This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "believe," "expect," "anticipate," "project," "target," "optimistic," "intend," "aim," "will" or similar expressions are intended to identify forward-looking statements. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. These statements are based on the beliefs of our management as well as assumptions made by and information currently available to us and reflect our current view concerning future events. As such, they are subject to risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among many others: our significant operating losses; our limited operating history; uncertainty of capital resources; the speculative nature of our business; our ability to successfully implement new strategies; present and possible future governmental regulations; operating hazards; competition; the loss of key personnel; any of the factors in the "Risk Factors" section of the Company's Annual Report on Form 10-K; other risks identified in this Report; and any statements of assumptions underlying any of the foregoing. You should also carefully review other reports that we file with the SEC. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law. When used in this report, the terms "China ACM", "Company", "we", "our", and "us" refer to China Advanced Construction Materials Group, Inc. (a Delaware corporation) and its wholly-owned subsidiaries Xin Ao Construction Materials, Inc. and Beijing Ao Hang Construction Materials Technology Co., Ltd., as well as Beijing Xin Ao Concrete Co., Ltd., the Company's variable interest entity.

Use of Non-GAAP Financial Measures

The Company makes reference to Non-GAAP financial measures in portions of "Management's Discussion of Financial Condition and Results of Operations". Management believes that investors may find it useful to review our financial results that exclude the non-cash expense, change in fair value of warrant, shown in the below chart, of $7,273,441 due to the adoption of a Financial Accounting Standards Board's ("FASB") ASC 815 (EITF 07-05) accounting standard as discussed in the section "Derivative Liability" below.

Management believes that these Non-GAAP financial measures are useful to investors in that they provide supplemental information to possibly better understand the underlying business trends and operating performance of the Company. The Company uses these Non-GAAP financial measures to evaluate operating performance. However, Non-GAAP financial measures should not be considered as an alternative to net income or any other performance measures derived in accordance with GAAP.

                                                        Three
                                                       Months
                                                        Ended
                                                    September 30                                  June 30
                                               2009               2008
                                           (Unaudited)        (Unaudited)      Differences         2009
Net Income (Loss) -GAAP                    $ (4,522,937 )     $  1,458,839     $ (5,981,776 )   $ 12,068,489
Subtract:
Dividends and accretion on
redeemable convertible preferred stock     $    340,864       $    309,096     $     31,768        1,229,473
Net Income (loss) available to Common
shareholders -GAAP                         $ (4,863,801 )     $  1,149,743     $ (6,013,544 )   $ 10,839,016
Add Back:
Change in fair value of warrant            $  7,273,441 (a)   $          -     $  7,273,441     $          -
Adjusted Net Income available to Common
shareholders -non-GAAP                     $  2,409,640       $  1,149,743     $  1,259,897     $ 10,839,016

Basic earning (loss) per share - GAAP      $      (0.44 )     $       0.11     $      (0.55 )   $       1.03
Add back:
Change in fair value of warrant            $       0.66       $          -     $       0.66     $          -
Adjusted basic earning per share
non-GAAP                                   $       0.22       $       0.11     $       0.11     $       1.03

Diluted earning (loss) per share-GAAP      $      (0.44 )     $       0.10     $      (0.54 )   $       0.86
Add back:
Change in fair value of warrant            $       0.48       $          -     $       0.48     $          -
Change in diluted earnings                 $       0.14       $          -     $       0.14     $          -
Adjusted diluted earning per share
non-GAAP                                   $       0.18       $       0.10     $       0.08     $       0.86

Weighted average number of shares - GAAP
Basic                                        10,985,405         10,525,000                -       10,526,719
Diluted                                      10,985,405         14,121,413                -       14,032,479

Weighted average number of shares - non
GAAP
Basic                                        10,985,405         10,525,000                -       10,526,719
Diluted                                      15,061,158         14,121,413                -       14,032,479

(a) The Company adopted the provisions of a FASB accounting standard, ASC
815 (EITF 07-05), which provides standards with respect to determining whether an instrument (or embedded feature) is indexed to an entity's own stock. As a result of adopting this accounting standard, warrants previously treated as equity pursuant to the derivative treatment exemption are no longer afforded equity treatment because the warrants have a downward ratchet provision on the exercise price. As a result, the warrants are not considered indexed to the Company's own stock, and as such, all future changes in the fair value of these warrants will be recognized currently in earnings until such time as the warrants are exercised or expired. Effective July 1, 2009, the Company reclassified the fair value of these warrants from equity to liability, as if these warrants were treated as a derivative liability since their issuance in June 2008. On July 1, 2009, the Company recognized a $7,273,441 loss from the change in fair value for the three months ended September 30, 2009.

