What changed in this filing

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Item 1. Financial Statements

2010-01-14 compared with 2009-10-20 · 745 added, 354 removed, 213 unchanged (84% of the section changed)

FINANCIAL STATEMENTS

CHINA INFRASTRUCTURE CONSTRUCTION

FINANCIAL STATEMENTS (UNAUDITED)

31, 2009 and 2008

to Consolidated Financial Statements

Balance Sheets

Statements of Operations and Comprehensive Income

Statements of Cash Flows

INFRASTRUCTURE CONSTRUCTION CORPORATION

FINANCIAL STATEMENTS NOVEMBER 30, 2009

to Consolidated Financial Statements

Balance Sheets (Unaudited)

Statements of Operations and Comprehensive Income (loss)

Statements of Cash Flows (Unaudited)

to Consolidated Financial Statements (Unaudited)

INFRASTRUCTURE CONSTRUCTION CORPORATION

BALANCE SHEETS

August 31, 2009

NOVEMBER 30, 2009 AND MAY 31, 2009

and cash equivalents

5 unchanged sentences

party payable

portion of capital lease obligations

current liabilities

portion of capital lease obligations

payables - long-term

long-term liabilities

Stockholders'

4 unchanged sentences

100,000,000 shares authorized;

shares issued and outstanding

11,528,429 and

1,529,550shares issued and outstanding as of November 30, 2009 and May 31,

earnings (deficit)

other comprehensive income

China Infrastructure Construction Corporation stockholders'

Non-controlling

Noncontrolling

liabilities and equity

accompanying notes to consolidated financial statements

accompanying notes are an integral part of this statement.

INFRASTRUCTURE CONSTRUCTION CORPORATION

STATEMENTS OF OPERATIONS

COMPREHENSIVE INCOME

ended August 31, 2009

ended August 31, 2008

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

THREE AND SIX MONTHS ENDED NOVEMBER 30, 2009 AND 2008

MONTHS ENDED NOVEMBER 30,

of goods sold

and administrative expenses

operating expenses

operating income

general and administrative expenses

operating income (loss)

income (expense):

Interest (expense)

income (expense)

other income (expense)

before income taxes

taxes provision

Net income attributable to non-controlling interests

income attributable to China Infrastructure Construction

per share - basic and diluted

income (loss) before income taxes

income (loss)

Net income attributable to noncontrolling interests

income (loss) attributable to China Infrastructure Construction

(loss) per share - basic and diluted

and diluted weighted average shares outstanding

Comprehensive

income (loss)

currency translation adjustment

Comprehensive

income (loss)

Comprehensive

income attributable to non-controlling interest

income attributable to non-controlling interests

Comprehensive

income attributable to China Infrastructure Construction

accompanying notes to consolidated financial statements

income (loss) attributable to China Infrastructure Construction

accompanying notes are an integral part of this statement.

INFRASTRUCTURE CONSTRUCTION CORPORATION

STATEMENTS OF CASH FLOWS

ended August 31, 2009

ended August 31, 2008

SIX MONTHS ENDED NOVEMBER 30, 2009 AND 2008

flows from operating activities:

to reconcile net income to net cash used

in operations:

Non-controlling

and amortization

for allowance on accounts receivable

income (loss)

to reconcile net income (loss) to net cash used in

issued for compensation

in operating liabilities and assets:

4 unchanged sentences

assets additions

from related party receivable

cash provided by investing activities

- construction in progress

to related party receivable

cash used in investing activities

flows from financing activities:

issued for cash

from related party payable

2 unchanged sentences

of rate changes on cash

in cash and cash equivalents

(decrease) in cash and cash equivalents

and cash equivalents, beginning of period

2 unchanged sentences

taxes paid in cash

investing and financing activities:

assets acquired with loan payable

accompanying notes to consolidated financial statements

investing activities

of plant and equipment through other payable

party receivable offset by payable to related party

accompanying notes to unaudited consolidated financial statements

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Nature of operations

Infrastructure Construction Corporation (the “Company”) was organized on

February 28, 2003 as Fidelity Aircraft Partners LLC, a Colorado limited

liability company (“Fidelity LLC”).

On December 16, 2004, Fidelity LLC converted

itself into Fidelity Aviation Corporation by filing a Statement of Conversion

and Articles of Incorporation with the Colorado Secretary of State.

