: 600020).

Main Advantages

Geographic Location

The infrastructure has a natural characteristic of regional monopolization, and there is no other resource to replace it within a specific region. Therefore, the geographic location decides the market space of infrastructure assets and has a substantial influence on the profit-earning capability of such assets, and so does the expressway industry. The Pinglin Expressway is located between Luoyang and Pingdingshan, two (2) major industrial cities among the city group in central China and Henan Province. In the north, the Expressway connects with the northwest area through the Lianyungang-Huo’erguosi expressway in Luoyang, and in the east connects to Anhui, Jiangsu, Zhejiang and Shanghai through Luohe city. In the south, the Expressway connects with the Beijing-Zhuhai expressway through Luohe City. With the gradual emergence of the effects produced by China’s initialization of its domestic demand policy, we believe the logistics between the coastal areas and inland China will result in further growth.

Ping’s Corporate Governance Structure

The Company has a standard and highly effective corporate governance structure. Ping has implemented a management system of responsibility by the General Manager under the leadership of its Board of Directors and has established an internal control system. Ping currently implements a series of incentive and binding policies to encourage management to create value for its stockholder, thus avoiding the defects commonly encountered in state-owned enterprises such as internally-connected person control and absence of the owners. We believe these standards and practices will ensure that the Company’s operating activities will not deviate from the track of healthy development.

Governmental Relationships

The operation of the infrastructure industry will not be separated from the support and cooperation of the governmental departments. Whether the infrastructure is working at optimum levels is associated with the integral competitiveness of a city and even a district. Therefore, each local government attaches great importance to the construction and operation of the infrastructure and provides a strategic priority to its development. Henan is located in central China, and has been positioned as an agricultural province for a long time, where the urbanization rate is lower than the average level of the whole country, the infrastructures are backward and the local governments have more eagerness to advance the infrastructure. However, due to certain restrictions on local finance, it is impossible to complete such a significant project only by depending on the investment from the government. During the construction of Pinglin Expressway, the Company experienced many links such as project examination and approval, bank funding, license authorization, charging approval and governmental custody and high efficiency management. As a result, we believe Ping has achieved recognition from the various governmental departments and has established a good cooperative relationship with them. We believe this will also establish a solid basis for long-term development of the Company.

Financial Advantages

We believe the Company's major financial advantages to be (a) sound operation, (b) low market risk, (c) no cyclical fluctuation, (d) strong capacity of cash flow from operation, (e) large free cash flow and (f) strong solvency and capital accumulation capacity. Furthermore, infrastructure industries are in line with the state’s industrial policy and concessions on charge standards and interest rates on bank loans .

Qualifications

The Company entered into that certain Chartered Right Agreement on Pingdingshan-Linru Expressway Project on April 10, 2003 with the Pingdingshan Communications Bureau (authorized by Pingdingshan People’s Government), upon which, the Company is entitled to the rights of construction, operation and toll collection. A copy of such Agreement is referenced to this Report as Exhibit 10.2.

In accordance with Y. F. G. S. F. [2006] No. 1460 filed jointly by Henan Provincial Development and Reform Commission and Henan Provincial Department of Communications, the toll collection standard of Pingdingshan-Linru expressway was specially increased on October 20, 2006, and the charging standard after the adjustment is as follows:

	Type of Vehicle	Charging: RMB: Yuan/car km	Charging: USD: Dollar/car km
Type A	Small passenger car, truck loaded below 2 tons	0.55	0.0759
Type B	Middle-sized passenger car, truck loaded 2-5 tons	0.75, 0.80	0.1035, 0.1104
Type C	Large-sized passenger car, truck loaded 5-8 tons	1.10, 1.40	0.1518, 0.1931
Type D	Truck loaded 8-20 tons l	1.75	0.2414
Type E	Truck loaded 20-40 tons	2.10	0.2897
Type F	Truck loaded more than 40 tons	RMB0.08/ton. km	0.0110/ton.km

Technical Information

According to the rules in “Road Engineering Technical Standard” issued by Ministry of Communications of PRC, the main technical indexes of Pinglin Expressway are in the table as follows:

Construction mileage		107km
Grade of the Road		Dual-carriageway with two (2) lanes each direction
Design Speed		120km/h
Road Surface Type		Asphalt concrete
Design Load for Bridge/Culvert		Automobile - S 20, Trailer-120
Terrain		Plain lightly undulate area

Employees

Ping attaches great importance to the cultivation of professional managerial persons and pursues a talent policy of retaining professionals by undertaking an enterprise culture. Through continuously improving its corporate governance structure, management system and talent introduction and incentive system, Ping has created an excellent working atmosphere and development opportunity, which integrates the individual occupational plan with the Company’s development and reduces the turnover of the employees, especially the core technicians, thus forming a relatively stable and high-quality employee team. Figure 1 below sets forth the current institutional structure of Ping:

As of June 30, 2011, we had approximately 376 full-time employees. The number of employees by function is listed below:

	Number of Employees	% of Total Employees
Toll Collection Operations	276	73.4
Maintenance and Operations	42	11.2
Finance and Accounting	6	1.6
Administration	42	11.2
Executive Management	10	2.6
Total	376	100

Institutional Structure

There are six (6) departments in the Company, and the main function of each department is as follows:

Operation and Management Department : This Department is responsible for toll collection management, routine maintenance of operating facilities and statistics of traffic volume.

Engineering Maintenance Department : This Department is responsible for the organization of Expressway maintenance, for managing infrastructure and maintenance projects, for coordinating the relationship between the parties participating in the projects, for managing project quality and for selecting and purchasing fixed assets and project materials.

Road Administration Department : This Department is responsible for implementing national laws and regulations on the expressways, maintaining road assets and property rights according to the law, supervising and investigating expressway cases and other road administration such as comprehensive management and special treatment and supervising the maintenance work.

Planned Finance Department : This Department is responsible for setting and optimizing the financial system and flow, conducting basic accounting checks, controlling and managing financial matters, managing capital plans, managing contracts, researching and preparing mid and long term development plans, conducting internal audits and other matters related to industry, commerce and taxation.

Human Resources Department : This Department is responsible for drafting human resources plans and allocating the staff, organizing and implementing staff training and career development, providing performance and salary management as well as other personnel services.

Office Department : This Department is responsible for managing administrative affairs, drafting the Company’s systems and documents, managing the archives, stamps and vehicles and organizing and administrating conference-related matters.

Intellectual Property

We currently do not own any copyrights, trademarks or patents.

Competition

Our competition consists of other expressways. As newly-constructed expressways continue to open, the expressway network improves and the density of road network increases, a portion of traffic flow will change whereby travelers will opt for shorter traveling routes, while the expressway network has the clustering effect on traffic flow. Thus, relevant expressways will form competition against each other. The Pinglin Expressway has its competitive advantage in route; according to China’s expressway general plan, it will be the shortest route in the province.

Secondly, the common roads have competition between each other. Although on the common roads there are some problems such as low velocity, high oil consumption and low safety, the charges for the vehicle are inexpensive so that some of the traffic flow may be attracted. However, as the economy grows and people’s income rises, we believe time and safety factors will be more of a priority, especially in long distance road transportation, and the advantage of expressways will be prominent.

Thirdly, there are competitions from railways and air transportation. The capacity of air-express is limited, and it costs much more than expressways do, so it is restrained in its availability to the general public. The railway transportation has a lower cost, but it is different from the road transportation due to different service objects. Moreover, the total social demand for passenger and freight transportation is increasing, so the increase in the railway transportation capacity can’t completely offset by the growth in demand for expressways.

Research and Development

The Company did not incur any expenses on research and development during the fiscal years ended June 30, 2011 or June 30, 2010.

Environmental Laws

The Company did not incur any expenses in connection with compliance with environmental laws (federal, state, local and foreign) during the fiscal year ended June 30, 2011.

ITEM 1A.

Risk Factors

The financial condition, business, operations, and prospects of the Company involve a high degree of risk. You should carefully consider the risks and uncertainties described below, which constitute the material risks relating to the Company, and the other information in this report. If any of the following risks are realized, the Company’s business, operating results and financial condition could be harmed and the value of the Company’s stock could suffer. This means that investors and stockholders of the Company could lose all or a part of their investment.

RISKS RELATING TO THE PEOPLE’S REPUBLIC OF CHINA

Certain Political and Economic Considerations Relating to China Could Adversely Affect Our Company.

The PRC is transitioning from a planned economy to a market economy. While the PRC government has pursued economic reforms since its adoption of the open-door policy in 1978, a large portion of the PRC economy is still operating under five-year plans and annual state plans. Through these plans and other economic measures, such as control on foreign exchange, taxation and restrictions on foreign participation in the domestic market of various industries, the PRC government exerts considerable direct and indirect influence on the economy. Many of the economic reforms carried out by the PRC government are unprecedented or experimental, and are expected to be refined and improved.

Other political, economic and social factors can also lead to further readjustment of such reforms. This refining and readjustment process may not necessarily have a positive effect on our operations or future business development. Our operating results may be adversely affected by changes in the PRC’s economic and social conditions as well as by changes in the policies of the PRC government, such as changes in laws and regulations (or the official interpretation thereof), measures which may be introduced to control inflation, changes in the interest rate or method of taxation, and the imposition of additional restrictions on currency conversion.

The Chinese Government Exerts Substantial Influence Over The Manner In Which We Must Conduct Our Business Activities Which Could Adversely Affect Our Company.

China only recently has permitted provincial and local economic autonomy and private economic activities. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and State ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to toll collection standards, taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.

The Chinese Legal System Has Inherent Uncertainties That Could Limit The Legal Protections Available To You.

Our contractual arrangements are governed by the laws of the People’s Republic of China. China’s legal system is based upon written statutes. Prior court decisions may be cited for reference but are not binding on subsequent cases and have limited value as precedents. Since 1979, the Chinese legislative bodies have promulgated laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties, and therefore you may not have legal protections for certain matters in China.

All Of Our Assets Are Located In China, Any Dividends Of Proceeds From Liquidation Is Subject To The Approval Of The Relevant Chinese Government Agencies.

Our assets are located inside China. Under the laws governing foreign invested enterprises in China, dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. Any dividend payments will be subject to the decision of our Board of Directors and subject to foreign exchange rules governing such repatriation. Any liquidation is subject to both the relevant government agency’s approval and supervision as well the foreign exchange control. This may generate additional risk for our investors in case of dividend payments and liquidation.

Future Inflation In China May Inhibit Our Activity To Conduct Business In China.

In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. These factors have led to the adoption by Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. While inflation has been more moderate since 1995, high inflation may in the future cause Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China and thereby harm our business operations.

Currency Conversion And Exchange Rate Volatility Could Adversely Affect Our Financial Condition.

The PRC government imposes control over the conversion of Renminbi into foreign currencies. Under the current unified floating exchange rate system, the People’s Bank of China (PBOC) publishes an exchange rate, which we refer to as the PBOC exchange rate, based on the previous day’s dealings in the inter-bank foreign exchange market. Financial institutions authorized to deal in foreign currency may enter into foreign exchange transactions at exchange rates within an authorized range above or below the PBOC exchange rate according to market conditions.

Pursuant to the Foreign Exchange Control Regulations of the PRC issued by the State Council which came into effect on April 1, 1996, and the Regulations on the Administration of Foreign Exchange Settlement, Sale and Payment of the PRC which came into effect on July 1, 1996, regarding foreign exchange control, conversion of Renminbi into foreign exchange by Foreign Investment Enterprises (“ FIEs ”), for use on current account items, including the distribution of dividends and profits to foreign investors, is permissible. FIEs are permitted to convert their after-tax dividends and profits to foreign exchange and remit such foreign exchange to their foreign exchange bank accounts in the PRC. Conversion of Renminbi into foreign currencies for capital account items, including direct investment, loans, and security investment, is still under certain restrictions. On January 14, 1997, the State Council amended the Foreign Exchange Control Regulations and added, among other things, an important provision, which provides that the PRC government shall not impose restrictions on recurring international payments and transfers under current account items.

Enterprises in the PRC (including FIEs) which require foreign exchange for transactions relating to current account items, may, without approval of the State Administration of Foreign Exchange, or SAFE, effect payment from their foreign exchange account or convert and pay at the designated foreign exchange banks by providing valid receipts and proofs.

Convertibility of foreign exchange in respect of capital account items, such as direct investment and capital contribution, is still subject to certain restrictions, and prior approval from the SAFE or its relevant branches must be sought.

Since 1994, the exchange rate for Renminbi against the United States dollars has remained relatively stable, most of the time in the region of approximately RMB8.3 to US$1.00. However, in 2005, the Chinese government announced that would begin pegging the exchange rate of the Chinese Renminbi against a number of currencies, rather than just the U.S. Dollar. As our operations are primarily in China, any significant revaluation of the Chinese Renminbi may materially and adversely affect our cash flows, revenues and financial condition. For example, to the extent that we need to convert United States dollars into Chinese Renminbi for our operations, appreciation of this currency against the United States dollar could have a material adverse effect on our business, financial condition and results of operations. Conversely, if we decide to convert Chinese Renminbi into United States dollars for other business purposes and the United States dollar appreciates against this currency, the United States dollar equivalent of the Chinese Renminbi we convert would be reduced.

The Value Of Our Securities Will Be Affected By The Foreign Exchange Rate Between U.S. Dollars And Renminbi.

The value of the Company’s Common Stock will be affected by the foreign exchange rate between U.S. dollars and Renminbi, and between those currencies and other currencies in which our sales may be denominated. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operational needs and should the Renminbi appreciate against the U.S. dollar at that time, our financial position, the business of the Company, and the price of our Common Stock may be harmed. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of declaring dividends on our Common Stock or for other business purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of our earnings from our China operations would be reduced.

You May Experience Difficulties In Effecting Service Of Legal Process, Enforcing Foreign Judgments Or Bringing Original Actions In China Based On United States Or Other Foreign Laws Against Us.

We conduct our operations in China and a significant portion of our assets is located in China. In addition, our directors and executive officers reside within China, and substantially all of the assets of these persons are located within China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon those directors or executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover, our Chinese counsel has advised us that China does not have treaties with the U.S. and many other countries that provide for the reciprocal recognition and enforcement of judgment of courts. As a result, recognition and enforcement in China of judgments of a court of the U.S. or any other jurisdiction in relation to any matter may be difficult or impossible.

Our Significant Amount Of Deposits In Certain Banks In China May Be At Risk If These Banks Go Bankrupt During Our Deposit Period.

As of June 30, 2011, we had approximately RMB160.4 million (approximately US$24.8 million) in banks in China, which almost constitute all of our total cash. The terms of these deposits are, in general, up to twelve (12) months. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors’ interests. However, China promulgated a new Bankruptcy Law in August 2006, which has come into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures for the bankruptcy of Chinese banks based on the Bankruptcy Law. Under the new Bankruptcy Law, a Chinese bank may go bankrupt. In addition, since China’s concession to WTO, foreign banks have been gradually permitted to operate in China and have been severe competitors against Chinese banks in many aspects, especially since the opening of Renminbi business to foreign banks in late 2006. Therefore, the risk of bankruptcy of those banks in which we have deposits has increased. In the event of bankruptcy of one of the banks which holds our deposits, we are unlikely to recover our deposits back in full since we are unlikely to be classified as a secured creditor based on PRC laws.

RISKS RELATING TO OUR BUSINESS

Because Our Operating History Is Limited And The Revenue And Income Potential Of Our Business And Markets Are Unproven, We Cannot Predict Whether We Will Meet Internal or External Expectations Of Future Performance.

We believe that our future success depends on our ability to significantly increase revenue from toll collections, of which we have a limited history. The Expressway marketplace features high investment and a long recovery period. The main market risk in connection with our Company is the future traffic volume less than the predicted amount. Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies with a limited operating history. These risks include our ability to:

offer new and innovative services on the Expressway;

attract billboard advertisers;

attract more travelers;

respond effectively to competitive pressures and address the effects of strategic relationships or corporate combinations;

maintain our current, and develop new, strategic relationships;

increase awareness of the Expressway and continue to build traveler loyalty;

attract and retain qualified management and employees; and

upgrade our technology to support increased traffic and expanded services.

Our Business And Growth Could Suffer If We Are Unable To Hire And Retain Key Personnel That Are In High Demand.

We depend upon the continued contributions of our senior management and other key personnel, including Li Xipeng and Zhang Chunxian. The loss of the services of any of our executive officers or other key employees could have a material adverse effect on our business, operations, revenues or prospects. We do not maintain key man insurance on the lives of these individuals at present. As we plan to expand, we will have to attract managerial staff. We may not be able to identify and retain qualified personnel due to our lack of understanding of different cultures and lack of local contacts. This may impede any potential expansion. Our future success will also depend on our ability to attract and retain highly skilled and qualified technical, engineering, managerial, finance, marketing, security and customer service personnel in China. Qualified individuals are in high demand, and we may not be able to successfully attract, assimilate or retain the personnel we need to succeed.

If We Need Additional Capital To Fund Our Growing Operations, We May Not Be Able To Obtain Sufficient Capital And May Be Forced To Limit The Scope Of Our Operations.

We may experience increased capital needs and we may not have enough capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including (i) our profitability; (ii) the success of our competitors; (iii) the amount of our capital expenditures; and (iv) new infrastructure project investment. We cannot assure you that we will be able to obtain capital in the future to meet our needs.