Overview

China Advanced Construction Materials Group, Inc. ("China ACM") is a holding company whose primary business operations are conducted through our wholly-owned subsidiaries BVI-ACM and China-ACMH. BVI-ACM engages in the production of advanced construction materials for large scale commercial, residential, and infrastructure developments. The Company is primarily focused on producing and supplying a wide range of advanced ready-mix concrete materials for highly technical, large scale, and environmentally-friendly construction projects. BVI-ACM owns 100% of the issued and outstanding capital stock of China-ACMH, a company incorporated under the laws of China. On November 28, 2007, China-ACMH entered into a series of contractual agreements with Beijing Xin Ao Concrete Co. Ltd. ("Xin Ao"), a company incorporated under the laws of China, and its two shareholders pursuant to which China-ACMH effectively takes over management of the business activities of Xin Ao and has the right to appoint all executives and senior management and the members of the board of directors of Xin Ao. The contractual arrangements are comprised of a series of agreements, including an Exclusive Technical Consulting and Services Agreement and an Operating Agreement, through which China-ACMH has the right to advise, consult, manage and operate Xin Ao for an annual fee in the amount of Xin Ao's yearly net profits after tax. In addition, Xin Ao's Shareholders have pledged their rights, titles and equity interest in Xin Ao as security for China-ACMH to collect technical consulting and services fees provided to China-ACMH through an Equity Pledge Agreement. In order to further reinforce China-ACMH's rights to control and operate Xin Ao, Xin Ao's shareholders have granted China-ACMH the exclusive right and option to acquire all of their equity interests in Xin Ao through an Option Agreement. As all of the companies are under common control, this has been accounted for as a reorganization of entities and the financial statements have been prepared as if the reorganization had occurred retroactively. The Company has consolidated Xin Ao's operating results, assets and liabilities within its financial statements.

BVI-ACM, through China-ACMH, operates and controls Xin Ao through the contractual arrangements mentioned above. BVI-ACM used the contractual arrangements to acquire control of Xin Ao, instead of using a complete acquisition of Xin Ao's assets or equity to make Xin Ao a wholly-owned subsidiary of BVI-ACM because (i) new PRC laws governing share exchanges with foreign entities, which became effective on September 8, 2006, make the consequences of such acquisitions uncertain and (ii) other than by share exchange transactions, PRC law requires Xin Ao to be acquired for cash and BVI-ACM was not able to raise sufficient funds to pay the full appraised value for Xin Ao's assets or shares as required under PRC law.

Together with our subsidiaries, we provide materials and services through our network of seven ready-mixed concrete plants throughout Beijing and eleven portable concrete plants located in various provinces all over China in supporting our high speed railway projects during the first quarter of fiscal year 2010. We own one concrete plant and its related equipment, lease three plants. In addition, we have technical and preferred procurement agreements with three independently owned concrete mixture stations, pursuant to which we are paid by percentages of cost savings for technical support provided to clients and of sales price for projects we refer to other stations due to the geographical location of our owned and leased plants. Our manufacturing services are used primarily for our national high speed railway projects; almost all of our general contract contractors on the high speed railway projects supply the needed raw materials, which results in higher gross margins for us and reduces our upfront capital investments needed to purchase raw materials. We also produce ready-mix concrete at portable plants, which can be dismantled and moved to new sites for new projects. Our management believes that we have the ability to capture a much greater share of the Beijing market and further expand our footprint in China via expanding relationships and networking, signing new contracts, and continually developing market-leading innovative and eco-friendly ready-mix concrete products. Based on reports from the National Development and Reform Commission, or NDRC, we anticipate that our market share will further expand due to the announced $586 billion infrastructure stimulus packages by the Chinese government last year, which will focus primary on transportation related projects such as railway, highway, and transportation related infrastructure.