August 24, 2009, the Company changed its name from Fidelity Aviation Corporation

to China Infrastructure Construction Corporation.

of Operations

Infrastructure Construction Corporation (the “Company”, “China Infrastructure”,

“CHNC”, “We”, “Our”) was organized on February 28, 2003 as Fidelity Aircraft

Partners LLC, a Colorado limited liability company (“Fidelity LLC”).

16, 2004, Fidelity LLC converted itself into Fidelity Aviation Corporation by

filing a Statement of Conversion and Articles of Incorporation with the Colorado

Secretary of State.

Effective August 24, 2009, the Company changed its name from

Fidelity Aviation Corporation to China Infrastructure Construction

October 8, 2008, China Infrastructure entered into and consummated the

2 unchanged sentences

shareholder pursuant to which China Infrastructure issued 12,000,000 pre-split

shares of China Infrastructure common stock (the “Share Exchange”) in

exchange for all issued and outstanding common stock of NCH.

shares or 1,200,000 post split shares of China Infrastructure common

stock (the “Share Exchange”) in exchange for all issued and outstanding common

stock of NCH.

Exchange resulted in (i) a change in control of China Infrastructure with the

25 unchanged sentences

CONSOLIDATED FINANCIAL STATEMENTS

operations (continued)

September 28, 2009, the Company effectuated a 1-for-10 reverse stock split of

the Company’s common stock, with no par value (the “Common Stock”) (the “Reverse

Stock Split”).

Upon the Reverse Stock Split, ten (10) shares of the outstanding

Common Stock were automatically converted into one (1) share of Common Stock.

The Reverse Stock Split, however, did not alter the number of shares the Company

is authorized to issue, but only reduced the number of shares of its Common

Stock issued and outstanding.

Any fractional share issued as a result of the

reverse split was rounded up.

Immediately before the Reverse Split there were

15,295,500 shares of Common Stock issued and outstanding.

Immediately after

giving effect to the Reverse Split, there were 1,529,550 shares of Common Stock

issued and outstanding.

October 14, 2009, to provide incentives to the Company’s management and to

adjust the Company’s capital structure, the Company issued to Rui Shen, a

majority shareholder of the Company, an aggregate of 7,031,344 shares of Common

Immediately prior to this issuance, Mr.

Shen was the holder of 800,000

shares (after taking into account the 1-for-10 reverse stock split).

after the issuance of Shares, Mr.

Shen held a total of 7,831,344 shares of

Common Stock, which represented 91.5% of the Company’s Common Stock outstanding

prior to the Private Placement.

October 16, 2009, the Company entered into and consummated the sale of

securities pursuant to a Subscription Agreement with a number of institutional

investors (the “Investors”), providing for the sale to the Investors of an

aggregate of approximately 2,564,103 shares of Common Stock for an aggregate

purchase price of approximately $10,000,000 (or $3.90 per Share).

of Presentation

3 unchanged sentences

of Regulation S-X.

Accordingly, they do not include all of the

information and footnotes required by generally accepted accounting principles

for complete financial statements.

In the opinion of

management, all adjustments considered necessary for a fair presentation have

been included.

All such adjustments are

of a normal recurring nature.

Operating results for the three month period

ended August 31, 2009, are not necessarily indicative of the results that may be

expected for the fiscal year ending May 31, 2010.

information refer to the consolidated financial statements and footnotes thereto

included in the Company’s annual report for the year ended May 31, 2009.

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Accordingly, they do not include all of the information

and footnotes required by generally accepted accounting principles for complete

financial statements.

In the opinion of management, all adjustments

considered necessary for a fair presentation have been included.

such adjustments are of a normal recurring nature.

Operating results for

the six month period ended November 30, 2009, are not necessarily indicative of

the results that may be expected for the fiscal year ending May 31,

For further information refer to the consolidated financial

statements and footnotes thereto included in the Company’s annual report for the

year ended May 31, 2009.

of Significant Accounting Policies

21 unchanged sentences

ownership interests in majority-owned subsidiaries of the Company.

preparation of financial statements in conformity with generally accepted

accounting principles requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities, and disclosures of

contingent assets and liabilities, at the date of the financial statements and

the reported amounts of income and expenses during the reporting period.

results could differ from those estimates.

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash

3 unchanged sentences

institutions in the PRC are not insured by any government entity or

Accumulated Other

Comprehensive Income

other comprehensive income represents foreign currency translation

accordance with the Escrow Agreement and the Subscription Agreement (note 11)

signed by China Infrastructure Construction Corporation, Trillion Growth China

General Partner and Anslow & Jaclin, LLP (the “Escrow Agent”) in

October 2009, the Company was required to keep with the Escrow Agent $120,000

immediately on the Closing Date of the Subscription Agreement.