If we cannot obtain additional funding, we may be required to:

reduce our investments in infrastructure industry;

limit our expansion efforts; and

decrease or eliminate capital expenditures.

Such reductions could materially adversely affect our business and our ability to compete. Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing stockholders. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

Competition With The Railways and Airways in China May Have A Negative Impact On Our Business

With the rapid development of the domestic expressway, China is also giving great support to the development of railways and airways. The construction of a special passenger railway and the speed-up of railways in general will be able to greatly improve the transport capacity of passengers and freight by railway and bring about a division of the target clients of the Expressway which could be an impediment to our growth and have a negative impact on our revenues.

We Are Exposed To Risks Related To VIE Arrangements With Zhengzhou Simian.

On October 10, 2011, we entered into a loan set-off agreement with Tai Ao Expressway whereby we offset the long-term notes receivable from Tai Ao Expressway by the entry of VIE arrangements with Zhengzhou Simian and its stockholder. We describe these arrangements in more detail under “Current Operations of the Company - VIE Arrangements with Zhengzhou Simian Real Estate Co., Ltd.”

We have no equity ownership interest in Zhengzhou Simian, and rely on contractual arrangements with Zhengzhou Simian and its stockholders to control and operate Zhengzhou Simian. These contractual arrangements may not be as effective in providing control over Zhengzhou Simian as direct ownership would be. For example, Zhengzhou Simian could fail to take actions required for our business despite its contractual obligation to do so. If Zhengzhou Simian, or its stockholder, fails to perform their respective obligations under agreements with us, we may have to incur substantial costs and resources to enforce such arrangements and may have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which may not be effective. In addition, we may not be able to renew these agreements with Zhengzhou Simian and its stockholder when they expire. Our contractual arrangements with Zhengzhou Simian are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in the United States and uncertainties in the Chinese legal system could limit our ability to enforce these contractual arrangements. In the event that we are unable to enforce these contractual arrangements, our business, financial condition and results of operations could be adversely affected.

We Have Incurred Operating Losses And May Not Be Profitable In The Future; Our Plans To Maintain And Increase Liquidity May Not Be Successful; The Report Of The Independent Registered Public Accounting Firm Includes A Going Concern Uncertainty Explanatory Paragraph.

We incurred a net loss of $137 million, and had a working capital deficit of $27 million and cash and cash equivalents of $0.56 million on June 30, 2011. These factors raise substantial doubt as to our ability to continue as a going concern, and our independent registered public accounting firm has included a going concern uncertainty explanatory paragraph in their report dated October 10, 2011 which is included elsewhere in this Form 10-K. The Company currently generates its cash flow through its operating profit and borrowings from banks. During the reporting period, to increase its cash resources, the Company obtained a long-term loan of $19 million. The Company also had cash flow from operations of $11 million for the year ended June 30, 2011. As of the date of this report, the Company has not experienced any difficulty in raising funds through bank loans, and has not experienced any liquidity problems in settling payables in the normal course of business and repaying bank loans when they fall due. To improve liquidity, the Company may explore new expansion opportunities and external funding sources. (see Note 3 of the Notes to Consolidated Financial Statements). Successful renewal of our bank loans, however, is subject to numerous risks and uncertainties. In addition, the increasingly competitive industry conditions under which we operate have negatively impacted our results of operations and cash flows and may continue to do so in the future. These factors raise substantial doubt about our ability to continue as a going concern.

RISKS RELATING TO OUR COMMON STOCK

Our Common Stock Price Is Volatile And Could Decline In The Future.

The stock market in general and the market price for other companies based in the PRC have experienced extreme stock price fluctuations. In some cases, these fluctuations have been unrelated to the operating performance of the affected companies. Many companies in the toll road industry have experienced dramatic volatility in the market prices of their common stock. We believe that a number of factors, both within and outside of our control, could cause the price of our Common Stock to fluctuate, perhaps substantially. Factors such as the following could have a significant adverse impact on the market price of our Common Stock:

announcements of technological innovations by us or our competitors;

our ability to obtain additional financing and, if available, the terms and conditions of the financing;

our financial position and results of operations;

litigation;

period-to-period fluctuations in our operating results;

changes in estimates of our performance by any securities analysts;

new regulatory requirements and changes in the existing regulatory environment;

the issuance of new equity securities in a future offering;

changes in interest rates;

changes in toll road standards;

market conditions of securities traded on the NASDAQ Capital Market;

investor perceptions of us and the toll road industry generally; and

general economic and other national conditions.

We May Have Difficulty Raising Necessary Capital To Fund Operations As A Result Of Market Price Volatility For Our Shares Of Common Stock.

In recent years, the securities markets in the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies. For these reasons, our shares of Common Stock can also be expected to be subject to volatility resulting from purely market forces over which we will have no control. If our business development plans are successful, we may require additional financing to continue to develop and exploit existing and new technologies and to expand into new markets. The exploitation of our technologies may, therefore, be dependent upon our ability to obtain financing through debt and equity or other means.

Our Common Stock Is Considered A “Penny Stock” And As A Result, Related Broker-Dealer Requirements Affect Its Trading And Liquidity.

Our common stock is deemed to be “penny stock” as that term is defined in Rule 3a51-1 promulgated under the Exchange Act. Penny stocks are stocks:

With a price of less than $5.00 per share;

That are not traded on a “recognized” national exchange; or

In issuers with net tangible assets less than $2.0 million (if the issuer has been in continuous operation for at least three years) or $5.0 million (if in continuous operation for less than three years), or with average revenues of less than $6.0 million for the last three (3) years.

Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to resell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.

Shares Eligible For Future Sale May Adversely Affect The Market Price Of Our Common Stock.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of Common Stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act of 1933, as amended, subject to certain limitations. In general, effective February 15, 2008, pursuant to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has satisfied a six (6) months holding period may, under certain circumstances, sell within any three (3) month period a number of securities which does not exceed one percent (1%) of the then outstanding shares of common stock. In addition, effective February 15, 2008, Rule 144 also permits, under certain circumstances, the sale of securities, without any limitations, by a non-affiliate of our company that has satisfied a one (1) year holding period. Any substantial sale of common stock pursuant to Rule 144 may have an adverse effect on the market price of our Common Stock.

One Stockholder Which is 50% Controlled By Our Chief Executive Officer and Chairman of the Board of The Company Exercises Significant Control Over Matters Requiring Stockholder Approval.

After giving effect to the issuance of all the shares of Common Stock, Joylink has voting power equal to eighty-five percent (85%) of our voting securities as of the date of this Report. Moreover, Joylink is fifty percent (50%) controlled by Li Xipeng, the Company’s Chief Executive Officer and Chairman of the Board. As a result, Joylink, and our CEO through such stock ownership, exercises control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership in Joylink may also have the effect of delaying or preventing a change in control of us that may be otherwise viewed as beneficial by stockholders other than Joylink.

We May Incur Significant Costs To Ensure Compliance With U.S. Corporate Governance And Accounting Requirements.

We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC. We expect all of these applicable rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

We May Be Required To Raise Additional Financing By Issuing New Securities With Terms Or Rights Superior To Those Of Our Shares Of Common Stock, Which Could Adversely Affect The Market Price Of Our Shares Of Common Stock.

We may require additional financing to fund future operations, including expansion in current and new markets, programming development and acquisition, capital costs and the costs of any necessary implementation of technological innovations or alternative technologies. We may not be able to obtain financing on favorable terms, if at all. If we raise additional funds by issuing equity securities, the percentage ownership of our current stockholders will be reduced, and the holders of the new equity securities may have rights superior to those of the holders of shares of Common Stock, which could adversely affect the market price and the voting power of shares of our Common Stock. If we raise additional funds by issuing debt securities, the holders of these debt securities would similarly have some rights senior to those of the holders of shares of Common Stock, and the terms of these debt securities could impose restrictions on operations and create a significant interest expense for us.

We Do Not Foresee Paying Cash Dividends In The Foreseeable Future.

We have not paid cash dividends on our stock and we do not plan to pay cash dividends on our stock in the foreseeable future.

ITEM 1B.

Unresolved Staff Comments

None.

ITEM 2.

Properties

DESCRIPTION OF PROPERTIES

All land in China is owned by the State. Individuals and companies are permitted to acquire rights to use land or land use rights for specific purposes. In the case of land used for industrial purposes, the land use rights are granted for a period of fifty (50) years. This period may be renewed at the expiration of the initial and any subsequent terms. Granted land use rights are transferable and may be used as security for borrowings and other obligations.

Ping owns land use rights with respect to its office location at Pinglin Toll Road Station, New District, Pingdingshan City, Henan Province, the PRC. Pursuant to the approval from The Ministry of Land and Resources of the PRC [No. 2004-289] dated September 10, 2004, Ping was granted approximately Seven Hundred (700) hectares land use right for construction purpose, among which approximately Eight (8) hectares were used in association with the office and service facilities and the others were used for the construction of toll road infrastructures.

CMH and WOC share offices at Room 42, New Henry House, 10 Ice House Street, Central, Hong Kong. This office consists of approximately Three Thousand (3,000) square feet.

We believe that all of our properties and equipment have been adequately maintained, are generally in good condition, and are suitable and adequate for our business.

ITEM 3.

Legal Proceedings

In the normal course of business, we are named as a defendant in lawsuits in which claims are asserted against us. In our opinion, the liabilities, if any, which may ultimately result from such lawsuits, are not expected to have a material adverse effect on our financial position, results of operations or cash flows. In our opinion, as of the date hereof, there is no pending litigation, the outcome of which would have material outcome on the Company’s financial position.

PART II

ITEM 5.

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

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S

COMMON EQUITY AND OTHER STOCKHOLDER MATTERS

The Registrant’s Common Stock is traded on the NASDAQ Capital Market under the symbol “CIIC”. The following table sets forth on a per share basis for the periods shown, the high and low sale prices of our Common Stock. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Sale Prices	High		Low

Fiscal Year Ended June 30, 2010
Quarter ended September 30, 2009	$	1.80	$	1.01
Quarter ended December 31, 2009		4.75		1.09
Quarter ended March 31, 2010		3.55		1.65
Quarter ended June 30, 2010	$	2.58	$	1.02

Sale Prices	High		Low
Fiscal Year Ended June 30, 2011
Quarter ended September 30, 2010	$	1.34	$	0.628
Quarter ended December 31, 2010		0.701		0.54
Quarter ended March 31, 2011		0.73		0.4
Quarter ended June 30, 2011	$	0.42	$	0.26

When the trading price of the Company’s Common Stock is below $5.00 per share, the Common Stock is considered to be a “penny stock” that is subject to rules promulgated by the SEC (Rule 15-1 through 15g-9) under the Exchange Act. These rules impose significant requirements on brokers under these circumstances, including: (a) delivering to customers the SEC’s standardized risk disclosure document; (b) providing customers with current bid and ask prices; (c) disclosing to customers the brokers-dealer’s and sales representatives compensation; and (d) providing to customers monthly account statements.

Holders of Common Equity

As of October 13, 2011, the Company has an aggregate of 80,000,000 shares of its Common Stock issued and outstanding and four (4) stockholders of record.

Dividends

Prior to the closing of the Exchange, the Company effectuated a 2-1 reverse stock split for the issued and outstanding shares of its Common Stock. The effective date for this reverse split was December 3, 2007.

On January 22, 2008, the Company completed a dividend distribution to its shareholders of record as of January 18, 2008 in the amount equal to five percent (5%) (1,250,005 shares) of the then issued and outstanding Common Stock. Following the dividend distribution and immediately prior to the consummation of the Exchange, the Company had 26,250,005 shares of Common Stock issued and outstanding.

The further issuance of dividends, if any, will be contingent upon our revenues and earnings, if any, capital requirements and financial conditions. The payment of dividends, if any, will be within the discretion of the Company’s Board of Directors. The company presently intends to retain all earnings, if any, for use in its business operations and accordingly, the Board does not anticipate declaring any cash dividends for the foreseeable future. We have not paid any cash dividends on our Common Stock.

Securities Authorized for Issuance under Equity Compensation Plans

The following table discloses information as of June 30, 2011 with respect to compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.

	(a)		(b)		(c)
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
N/A		-0-		-0-		-0-
Total		-0-		-0-		-0-

Options and Warrants

As of the date of this Report, we have no outstanding options or warrants.

Transfer Agent

Interwest Transfer Company, Inc., 1981 East Murray Holladay Road, Suite 100, P.O. Box 17136, Salt Lake City, UT 84117, telephone (801) 272-9294, facsimile (801) 277-3147 currently acts as our transfer agent and registrar.

Performance Graph

Not required for a smaller reporting company.

Recent Sales of Unregistered Securities

The Company effectuated a 2-1 reverse split of its Common Stock effective on December 3, 2007 effectively reducing the number of issued and outstanding shares of Common Stock to 25,000,000 shares.

On January 22, 2008, the Company completed a diviend distribution to its shareholders of record as of January 18, 2008 in the amount equal to five percent (5%) (1,250,005 shares) of the then issued and outstanding Common Stock. Following the dividend distribution and immediately prior to the consummation of the Exchange, the Company had 26,250,005 shares of Common Stock issued and outstanding.

On February 8, 2008, pursuant to the terms of the Exchange Agreement, the Company acquired all of the issued and outstanding capital stock of CMH in exchange for the issuance by the Company of 54,400,000 newly-issued shares of Common Stock to the Stockholder (Joylink Holdings, Inc.).

ITEM 6.

Selected Financial Data

Not required for a smaller reporting company.

ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this Report. This Report contains forward-looking statements. Generally, the words “believes”, ”anticipates”, “may”, “will”, “should”, “expect”, “intend”, “estimate”, “continue” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the SEC from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

Business Overview

The Company is engaged in the investment, construction, operation and management of the Pinglin Expressway toll road in the Province of Henan, China and the rental of petrol stations and service districts along the toll roads.

With the approval from Henan Communications Bureau and the State Development and Reform Committee of China [NO. 2003-1784], the Company is permitted to construct and operate the Pinglin Expressway in Henan, China for thirty (30) years from 2003. Pursuant to the permission from Henan Communications Bureau and Henan Development and Reform Committee [NO. 2005-1885], the Company is entitled to operate six toll gates. All the rates applicable to the automobiles are defined by the Henan Communications Bureau and Henan Development and Reform Committee.

The Pinglin Expressway is a significant part of the Nanluo Expressway, a key national trunk highway in China which connects Nanjing to Luoyang. The Nanluo Expressway links the northwestern regions to the southeastern coastal regions of China. The construction of the Pinglin Expressway started on October 23, 2003 and was completed in two (2) phases. The first phase of the construction (covering a section of approximately 86 kilometers in length) linking Ruzhou and Pingdingshan in HenanProvince, began commercial operations on December 31, 2005.On May 31, 2006, the second phase of the construction (covering a section of approximately 21 kilometers in length) linking Pingdingshan to Yexian in HenanProvince was completed.

The Pinglin Expressway is a dual carriageway four lane expressways, the toll section is 106 km in length. Toll revenue from vehicles passing through the Expressway’s six toll gates (South Pingdingshan, Pingdingshan New Town, Baofeng, Xiaotun, Ruzhou and Wenquan) is the primary source of the Company’s revenue. The Expressway is also located between two key cities, Luoyang and Luohe. The Expressway extends from east to west, from Shilipu (the end of the Luohe-Pingdingshan expressway), through Yexian and Pingdingshan and then to New Xiying village at the joint of Pingdingshan and Luoyang. The road is linked with the Lianhuo (Lianyungang-Huoerguosi) national highway in Luoyang, and then extends to the southeast of LuoheCity and connects with the Beijing-Zhuhai national highway to form a convenient channel between Luoyang and Luohe. In addition to the traffic flow of the line itself, we believe it also attracts the traffic flow from the Lianhuo highway to Zhengzhou and then to the Beijing-Zhuhai national highway to alter the route of the Pinglin Expressway. Furthermore, the Expressway extends east to link the highway network of the Jiangsu and Anhui provinces and also links seaports, including Shanghai.

The Company’s operating revenue is generated through toll charges on vehicles that pass through the toll gate. The standard toll charges is approved and set by the provincial price administrative bureau. The Company’s revenue is equal to the relevant standard toll rate for the types of vehicles, multiplied by the relative miles of travel on the Expressway which the Company is operating, and is cleared by the Henan Expressway System Toll Collection Center each month (Henan Expressway has a system of charges and a clearing center which calculates and allocates toll charge income according to the charge standards and the miles of vehicle travel in the Expressway). The Company specializes in the operation and management of expressways, and maintenance projects are outsourced to professional road construction enterprises.

The Company began generating operating revenue in January 2006. The Expressway was not fully operational until June 2006, therefore our operating income was low and growth was moderate. After several years of operations, awareness of the Expressway and passenger and commercial vehicle traffic has gradually increased. We believe that along with income growth in the future, the profit earning capacity of the Company will improve steadily.

Enterprise Strategy

Henan is the province with the largest population in China. However, its urbanization rate is far below the national average. With rapid economic and social development and the accelerated process of urbanization in Henan, demand is growing rapidly for infrastructure, such as the Expressway and other transportation infrastructure, urban facilities such as heating, water supply, and sewerage treatment. The existing infrastructure can no longer meet the needs of the region’s social development.