Principal Factors Affecting Our Financial Performance

We believe that the following factors will continue to affect our financial performance:

Large Scale Contractor Relationships. We have contracts with major construction contractors which are constructing key infrastructure, commercial and residential projects. Our sales efforts focus on large-scale projects and large customers which place large recurring orders and present less credit risks to us. For the three months ended September 30, 2009, two customers accounted for approximately 10.17% of the Company's sales and approximately 7.26% of the Company's accounts receivable. For the three months ended September 30, 2008, two customers accounted for approximately 37.3% of the Company's sales and 9.3% of the Company's accounts receivable.

Experienced Management. Management's technical knowledge and business relationships gives us the ability to secure major infrastructure projects, which provides us with leverage to acquire less sophisticated operators, increase production volumes, and implement quality standards and environmentally sensitive policies.

Innovation Efforts. We strive to produce the most technically and scientifically advanced products to our customers and maintain close relationships with Tsinghua University, Xi'an University of Architecture and Technology and Beijing Dongfangjianyu Institute of Concrete Science & Technology which assist us with our research and development activities. During our 5 year agreement with the parties, we have realized an advantage over many of our competitors by gaining access to a wide array of resources and knowledge. At present, no payments have been made by us under the agreement.

PRC Taxation

Our subsidiary, China-ACMH and its VIE, Xin Ao are governed by the Income Tax Law of the People's Republic of China concerning Foreign Investment Enterprises ("FIE") and Foreign Enterprises and various local income tax laws (the Income Tax Laws).

Xin Ao has been using recycled raw materials in its production since its inception which entitled us to an income tax exemption from January 1, 2003 through December 31, 2007 and an income tax reduction from 25% to 15% from January 1, 2009 through December 31, 2011 as granted by the State Administration of Taxation, PRC. The renewal certificate was awarded based on the company's involvement in producing high-tech products, its research and development, as well as its technical services.

On March 16, 2007, the National People's Congress of the PRC passed the new EIT Law, which took effect as of January 1, 2008. Under the new EIT Law, an enterprise established outside of the PRC with "de facto management bodies" within the PRC is considered a resident enterprise and will normally be subject to the enterprise income tax at the rate of 25.% on its global income. The new EIT Law, however, does not define the term "de facto management bodies." If the PRC tax authorities subsequently determine that we should be classified as a resident enterprise, then our global income will be subject to PRC income tax at a tax rate of 25.0%. In addition, under the new EIT Law, dividends from our PRC subsidiaries to us will be subject to a withholding tax. The rate of the withholding tax has not yet been finalized, pending promulgation of implementing regulations. Furthermore, the ultimate tax rate will be determined by treaty between the PRC and the tax residence of the holder of the PRC subsidiary. The new EIT Law imposes a unified income tax rate of 25.% on all domestic-invested enterprises and FIEs, such as our PRC operating subsidiaries, unless they qualify under certain limited exceptions, but the EIT Law permits companies to continue to enjoy their existing preferential tax treatments until such treatments expire in accordance with their current terms. Because the Company's operating subsidiary, Xin Ao's use of recycled raw materials in its production since its inception entitled the Company to an income tax exemption from January 1, 2003, through to December 31, 2007 and an income tax reduction from 25% to 15% from January 1, 2009 to December 31, 2011 as granted by the State Administration of Taxation of the PRC. The income tax exemption granted to the Company was eliminated after December 31, 2007. Beginning January 1, 2008, the new Chinese Enterprise Income Tax ("EIT") law replaced the existing laws for Domestic Enterprises ("DES") and Foreign Invested Enterprises ("FIEs"). Effective January 1, 2009, the China-ACM new reduced EIT rate of 15% replaced the existing rates of 25% currently applicable to both DES and FIEs.