This fund can

only be disbursed when certain criteria are met.

The escrow account also keeps

$38,089 attorney fees as a covenant for future services.

As of November 30, 2009

and May 31, 2009, the amount not disbursed was $158,089 and $0, respectively,

and these are included in restricted cash in the consolidated balance sheets.

Deposits held in the escrow account are not insured by any government entity or

Trade Accounts

5 unchanged sentences

An allowance for doubtful accounts is established and determined based

on management’s assessment of known requirements, aging of receivables, payment

history, the customer’s current credit worthiness and the economic

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

of Significant Accounting Policies (continued)

Company receives revenue from sales of concrete products.

We recognize revenue

when all four revenue recognition criteria have been met:

persuasive evidence of

an arrangement exists, we have delivered the product, the fee is fixed or

determinable and collection is reasonably assured.

Our products delivered to

customers would be checked on site by customers and, once the products are

accepted by customers, they will sign the check or notes payable.

warranty issue after the delivery.

Company recognizes its revenues net of value-added taxes (“VAT”).

Company is subject to VAT which is levied at the rate of 6% on the invoiced

value of sales.

However, the Company enjoys a free VAT policy according to the

national policy, which encourages the development of the cement industry if

the manufacturer satisfies the environmental protection requirements.

Company has enjoyed the free VAT policy from January 1, 2006 and has been

reviewed every year by the local tax bureau.

Shipping Income and

00-10 “ Accounting for Shipping

and Handling fees and Costs ” establishes standards for the classification

of shipping and handling costs.

All amounts billed to a customer related to

shipping and handling are classified as revenue.

All costs incurred by the

Company for shipping and handling are included in cost of sales.

preparation of financial statements in conformity with generally accepted

accounting principles requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities, and disclosures of

contingent assets and liabilities, at the date of the financial statements and

the reported amounts of income and expenses during the reporting period.

results could differ from those estimates.

on management’s regular assessment of known requirements, aging of receivables,

payment history, the customer’s current credit worthiness and the economic

These factors continuously change, and can have an impact on

collections and the Company’s estimation process.

These impacts may be material.

Management reviews and maintains an allowance for doubtful accounts that

reflects the management’s best estimate of potentially uncollectible trade

Certain accounts receivable amounts are charged off against

allowances after a designated period of collection efforts.

Subsequent cash

recoveries are recognized as income in the period when they occur.

Allowance for

doubtful debts amounted to $774,143 and $311,928 as of November 30, 2009 and May

31, 2009, respectively.

are stated at the lower of cost, determined on a weighted average basis, and net

1 unchanged sentence

Net realizable value is the estimated selling price, in the

ordinary course of business, less estimated costs to complete and

ordinary course of business, less estimated costs to complete and dispose.

Inventories consist of the following:

Raw materials

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

of Significant Accounting Policies (continued)

Property, plant and

plant and equipment are carried at cost less accumulated depreciation.

6 unchanged sentences

depreciation are removed from the accounts and any gain or loss is included in

Depreciation related to property and equipment is reported in cost of

Property, plant and equipment are depreciated over their estimated

useful lives as follows:

and equipment

and office equipment

August 31, 2009

Depreciation related to manufacturing is reported in cost of revenues.

Depreciation not related to manufacturing is reported in selling, general and

administrative expenses.

Property, plant and equipment are depreciated over

their estimated useful lives as follows:

and equipment

and office equipment

property, plant and equipment

expense included in general and administrative expenses for the three months

ended August 31, 2009 and 2008 was $52,617 and $60,670, respectively.

Depreciation expense included in cost of sales for the three months ended August

31, 2009 and 2008 was $201,067 and $193,994, respectively.

in progress represents direct costs of construction and design fees incurred for

the Company’s new project in Tangshan.

All construction costs associated with

this project are accumulated and capitalized as construction in progress.

construction in progress is closed out to the appropriate asset classification

when the project is substantially complete, occupied, or placed into service.

depreciation is provided until it is completed and ready for its intended use.

At August 31, 2009, the costs involved with construction in progress were

Impairment of Long-Lived and

1 unchanged sentence

assets of the Company are reviewed annually to assess whether the carrying value

has become impaired according to the guidelines established in Statement of

Accounting Standards (SFAS) No.

144, “Accounting for the Impairment or

Disposal of Long-Lived Assets.” No impairment of assets was

has become impaired according to the guidelines established in FASB Codification

considers assets to be impaired if the carrying value exceeds the future

projected cash flows from related operations.