Because the Chinese government’s financial revenue growth is limited, its investments alone are unable to build huge infrastructure projects in a relatively short period of time. In order to attract other funding, local governments are willing to grant to commercial companies the right to invest in the construction and operation of projects, or directly sell the equity of the established enterprises to recover their early input.

The Company plans to invest in the construction and purchase of additional expressways, water supply, sewage treatment facilities and other infrastructure assets in the next few years. In doing so, it intends to seize the opportunities in infrastructure development in China, especially in Henan province. We believe that through consolidation, the Company will strengthen its business in infrastructure development and create economics of scale resulting in reduction in operation costs.

The Company intends to actively seek various sources in the capital markets to raise funds for its future expansion and consolidation.

In addition, the Company will continue to maintain and improve its business operations in areas of operations management, information systems, customer services, and repair maintenance.

Significant Accounting Policies and Estimates

We prepare our financial statements in accordance with generally accepted accounting principles in the United States, which require us to make estimates and assumptions that affect the reported amounts of our assets and liabilities, to disclose contingent assets and liabilities on the date of the financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than other in their application.

This section should be read together with the Summary of Significant Accounting Policies included as Note 2 to the consolidated financial statements included herein.

On July 11, 2011, the Company filed a board minute resolution to finalize the plan to resolve the notes receivable from and advances to the related parties Tai Ao and Xinyang. According to the minute, the management does not believe that Tai Ao and Xinyang will have sufficient cash flow to repay both principal and interests of the notes receivable and advance. Therefore, a write down on the balance of notes receivable from and advance to Tai Ao and Xinyang was approved. The bad debt was provided based on management’s best estimate of the realizable amount resulting from the lack of government approval of the acquisition of Tai Ao and deteriorating operations of Tai Ao, which resulted in the inability to pay the balances. On October 10, 2011, the Company entered into contractual agreements with Zhengzhou Simian Real Estate Co., Ltd (“Simian”) and Henan Shengrun Real Estate Co., Ltd. (“Shengrun”), the stockholder of Simian. Pursuant to the arrangements, the Company will acquire a 51% equity interest in Simian, which is wholly owned by Shengrun. Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is a 51% owner of Shengrun. The consideration for such purchase would be settled with the note receivable from Tai Ao of $57,169,593, which is the Company’s current estimate of 51% equity interest of the audited net assets of Simian on a historical cost basis. A provision amounting to $26,448,982 and $40,054,014 was provided by the Company for the notes receivable from and advance to Tai Ao, and a provision amounting to $83,087,504 was provided for notes receivable to Xinyang as of June 30, 2011, respectively.

Revenue Recognition

The Company’s revenue represents toll revenue net of business tax, and is recognized when all of the following criteria are met:

The amount of revenue can be measured reliably,

It is probable that the economic benefits associated with the transaction will flow to the enterprise,

The costs incurred or to be incurred in respect of the transaction can be measured reliably, and

Collectibility is reasonably assured.

Rental income is measured at the fair value of the consideration receivable and represents amounts receivable for services provided in the normal course of business, net of discounts and sales tax.

Fair Value of Financial Instruments

The Company’s financial instruments include restricted cash, accounts receivable, notes receivable, due from related parties, other receivables, other payables and accrued liabilities, short-term bank loans, payable to contractors, other current liabilities and deferred taxes. We estimated that the carrying amount approximates fair value due to their short-term nature. The fair value of the Company’s long-term bank loans and deferred revenue are estimated based on the current rates offered to the Company for debt of similar terms and maturities. The Company’s fair value of long-term bank loans and deferred revenue was not significantly different from the carrying value at June 30, 2011 and 2010.

Depreciation of Toll Road Infrastructures

We determine the estimated useful lives and related depreciation charges for our toll road infrastructures, property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of toll road infrastructures, property, plant and equipment of a similar nature and functions and the practice in similar industries. Toll road infrastructures, property, plant and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization of the toll road infrastructures are calculated to write off their cost, commencing from the date of commencement of commercial operations of the toll roads, based on the ratio of actual traffic volume compared to the total expected traffic volume of the toll roads as estimated by reference to traffic projection reports prepared by an independent PRC organization each year. It could change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Other properties, plant and equipment are depreciated or amortized over their estimated useful lives, using the straight-line method. We will increase the depreciation charge where useful lives are less than previously estimated lives, or we will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.

Toll road infrastructures are carried at cost less accumulated depreciation and amortization. Depreciation and amortization of the toll road infrastructures are calculated to write off their cost, commencing from the date of commencement of commercial operation of the toll roads, based on the ratio of actual traffic volume compared to the total expected traffic volume of the toll roads as assessed by management each year. The total expected traffic volume is derived from a traffic projection report prepared by an independent PRC organization.

Impairment of Long-Lived Assets

We review periodically the carrying amounts of long-lived assets including toll road infrastructures, property, plant and equipment, land use rights, construction in progress, long-term investment and long-term deferred assets with finite useful lives or beneficial periods, to assess whether they are impaired. We evaluate these assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable such as a change of business plan or a period of continuous losses. 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 projected 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 assets. In determining estimates of future cash flows, significant judgment in terms of projection of future cash flows and assumptions is required. There were no impairments for the years ended June 30, 2011 and 2010.

Related Parties Transactions

The Company considers parties to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.

Relationship between the Company and related parties without controlling relationships are as follow:

Company name		Relationship with the Company

Tai Ao Expressway Co., Ltd. (“Tai Ao”)		Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is the Chairman and 51% owner of Tai Ao.
Xinyang Expressway Co., Ltd. (“Xinyang”)		Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is the Chairman and 100% owner of Xinyang.
Henan Ruijia Industry Co., Ltd. (“Ruijia”)		Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is the Chairman and 60% owner of Ruijia.
Henan Hairun Trade Co., Ltd. (“Hairun”)		Substantially controlled by the Vice President of Operations of the Company
Henan Shengrun Venture Investment Co.Ltd. (“Shengrun”)		Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is the Chairman and 97% owner of Shengrun.
ZhengZhou Zhengbian Heat Ltd. (“Zhengbian Heat”)		Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is the Chairman and 80% owner of Zhengbian Heat.
Xinyang Hongqiao Heat Co., Ltd. (“Hongqiao”)		Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is the Chairman and 92% owner of Hongqiao.
Zhengzhou Zhengdong Thermoelectricity Co., Ltd. (“Zhengdong”)		Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is the Chairman and 80% owner of Zhengdong.
Zhengzhou Zhengbian Tap Water Co., Ltd.(“Zhengbian”)		Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is the Chairman and 80% owner of Zhengbian.

The material related party transactions of the Company mainly relate to borrowings and loans for working capital needs, which are disclosed as follows:

On September 27, 2009, the board of directors of the Company approved a share purchase resolution. Pursuant to a letter of intent dated September 27, 2009, the Company would purchase at least 51% of Tai Ao. The consideration for such purchase would be settled first with the note receivable from Xinyang of $78,876,139, and the remainder in cash. If the Company successfully negotiated with Tai Ao’s shareholders, the consideration would be determined in accordance with the audited net assets of Tai Ao at the purchase date. If the Company consummated such a transaction, the transaction would have been accounted for as an acquisition of a company under common control.

The collectibility of the notes receivables from related parties to a large extent depended on the completion of the share purchase resolution.

The Chinese government now requires foreign acquirers of assets based in China to use all cash in an acquisition. A share-based acquisition has to be approved by the Commerce Bureau of Pingdingshan City. The success of getting approval from the Commerce Bureau of Pingdingshan City is uncertain. The Company has to arrange for a large amount of cross-border capital, which can be time consuming and technically difficult due to the foreign exchange control in China.

In addition, the Chinese government recently imposed a new national security review on future foreign acquisitions of certain types of businesses and assets that are of the strategic and national security interest of China, including infrastructure projects. Since this regulatory requirement just became effective, it is uncertain how the government will view this transaction and what steps will be taken.

As of September 26, 2011, the acquisition has not been approved by the Commerce Bureau of Pingdingshan City and the success of getting approval from the Commerce Bureau of Pingdingshan City is not expected in the future. Furthermore, even if the Company were to receive regulatory approval, it is uncertain that sufficient revenues would be generated to repay the related party loans.

On July 11, 2011, the Company filed a board minute resolution to finalize the plan to resolve the notes receivable from and advances to the related parties Tai Ao and Xinyang. According to the minute, the management does not believe that Tai Ao and Xinyang will have sufficient cash flow to repay both principal and interests of the notes receivable and advance. Therefore, a write down on the balance of notes receivable from and advance to Tai Ao and Xinyang was approved. The bad debt was provided based on management’s best estimate of the realizable amount resulting from the lack of government approval of the acquisition of Tai Ao and deteriorating operations of Tai Ao, which resulted in the inability to pay the balances. On October 10, 2011, the Company entered into contractual agreements with the shareholder of Zhengzhou Simian Real Estate Co., Ltd (“Simian”). Pursuant to the arrangements, the Company will acquire a 51% equity interest in Simian, which is wholly owned by Henan Shengrun Real Estate Co., Ltd. Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is a 51% owner of Henan Shengrun Real Estate Co., Ltd. The consideration for such purchase would be settled with the note receivable from Tai Ao of $57,169,593, which is the Company’s current estimate of 51% equity interest of the audited net assets of Simian on a historical cost basis. A provision amounting to $26,448,982 and $40,054,014 was provided by the Company for the notes receivable from and advance to Tai Ao, and a provision amounting to $83,087,504 was provided for notes receivable to Xinyang as of June 30, 2011, respectively.

On April 12, 2009, Henan Ruijia Industry Co., Ltd. (“Ruijia”) entered into an agreement with the Company. Pursuant to the agreement, the Company provided a note receivable for $2,191,445 to Ruijia. Such note receivable was due April 11, 2010, and bears a 5.31% interest rate per annum. The principal and the interest were payable at maturity. On November 12, 2009, the Company received the principal of such note receivable. Considering the Company has never received the interest from the note, the Company’s management believes there is uncertainty as to collection of the interest income. A full provision amounting to $72,227 was provided by the Company for the interest as of June 30, 2011.

On July 28, 2009, Henan Hairun Trade Co., Ltd. (“Hairun”) entered into an agreement with the Company. Pursuant to the agreement, the Company provided a note receivable for $1,465,975 to Hairun. Such note receivable was due July 27, 2010, and bears a 5.31% interest rate per annum. On November 12, 2009, the Company received the principal of such note receivable. Considering the Company has never received the interest from the note, the Company’s management believes there is uncertainty as to collection of the interest income. A full provision amounting to $24,190 was provided by the Company for the interest as of June 30, 2011.

The notes receivable were provided to these companies for their construction and operation working capital. Tai Ao, Xinyang and Ruijia are related to the Company through a common shareholder of the Company. Hairun is a trading company substantially controlled by Ms. Lin Jie, the Vice President of Operations of the Company. The notes receivable are interest bearing and unsecured

Henan Hairun Trade Co., Ltd. is substantially controlled by Ms. Lin Jie, the Vice President of Operations of the Company. The Company made payments to Hairun for its working capital needs. For the year ended June 30, 2011, the payments to Hairun amounted to $2,422,750, and the repayments from Hairun amounted to $2,564,954. The balance of $8,896 and $146,873 at June 30, 2011 and 2010 is unsecured, interest free and due on demand.

The Company and Henan Shengrun Venture Investment Co., Ltd. have the same chairman, Li Xipeng. Li Xipeng owns 97% of the shares of Henan Shengrun Venture Investment Co., Ltd.. The Company made payments to Henan Shengrun Venture Investment Co., Ltd. for its working capital needs. For the year ended June 30, 2011, the payments to Henan Shengrun Venture Investment Co., Ltd. amounted to $7,118,386, and the repayments from Henan Shengrun Venture Investment Co., Ltd. amounted to $6,266,031. The balance of $874,022 at June 30, 2011 is unsecured, interest free and due on demand.

The Company and Zhengzhou Zhengdong Thermoelectricity Co., Ltd. (“Zhengdong”) have the same chairman, Li Xipeng. Li Xipeng owns 80% of the shares of Zhengzhou Zhengdong Thermoelectricity Co., Ltd. The Company made payments to Zhengzhou Zhengdong Thermoelectricity Co., Ltd. for its working capital needs. For the year ended June 30, 2011, the payments to Zhengdong were $21,862,659, and the repayments from Zhengdong were $14,318,678. The balance of $7,735,747 at June 30, 2011 is unsecured, interest free and due on demand.

Contingencies

In the normal course of business, we are subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters. We recognize a liability for such contingency if we determine that it is probable that a loss has incurred and a reasonable estimate of the loss can be made. We may consider many factors in making these assessments, including past history and the specifics of each matter.

The Company entered into a guarantee agreement with China Citic Bank Zhengzhou Branch (the “Bank”). Pursuant to the agreement, the Company provided corporate guarantees for bank loans to Tai Ao, with a debt ceiling of Rmb 65 million (approximately $10,056,471). The guarantee period is from September 1, 2010 to December 31, 2011. As of June 30, 2011, Tai Ao borrowed Rmb 50 million (approximately $7,735,747), due September 15, 2011, which has been repaid on its due date. On September 16, 2011, Tai Ao borrowed Rmb 50 million (approximately $7,735,747), due September 15, 2012 and this was also guaranteed by the Company. Associated with the corporate guarantee, Tai Ao also provided a cross guarantee for bank loans of $7,735,747 to the Company.

Tai Ao generally finances its operations through operating profits and a combination of borrowings from banks. As of June 30, 2011, Tai Ao has not experienced any difficulty in raising funds through bank loans, or any difficulty in repaying bank loans when they fall due. Therefore, the Company’s management considers the risk of default by Tai Ao as remote, and no liability for the guarantor's obligation under the guarantee was recognized as of June 30, 2011. No fee was paid to Tai Ao for its guarantee.

On September 9, 2010, the Company received a letter from The NASDAQ Stock Market LLC (“NASDAQ”) advising that for the previous 30 consecutive business days, the closing bid price of the Company’s common stock was below the minimum $1.00 per share requirement for continued listing on NASDAQ Capital Market pursuant to NASDAQ Marketplace Rule 5550(a)(2). The company was given 180 calendar days, or until March 8, 2011, to regain compliance with the minimum bid price requirement. On March 9, 2011, the Company was provided an additional 180 calendar days, or until September 6, 2011, to regain compliance.

On September 7, 2011, the Company received a Staff Determination Letter (the “Letter”) from NASDAQ informing the Company that the Company has not regained compliance with Listing Rule 5550(a)(2) prior to the expiration of the second 180 day compliance period. The Letter indicated that NASDAQ would delist the Company’s securities from the Capital Market on September 16, 2011 and a Form 25-NSE would be filed with the Securities and Exchange Commission (the “SEC”), unless the Company requested an appeal of the delisting determination to a NASDAQ Listing Qualification Panel (the “Panel”) pursuant to the procedures set forth in the NASDAQ Listing Rule 5800 Series.

NASDAQ stated in the Letter that if the Company appealed the delisting determination and requested a hearing by 4pm Eastern Time on or before September 14, 2011, the delisting of the Company’s securities would be stayed pending the Panel’s decision after hearing the Company’s case.

On September 13, 2011, the Company formally appealed the delisting determination contained in the Letter and requested an oral hearing in front of the Panel. As a result of such appeal and hearing request, the Company’s common stock will not be delisted from NASDAQ until, and unless, the Panel makes a determination of delisting the Company’s common stock after a formal hearing.

Recent Accounting Pronouncements

In December 2010, the FASB issued ASU No. 2010-28 (“ASU 2010-28”), Intangibles — Goodwill and Other (“ASC 350”): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The objective of this standard is to address questions about entities with reporting units with zero or negative carrying amounts because some entities concluded that Step 1 of the test is passed in those circumstances because the fair value of their reporting unit will generally are greater than zero. The amendments in this standard modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The Company does not expect the adoption of ASU 2010-28 will have a material impact on its financial statements.

In December 2010, the FASB issued ASU No. 2010-29 (“ASU 2010-29”), Disclosure of Supplementary Pro Forma Information for Business Combinations (“ASC 805”). The objective of this standard is to address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. This standard specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This standard also expands the supplemental pro forma disclosures under ASC 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This standard is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company does not expect the adoption of ASU 2010-29 will have a material impact on its financial statements.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The guidance in ASU 2011-04 changes the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements, including clarification of the FASB's intent about the application of existing fair value and disclosure requirements and changing a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this ASU should be applied prospectively and are effective for interim and annual periods beginning after December 15, 2011. Early adoption by public entities is not permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The guidance in ASU 2011-05 applies to both annual and interim financial statements and eliminates the option for reporting entities to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. This ASU also requires consecutive presentation of the statement of net income and other comprehensive income. Finally, this ASU requires an entity to present reclassification adjustments on the face of the financial statements from other comprehensive income to net income. The amendments in this ASU should be applied retrospectively and are effective for fiscal year, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

Results of Operations

Results of Operations for the year Ended June 30, 2011 Compared to year Ended June 30, 2010

The following table sets forth a summary of certain key components of our results of operations for the years indicated, in dollars and as a percentage of revenues.

