XML 29 R14.htm IDEA: XBRL DOCUMENT

Property, Plant and Equipment, net

12 Months Ended

Sep. 30, 2016

Property, Plant and Equipment, net [Text Block]

8.	Property, Plant and Equipment, net

Property, plant and equipment as of September 30, 2015 and 2016 consisted of the following:

			2015			2016
	Buildings	$	18,440,000		$	17,569,328
	Machinery and equipment		4,020,238			4,388,160
	Office equipment		37,050			82,722
	Motor vehicles		147,197			168,240
			22,644,485			22,208,450
	Accumulated depreciation		(369,665	)		(1,473,241	)
	Carrying amount	$	22,274,820		$	20,735,209

Depreciation expense for the years ended September 30, 2015 and 2016 is included in the consolidated statements of operations as follows:

			2015			2016
	Cost of revenues	$	198,053		$	800,604
	Research and development expenses		107,803			88,048
	Sales and marketing expenses		-			28
	General and administrative expenses		77,139			256,186
		$	382,995		$	1,144,866

The Company has not yet obtained the property ownership certificates of the buildings in its Dalian manufacturing facilities with a carrying amount of $18,318,313 and $16,958,674 as of September 30, 2015 and 2016, respectively. The Company built its facilities on the land for which it had already obtained the related land use right. The Company has submitted applications to the Chinese government for the ownership certificates on the completed buildings located on these lands. However, the application process takes longer than the Company expected and it has not obtained the certificates as of the date of this report. However, since the Company has obtained the land use right in relation to the land, the management believe the Company has legal title to the buildings thereon albeit the lack of ownership certificates. As soon as the Chinese government completes its formalities, the Company will obtain the ownership certificates. The management expects that they will obtain the property ownership certificates by March 2017.

During the course of the Company’s strategic review of its operations, the Company assessed the recoverability of the carrying value of the Company’s property, plant and equipment. The impairment charge, if any, represented the excess of carrying amounts of the Company’s property, plant and equipment over the estimated discounted cash flows expected to be generated by the Company’s production facilities. The Company believes that there was no impairment of its property, plant and equipment for the years ended September 30, 2015 and 2016.

During the years ended September 30, 2015 and 2016, the Company purchased machinery and equipment from BAK Tianjin in the amount of $6.8 million and nil (inclusive of VAT) respectively.