The Company also re-evaluates the

periods of depreciation to determine whether subsequent events and circumstances

warrant revised estimates of useful lives.

As of November 30, 2009, the Company

expects these assets to be fully recoverable.

No impairment of assets was

recorded in the periods reported.

advertising and promotion costs are expensed as incurred.

The Company did not

incur any advertising costs during the three months ended August 31, 2009 and

Accumulated Other

Comprehensive Income

other comprehensive income represents foreign currency translation

Company receives revenue from sales of concrete products and from provision of

concrete pumping service and consulting service.

The Company's revenue

recognition policies are in compliance with ASC 605 (previously Staff Accounting

Bulletin 104).

Sales revenue is recognized at the date of shipment to customers

or services have been rendered when a formal arrangement exists, the price is

fixed or determinable, the delivery is completed, no other significant

obligations of the Company exist and collectability is reasonably assured.

sales are non-returnable.

Therefore, we do not estimate deductions or allowance

for sales returns.

Sales are presented net of any discounts, reward, or

incentive given to customers.

Payments received before all of the

relevant criteria for revenue recognition are satisfied are recorded as unearned

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

of Significant Accounting Policies (continued)

General and administrative

and administrative expenses represent salaries and benefits, depreciation and

amortization, allowance for impairment loss and other general and administrative

The Company expenses General and administrative expenses as

products delivered to customers would be checked on site by customers and, once

the products are accepted by customers, they will sign the acceptance notice.

There is no warranty issue after the delivery.

incentive given to our customers is an adjustment of the selling prices of our

products therefore the consideration is characterized as a reduction of revenue

when recognized in our income statement.

Company recognizes its revenues net of value-added taxes (“VAT”).

Company is subject to VAT which is levied at the rate of 6% on the invoiced

value of sales.

However, the Company enjoys a free VAT policy according to the

national policy, which encourages the development of the cement industry if

the manufacturer satisfies the environmental protection requirements.

Company has enjoyed the free VAT policy from January 1, 2006 and has been

reviewed every year by the local tax bureau.

Cost of Goods

goods sold consists primarily of the costs of the raw materials, freight

charges, direct labor, depreciation of plant and machinery, warehousing cost and

overhead associated with the manufacturing process and commission

Selling, General and

Administration Expenses

general and administrative expenses include costs incurred in connection with

performing selling, general and administrative activities such as executives and

administrative and sale employee salaries, related employee benefits, office

supplies, and professional services (legal and audit).

Shipping and Handling

ASC 605-45-20 “ Shipping and

Handling costs ”

standards for the classification of shipping and handling costs.

billed to a customer related to shipping and handling are classified as

Company expenses advertising costs as incurred.

Advertising expenses

charged to operations were $0 for the three and six months ended November 30,

2009 and 2008, respectively.

Advertising costs, if any, are included in selling,

general and administrative expense on the income statement.

Foreign Currency and

4 unchanged sentences

The financial statements are

translated into US dollars from RMB at year-end exchange rates for assets and

translated into US dollars from RMB at period-end exchange rates for assets and

liabilities, and weighted average exchange rates for revenues and expenses.

1 unchanged sentence

capital transactions occurred.

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

21, 2005, the PRC changed its foreign currency exchange policy from a fixed

7 unchanged sentences

dollars at rates used in translation.

Company has implemented SFAS No.109 “Accounting for Income Taxes”, which

provides for a liability approach to accounting for income taxes.

income taxes result from the effect of transactions that are recognized in

different periods for financial and tax reporting purposes.

The Company has

recorded no deferred tax assets or liabilities as of August 31, 2009 and

There are no material timing differences and therefore no

deferred tax asset or liability as of August 31, 2009 and 2008.

There are no net

operating loss carry forwards as of August 31, 2009 and 2008.

Income Tax Laws of the PRC, the Company’s subsidiaries are generally subject to

an income tax at an effective rate of 25% on income reported in the statutory

financial statements after appropriate tax adjustments.

Currently, the Company

is charged at 0% income tax expense for the three months ended August 31, 2009

The exemption of income tax to the Company will last until

December 31, 2010 and from year 2011, the Company will be subject to an income

tax at an effective rate of 25%.