	Years Ended June 30						Years Ended June 30
	2011			2010			2011			2010

Revenues		55,806,425			42.626,988			100.0	%		100.0	%
Operating costs		6,055,735			3,622,060			10.9	%		8.5	%
Depreciation and amortization		11,447,835			12,995,000			20.5	%		30.5	%
Gross profit		38,302,855			26,009,928			68.6	%		61.0	%
Bad debts for notes receivable and advances to related parties		145,882,223			-			261.4	%		-
General and administrative expenses		5,920,822			4,197,729			10.6	%		9.8	%
(Loss) Income from operations		(113,500,190	)		21,812,199			(203.4	)%		51.2	%
Interest income from related parties		-			8,379,605			-			19.7	%
Other interest income (expense)		136,991			189,641			0.2	%		0.4	%
Interest expense		31,418,643			28,397,389			56.3	%		66.6	%
Other income, net		668,629			1,474,458			1.2	%		3.5	%
(Loss) Income from operations before income taxes		(144,113,213	)		3,458,514			(258.3	)%		8.1	%
Income tax benefit (expense)		7,565,282			(981,384	)		13.6	%		2.3	%
Net (Loss) income		(136,547,931	)		2,477,130			(244.7	)%		5.8	%

Revenues

Our revenues are derived from the operation of Pinglin Expressway. Our revenues increased by approximately $13.2 million, or 30.9%, from approximately $42.6 million for the year ended June 30, 2010 to approximately $55.8 million for the year ended June 30, 2011. The increase was mainly due to the following:

1) The converted average daily traffic volume, a guideline specifically used in the toll road industry to evaluate operational performance, increased 2,675 units, or 21.1%, from 12,696 units for the year ended June 30, 2010 to 15,371 units for the year ended June 30, 2011.

2) Pinglin Expressway is part of Ningnuo Expressway, which intersects the Lianhuo Expressway (the main freight channel from east to west) at Luoyang. Due to the rebuilding of the Lianhuo Expressway, which finished in October 2010, trucks chose our Expressway because of the improved road conditions and additional traffic lanes. With the completion of rebuilding of the Lianhuo Expressway, the traffic volume of the Expressway will be back to normal growth. As a result, the long-haul truck flow through Pinglin Expressway for the year ended June 30, 2011 increased approximately 22% compared to the same period in 2010. Thus, the revenues increased accordingly. Considering the short time after the completion of rebuilding of the Lianhuo Expressway, the Company cannot assess the impact of the future total traffic volume of Pinglin Expressway in the current reporting period, and will assess it each reporting period.

3) With the continuous development of the domestic economy, the coal demand for industry increased. Therefore, the weight and flow rate of trucks carrying coal through Pinglin Expressway increased accordingly.

Operating Costs

Our operating costs mainly represent the road maintenance costs, road management costs and labor costs associated with the toll operations. Our operating costs increased by approximately $2.4 million, or 67.2%, from approximately $3.6 million for the year ended June 30, 2010 to approximately $6.0 million for the year ended June 30, 2011. The increase is mainly due to the increase in the specific project costs and the road management costs due to the upgrade of express network charging system for the year ended June 30, 2011.

Depreciation and Amortization

Our total depreciation and amortization related to toll operations decreased by approximately $1.5 million, or 11.9%, from approximately $12.9 million for the year ended June 30, 2010 to approximately $11.4 million for the year ended June 30, 2011. The decrease was mainly caused by the 2010 reassessment of the future expected traffic volume.

Depreciation of toll road infrastructures is calculated on a units-of-usage basis. The Company recorded the depreciation based on the ratio of actual traffic volume during the period compared to the total expected traffic volume of the toll roads during the estimated operation licensing period.

Management assesses the future total expected traffic volume at each year end. Considering the current economic environment and the actual traffic volume during the year ended June 30, 2010, compared to prior years’ estimate, management believed that there was a significant decline in future total anticipated volume. Based on such estimation, the management reassessed the future total traffic volume at June 30, 2010, which decreased by approximately 15.6% compared to the assessment at June 30, 2009. As a result, depreciation of toll road infrastructures had a significant increase for the year ended June 30, 2010 because the depreciation cost resulting from the accumulated impact of the reassessment of the future expected traffic volume was allocated to the year ended June 30, 2010. There was no change in the assessment of future traffic volume at June 30, 2011 from June 30, 2010. The above reasons caused the decrease in depreciation expense in year ended June 30, 2011 compared with that of 2010.

Gross Profit

Our gross profit increased by approximately $12.3 million, or 47.3%, from approximately $26.0 million for the year ended June 30, 2010 to approximately $38.3 million for the year ended June 30, 2011. Such gross profit increase is primarily due to the increase in our revenues and decrease in our depreciation and amortization expenses, partially offset by the increase in operating cost.

Gross profit as a percentage of revenues increased from 61.0% for the year ended June 30, 2010 to 68.6% for the year ended June 30, 2011 as a result of the explanation above.

General and Administrative Expenses

Our general and administrative expenses mainly represent employee payroll and welfare, traveling expenses, vehicle gasoline and maintenance costs, entertainment expenses, consulting fees, provisions for doubtful accounts and miscellaneous taxes. General and administrative expenses increased by approximately $1.7 million, or 41.0%, from approximately $4.2 million for the year ended June 30, 2010 to approximately $5.9 million for the year ended June 30, 2011. Such increase is primarily due to the increase in consulting fee from ICBC and CCB.

Bad Debts for Notes Receivable and Advances to Related Parties

Our bad debt for notes receivables from related parties for the year ended June 30, 2011 mainly due to that the Company entered into a renewal agreement with Tai Ao and Xinyang to resolve the notes receivable from the related parties. The agreement was renewed based on management’s estimate of the realizable amount resulting from the lack of government approval of the acquisition of Tai Ao and deteriorating operations of Tai Ao, which resulted in the inability to the pay balances. Pursuant to the agreement, the principal and interest of notes receivables from Tai Ao and Xinyang was decreased to $57,169,593, since the Company’s management believes there is uncertainty as to collection of some of the notes receivables and advance to related parties, and a bad debt provision amounting to $145.9 million was provided by the Company for the notes receivable from and advance to Tai Ao and Xinyang.

Interest Income and Expense

Interest income from related parties decreased by approximately $8.4 million, or 100.0%, from approximately $8.4 million for the year ended June 30, 2010 to approximately $0 million for the year ended June 30, 2011. The decrease is primarily due to the Company’s management’s decision to cease to accrue the interest income from notes receivable from related parties for the year ended June 30, 2011.

Interest expense increased by approximately $3.0 million, or 10.6%, from approximately $28.4 million for the year ended June 30, 2010 to approximately $31.4 million for the year ended June 30, 2011. This increase is primarily due to the increase of the principle and the floating interest rate for the year ended June 30, 2011.

Income Tax Benefit (Expense)

Income tax expense decreased by approximately $8.5 million, or 870.9%, from income tax expense of approximately $0.9 million for the year ended June 30, 2010 to income tax benefit of approximately $7.6 million for the year ended June 30, 2011, as a result of the significant decrease in our income from operations due to the significant bad debt provisions. The Company accrued interest income for the related party loans in prior years, which resulted in the deferred tax liabilities. Due to the significant bad debt provisions for the principal and interest of notes receivable, the Company believes the related deferred tax effect caused by the interest income of prior years should also be reversed since they will not be recognized as an income in the future. Therefore, a tax benefit occurred in this period. Our effective tax rate was 5% and 28% for the year ended June 30, 2011 and 2010, respectively.

Net (Loss) Income

Our net (loss) income decreased by approximately $139.0 million, or 5612.3%, from net income of approximately $2.5 million for the year ended June 30, 2010 to net loss of approximately $136.5 million for the year ended June 30, 2011. This decrease is primarily due to the significant bad debt provisions amounting to $149.6 million provided by the Company due to the resolve the notes receivable from the related parties for the year ended June 30, 2011.

Liquidity and Capital Resources

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company had a net loss of $136,547,931 for the year ended June 30, 2011. This was primarily due to the Company plans to resolve the related party notes receivable and advances, resulting in a bad debt provision of $149,590,500 which was provided for the notes receivable from and advances to related parties. The Company derives revenues from the operations of the Pinglin Expressway and the revenues increased by approximately 31% for the year ended June 30, 2010 compared to the year ended June 30, 2011.

The Company had a working capital deficit of $26,990,951 and cash and cash equivalents of $557,244 on June 30, 2011. This was primarily due to the Company providing advances to its related parties for their highway construction and working capital. The Company currently generates its cash flow through its operating profit and borrowings from banks. During the reporting period, to increase its cash resources, the Company obtained a long-term loan of $19,161,715. The Company also had cash flow from operations of $11,225,711 for the year ended June 30, 2011. As of the date of this report, the Company has not experienced any difficulty in raising funds through bank loans, and has not experienced any liquidity problems in settling payables in the normal course of business and repaying bank loans when they fall due. To improve liquidity, the Company may explore new expansion opportunities and external funding sources.

We generally finance our operations through, to a substantial extent, from operating profit and a combination of borrowings from banks. We use cash generated from operations to pay current liabilities. To increase our cash resources, we will renew short-term loans when due and obtain long-term loans, if necessary. There can be no assurance that we will be successful in renewing loans or obtaining new loans.

As of the date of this report, we have not experienced (1) any difficulty in raising funds by bank loans, (2) any liquidity problems in settling the payables in the normal course of business, and (3) any difficulty in repaying bank loans when they fall due. To improve liquidity, we may explore new expansion opportunities and funding sources from which the management may consider seeking external funding and financing.

The following table sets forth the summary of our cash flow, in dollars, for the years indicated:

	Years Ended June 30
	2011			2010
Net cash provided by operating activities	$	11,225,711		$	21,051,849
Net cash used in investing activities		(18,934,468	)		(12,669,560	)
Net cash provided in financing activities		7,136,159			(8,629,941	)
Net decrease in cash and cash equivalents		(572,598	)		(247,652	)
Effect of exchange rate changes on cash		(137,357	)		(99,409	)
Cash and cash equivalents at beginning of year		1,267,199			1,614,260
Cash and cash equivalents at end of year	$	557,244		$	1,267,199

Operating Activities

Net cash provided by operating activities was approximately $11.2 million for the year ended June 30, 2011, as compared to $21.1 million for the year ended June 30, 2010. This decrease is primarily due to the increase in our accounts receivables of approximately $1.5 million and decrease in our advance from customers of approximately $2.3 million for the year ended June 30, 2011, which compared to decrease in our accounts receivables of approximately $1.0 million and increase in our advance from customers of approximately $2.4 million for the year ended June 30, 2010.

Investing Activities

Net cash used in investing activities was approximately $18.9 million for the year ended June 30, 2011 as compared to approximately $12.7 million for the year ended June 30, 2010. The change is primarily due to the fact that (a) we provided additional $7.7 million working capital for related parties, Zhengdong, for the year ended June 30, 2011, as compared to year ended June 30, 2010; (b) we paid the amount to purchase shares of Pingdingshan City Credit Corporation of approximately $1.6 million for the year ended June 30, 2011.

Financing Activities

Net cash provided in financing activities was approximately $7.1 million for the year ended June 30, 2011 as compared to net cash used of approximately $8.6 million for the year ended June 30, 2010. Such change is primarily due to the fact that (a) we received $19.1 million in proceeds from long-term bank loans from China Construction Bank due to working capital needs; and (b) the repayment of long-term bank loans decreased approximately $6.0 million for the year ended June 30, 2011 as compared to the year ended June 30, 2010; and (c) the restricted cash increased approximately $20.0 million for the year ended June 30, 2011 as compared to the year ended June 30, 2010; (d) the repayment of notes payable increased approximately $10.0 million for the year ended June 30, 2011 as compared to the year ended June 30, 2010.

Working Capital

Our working capital increased by approximately $34.6 million from a deficit of approximately $61.6 million as of June 30, 2010 to a deficit of approximately $27.0 million as of June 30, 2011. This was primarily due to a change in the payment schedule of long-term loans, which resulted in a decrease in the current portion of long-term bank loans of approximately $12.3 million, and short-term bank loans of approximately $7.0 million and the restricted cash increased approximately $20.0 million. The negative working capital of the Company as of June 30, 2011 and 2010 is the Company providing advances to its related parties for their highway construction and working capital.

The Company currently generates its cash flow through operations and bank loans, and the Company believes that its cash flow generated from operations, the renewal of existing bank loans and proceeds from new loans will be sufficient to sustain operations for the next twelve (12) months. The Company also had cash flow from operations of $11,225,711 for the year ended June 30, 2011. From time to time, the Company may explore new expansion opportunities and funding sources from which our management may consider seeking external funding and financing.

Capital Expenditures

We made capital expenditures of approximately $0.2 and $0.2 million for the year ended June 30, 2011 and 2010, respectively. Capital expenditures principally consisted of toll road infrastructures, toll stations and ancillary facilities, communication and monitoring equipment and other equipment related to our toll operations. If we are permitted to construct and operate a new toll road or invest other toll road companies, we may require additional funds.

Off-Balance Sheet Arrangements

October 10, 2011, the Company entered into contractual agreements (known as a “variable interest entity” (VIE) arrangement) with shareholder of Zhengzhou Simian Real Estate Co., Ltd (“Simian”), which is wholly owned by Henan Shengrun Real Estate Co., Ltd. Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is a 51% owner of Henan Shengrun Real Estate Co., Ltd.. According to the arrangements, the Company will acquire a 51% equity interest of Simian by a series of variable interest entity (“VIE”) contractual arrangement, which will be settled with the note receivable from Tai Ao of $57,169,593. If the Company successfully purchases the equity of Simian, the consolidation will be determined as variable interest entity in accordance with the audited historical cost basis of net assets of Simian at the purchase date. If the Company consummated such a transaction, the transaction would have been accounted for as an acquisition of a company under common control.

ITEM 7A.

Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our exposure to interest rate risk for changes in interest rates relates primarily to the interest expense incurred by the bank loans and the interest income generated by the loans to our related parties or bank deposits. We have not used any derivative financial instruments in our investment portfolio or for cash management purposes. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. However, our future interest expense or interest income may increase of expectations due to changes in interest rates in the PRC.

Foreign Exchange Risk

We do not hold any derivative instruments and do not engage in any hedging activities. Because most of our purchases and sales are made in RMB, any exchange rate change affecting the value of the RMB relative to the U.S. dollar could have an effect on our financial results as reported in U.S. dollars. If the RMB were to depreciate against the U.S. dollar, amounts reported in U.S. dollars would be correspondingly reduced. If the RMB were to appreciate against the U.S. dollar, amounts reported in U.S. dollars would be correspondingly increased.

ITEM 8.

Financial Statements and Supplementary Data

Reference is made to pages F-1 through F-36 comprising a portion of this Annual Report immediately following the signature page of this Form 10-K.

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None.

ITEM 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions regarding required disclosure.

In connection with the preparation of this Form 10-K for the year ended June 30, 2011 our management, under the supervision of the CEO and CFO, conducted an evaluation of disclosure controls and procedures. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2011.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control structure and procedures over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) under the Exchange Act. Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of June 30, 2011 based on the framework set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on that evaluation, our CEO and CFO concluded that our internal control over financial reporting as of June 30, 2011 was effective.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

Except as disclosed above, there were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.

Other Information

None.

PART III

ITEM 10.

Directors, Executive Officers, and Corporate Governance

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Set forth below are the names of the Company’s directors and officers, their business experience during the last five (5) years, their ages and all positions and offices that they shall hold with the Company following the expiration of the ten (10) day time period following the mailing of an Information Statement complying with Form 14F-1 under the Exchange Act in connection with the Exchange. The Company has no “significant employees”.

Name	Age	Position(s)
Li Xipeng	48	Chief Executive Officer and Chairman of the Board
Li Lei (1)	47	Chief Financial Officer and Director
Lin Jie	50	Vice President of Operations
Wu Lei	34	Vice President of Strategy Development
Wang Feng	38	Secretary
Sun Jianhao	48	Director
Huang Yuemin	54	Director
Xu Huiqing	57	Director
Zhang Chunxian	46	Director
Aaron Zhu	43	Director

(1) Mr. Li was appointed as the Company’s Chief Financial Officer on June 27, 2011.

Board Leadership Structure

The Board of Directors believes that Mr. Li Xipeng’s service as Chairman of the Board is in the best interest of the Company and its stockholders. Mr. Li possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company and its business and is thus best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most critical matters. His combined role enables decisive leadership, ensures clear accountability, and enhances the Company’s ability to communicate its message and strategy clearly and consistently to the Company’s shareholders, employees, customers and suppliers.

Family Relationships

There are no family relationships between or among the members of the Board of Directors or other executives. None of our directors and officers are directors or executive officers of any company that files reports with the SEC.

Biographies (Business Experience)

Li Xipeng has served as Chief Executive Officer of the Company and has served as a Director of the Company since the closing date of the Exchange and as Chairman of Ping since May 2003. Prior to that, Mr. Li served as Chairman of HSV in the PRC since May 2001 and prior to that he served as Chairman of Henan Shengrun Real Estate Co., Ltd. in the PRC since May 2000. Mr. Li is also currently the legal representative of Ping. Mr. Li graduated from Zhongnan University of Economics and Law and he earned his EMBA at Cheung Kong Graduate School of Business.