Derivative Liability

Effective July 1, 2009, the Company became subject to a FASB accounting standard, ASC 815 (EITF 07-05), which determines whether an instrument (or embedded feature) is indexed to an entity's own stock. This accounting standard specifies that a contract which would otherwise meet the definition of a derivative but is both (a) indexed to the Company's own stock and (b) classified as stockholders' equity in the statement of financial position would not be considered a derivative financial instrument. This accounting standard provides a new two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed to an issuer's own stock and thus able to qualify for the scope exception.

As such, warrants previously treated as equity pursuant to the derivative treatment exemption are no longer afforded equity treatment because the warrants have a downward ratchet provision on the exercise price. As a result, the warrants are not considered indexed to the Company's own stock, and, as such, all future changes in the fair value of these warrants will be recognized as earnings until such time as the warrants are exercised or expire.

The conversion option does not need to be separated from the redeemable convertible preferred stock and accounted for as derivative liability because it contains a residual equity interest, which on dissolution and liquidation of the Company, entitle the preferred stockholders to liquidation value and accumulated dividends, and rank equal with the common shareholders on an as if converted basis. A FASB accounting standard provides that if the instrument has a residual equity interest, it "should" be considered to be an equity instrument and if the preferred stock is considered to be an equity instrument, then the embedded conversion option would not be separated because its risks and rewards are clearly and closely related to that of redeemable convertible preferred stock.

Results of Operations

The following table sets forth key components of our results of operations for
the periods indicated, in US dollars:

                                                          Three Months Ended
                                                             September 30,
                                                         2009             2008
                                                     (Unaudited)      (Unaudited)

Total revenue                                        $ 19,481,136     $  5,136,746
Total cost of revenue                                  16,194,100        2,448,332
Gross profit                                            3,287,036        2,688,414
Selling, general and administrative expenses             (895,031 )       (657,109 )
Other (expense) income, net                            (6,378,128 )          2,361
(Loss) Income before provision for income taxes        (3,986,123 )      2,033,666
Income taxes expense                                     (536,814 )       (574,827 )
Net (Loss) income                                      (4,522,937 )      1,458,839
Dividends and accretion on redeemable preferred           340,864          309,096
Net (Loss) income available to Common shareholders   $ (4,863,801 )   $  1,149,743

The following table sets forth the results of our operations for the periods indicated as a percentage of total sales:

                                                                      Three Months Ended
                                                                         September 30,
                                                                   2009                2008
                                                                (Unaudited)         (Unaudited)

Total revenue                                                          100.0 %             100.0 %
Total cost of revenue                                                   83.1 %              47.7 %
Gross profit                                                            16.9 %              52.3 %
Selling, general and administrative expenses                            (4.6 )%            (12.8 )%
Other expense, net                                                     (32.7 )%              0.0 %
(Loss) Income before provision for income taxes                        (20.4 )%             39.5 %
Income taxes expense                                                    (2.8 )%            (11.2 )%
Net (loss) income                                                      (23.2 )%             28.3 %
Dividends and accretion on redeemable preferred                          1.7 %               6.0 %
Net (loss) income available to Common shareholders                     (24.9 )%             22.3 %