The current income tax expense and deferred tax

expense for the three months ended August 31, 2009 and 2008 are as

Company accounts for income taxes in accordance with ASC 740 (Formerly SFAS 109,

“Accounting for Income Taxes.”) Under the asset and liability method as required

by ASC 740 (Formerly SFAS 109), deferred income taxes are recognized for the tax

consequences of temporary differences by applying enacted statutory tax rates

applicable to future years to differences between the financial statement

carrying amounts and the tax bases of existing assets and liabilities.

740, the effect on deferred income taxes of a change in tax rates is recognized

in income in the period that includes the enactment date.

A valuation allowance

is recognized if it is more likely than not that some portion, or all of, a

deferred tax asset will not be realized.

As of November 30, 2009 and May 31,

2009, the Company did not have any deferred tax assets or liabilities, and as

such, no valuation allowances were recorded at November 30, 2009 and May 31,

(Formerly FIN 48) clarifies the accounting and disclosure for uncertain tax

positions and prescribes a recognition threshold and measurement attribute for

recognition and measurement of a tax position taken or expected to be taken in a

ASC 740 also provides guidance on de-recognition, classification,

interest and penalties, accounting in interim periods, disclosure and

740, evaluation of a tax position is a two-step process.

The first step is to

determine whether it is more-likely-than-not that a tax position will be

sustained upon examination, including the resolution of any related appeals or

litigation based on the technical merits of that position.

The second step is to

measure a tax position that meets the more-likely-than-not threshold to

determine the amount of benefit to be recognized in the financial statements.

tax position is measured at the largest amount of benefit that is greater than

50 percent likely of being realized upon ultimate settlement.

Tax positions that

previously failed to meet the more-likely-than-not recognition threshold should

be recognized in the first subsequent period in which the threshold is met.

Previously recognized tax positions that no longer meet the more-likely-than-not

criteria should be de-recognized in the first subsequent financial reporting

period in which the threshold is no longer met.

Company’s operations are subject to income and transaction taxes in the United

States, HongKong, and the PRC jurisdictions.

Significant estimates and judgments

are required in determining the Company’s worldwide provision for income taxes.

Some of these estimates are based on interpretations of existing tax laws or

regulations, and as a result the ultimate amount of tax liability may be

However, the Company does not anticipate any events that would lead

to changes to these uncertainties.

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Restrictions on Transfer of

5 unchanged sentences

restrictions exist with respect to loans and advances.

(Formerly SFAS 107, “Disclosures about Fair Value of Financial Instruments”)

defines financial instruments and requires disclosure of the fair value of those

ASC 820 (Formerly SFAS 157, “Fair Value Measurements”), adopted

July 1, 2008, defines fair value, establishes a three-level valuation hierarchy

for disclosures of fair value measurement and enhances disclosure requirements

for fair value measures.

The carrying amounts reported in the balance sheets for

current receivables and payables, including short-term loans, qualify as

financial instruments and are a reasonable estimate of fair value because of the

short period of time between the origination of such instruments, their expected

realization and, if applicable, the stated rate of interest is equivalent to

rates currently available.

The three levels are defined as follows:

inputs to the valuation methodology are quoted prices (unadjusted) for

identical assets or liabilities in active

inputs to the valuation methodology include quoted prices for similar

assets and liabilities in active markets, and inputs that are observable

for the assets or liability, either directly or indirectly, for

substantially the full term of the financial

inputs to the valuation methodology are unobservable and significant to

the fair value.

Company did not identify any assets or liabilities that are required to be

presented on the balance sheet at fair value in accordance with ASC 820

(Formerly SFAS 157).

Company records stock-based compensation expense pursuant to ASC 718 ( Formerly

SFAS 123R, “Share Based Payment.”) The Company uses the Black-Scholes option

pricing model which requires the input of highly complex and subjective

variables including the expected life of options granted and the Company’s

expected stock price volatility over a period equal to or greater than the

expected life of the options.

Because changes in the subjective assumptions can

materially affect the estimated value of the Company’s employee stock options,

it is management’s opinion that the Black-Scholes option pricing model may not

provide an accurate measure of the fair value of the Company’s employee stock

Although the fair value of employee stock options is determined in

accordance with ASC 718 using an option pricing model, that value may not

be indicative of the fair value observed in a willing buyer/willing seller

market transaction.

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

of Significant Accounting Policies (continued)

compensation expense is recognized based on awards expected to vest, and there

were no estimated forfeitures as the Company has a short history of issuing

ASC 718 ( Formerly SFAS 123R) requires forfeitures to be estimated at

the time of grant and revised in subsequent periods, if necessary, if actual

forfeitures differ from those estimates.

Basic and Diluted Earnings

per share is calculated in accordance with Statement of Financial Accounting

Standards No.