Li Lei has served as Chief Financial Officer and a Director of the Company since June 27, 2011. Prior to joining the Company, Mr. Li served as Chief Executive Officer of Beijing Sino-US Great Wall Investment Company Ltd. From August 2005 through September 2010, he served as the General Manager of the Treasury and Capital Department at China Everbright Bank. From October 2004 to August 2005, he worked at General Electric Capital. From March 2002 to October 2004, he worked at Federal Home Loan Mortgage Corporation (Freddie Mac) in the U.S. Mr. Li worked at Merrill Lynch between November 2000 and March 2002 and worked in the Chief Financial Officer’s office at AT&T in the U.S. between July 1999 and November 2000. Mr. Li received his Ph.D. degree in Economics from the University of Pittsburgh in 1999. Mr. Li is a Certified Financial Analyst charter holder. Mr. Li has extensive practical experience in capital market, security trading and risk management.

Lin Jie has served as a Vice President of Operations of the Company since March 9, 2008 and has served as Manager of the Finance Department and as Assistant to the General Manager of Ping since May 2003. Prior to that, Ms. Lin served as Manager of the Finance Department of Henan Shengrun Real Estate Co., Ltd. in the PRC since March 2000.

Wu Lei has served as Vice President of Strategy Development of the Company since March 9, 2008. Ms. Wu earned her BSc. at Wuhan University (Law) in 2000 and her Masters degree in economics in 2006. Ms. Wu has no prior work experience.

Wang Feng has served as corporate Secretary of the Company since March 9, 2008 and has served as the corporate Secretary of Ping since May 2007. Prior to that, Mr. Wang served as Investment Manager of Henan Hi-Tech Venture Capital Co., Ltd. in the PRC from March 2006 to May 2007 and as Investment Manager of Zhongyuan Trust and Investment Co., Ltd. in the PRC from November 2003 through February 2006. Prior to that Mr. Wang earned his Master’s degree from Beijing Information Science and Technology University and his BSc. at Hunan University. Mr. Wang is a Chinese Certified Public Accountant.

Sun Jianhao has served as a Director of the Company since March 9, 2008 and has served as Chairman of Pingdingshan Zhongya Road and Bridge Construction Co., Ltd. in the PRC since November 2004. Prior to that Mr. Sun served as Deputy Director of Pingdingshan Development and Planning Commission in the PRC from September 2004 through October 2004. Prior to that Mr. Sun served as Deputy Director of Pingdingshan New District Management Commission in the PRC from August 1999 through August 2004.

Huang Yuemin has served as a Director of the Company since March 9, 2008 and has served as Manager in the International Operations Department, General Manager and Chairman of Zhongyuan Trust and Investment Co., Ltd. in the PRC since March 1990. Prior to that, Mr. Huang served as Director in the Investment Department of Henan Development and Planning Commission in the PRC since August 1984 through February 1990. Mr. Huang earned his Associate’s degree from Tianjin University.

Xu Huiqing has served as a Director of the Company since March 9, 2008 and has served as Chairman and General Manager of Pingdingshan High Way Construction Co., Ltd. in the PRC since June 2003. Prior to that, Mr. Xu served as Deputy Director of Pingdingshan Bureau of Communications in the PRC from March 2002 through June 2003. Prior to that, Mr. Xu served as Deputy Director General for Pingdingshan Geography and Mine Bureau in the PRC from May 1994 through March 2002.

Zhang Chunxian served as Chief Financial Officer of the Company from March 9, 2008 to June 27, 2011 and has served as Chief Financial Officer of Ping since May 2003. Prior to that, Mr. Zhang served as Manager in the Trust and Investment Department of Zhongyuan Trust and Investment Co., Ltd. in the PRC. Mr. Zhang is a Chinese Certified Public Accountant.

Aaron Zhu has served as an independent director of the Company since July 2010. He is a member of the audit committee. Mr. Zhu currently is an independent business consultant based in Ohio. From January 1997 through March 2000, Mr. Zhu served as Corporate Controller of Harrington Signal Corporation, a US company based in Illinois. Mr. Zhu then served as Executive Director of China Merchants Dichain Holdings based in Hong Kong from April 2000 through March 2003, as Executive Director of China Merchants Dichain (Asia), a public company in Hong Kong (HKSE: 00632) from March 2003 through September 2004, as Executive Director and Chief Financial Officer of DF China Technology (NASDAQ: DFCT) from April 2003 through October 2004, Co-Chief Executive Officer of China Technology Development Corp. (NASDAQ: CTDC) from May 2005 through February 2006 and as a Financial Advisor at Morgan Stanley from April 2007 through February 2008. Mr. Zhu currently also serves as an Adjunct Professor at North Central State College in Ohio. Mr. Zhu received his Bachelors degree in Management from Shenzhen University of China and his MBA from Regent University in Virginia.

Involvement in Certain Legal Proceedings

None of our directors or executive officers has, during the past ten years:

(a)	Had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

(b)	Been convicted in a criminal proceeding or subject to a pending criminal proceeding;

(c)

Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; and

(d)	Been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Promoters and Control Persons

None.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than ten percent (10%) of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than ten percent (10%) stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

Based solely on a review of the copies of such forms furnished to us, we believe that during the year ended June 30, 2011 all officers, directors and ten percent (10%) beneficial owners who were subject to the provisions of Section 16(a) complied with all of the filing requirements during the year, except for the following persons have failed to file the corresponding documents set forth below:

Name		Form Type(s)		Type of Holder
Li Lei		Form 3		Chief Financial Officer and Director

Code of Ethics

We have adopted a Code of Ethics, as required by the rules of the SEC and NASDAQ. This Code of Ethics applies to all of our directors, officers and employees. The Code of Ethics, and any amendments to, or waivers from, the Code of Ethics, is available in print, at no charge, to any stockholder who requests such information.

Committees of our Board of Directors

Our Board of Directors has an Audit Committee, a Compensation Committee and a Nominating Committee. A brief description of each committee is set forth below.

Audit Committee – The purpose of the Audit Committee is to provide assistance to our Board of Directors in fulfilling their oversight responsibilities relating to our consolidated financial statements and financial reporting process and internal controls in consultation with our independent registered public accountants and internal auditors. The Audit Committee is also responsible for ensuring that the independent registered public accountants submit a formal written statement to us regarding relationships and services which may affect the auditors’ objectivity and independence. During the fiscal year ended June 30, 2011, members of the Audit Committee were independent directors Huang Yuemin, Xu Huiqing and Aaron Zhu. Our Audit Committee financial expert is Aaron Zhu, who is an independent director. The Audit Committee met 4 times during the fiscal year ended June 30, 2011.

Compensation Committee – Independent directors Xu Huiqing, Huang Yuemin and Sun Jianhao were members of our Compensation Committee during the fiscal year ended June 30,2011. The purpose of the Compensation Committee is to review and make recommendations to our Board of Directors regarding all forms of compensation to be provided to the executive officers and directors of our company, including stock compensation and loans, and all bonus and stock compensation to all employees. The Compensation Committee met 2 times during the fiscal year ended June 30, 2011.

Nominating Committee – Independent directors Sun Jianhao, Huang Yuemin and Xu Huiqing were members of our Nominating Committee during the fiscal year ended June 30, 2011. The purpose of the Nominating Committee is to review the composition and evaluate the performance of the Board, recommend persons for election to the Board and evaluate director compensation; The nominating committee is also responsible for reviewing the composition of committees of the Board and recommending persons to be members of such committees, and maintaining compliance of committee membership with applicable regulatory requirements. The Nominating Committee met 2 time s during the fiscal year ended June 30, 2011. The Company has not adopted procedures by which security holders may recommend nominees to the Company’s Board of Directors.

ITEM 11.

Executive Compensation

Compensation Discussion and Analysis

Not required for smaller reporting companies.

Summary Compensation Table

The following table sets forth certain information with respect to the compensation paid to the Named Executive Officers of the Company during the years ended June 30, 2011 and June 30, 2010.

Name And Principal Function	Year	Salary		Bonus		Employer’s Contribution to Mandatory Pension and other benefits		Total
		($)		($)				($)
(a)	(b)	(c)		(d)		($)		(j)
Li Xipeng,	2011		-0-		-0-		-0-		-0-
Chief Executive Officer	2010		-0-		-0-		-0-		-0-

Zhang Chunxian, Former	2011		16,460		8,450		317		25,227
Chief Financial Officer *	2010		15,929		6,582		-0-		22,511

Lin Jie,
Vice President of	2011		12,838		5,432		317		18,587
Operations	2010		12,418		5,120		-0-		17,538

Wu Lei,
Vice President of	2011		7,134		1,507		317		8,958
Strategy Development	2010		6,884		1,500		637		9,021

	2011		12,313		5,432		317		18,062
Wang Feng, Secretary	2010		11,909		3,657		439		16,005

* Zhang Chunxian resigned from his position as Chief Financial Officer of the Company on June 27, 2011.

Narrative Disclosure to Summary Compensation Table

During the year ended June 30, 2011, we paid an aggregate of approximately $186,578 in cash compensation to our management team members, including $126,380 for salary, $57,030 for bonus and $3,168 for benefits. We paid an aggregate of approximately $70,827 to our senior executive officers, including salary, bonus and benefits. During the year ended June 30, 2010, we paid an aggregate of approximately $176,766 in cash compensation to our management team members, including $123,249 for salary, $50,500 for bonus and $23,017 for benefits. We paid an aggregate of approximately $65,075 to our senior executive officers, including salary, bonus and benefits. Our senior executive officers are eligible to receive cash bonuses which are paid on the basis of their success in achieving designated individual goals and the Company’s success in achieving specific company-wide goals. The amount of the bonus is determined by our board compensation committee at the end of each fiscal year.

In order to retain experienced and senior level executives, we believe the salary and bonus compensation of our senior executives is one of the highest among local equivalent companies. The Company will continue to provide competitive salary and bonus compensation to retain and recruit high quality executives and employees.

The Company will introduce option and equity based incentive scheme in the future as compensation for our senior executives and independent directors for the successful operation results.

All senior executives have the standard three-year employment service contracts in accordance with applicable PRC regulations. None of these service contracts provides benefits upon termination. These are standard employment service contracts without any specific terms and duration for any positions that the senior executives are holding. In addition, we did not provide any pension or retirement plans for senior executives other than the mandatory plans required by the PRC government.

The Company currently does not have an equity/option – based compensation plan for senior executives. None of the senior executives has been granted any rights to equity or options.

Grants of Plan-Based Awards

None.

Outstanding Equity Awards at Fiscal Year-End

None.

Option Exercises and Stock Vested

None.

Pension Benefits

None.

Non-Qualified Deferred Compensation

None.

Potential Payments Upon Termination or Change of Control

None.

Additional Narrative Disclosure

None.

Director Compensation

The following table sets forth certain information relative to compensation paid to outside directors as of years ended June 30, 2011 and June 30, 2010:

Name And Principal Function	Year	Salary		Bonus		other benefits		Total
(a)	(b)	($) (c)		($) (d)		($)		($) (j)
Huang Yuemin	2011		-0-		-0-		-0-		-0-
	2010		-0-		-0-		-0-		-0-

Mu Xinjie (1)	2011		-0-		-0-		-0-		-0-
	2010		52,657		-0-		-0-		52,657

Sun Jianhao	2011		-0-		-0-		-0-		-0-
	2010		-0-		-0-		-0-		-0-

Xu Huiqing	2011		-0-		-0-		-0-		-0-
	2010		-0-		-0-		-0-		-0-

Li Lei	2011		-0-		-0-		-0-		-0-
	2010		-0-		-0-		-0-		-0-

Aaron Zhu (3)	2011		54,316		-0-		-0-		54,316
	2010		-0-		-0-		-0-		-0-

(1) Mr. Mu was not nominated for election as a director and his term expired on June 18, 2010.

(2) Mr. Li was elected as a director on June 27, 2011.

(3) Mr. Zhu was elected as a director on June 18, 2010.

Narrative To Director Compensation Table

During the fiscal year ended June 30, 2011, we paid $54,316 to Aaron Zhu, our Independent Director. We did not have any other compensation arrangement for any other directors in 2011. The Company did not pay salaries or any other bonuses or benefits to other directors.

During the fiscal year ended June 30, 2010, we paid $52,657 to one independent director, Mr. Xinjie Mu, for his financial and accounting expertise on the Audit Committee. Commencing in February 2008, the Company pays him $4,388 (RMB 30,000) per month. We did not have any other compensation arrangement for any other directors in 2010. The Company did not pay salaries or any other bonuses or benefits to other directors.

We intend to implement compensation arrangements for independent directors in fiscal year 2009, which will include both cash and stock option plans which may include fees for retainers, committee services, services as chairman of the board or on committees and meeting attendance.

Employee Agreement

We have entered into three-year service contracts with all of our employees in accordance with applicable PRC regulations. None of these service contracts provides benefits upon termination. We were required by PRC law to make monthly contributions in amounts equal to 20.0%, 8.2%, and 10% of our employees’ average monthly salary in the preceding year to a pension plan, a medical insurance plan, and employee housing plan, respectively, each for the benefit of our employees subject to certain statutory limits.

Our employees are not subject to any collective bargaining agreement. We have not been involved in any material labor disputes. We believe that we have a good relationship with our employees.

We may terminate his or her employment for cause at any time, with prior written notice, for certain acts of the executive officer, including but not limited to, a conviction of a felony, or willful gross misconduct by the executive officer in connection with his or her employment, and in each case if such acts have resulted in material and demonstrable financial harm to us. An executive officer may, with prior written notice, terminate his or her employment at any time for any material breach of the employment agreement by us that is not remedied promptly after receiving the remedy request from the employee. Furthermore, either party may terminate the employment agreement at any time without cause upon advance written notice to the other party. Upon termination, the executive officer is generally entitled to a severance pay of at least one (1) month but not exceeding twelve (12) months amount of salary.

Each executive officer has agreed to hold, both during and subsequent to the terms of his or her agreement, in confidence and not to use, except in pursuance of his or her duties in connection with the employment, any of our confidential information, technological secrets, commercial secrets and know-how.

ITEM12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth each person known by us to be the beneficial owner of five (5%) percent or more of our Common Stock, all directors individually and all directors and officers as a group as of October 13, 2011. Each person named below has sole voting and investment power with respect to the shares shown unless otherwise indicated.

Name and Address of Beneficial Owner (1)	Amount of Direct Ownership After Exchange		Amount of Indirect Ownership After Exchange			Total Beneficial ownership After Exchange			Percentage of Class (2)
Li Xipeng, Chief Executive Officer and Chairman of the Board		0		34,086,250	(3)		34,086,250	(3)		42.6	%

Li Lei, Chief Financial Officer and Director		0		0			0			0	%

Lin Jie, Vice President of Operations		0		6,817,250	(4)		6,817,250	(4)		8.52	%

Wu Lei, Vice President of Strategy Development		0		6,817,250	(5)		6,817,250	(5)		8.52	%

Wang Feng, Secretary		0		0			0			0	%

Sun Jianhao, Director		0		6,817,250	(6)		6,817,250	(7)		8.52	%

Huang Yuemin, Director		0		0			0			0	%

Xu Huiqing, Director		0		0			0			0	%

Zhang Chunxian, Director		0		6,817,250	(7)		6,817,250	(7)		8.52	%

Aaron Zhu, Director		0		0			0			0	%

ALL DIRECTORS AND OFFICERS AS A GROUP (10 PERSONS):		0		61,355,250			61,355,250			76.69	%

Joylink Holdings Limited Room 42, 4F, New Henry House 10 Ice House Street Central, Hong Kong		68,172,500		0			68,172,500			85.21	%

Shu Hongying Room 14 Unit 4, 11 Building Sichangdong Street Zhengzhou, Henan the PRC		0		6,817,250	(8)		6,817,250	(8)		8.52	%

(1)	Unless otherwise noted, each beneficial owner has the same address as the Company.

(2)

Applicable percentage of ownership is based on 80,000,000 shares of our Common Stock outstanding as of October 13, 2011, together with securities exercisable or convertible into shares of Common Stock within sixty (60) days of October 13, 2011 for each stockholder. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of Common Stock are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Note that affiliates are subject to Rule 144 and Insider trading regulations - percentage computation is for form purposes only.

(3)	Li Xipeng, the Company’s Chairman and Chief Executive Officer, owns 50% of Joylink Holdings Limited, which owns 68,172,500 shares of the Company’s Common Stock. Therefore, Li Xipeng may be considered to beneficially own 34,086,250 shares.

(4)	Lin Jie, the Company’s Vice President, owns 10% of Joylink Holdings Limited, which owns 68,172,500 shares of the Company’s Common Stock. Therefore, Lin Jie may be considered to beneficially own 6,817,250 shares.

(5)	Wu Lei, the Company’s Vice President, owns 10% of Joylink Holdings Limited, which owns 68,172,500 shares of the Company’s Common Stock. Therefore, Wu Lei may be considered to beneficially own 6,817,250 shares.

(6)	Sun Jianhao, the Company’s Vice President, owns 10% of Joylink Holdings Limited, which owns 68,172,500 shares of the Company’s Common Stock. Therefore, Sun Jianhao may be considered to beneficially own 6,817,250 shares.

(7)	Zhang Chunxian, a Director of the Company, owns 10% of Joylink Holdings Limited, which owns 68,172,500 shares of the Company’s Common Stock. Therefore, Zhang Chunxian may be considered to beneficially own 6,817,250 shares.