Comparison of the three months Ended September 30, 2009 and 2008

Revenue. Our revenue is generated from sales of our advanced ready-mix concrete products, manufacturing services, technical consulting services, and mixer rental. For the three months ended September 30, 2009, we generated revenue of $19,481,136 compared to $5,136,746 during the same period of 2008, an increase of $14,344,390 or 279.3%. The Company increased its production volumes from fixed concrete plants in Beijing area in the first quarter this fiscal year compared to the same period last year. As a result, our concrete sales revenue increased by $13,019,070, despite a decrease in unit sale price, compared to the same period last year. During the quarter ended September 30, 2009, we continued to supply concrete products to eleven railway projects all over China through our portable plants, specifically the projects located in Jiangsu Province, Hebei Province, Guangxi Province, Zhejiang Province, Guangdong Province, Henan Province, Liaoning Province, and Beijing. These eleven projects contributed $2,805,614 to our total revenue for the quarter ended September 30, 2009 compared to $1,925,543 in revenue from three projects we operated for the same quarter in 2008. The revenue increase in manufacture service was principally due to additional portable plants we operated this fiscal quarter compared to the same quarter last year. For these railway projects, the general contractors supplied their own raw materials and we provided manufacturing and transportation services. In addition, technical consulting services generated revenue of $1,244,895 during the first quarter of 2009, an increase of $628,098 or 101.8% compared to the same quarter in 2008. During the three month period ended September 30, 2009, we also rented our mixer trucks to mixture stations which generated mixer rental revenues of $543,870, a decrease of $112,944 or 17.2%. During this quarter, we relocated some mixer trucks to support our manufacture services and thus reduced the availability of mixer truck rental. We anticipate our overall sales revenue will continue to grow as the Chinese government announced its 4 trillion Yuan (USD$586 billion) stimulus package in November 2008 well as the Chinese government's railroad project plans which are expected to cost a total of $730 billion through 2020. We should be a direct beneficiary of transportation and infrastructure build-out from China's stimulus package. In addition, we plan to continue expanding our business into new geographical markets by leveraging our strong relationships with major contractors throughout China.

Cost of Sales. Cost of Sales, which consists of direct labor, rentals, depreciation, other overheads and raw materials including inbound freight charge, was $16,194,100 for the quarter ended September 30, 2009 as compared to $2,448,332 for the quarter ended September 30, 2008, an increase of 561.4% or $13,745,768. During the fiscal quarter prior to the celebration of National Day of the People's Republic of China in Beijing, our primary area of operation, all construction surrounding the city was halted and delayed due to severe restrictions on traffic controls. The increase on cost of revenue was due to overall increase in production from four fixed concrete plants in Beijing areas and increase production on manufacture and technical services as well as other services compared to the same period in 2008. The increase in cost of sales was also due to increases in cruel oil prices which increased the costs of raw materials and transportation during the quarter. The cost of sales on concrete increased $12,776,409 this fiscal quarter compared to the same quarter last year. Such increase was due to an increase in our concrete production as a result of the three additional plants we added in last fiscal quarter, as well as the increase in cruel oil prices as indicated above. Although our production volume increased during this fiscal quarter, the overall plant utilization rate was down mainly due to severe traffic and construction restrictions in Beijing in anticipation of the National Day of the PRC and the increase in the price of cruel oil. Cost of sales in manufacturing service increased $1,259,959 during the fiscal quarter ended September 30, 2009 as compared to the same quarter last year. Such increase was due to the increase in total operational capacity and decrease in utilization rate for the three new portable plants we recently added to operation as well as an increase in transportation costs. We anticipate our production and utilization rate will start picking up during the second quarter as the celebration National Day of PRC came to an end in the beginning of October. However, we are uncertain whether the cruel oil prices will maintain at the current level in the near future.

Gross Profit. Our gross profit is equal to the difference between our revenue and cost of sales. Gross profit was $3,287,036 for the fiscal quarter ended September 30, 2009 as compared to $2,688,414 for the quarter ended September 30, 2008. The gross profit for sale of concrete was $550,041 or 3.7% for the quarter ended September 30, 2009 compared to $307,380 or 16.5% for the same period last year, an increase of $242,661. The decrease in concrete gross margin this fiscal quarter compared to the same period last year was primarily due to the increase in costs of raw materials and transportation as a result of the increase in the price of cruel oil as well as the low utilization rate from newly leased plants and traffic restrictions due to the National Day of the PRC as discussed above. However, heading into the second quarter, our traditional concrete production continues to increase and our utilization has improved, which should favorably impact our gross margins. The gross profit on our manufacturing services was $1,048,447 or 37.4% for the quarter ended September 30, 2009, a decrease of $379,888. Such decrease was principally due to fixed costs incurred on our new portable plants before they commenced production during the quarter as well as the increase in costs of transportation. We expect the gross margin in manufacturing services will start picking up in the second fiscal quarter this year as the celebration of National Day of PRC came to an end in the beginning of October. The gross margins on technical services and mixer rental were 95.6% and 91.6% respectively during the quarter ended September 30, 2009. We plan to continue expanding our manufacturing and technical services, which produce the highest gross profits among our revenue sectors.

. . .