128 ("SFAS No.

128"), "Earnings per share".

Basic net earnings per

share is based upon the weighted average number of common shares outstanding.

Diluted net earnings per share is based on the assumption that all dilutive

convertible shares and stock options were converted or exercised.

computed by applying the treasury stock method.

Trade Accounts

maintain an allowance for doubtful accounts which reflects our best estimate of

potentially uncollectible trade receivables.

We regularly review our trade

receivables allowances by considering such factors as historical experience,

credit-worthiness, the age of the trade receivable balances and current economic

conditions that may affect a customer’s ability to pay.

accounts receivable

for doubtful accounts

trade accounts receivable

Other Receivables

receivables consist of insurance claims and the temporary lending to the staff

with no fixed repayment date and with no interest bearing on it.

The allowances

on the other accounts receivable are recorded when circumstances indicate

collection is doubtful for particular accounts receivable.

Company provides for allowances on a specific account basis.

outstanding amount was $438,124 and $270,819 as of August 31, 2009 and May 31,

Company reports earnings per share in accordance with the provisions of ASC 260

( Formerly SFAS No.

128, "Earnings Per Share.") ASC 260 requires

presentation of basic and diluted earnings per share in conjunction with the

disclosure of the methodology used in computing such earnings per share.

earnings per share excludes dilution and is computed by dividing income

available to common stockholders by the weighted average common shares

outstanding during the period.

Diluted earnings per share takes into account the

potential dilution that could occur if securities or other contracts to issue

common stock were exercised and converted into common stock.

Under this method,

options and warrants are assumed to be exercised at the beginning of the period

(or at the time of issuance, if later), and as if funds obtained thereby were

used to purchase common stock at the average market price during the

following is a reconciliation of the basic and diluted earnings per

THREE MONTHS ENDED

SIX MONTHS ENDED

income (loss) for earnings per share

average shares used in basic computation

effect of warrants

average shares used in diluted computation

(loss) per share, basic and diluted

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Statement of Cash

accordance with FASB ASC 230 cash flows from the Company's operations is

calculated based upon the local currencies.

As a result, amounts related to

assets and liabilities reported on the statement of cash flows may not

necessarily agree with changes in the corresponding balances on the balance

of Financial Accounting Standards No.

131 (SFAS 131), (ASC 250) “Disclosure

about Segments of an Enterprise and Related Information” requires use of the

management approach model for segment reporting.

The management approach model

is based on the way a company's management organizes segments within the company

for making operating decisions and assessing performance.

Reportable segments

are based on products and services, geography, legal structure, management

structure, or any other manner in which management disaggregates a

management does not disaggregate Company data, the Company has determined that

only one segment exists.

Recent Accounting

Pronouncements

June 2009, the FASB issued ASC 860 (previously SFAS No.

“Accounting for Transfers of Financial Assets”), which requires additional

information regarding transfers of financial assets, including securitization

transactions, and where companies have continuing exposure to the risks related

to transferred financial assets.

SFAS 166 eliminates the concept of a

“qualifying special-purpose entity,” changes the requirements for derecognizing

financial assets, and requires additional disclosures.

SFAS 166 is effective for

fiscal years beginning after November 15, 2009.

The Company does not

believe this pronouncement will impact its financial statements.

June 2009, the FASB issued ASC 810 (previously SFAS No.

determining whether to consolidate a variable interest entity.

These amended

standards eliminate a mandatory quantitative approach to determine whether a

variable interest gives the entity a controlling financial interest in a

variable interest entity in favor of a qualitatively focused analysis, and

require an ongoing reassessment of whether an entity is the primary beneficiary.

We are currently evaluating the impact that adoption will have on our

consolidated financial statements.

2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends

ASC Topic 820, Measuring

Liabilities at Fair Value , which provides additional guidance on the

measurement of liabilities at fair value.

These amended standards clarify that

in circumstances in which a quoted price in an active market for the identical

liability is not available, we are required to use the quoted price of the

identical liability when traded as an asset, quoted prices for similar

liabilities, or quoted prices for similar liabilities when traded as assets.

these quoted prices are not available, we are required to use another valuation

technique, such as an income approach or a market approach.

We do not expect it

to have a significant impact on our consolidated financial

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

October 2009, the FASB issued Accounting Standards Update, 2009-13, Revenue

Recognition (Topic 605):

Multiple Deliverable Revenue

Arrangements - A Consensus of the FASB Emerging Issues Task Force.” This

update provides application guidance on whether multiple deliverables exist, how

the deliverables should be separated and how the consideration should be

allocated to one or more units of accounting.