(8)	Shu Hongying owns 10% of Joylink Holdings Limited, which owns 68,172,500 shares of the Company’s Common Stock. Therefore, Shu Hongying may be considered to beneficially own 6,817,250 shares.

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

Transactions With Related Persons

Notes Receivable to Related Persons

On June 29, 2010, Tai Ao Expressway Co., Ltd. (“Tai Ao”) entered into a renewal agreement with the Company. Pursuant to the agreement, the note receivable from Tai Ao was extended to June 29, 2011 with a 5.94% interest rate per annum. Interest shall be paid annually and the principal shall be repaid at maturity. The note receivable from Tai Ao is classified as a non-current asset because the Company expects to purchase a controlling interest in Tai Ao and the receivable will be part of the cost of acquiring the ownership interest . Also see September 27, 2009 letter of intent below.

On June 29, 2010, Xinyang Expressway Co., Ltd. (“Xinyang”) entered into a renewal agreement with the Company. Pursuant to the agreement, the note receivable to Xinyang was extended to June 29, 2011 with a 5.94% interest rate per annum. Interest is paid annually and the principal is repaid at maturity. Also see September 27, 2009 letter of intent below.

The notes receivable were provided to these companies for their construction and operation working capital. Tai Ao, Xinyang and Ruijia are related to the Company through a common shareholder of the Company. Hairun is a trading company substantially controlled by Lin Jie, the vice president of operations of the Company. The notes receivable are interest bearing and unsecured. Interest income was $0 and $8,379,605 for the years ended June 30, 2011 and 2010, respectively.

On September 27, 2009, the board of directors of the Company approved a share purchase resolution. Pursuant to a letter of intent dated September 27, 2009, the Company shall purchase at least 51% of Tai Ao. The consideration for such purchase will be settled first with the note receivable from Xinyang of $78,876,139, and the remainder in cash. If the Company successfully negotiates with Tai Ao’s shareholders, the consideration will be determined in accordance with the audited net assets of Tai Ao at the purchase date. If the Company consummates such transaction, the transaction is expected to be accounted for as an acquisition of a company under common control. Also see Notes 6 and 7.

Advances Made on Behalf of Related Person

The Company and Tai Ao Expressway Co., Ltd. are held by the same shareholder with the company, Li Xipeng. The Company made advances to suppliers on behalf of Tai Ao for the purchase of construction materials commencing in 2006 in order to assist Tai Ao with its working capital needs.

For the years ended June 30, 2011 and 2010, the Company made advances to suppliers on behalf of Tai Ao for the purchase of construction materials amounting to $13,066,176 and $610,471, and the repayment from Tai Ao was amounting to $7,630,524 and $731,350, respectively. The balances of $0 and $32,732,531 at June 30, 2011 and 2010, respectively, are unsecured, interest free and due on demand.

The advance to Tai Ao is classified as a non-current asset because the Company plans to acquire a controlling interest in Tai Ao. Also see Notes 6 and 7.

Henan Hairun Trade Co., Ltd. is substantially controlled by Ms. Lin Jie, the Vice President of Operations of the Company. The Company made prepayment to Hairun for its working capital needs. For the years ended June 30, 2011 and 2010, the prepayments to Hairun were amounting to $2,422,750 and $731,350, and the repayment from Hairun was amounting to $2,564,954 and $585,080, respectively. The balances at June 30, 2011 and 2010 were $8,896 and $146,873, respectively.

The Company and Henan Shenrun Venture Investment Co., Ltd. have the same chairman, Li Xipeng. Li Xipeng owns 97% of the shares of Henan Shenrun Venture Investment Co., Ltd.. The Company made payments to Henan Shenrun Venture Investment Co., Ltd. for its working capital needs. For the year ended June 30, 2011, the payments to Henan Shenrun Venture Investment Co., Ltd. amounted to $7,118,386, and the repayments from Henan Shenrun Venture Investment Co., Ltd. amounted to $6,266,031. The balance of $874,022 at June 30, 2011 is unsecured, interest free and due on demand.

Due to Related Party

Due to a related party was working capital lend from Zhengzhou Zhengbian Tap Water Co., Ltd, which was controlled by Henan Shengrun Venture Investment Management Co., Ltd., the same shareholder of the Company. For the years ended June 30, 2011 and 2010, the working capital lend from Zhengzhou Zhengbian Tap Water Co., Ltd were amounting to $0 and $585,080, and the repayment to Zhengzhou Zhengbian Tap Water Co., Ltd was amounting to $603,519 and $0, respectively. The balances at June 30, 2011 and 2010 were $0 and $587,492, respectively.

Agreements With Promoters and Certain Control Persons

None.

Director Independence

The following directors are independent: Sun Jianhao, Huang Yuemin, Xu Huiqing, and Aaron Zhu. The following directors are not independent: Li Xipeng, Li Lei and Zhang Chunxian.

ITEM 14.

Principal Accountant Fees and Services

Audit Fees

During the fiscal years ended June 30, 2011 and 2010, the fees for our principal accountant were approximately $220,000 and $255,000 , respectively, representing services for quarterly reviews and the year end audits.

Audit-Related Fees

During the fiscal years ended June 30, 2011 and 2010, the fees for our principal accountant’s audit related services were $2,828 and $2,250, respectively, and were reasonably related to the performance of the audit or review of financial statements.

Tax Fees

During the fiscal years ended June 30, 2011 and 2010, our principal accountant did not render tax compliance, tax advice and tax planning services.

All Other Fees

During the fiscal years ended June 30, 2011 and 2010, there were no fees for products and services provided by the principal accountant other than those set forth above.

Audit Committee Pre-Approval

The policy of the Audit Committee is to pre-approve all audit and non-audit services provided by the independent accountants. These services may include audit services, audit-related services, tax fees, and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is subject to a specific budget. The Audit Committee has delegated pre approval authority to certain committee members when expedition of services is necessary. The independent accountants and management are required to periodically report to the full Audit Committee regarding the extent of services provided by the independent accountants in accordance with this pre-approval delegation, and the fees for the services performed to date. All of the services described above in this Item 14 were approved in advance by the Audit Committee during the fiscal year ended June 30, 2011.

PART IV

ITEM 15.

Exhibits and Financial Statement Schedules

(a)

Financial Statements and Schedules

The financial statements are set forth under Item 8 of this Annual Report on Form 10-K. Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.

(b)

Exhibits

EXHIBIT NO.	DESCRIPTION	LOCATION
3.1	Articles of Incorporation of Learning Quest Technologies, Inc.	Incorporated by reference to Exhibit 3.01 to the Company’s Form 10-SB as filed with the SEC on December 17, 2004.
3.2	Amended and Restated Bylaws of China Infrastructure Investment Corporation, dated as of May 21, 2008.	Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K as filed with the SEC on May 22, 2008.
3.3	Certificate of Incorporation of Color Man Holdings Limited	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
3.4	Certificate of Incorporation of Wise On China Limited	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
3.5	Certificate of Incorporation of Pingdingshan Pinglin Expressway Co., Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
3.6	Company Charter of Color Man Holdings Limited (Memorandum of Association and Articles of Association	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
3.7	Company Charter of Wise On China Limited	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
3.8	Articles of Association of Pingdingshan Pinglin Expressway Co., Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.1	Share Exchange Agreement, dated February 8, 2008, by and among Learning Quest Technologies, Inc., Color Man Holdings Ltd. and Joylink Holdings Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.2	Chartered Rights Agreement on Pingdingshan-Linru Expressway Project, dated April 10, 2003, by and between Pingdingshan Pinglin Expressway Co., Ltd. and Pingdingshan Bureau of Communications	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.3	Loan Contract of the Year 2004, dated December 28, 2004, by and between the China Development Bank and Pingdingshan Pinglin Expressway Co., Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.4	Loan Contract of the Fixed Assets (No. YBZ No. 0054, 2005), dated July 29, 2005, by and between The Pingdingshan Branch of Industrial and Commerical Bank of China and Pingdingshan Pinglin Expressway Co., Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.5	Loan Contract, dated February 25, 2005, by and between the Agricultural Bank of China, Xinhua Branch of Pingdingshan City and Pingdingshan Pinglin Expressway Co., Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.6	Loan Contract of the Year 2007, dated September 28, 2007, by and between the China Development Bank and Pingdingshan Pinglin Expressway Co., Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.7	Loan Contract, dated June 7, 2005, by and between the Agricultural Bank of China, Xinhua Branch of Pingdingshan City and Pingdingshan Pinglin Expressway Co., Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.8	General Loan Contract, dated November 29, 2004, by and between the China Development Bank and Pingdingshan Pinglin Expressway Co., Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.9	Loan Contract of the Fixed Assets (No. YBZ No. 0051, 2005), dated July 29, 2005, by and between The Pingdingshan Branch of Industrial and Commerical Bank of China and Pingdingshan Pinglin Expressway Co., Ltd.	Incorporated by reference to that Company’s Current Report on Form 8-K as filed with the SEC on February 11, 2008.
10.10	Loan Set-Off Agreement, dated October 10, 2011, by and among the Company, Pingdingshan Pinglin Expressway Co., Ltd., Pingdingshan Tai Ao Expressway Co., Ltd., Henan Shengrun Real Estate Co., Ltd., and Zhengzhou Simian Real Estate Co., Ltd.	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on October 13, 2011
10.11	Exclusive Business Cooperation Agreement, dated October 10, 2011, by and between Pingdingshan Pinglin Expressway Co., Ltd. and Zhengzhou Simian Real Estate Co., Ltd.	Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on October 13, 2011
10.12	Exclusive Option Agreement, dated October 10, 2011, by and among Pingdingshan Pinglin Expressway Co., Ltd., Henan Shengrun Real Estate Co., Ltd. and Zhengzhou Simian Real Estate Co., Ltd.	Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K as filed with the SEC on October 13, 2011

10.13	Equity Interest Pledge Agreement, dated October 10, 2011, by and among Pingdingshan Pinglin Expressway Co., Ltd., Henan Shengrun Real Estate Co., Ltd. and Zhengzhou Simian Real Estate Co., Ltd.	Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K as filed with the SEC on October 13, 2011
10.14	Power of Attorney dated October 10. 2011 by Henan Shengrun Real Estate Co., Ltd.	Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K as filed with the SEC on October 13, 2011
14.1	Code of Ethics	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on September 29, 2008
16.1	Auditor Letter	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on September 29, 2008
21	List of Subsidiaries	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on September 29, 2010
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Provided herewith
31.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Provided herewith
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Provided herewith
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Provided herewith
99.1	Audit Committee Charter of the Company	Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K as filed with the SEC on May 22, 2008
99.2	Compensation Committee Charter of the Company	Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K as filed with the SEC on May 22, 2008
99.3	Corporate Governance and Nominating Committee Charter of the Company	Incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K as filed with the SEC on May 22, 2008

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned, thereunto duly authorized.

	CHINA INFRASTRUCTURE INVESTMENT CORPORATION
Date: October 13, 2011

	By:	/s/ Li Xipeng
		Li Xipeng
		Chief Executive Officer, Principal Executive Officer and Chairman of the Board

		/s/ Li Lei
		Li Lei
		Chief Financial Officer, Principal Financial and Accounting Officer and Director

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

Signatures	Title	Date

/s/ Li Xipeng	Chief Executive Officer,	October 13, 2011
Li Xipeng	Principal Executive Officer and
	Chairman of the Board

/s/ Li Lei	Chief Financial Officer,	October 13, 2011
Li Lei	Principal Financial and
	Accounting Officer and
	Director

/s/ Sun Jianhao	Director	October 13, 2011
Sun Jianhao

/s/ Huang Yuemin	Director	October 13, 2011
Huang Yuemin

/s/ Xu Huiqing	Director	October 13, 2011
Xu Huiqing

/s/ Zhang Chunxian	Director	October 13, 2011
Zhang Chunxian

/s/ Aaron Zhu	Director	October 13, 2011
Aaron Zhu

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

CONTENTS

PAGE	1	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PAGES	2	CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2011 AND 2010

PAGE	4	CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

PAGE	5	CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

PAGES	6	CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

PAGES	7-36	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of:

China Infrastructure Investment Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of China Infrastructure Investment Corporation and Subsidiaries (the “Company”) as of June 30, 2011 and 2010, and the related statements of income (loss) and comprehensive income (loss), changes in shareholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2011 and 2010 and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company incurred a net loss of $136,547,931 for the year ended June 30, 2011 and has a working capital deficit of $26,990,951 at June 30, 2011. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Weinberg & Company, P.A.

Weinberg & Company, P.A.

Boca Raton, Florida

October 10, 2011

F-1

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

	June 30, 2011		June 30, 2010
CURRENT ASSETS
Cash and cash equivalents	$	557,244	$	1,267,199
Restricted cash		24,265,291		3,961,227
Accounts receivable, net of allowance for doubtful accounts of $57,554 and $54,637 at June 30, 2011 and 2010, respectively		1,476,668		8,812
Other receivables		145,791		150,132
Advances to related parties		8,618,665		146,873
Prepaid expenses		16,576		465,329
Deferred taxes, current		263,602		-
Other current assets		561,563		432,155
Total current assets		35,905,400		6,431,727

LONG-TERM ASSETS
Toll road infrastructures, net		442,125,289		428,661,699
Plant and equipment, net		15,278,459		15,154,141
Land use rights, net		45,826,301		45,509,651
Notes receivable from related parties, net of allowance for doubtful accounts of $109,536,486 and $0 at June 30, 2011 and 2010, respectively		57,169,593		158,347,962
Advance to a related party, net of allowance for doubtful accounts of $40,054,014 and $0 at June 30, 2011 and 2010, respectively		-		32,732,531
Long-term investment		3,341,843		1,586,229
Deferred taxes		3,301,384		4,213,238
Total long-term assets		567,042,869		686,205,451

TOTAL ASSETS	$	602,948,269	$	692,637,178

See accompanying notes to the consolidated financial statements.

F-2

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY

	June 30, 2011			June 30, 2010
CURRENT LIABILITIES
Other payables and accrued liabilities	$	2,762,343		$	2,125,696
Short-term bank loans		7,735,747			14,687,307
Current portion of long-term bank loans		7,735,747			20,086,361
Notes payable		31,382,178			3,520,608
Payable to contractors		12,478,734			15,873,729
Deferred taxes		-			8,286,945
Current portion of long-term deferred revenue		111,962			99,949
Due to related parties		-			587,492
Service zone deferred revenue		104,691			2,395,710
Accrued payroll		540,652			347,297
Other current liabilities		44,297			32,632
Total current liabilities		62,896,351			68,043,726

LONG-TERM LIABILITIES
Long-term bank loans		480,037,132			434,591,546
Long-term deferred revenue		6,751,015			6,521,458
Total long-term liabilities		486,788,147			441,113,004

TOTAL LIABILITIES		549,684,498			509,156,730

CONTINGENCIES

SHAREHOLDERS’ EQUITY
Common stock, $.001 par value, 150,000,000 shares authorized, 80,000,000 shares issued and outstanding at June 30, 2011 and 2010		80,000			80,000
Additional paid-in capital		141,374,184			141,374,184
Accumulated other comprehensive income		34,815,258			28,484,004
Retained (deficit) earnings, (restricted portion was $43,234 at June 30, 2011 and 2010)		(123,005,671	)		13,542,260
Total Shareholders’ Equity		53,263,771			183,480,448

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	602,948,269		$	692,637,178

See accompanying notes to the consolidated financial statements.

F-3

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

	Years Ended June 30,
	2011			2010

REVENUES	$	55,806,425		$	42,626,988

OPERATING COSTS		6,055,735			3,622,060

DEPRECIATION AND AMORTIZATION		11,447,835			12,995,000

GROSS PROFIT		38,302,855			26,009,928

Bad debts for notes receivable and advances to related parties		145,882,223			-

General and administrative expenses		5,920,822			4,197,729

INCOME (LOSS) FROM OPERATIONS		(113,500,190	)		21,812,199

OTHER INCOME (EXPENSES)

Interest expense		(31,418,643	)		(28,397,389	)

Interest income from related parties		-			8,379,605

Other interest income		136,991			189,641

Other income, net		668,629			1,474,458

(LOSS) INCOME FROM OPERATIONS BEFORE INCOME TAXES		(144,113,213	)		3,458,514

INCOME TAX BENEFIT (EXPENSE)		7,565,282			(981,384	)

NET (LOSS) INCOME		(136,547,931	)		2,477,130

OTHER COMPREHENSIVE INCOME

Foreign currency translation gain		6,331,254			967,905

COMPREHENSIVE (LOSS) INCOME	$	(130,216,677	)	$	3,445,035

WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED		80,000,000			80,000,000

NET INCOME (LOSS) PER COMMON SHARE, BASIC AND DILUTED	$	(1.71	)	$	0.03

See accompanying notes to the consolidated financial statements.

F-4

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

	Common Stock						Accumulated Other
	Number of shares		Par value		Additional Paid-in Capital		Comprehensive Income		Retained Earnings (Deficit)			Total

BALANCE AT JUNE 30, 2009		80,000,000	$	80,000	$	141,152,164	$	27,516,099	$	11,065,130		$	179,813,393

Foreign currency translation gain		-		-		-		967,905		-			967,905

Contributed capital		-		-		222,020		-		-			222,020

Net income		-		-		-		-		2,477,130			2,477,130

BALANCE AT JUNE 30, 2010		80,000,000		80,000		141,374,184		28,484,004		13,542,260			183,480,448

Foreign currency translation gain		-		-		-		6,331,254		-			6,331,254

Net loss		-		-		-		-		(136,547,931	)		(136,547,931	)

BALANCE AT JUNE 30, 2011		80,000,000	$	80,000	$	141,374,184	$	34,815,258	$	(123,005,671	)	$	53,263,771

See accompanying notes to the consolidated financial statements.

F-5

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended June 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(136,547,931	)	$	2,477,130
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for doubtful accounts		94,026			159,088
Bad debt allowance for notes receivable and advances to related parties		145,882,223			-
Depreciation and amortization		12,115,699			13,625,751
Deferred taxes		(7,638,693	)		947,229
Long-term deferred revenue		(646,394	)		(606,004	)
Imputed interest		537,207			527,107
Expenses paid by shareholder		-			222,020
Gain of sales of equipment		23,094			-
Changes in operating assets and liabilities:
(Increase) Decrease In:
Accounts receivable		(1,467,856	)		1,026,322
Other receivables		4,341			(1,198	)
Other current assets		319,345			43,228
Increase (Decrease) In:
Other payables and accrued liabilities		636,650			(65,618	)
Deferred revenue		-			84,287
Advances from customers		(2,291,020	)		2,374,343
Other current liabilities		205,020			238,164
Net cash provided by operating activities		11,225,711			21,051,849

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment		(237,973	)		(241,722	)
Sales of plant and equipment		17,784			-
Purchases of long-term investment		(1,629,500	)		-
Decrease in payable to contractors		(3,394,995	)		(6,216,893	)
		-			2,194,051
Increase in notes receivable from related parties for interest		-			(8,379,605	)
Increase in advances to related parties		(13,689,784	)		(25,391	)
Net cash used in investing activities		(18,934,468	)		(12,669,560	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term bank loans		19,161,715			-
Repayments of long-term bank loans		(10,561,574	)		(16,098,481	)
Proceeds from short-term bank loans		16,295,000			14,627,004
Repayments of short-term bank loans		(23,838,981	)		(7,313,502	)
Proceeds from notes payable		40,411,351			3,944,964
Repayments of notes payable		(13,423,769	)		(3,964,540	)
Prepayments of due to related parties		(603,519	)		585,080
Restricted cash		(20,304,064	)		(410,466	)
Net cash provided by (used in) financing activities		7,136,159			(8,629,941	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(572,598	)		(247,652	)
Effect of exchange rate changes on cash		(137,357	)		(99,409	)
Cash and cash equivalents at beginning of year		1,267,199			1,614,260

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	557,244		$	1,267,199

See accompanying notes to the consolidated financial statements.

F-6

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended June 30,
	2011		2010
SUPPLEMENTAL CASHFLOW INFORMATION:
Interest paid	$	28,922,420	$	27,835,512
Income taxes paid	$	114,895	$	69,333

See accompanying notes to the consolidated financial statements.

F-7

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES

China Infrastructure Investment Corporation and subsidiaries (“CIIC” or the “Company”) was incorporated under the laws of the State of Nevada on January 11, 2001.

With the approval from Henan Transportation Bureau and the State Development and Revolution Committee of China [NO. 2003-1784], the Company is permitted to construct and operate the toll road from Pingdingshan to Linru, Henan, China, for 30 years from 2003. Pursuant to the permission from Henan Transportation Bureau and Henan Development and Revolution Committee [NO. 2005-1885], the Company is entitled to operate 6 toll gates. All the rates applicable to the automobiles are defined by the Henan Transportation Bureau and Henan Development and Revolution Committee.

The principal activities of the Company are investment, construction, operation, and management of the Pingdingshan – Linru section (“Pinglin Expressway”), and the rent of petrol stations and service districts along the toll roads. Currently, all the operations of the Company are in the People’s Republic of China (“PRC”).

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Principles of Consolidation

The consolidated financial statements include the accounts of China Infrastructure Investment Corporation and the following subsidiaries:

(i)

Color Man Holdings Limited (“CMH”) (An inactive holding company, 100% subsidiary of CIIC).

(ii)

Wise On China Limited (“WOCL”) (An inactive holding company,100% subsidiary of CMH)

(iii)

Pingdingshan Pinglin Expressway Co., Ltd. (“Ping”) (100% subsidiary of WOCL)

Inter-company accounts and transactions have been eliminated in consolidation.

(b)

Concentrations

The location of the toll road and the operations of the Company are solely in the Henan Province, PRC.

The Company has a concentration of related party receivables from Tai Ao Expressway Co., Ltd. (“Tai Ao”) as of June 30, 2011 and 2010. Also see Notes 7, and 8.

(c)

Economic and Political Risks

The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

F-8

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d)

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America 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.

A significant estimate of the Company is the estimate of future total traffic volume. This estimate is used for the calculation of depreciation relating to the toll road. Also see Note 2(g).

Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ materially from those estimates.

On July 11, 2011, the Company filed a board minute resolution to finalize the plan to resolve the notes receivable from and advances to the related parties Tai Ao and Xinyang. According to the minute, the management does not believe that Tai Ao and Xinyang will have sufficient cash flow to repay both principal and interests of the notes receivable and advance. Therefore, a write down on the balance of notes receivable from and advance to Tai Ao and Xinyang was approved. The bad debt was provided based on management’s best estimate of the realizable amount resulting from the lack of government approval of the acquisition of Tai Ao and deteriorating operations of Tai Ao, which resulted in the inability to pay the balances. On October 10, 2011, the Company entered into contractual agreements with the shareholder of Zhengzhou Simian Real Estate Co., Ltd (“Simian”). Pursuant to the arrangements, the Company will acquire a 51% equity interest in Simian, which is wholly owned by Henan Shenrun Real Estate Co., Ltd. Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is a 51% owner of Henan Shenrun Real Estate Co., Ltd. The consideration for such purchase would be settled with the note receivable from Tai Ao of $57,169,593, which is the Company’s current estimate of 51% equity interest of the audited net assets of Simian on a historical cost basis. A provision amounting to $26,448,982 and $40,054,014 was provided by the Company for the notes receivable from and advance to Tai Ao, and a provision amounting to $83,087,504 was provided for notes receivable to Xinyang as of June 30, 2011, respectively. Also see Notes 7 and 8.

F-9

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e)

Fair Value of Financial Instruments

ASC 820-10(fair value measurement) establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

• Level 1—defined as observable inputs such as quoted prices in active markets;

• Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

• Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Cash and cash equivalents consist primarily of highly rated money market funds at a variety of well-known institutions with original maturities of three months or less. The original cost of these assets approximates fair value due to their short term maturity. The Company does not maintain any bank accounts in the United States of America.

(f)

Plant and Equipment

Plant and equipment is carried at cost less accumulated depreciation and impairment losses. Depreciation is provided over the estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:

Motor vehicles		8 years
Machinery		8 years
Office equipment		6 years
Toll stations and ancillary facilities		27 years
Communication and monitoring equipment		10 years

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to expense as incurred, whereas significant renewals and betterments are capitalized.

F-10

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g)

Toll Road Infrastructures

(h)

Land Use Rights

According to the laws of China, land in the PRC is owned by the Government and cannot be sold to an individual or company. However, the government grants the user a “land use right” to use the land. The land use rights granted to the Company are being amortized when the toll road is ready to operate, using the straight-line method over the approved toll road operating period of 27 years.

(i)

Impairment of Long-Term Assets

Long-term assets of the Company are reviewed annually as to whether their carrying value has become impaired, pursuant to the guidelines established in ASC 360-10. The Company considers assets to be impaired if the carrying value exceeds the future projected cash flows from the related operations. The Company also re-evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. There were no impairments for the years ended June 30, 2011 and 2010.

(j)

Revenue Recognition

Revenue represents toll revenue net of business tax, and is recognized when all of the following criteria are met:

- The amount of revenue can be measured reliably,

- It is probable that the economic benefits associated with the transaction will flow to the enterprise,

- The costs incurred or to be incurred in respect of the transaction can be measured reliably, and

F-11

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(j)

Revenue Recognition (Continued)

- Collectibility is reasonably assured.

(k)

Rental Income

The Company rents gas stations, advertising booths and toll road service districts to lessees. Rental income is measured at the fair value of the consideration receivable and represents amounts receivable for services provided in the normal course of business, net of discounts and sales tax. Also see Notes 17 and 18.

(l)

Retirement Benefits

Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to operations as incurred. Retirement benefits amounting to $202,327 and $235,595 were charged to operations for the years ended June 30, 2011 and 2010.

(m)

Earnings (loss) Per Share

Basic earnings (loss) per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no potentially dilutive securities for the years ended June 30, 2011 and 2010.

(n)

Foreign Currency Translation

The accompanying financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

	June 30, 2011		June 30, 2010

Year ended RMB:US$ exchange rate		6.4635		6.8086
Average RMB: US$ exchange rate for years ended		6.6278		6.8367

F-12

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(o)

Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income should be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s only component of comprehensive income is the foreign currency translation adjustment.

(p)

Recent Accounting Pronouncements

F-13

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(p)

Recent Accounting Pronouncements (Continued)

F-14

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

3.	GOING CONCERN

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company had a net loss of $136,547,931 for the year ended June 30, 2011. This was primarily due to the Company’s plan to resolve the related party notes receivable and advances, resulting in a bad debt provision of $149,590,500 which was provided for the notes receivable from and advances to related parties (see Notes 7 and 8). The Company derives revenues from the operations of the Pinglin Expressway and the revenues increased by approximately 31% for the year ended June 30, 2010 compared to the year ended June 30, 2011.

The Company plans to renew short-term loans when due and obtain long-term loans, if necessary. There can be no assurance that the Company will be successful in renewing loans or obtaining new loans.

F-15

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

4.	RESTRICTED CASH

Restricted cash consists of the following:

	June 30, 2011		June 30, 2010

Deposits for notes payable	$	24,265,291	$	3,520,608
Prepaid deposits for notes payable		-		440,619
	$	24,265,291	$	3,961,227

5.	NOTES RECEIVABLE

Notes receivable from unrelated companies consist of the following:

	June 30, 2011			June 30, 2010

Notes receivable from unrelated companies	$	940,081		$	892,432
Less: Provision for doubtful accounts		(940,081	)		(892,432	)
	$	-		$	-

On June 20, 2007, the Company loaned Pingdingshan Traffic Administration $655,403. The note is unsecured and was due December 20, 2007, bearing a 5.85% interest rate per annum. On December 20, 2007, the Company entered into a renewal agreement with Pingdingshan Traffic Administration, whereby the note was extended to December 20, 2008 with a 7.47% interest rate per annum. Considering the age of the note receivable has exceeded two years and the Company has never received the interest or principal from the note, the Company’s management believes there is uncertainty as to collection of the note and stopped accruing interest income on April 1, 2009. A full provision amounting to $826,015 was provided by the Company as of June 30, 2011.

On January 22, 2009, the Company loaned Pingdingshan Expressway Construction Co., Ltd. $104,676. The note is unsecured and was due January 21, 2010, and bears a 5.31% interest rate per annum. Considering the Company has never received the interest or principal from the note, the Company’s management believes there is uncertainty as to collection of the note and stopped accruing interest income on the due date. A full provision amounting to $114,066 was provided by the Company as of June 30, 2011.

Interest income from the notes receivable for the years ended June 30, 2011 and 2010 was $0 and $3,038, respectively.

F-16

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

6.	ACCOUNTS RECEIVABLE

	June 30, 2011		June 30, 2010

Accounts receivable for tolling charges	$	1,454,892	$	-
Accounts receivable for rental income		79,330		63,449
		1,534,222		63,449
Less: Provision for doubtful accounts		57,554		54,637
	$	1,476,668	$	8,812

F-17

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

7.	NOTES RECEIVABLE FROM RELATED PARTIES

	June 30, 2011			June 30, 2010

Xinyang Expressway Co., Ltd.
Principal	$	73,780,382		$	70,040,757
Interest receivable		9,307,122			8,835,382
Less: Provision		(83,087,504	)		-
		-			78,876,139

Henan Ruijia Industry Co., Ltd.
Interest receivable	$	72,227		$	68,566
Less: Provision		(72,227	)		-
		-			68,566

Henan Hairun Trade Co., Ltd.
Interest receivable	$	24,190		$	22,964
Less: Provision		(24,190	)		-
		-			22,964

Tai Ao Expressway Co., Ltd.
Principal	$	74,267,219		$	70,502,918
Interest receivable		9,351,356			8,877,375
Less: Provision		(26,448,982	)		-
		57,169,593			79,380,293

Total notes receivable from related parties	$	57,169,593		$	158,347,962

F-18

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

7.	NOTES RECEIVABLE FROM RELATED PARTIES (CONTINUED)

The collectibility of the notes receivables from related parties to a large extent depended on the completion of the share purchase resolution.

As of September 26, 2011, the acquisition has not been approved by the Commerce Bureau of Pingdingshan City and the success of getting approval from the Commerce Bureau of Pingdingshan City is not expected in future. Furthermore, even if the Company were to receive regulatory approval, it is uncertain that sufficient revenues would be generated to repay the related party loans.

On July 11, 2011, the Company filed a board minute resolution to finalize the plan to resolve the notes receivable from and advances to the related parties Tai Ao and Xinyang. According to the minute, the management does not believe that Tai Ao and Xinyang will have sufficient cash flow to repay both principal and interests of the notes receivable and advance. Therefore, a write down on the balance of notes receivable from and advance to Tai Ao and Xinyang was approved. The bad debt was provided based on management’s best estimate of the realizable amount resulting from the lack of government approval of the acquisition of Tai Ao and deteriorating operations of Tai Ao, which resulted in the inability to pay the balances. On October 10, 2011, the Company entered into contractual agreements with the shareholder of Zhengzhou Simian Real Estate Co., Ltd (“Simian”). Pursuant to the arrangements, the Company will acquire a 51% equity interest in Simian, which is wholly owned by Henan Shenrun Real Estate Co., Ltd. Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is a 51% owner of Henan Shenrun Real Estate Co., Ltd. The consideration for such purchase would be settled with the note receivable from Tai Ao of $57,169,593, which is the Company’s current estimate of 51% equity interest of the audited net assets of Simian on a historical cost basis. A provision amounting to $26,448,982 and $40,054,014 was provided by the Company for the notes receivable from and advance to Tai Ao, and a provision amounting to $83,087,504 was provided for notes receivable to Xinyang as of June 30, 2011, respectively. Also see Notes 8 and 20.

F-19

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

7.	NOTES RECEIVABLE FROM RELATED PARTIES (CONTINUED)

F-20

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

8.	ADVANCES TO RELATED PARTIES

	June 30, 2011			June 30, 2010

Current advances to related parties:

Zhengzhou Zhengdong Thermoelectricity Co., Ltd.		7,735,747			-
Henan Shenrun Venture Investment Co., Ltd.		874,022			-
Henan Hairun Trade Co., Ltd.	$	8,896			146,873
Total current advances		8,618,665			146,873

Long-term advance to a related party:

Tai Ao Expressway Co., Ltd.		40,054,014			32,732,531
Less: Provision		(40,054,014	)		-
Total long-term advance	$	-			32,732,531

	$	8,618,665		$	32,879,404

The Company and Tai Ao Expressway Co., Ltd. have the same chairman, Li Xipeng. Li Xipeng owns 51% of the shares of Tai Ao. The Company made payments to suppliers on behalf of Tai Ao for the purchase of construction materials commencing in 2006 in order to assist Tai Ao with its working capital needs. Also see Note 7 for the resolution of advance to Tai Ao.

F-21

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

8.	ADVANCES TO RELATED PARTIES (CONTINUED)

F-22

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

9.	TOLL ROAD INFRASTRUCTURES, NET

Toll road infrastructures consist of the following:

	June 30, 2011		June 30, 2010

At cost:	$	483,442,808	$	458,939,075

Less: Accumulated depreciation		41,317,519		30,277,376
Toll road infrastructures, net	$	442,125,289	$	428,661,699

Depreciation expense for the years ended June 30, 2011 and 2010 was $9,189,963 and $10,797,163, respectively. Also see Notes 2(d) and 2(g).

F-23

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

10.	PLANT AND EQUIPMENT, NET

Plant and equipment consist of the following:

	June 30, 2011		June 30, 2010
At cost:
Toll station and ancillary facilities	$	11,120,993	$	10,557,317
Communication and monitoring equipment		6,253,130		5,852,164
Motor vehicles		1,529,357		1,533,666
Machinery		315,247		299,269
Office equipment		739,837		614,884
		19,958,564		18,857,300
Less: Accumulated depreciation
Toll station and ancillary facilities		1,920,444		1,481,751
Communication and monitoring equipment		1,007,719		766,348
Motor vehicles		1,132,086		993,498
Machinery		193,334		147,249
Office equipment		426,522		314,313
		4,680,105		3,703,159
Plant and equipment, net	$	15,278,459	$	15,154,141

Depreciation expense for the years ended June 30, 2011 and 2010 was $864,914 and $830,728, respectively.