This update establishes a selling

price hierarchy for determining the selling price of a deliverable.

price used for each deliverable will be based on vendor-specific objective

evidence, if available, third-party evidence if vendor-specific objective

evidence is not available, or estimated selling price if neither vendor-specific

or third-party evidence is available.

The Company will be required to apply this

guidance prospectively for revenue arrangements entered into or materially

modified after January 1, 2011;

however, earlier application is permitted.

management is in the process of evaluating the impact of adopting this ASC

update on the Company’s financial statements.

Reclassifications

prior period amounts have been reclassified to conform to the current period

presentation.

Property, Plant and

equipment consist of the following:

November 30, 2009

and equipment

and office equipment

property, plant and equipment

expense included in selling, general and administrative expenses for the three

months ended November 30, 2009 and 2008 was $52,799 and $60,670, respectively.

Depreciation expense included in selling, general and administrative expenses

for the six months ended November 30, 2009 and 2008 was $106,353 and $105,401,

respectively.

There is no provision made for the other receivables at

August 31, 2009 and May 31, 2009.

is stated at weighted average cost and consisted of the following:

Depreciation expense included in cost of goods sold for the three

months ended November 30, 2009 and 2008 was $241,481 and $193,994, respectively.

Depreciation expense included in cost of goods sold for the six months ended

November 30, 2009 and 2008 was $442,078 and $322,908,

respectively.

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

in progress represents direct costs of construction and design fees incurred for

the Company’s new project in Tangshan.

All construction costs associated with

this project are accumulated and capitalized as construction in progress.

construction in progress is closed out to the appropriate asset classification

when the project is substantially complete, occupied, or placed into service.

depreciation is provided until it is completed and ready for its intended use.

At November 30, 2009, the costs involved with construction in progress were

Interest costs totaling $0 were capitalized into construction in

progress for the three and six months ended November 30, 2009 and 2008,

respectively.

Other Receivables

November 30, 2009, other receivables amounted to $1,413,083, which mainly

consists of $876,289 in receivables from an unrelated party, unsecured, interest

free, and with no fixed repayment date.

As of January 14, 2010, all of this

$876,289 has been collected.

It also includes insurance claims and travel

advances to the staff.

All the other receivables are from unrelated parties,

interest free, unsecured, and with no fixed repayment date.

As of May 31, 2009,

other receivables amounted to $270,819, which mainly consists of insurance

claims and the temporary lending to the staff with no fixed repayment date,

unsecured, and with no interest bearing on it.

The allowances on the other

accounts receivable are recorded when circumstances indicate collection is

doubtful for particular accounts receivable.

The Company provides for

allowances on a specific account basis.

There is no provision made for the other

receivables at November 30, 2009 and May 31, 2009.

Other Payables

payables consist of the following as of August 31, 2009 and May 31,

payables in current liabilities consist of the following as of November 30, 2009

and May 31, 2009:

November 30, 2009

other companies deposit

other payables

expense has been included in cost of goods sold.

other payables - current

Payables – Long-Term

other payables amounted to $521,676 and $0 as of November 30, 2009 and May 31,

The long-term other payables are payments due to unrelated vendors for

machinery and equipment purchases.

expenses amounted to $359,351 and $277,329 as of November 30, 2009 and May 31,

The accrued expenses mainly include accrued land lease expenses, accrued

electricity and utility expenses, and accrued interest.

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Related Party

5 unchanged sentences

are subject to common control or common significant influence.

outstanding amount of related party payable was zero and $564,419 as of August

31, 2009 and May 31, 2009, respectively.

These payables bear no interest and

have no fixed payment terms.

Currently, the related party payable consists of

the following:

outstanding amount of related party payable was $344,030 and $564,419 as of

November 30, 2009 and May 31, 2009, respectively.

These payables bear no

interest, are unsecured, and have no fixed payment terms.

Currently, the related

party payable consists of the following:

November 30, 2009

Yang (Chairman)

2 unchanged sentences

outstanding amount of related party receivables was $163,458 and $674,289 as of

August 31, 2009 and May 31, 2009, respectively.

November 30, 2009 and May 31, 2009, respectively.

These receivables require no

interest and have no fixed re-payment terms.

Currently, the receivables from

related party consist of the following:

interest, are unsecured, and have no fixed re-payment terms.