F-24

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

11.	LAND USE RIGHTS

Land use rights consist of the following:

	June 30, 2011		June 30, 2010

Cost	$	56,886,986	$	54,003,618
Less: Accumulated amortization		11,060,685		8,493,967
Land use rights, net	$	45,826,301	$	45,509,651

Amortization expense for the years ended June 30, 2011 and 2010 was $2,060,822 and $1,997,860, respectively.

Amortization expense for the next five years and thereafter is as follows:

June 30, 2012	$	2,113,207
June 30, 2013		2,113,207
June 30, 2014		2,113,207
June 30, 2015		2,113,207
June 30, 2016		2,113,207
Thereafter		35,260,266
Total	$	45,826,301

F-25

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

12.	LONG-TERM INVESTMENT

	June 30, 2011					June 30, 2010
	Ownership Interest			Net Book Value		Ownership Interest			Net Book Value

At cost:
Pingdingshan City Credit Corporation		2.79	%	$	3,341,843		2.03	%	$	1,586,229

The Company invested in Pingdingshan City Credit Corporation (“PCCC”), a commercial banking corporation established in 2005 by purchasing a 3% equity interest (10 million shares) for RMB 10 million (approximately $1.3 million) in December 2005. During the year 2009 and 2010, after PCCC increased its share capital, the Company’s share of the total equity interest in PCCC was diluted to 2.03%.

On March 1, 2011, pursuant to an agreement, the Company purchased an additional 0.77% equity interest in PCCC (10.8 million shares) from Tai Ao and obtained the share certificates on March 26, 2011. The consideration for the transaction was $1,648,830 (RMB 1.00 or $0.15 per share). After the transaction, the Company held 2.79% of the total equity interest in PCCC as of June 30, 2011.

As of June 30, 2011 and 2010, the Company does not have more than a 20% interest in the investment and does not exercise significant influence over the investee. The Company accounts for the investment under the cost method. Investment income is recognized by the Company when the investee declares a dividend and the Company believes it is collectible. $260,720 and $126,377 dividend income was recognized for the years ended June 30, 2011 and 2010.

F-26

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

13.	SHORT-TERM BANK LOANS

Short-term bank loans as of June 30, 2011 and 2010 consist of the following:

	June 30, 2011		June 30, 2010

Loan from China Minsheng Banking Corp., Ltd., due March 22, 2011, monthly interest only payments at 5.841% per annum, co-secured by the Chief Executive Officer Mr. Li Xipeng, Henan Shengrun Land Investment Co., Ltd. and accounts receivable owned by the Company.		-		7,343,654

Loan from China Citic Bank, due January 9, 2012, monthly interest only payments at 6.941% per annum, co-secured by Tai Ao Expressway Co., Ltd., the Chief Executive Officer Mr. Li Xipeng, and Henan Shengrun Venture Investment Management Co., Ltd.		7,735,747		-

Loan from China Citic Bank, due January 11, 2011, monthly interest only payments at 5.31% per annum, co-secured by Tai Ao Expressway Co., Ltd., the Chief Executive Officer Mr. Li Xipeng, and Henan Shengrun Venture Investment Management Co., Ltd.		-		7,343,653

Total short-term bank loans	$	7,735,747	$	14,687,307

Interest expense for the years ended June 30, 2011 and 2010 was $914,730 and $575,218, respectively.

F-27

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

14.	LONG-TERM BANK LOANS

Long-term bank loans consist of the following:

	June 30, 2011		June 30, 2010

Loan from National Development Bank of China Henan Branch, due May 20, 2017, 6.40% interest rate per annum, secured by the toll road operating right owned by the Company. Principal is repaid every 6 months in 20 unequal installments from November 2007, and interest is paid quarterly.	$	86,640,365	$	88,123,843

Loan from Agricultural Bank of China, due July 20, 2017, 6.40% interest rate per annum, secured by the toll road operating right owned by the Company. Principal is to be repaid every year in 10 equal installments from February 2010, and interest is paid monthly.		24,754,390		26,437,154

Loan from Agricultural Bank of China, due February 20, 2019, 6.40% interest rate per annum, secured by the toll road operating right owned by the Company. Principal is to be repaid every year in 10 equal installments, and interest is paid monthly.		29,395,838		29,374,614

Loan from Industrial and Commercial Bank of China Pingdingshan Branch, due November 19, 2019, 5.76% interest rate per annum, secured by the toll road operating right owned by the Company. Principal is repaid every year in 26 unequal installments from November 2007, and interest is paid monthly.		172,618,550		163,869,224

Loan from National Development Bank of China Henan Branch, due November 28, 2022, 6.40% interest rate per annum, secured by the toll road operating right owned by the Company. Principal is to be repaid every 6 months in 12 unequal installments from May 2017, and interest is paid quarterly.		154,714,938		146,873,072

Loans from China Construction Bank, due August 17, 2013, 5.13% interest rate per annum, secured by the toll road operating right owned by the Company. Principal is to be repaid at maturity, and interest is paid monthly.		13,924,344		-

F-28

CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

14.	LONG-TERM BANK LOANS (CONTINUED)

	June 30, 2011		June 30, 2010

Loans from China Construction Bank, due December 31, 2013, the monthly interest only payments at a 5.5575% interest rate per annum, secured by the toll road operating right owned by the Company. Principal is to be repaid at maturity.		5,724,454		-
Total long-term bank loans		487,772,879		454,677,907
Less: current portion		7,735,747		20,086,361

Long-term portion	$	480,037,132	$	434,591,546

For the years ended June 30, 2011 and 2010, interest expense was $28,637,464 and $27,260,294, respectively. No interest was capitalized as a component of construction costs during the reporting periods.

According to the loan agreements with National Development Bank of China Henan Branch, the bank has the right to demand repayment of the loans in full if the Company provides any guarantees to other third party debt that exceeds 70% of the Company’s total assets. As of June 30, 2011, the guarantees provided by the Company to other third party debt did not exceed 70% of the Company’s total assets.

The repayment schedule for the long-term bank loans is as follows:

June 30, 2012	$	7,735,747
June 30, 2013		31,487,584
June 30, 2014		54,731,956
June 30, 2015		35,083,159
June 30, 2016		28,628,452
Thereafter		330,105,981
Total	$	487,772,879

15.	NOTES PAYABLE

	June 30, 2011		June 30, 2010

Bank acceptance notes	$	31,382,178	$	3,520,608

Notes payables of $1,676,910 were issued to the Company’s contractors through China Construction Bank; notes payable of $7,735,747 were issued through China Citic Bank; notes payable of $7,735,747 were issued through China Minsheng Banking Corp., Ltd. and notes payable of $14,233,774 were issued through Shanghai Pudong Development Bank.

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CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

15.	NOTES PAYABLE (CONTINUED)

Notes payable as of June 30, 2011 and 2010 consist of the following:

	June 30, 2011		June 30, 2010

Notes payable issued on January 12, 2011, due July 11, 2011 (repaid on its due date)	$	7,735,747

Notes payable issued on January 26, 2011 and due July 25, 2011 (repaid on its due date)		1,103,199

Notes payable issued on January 27, 2011 and due July 27, 2011 (repaid on its due date)		415,862

Notes payable issued on January 28, 2011 and due July 28, 2011 (repaid on its due date)		46,414

Notes payable issued on January 31, 2011 and due July 31, 2011 (repaid on its due date)		111,435

Notes payable issued on March 17, 2011 and due September 17, 2011 (repaid on its due date)		7,735,747

Notes payable issued on June 29, 2011 and due December 29, 2011		14,233,774

Notes payable issued before June 30, 2010 and repaid on their due dates		-		3,520,608

Total	$	31,382,178		3,520,608

Restricted cash of $24,265,291 and $3,520,608 collateralized the notes at June 30, 2011 and 2010, respectively. All of the bank acceptance notes at June 30, 2010 were repaid on their due dates. All the bank acceptance notes are subject to bank charges of 0.05% of the principal as a commission on their loan transaction. Bank charges for bank acceptance notes were $83,274 and $1,753 for the years ended June 30, 2011 and 2010, respectively.

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CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

16.	LONG-TERM DEFERRED REVENUE

	June 30, 2011			June 30, 2010

Long-term deferred revenue	$	15,771,607		$	15,601,437
Imputed interest discount		(8,908,630	)		(8,980,030	)
Total		6,862,977			6,621,407
Less: current portion		111,962			99,949

Long-term portion	$	6,751,015		$	6,521,458

On January 1, 2006, the Company rented four gas stations to Petro China Company Limited Pingdingshan Branch (“PCCL”) for 30 years. The Company received the entire 30 year rental fee of $5,372,708 from PCCL in 2006. The amount received was net of business tax.

The Company imputed interest on the amount using an 8% discount rate, under the effective interest rate method. The rental income recognized during the years ended June 30, 2011 and 2010 was $625,101 and $606,004 respectively. The imputed interest for the years ended June 30, 2011 and 2010 was $537,207 and $532,054, respectively.

On August 1, 2009, the Company rented communication channels along the expressway to China Mobile Company Limited Pingdingshan Branch for 15 years. The total rental fee is $309,782, which is paid in 3 installments of $103,261 in July every 5th year for 15 years. The amount received was before tax. The Company amortized deferred revenue under the straight-line method. The rental income recognized for the years ended June 30, 2011 and 2010 was $20,228 and $18,921 respectively.

17.	SERVICE ZONE DEFERRED REVENUE

	June 30, 2011		June 30, 2010

Henan Expressway Management Bureau	$	-	$	2,019,532
Jiaxin Shitong Highway Service Management Limited Company		54,150		176,248
Xinle Huitong Enterprise and Service Management Co., Ltd.		50,541		164,498
Others		-		35,432

Total	$	104,691	$	2,395,710

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CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

17.	SERVICE ZONE DEFERRED REVENUE (CONTINUED)

On June 26, 2010, the Company rented the West Pingdingshan Service Zone to Jiaxin Shitong Highway Service Management Limited Company for five years beginning October 16, 2010. The total rental fee is $928,290, and is payable in 5 annual installments of $181,056. The Company amortized revenue under the straight-line method. The rental income recognized during the year ended June 30, 2011 was $128,248.

On June 26, 2010, the Company rented the West Pingdingshan and Ruzhou Service Zone to Xinle Huitong Enterprise and Service Management Co., Ltd. for five years beginning October 16, 2010. The total rental fee is $866,404, and is payable in 5 annual installments of $168,985. The Company amortized revenue under the straight-line method. The rental income recognized during the year ended June 30, 2011 was $119,698.

18.	INCOME TAX

On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “new CIT Law”), which became effective on January 1, 2008.Under the new CIT Law, the corporate income tax rate applicable to the Company starting January 1, 2008 is 25%. The new CIT Law impacted deferred tax assets and liabilities of the Company. The Company adjusted deferred tax balances as of December 31, 2009 based on their best estimates and will continue to assess the impact of the new law in the future. The effects arising from the enforcement of the new CIT law have been reflected in the accounts.

ASC 740-10 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740-10 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of June 30, 2011, the Company did not have a liability for unrecognized tax benefits.

Effective January 1, 2007, the Company adopted authoritative guidance issued by the FASB for uncertainty in income taxes. The Interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under the authoritative guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The authoritative guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of June 30, 2011, the Company does not have a liability for unrecognized tax uncertainties except as described below. The Company’s Chinese subsidiaries have never been subject to a tax examination and all years are open to examination by the tax authorities.

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CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

18.	INCOME TAX (CONTINUED)

Income tax benefit (expense) is summarized as follows:

	Years Ended June 30,
	2011			2010
Current	$	(96,164	)	$	(34,155	)
Deferred		7,661,446			(947,229	)
Income tax benefit (expense)	$	7,565,282		$	(981,384	)

The Company’s income tax benefit (expense) differs from the “expected” tax benefit (expense) (computed by applying the CIT rate of 25% percent to income before income taxes) as follows:

	Years Ended June 30,
	2011			2010
Computed “expected” benefit (expense)	$	36,028,303		$	(864,629	)
Valuation allowance		32,606			(90,415	)
Permanent differences		(28,495,627	)		(26,340	)
Income tax benefit (expense)	$	7,565,282		$	(981,384	)

The Company accrued interest income for the related party loans in prior years, which resulted in deferred tax liabilities. Due to the significant bad debt provisions for the principal and interest of notes receivable, the Company believes the related deferred tax effect caused by the interest income of prior years should also be reversed since they will not be recognized as an income in the future. Therefore, a tax benefit occurred for the year ended June 30, 2011.

As of June 30, 2011, a provision was provided by the Company for the principal of notes receivable and advances to Tai Ao and Xinyang. The Company believes the related tax effect caused by the provision of the principal of notes receivable and advances to related parties should be treated as permanent difference since they are not deductible for tax purposes in the PRC.

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CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

18.	INCOME TAX (CONTINUED)

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities are as follows:

Current portion:	June 30, 2011			June 30, 2010

G&A expenses	$	737,344		$	330,313
Interest expense		254,899			-
Road maintenance costs		464,535			316,408
Other expenses		133,161			126,412
Payroll expenses		64,416			58,368
Bad debts		30,292			13,659
US loss carry forward		236,102			268,708
Valuation allowance		(236,102	)		(268,708	)
PRC loss carry forward		-			939,492
Total deferred tax assets		1,684,647			1,784,652

Sales cut-off		(1,191,430	)		(920,961	)
Interest income		-			(8,940,112	)
Interest expense		(53,923	)		(34,583	)
Consulting fees		(3,411	)		(113,393	)
Other expenses		(172,281	)		(62,548	)
Total deferred tax liabilities		(1,421,045	)		(10,071,597	)

Net current deferred tax liabilities	$	263,602		$	(8,286,945	)

Non-current portion:

Rental income	$	130,229		$	149,941
Capitalized interest		2,365,902			2,245,984
Amortization		2,765,171			2,123,492
Bad debts		2,850,623			2,706,136
Total deferred tax assets		8,111,925			7,225,553

Depreciation		(4,810,541	)		(3,012,315	)
Total deferred tax liabilities		(4,810,541	)		(3,012,315	)

Net non-current deferred tax assets	$	3,301,384		$	4,213,238

As of June 30, 2011, the U.S. loss-carried-forward is $236,102. The net operating loss carry forward will expire in 2030. The Company estimated that there will not be sufficient profits available within the loss-carried-forward period and the loss-carried-forward will not be realized and therefore has reversed the entire amount.

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CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

19.	CONTINGENCIES

Litigation

From time to time the Company is involved in litigation primarily resulting from construction contract disputes. In the management’s opinion, they do not believe the outcome of such litigation will, individually or in the aggregate, have a material adverse effect on the Company's financial position.

Guarantee

Associated with the corporate guarantee, Tai Ao also provided a cross guarantee for bank loans of $7,735,747 to the Company. Also see Note 13.

The Company’s management considered the risk of default by Tai Ao as remote, and therefore no liability for the guarantor's obligation under the guarantee was recognized as of June 30, 2011. No fee was paid to Tai Ao for its guarantee.

NASDAQ Listing

On September 9, 2010, the Company received a letter from The NASDAQ Stock Market LLC (“NASDAQ”) advising that for the previous 30 consecutive business days, the closing bid price of the Company’s common stock was below the minimum $1.00 per share requirement for continued listing on NASDAQ Capital Market pursuant to NASDAQ Marketplace Rule 5550(a)(2). The Company was given 180 calendar days, or until March 8, 2011, to regain compliance with the minimum bid price requirement. On March 9, 2011, the Company was provided an additional 180 calendar days, or until September 6, 2011, to regain compliance.

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CHINA INFRASTRUCTURE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

20.	SUBSEQUENT EVENTS

On October 10, 2011, the Company entered into contractual agreements (known as a “variable interest entity” (VIE) arrangement) with the shareholder of Zhengzhou Simian Real Estate Co., Ltd (“Simian”), which is wholly owned by Henan Shenrun Real Estate Co., Ltd. Li Xipeng, the Chief Executive Officer, Chairman and significant shareholder of the Company is a 51% owner of Henan Shenrun Real Estate Co., Ltd.. According to the arrangements, the Company will acquire a 51% equity interest in Simian through a series of variable interest entity (“VIE”) contractual arrangements, which will be settled with the note receivable from Tai Ao of $57,169,593. The transaction will be accounted for as an acquisition of a company under common control. Also see Note 7.

The following unaudited pro forma combined condensed statements of income (loss) for the year ended June 30, 2011 and 2010 have been prepared as if the acquisition had occurred on June 30, 2011 and 2010. The pro forma information may not be indicative of the results that actually would have occurred if the acquisition had been in effect from and on the dates indicated or which may be obtained in the future.

	Unaudited Pro Forma Combined As Of and For The Year Ended June 30,
	2011			2010

Total Assets	$	685,552,905		$	629,089,004

Total Liabilities		577,361,485			530,200,356

Revenues	$	55,806,425		$	42,626,988

Loss from Operations		(113,635,559	)		(104,288,804	)

Net Loss	$	(136,623,128	)	$	(123,607,937	)

Net Loss Per Share
Basic	$	(1.71	)	$	(1.54	)
Diluted	$	(1.71	)	$	(1.54	)
Weighted Average number of shares outstanding
Basic		80,000,000			80,000,000
Diluted		80,000,000			80,000,000

F-36