All the related

party receivables are loans to related parties for business developments.

public company, the Company has set up stricter rules to forbid loans to related

Currently, the receivables from related party consist of the

November 30, 2009

Zhan (common shareholder)

1 unchanged sentence

Jian (20% owned by a common shareholder )

Yang (Chairman)

Yihua Daxin Investment (holding company)

Shunjun (Chairman’s brother-in-law)

Guiping (Chairman’s wife)

six months ended November 30, 2009, the May 31, 2009 related party receivable of

$674,289 was offset against payable to a related party, CEO and chairman of the

Company, according to an agreement in which the CEO agreed such

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Loans payables

the three months ended August 31, 2009, the Company acquired machinery with

loans payable amounted to $2,472,279.

The loan with interest at 6.76% requires

thirty six monthly interest plus principal payment of $56,000 and one $476,751

payment due on November 2009.

current portion

term loans, less current portion

maturities of long term loans are as follows:

Non-controlling Interests

Non-controlling

interests consist of other stockholders’ ownership interests in majority-owned

October 16, 2009, the Company borrowed $1,465,000 from Beijng Bank.

unsecured, and with an annual interest rate of 5.31%.

$1,318,500 of the total

amount is guaranteed by an unrelated party.

The due dates are as follows:

$146,500 due on April 16, 2010, $146,500 due on July 16, 2010, $293,000 due on

August 16, 2010, $439,500 due on September 16, 2010, and $439,500 due on October

Interest expenses are due on the 16th of every third month.

November 30, 2009, the loan payable to bank amounted to $1,465,000.

interest expense capitalized into construction in progress for the three and six

months ended November 30, 2009 and 2008.

no bank loan payable as of May 31, 2009.

interest expense and financial charges for the three and six months ended

November 30, 2009 on all debt, amounted to $3,183 and $3,655, respectively.

Total interest expense and financial charges for the three and six months ended

November 30, 2008 on all debt, amounted to $258 and $943,

respectively.

2009, the Company entered into a capital leaseback arrangement with an unrelated

third party for approximately $1,775,580 with an annual interest rate of 6.76%.

The lease has been accounted for as a capital lease with the same third party to

lease the equipments for three years, with total payments of approximately

The title of the equipments will be transferred back to the Company

upon the last payment.

A one time processing fee of $22,120 was paid by the

Company related to this lease.

The minimum payments for the remaining lease term

of 31 months from December 2009 to June 2012 and are as follows:

lease payment

imputed interest

capital lease obligation as of November 30, 2009

current maturity

lease obligation – long-term portion as of November 30,

future lease commitments for the next three year after November 30, 2009 are as

Noncontrolling Interest

Noncontrolling

interest consist of other stockholders’ ownership interest in majority-owned

subsidiaries of the Company, which is about 5.48% of the total ownership.

August 31, 2009 and May 31, 2009, the balance of minority interests was

November 30, 2009 and May 31, 2009, the balance of noncontrolling interest was

$1,485,265 and $1,210,695 respectively.

Earnings Per Share

(loss) per share for the three months ended August 31, 2009 and 2008 is

determined by dividing net income (loss) for the periods by the weighted average

number of both basic and diluted shares of common stock and common stock

equivalents outstanding.

At August 31, 2009 and 2008, there were no dilutive

months ended August 31,

for basic and diluted EPS

Net income attributable to China Infrastructure Construction

for basic and diluted EPS

Weighted average shares of common stock outstanding

basic and diluted

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Shareholder’s Equity

Reverse Stock

September 28, 2009, the Company effectuated a 1-for-10 reverse stock split of

the Company’s common stock, with no par value (the “Common Stock”) (the “Reverse

Stock Split”).

Upon the Reverse Stock Split, ten (10) shares of the outstanding

Common Stock were automatically converted into one (1) share of Common Stock.

The Reverse Stock Split, however, did not alter the number of shares the Company

is authorized to issue, but only reduced the number of shares of its Common

Stock issued and outstanding.

Any fractional share issued as a result of the

reverse split was rounded up.

Immediately before the Reverse Split there were

15,295,500 shares of Common Stock issued and outstanding.

Immediately after

giving effect to the Reverse Split, there were 1,529,550 shares of Common Stock

issued and outstanding.

All statements are retroactively stated.

Stock Issuance For

October 14, 2009, to provide incentives to the Company’s management and to

adjust the Company’s capital structure, the Company issued to Rui Shen, as a

trustee holding for the Company’s Chief Executive Officer and Chairman Mr.Yang.

The Company has used the closest share issuance price as the fair market value

to calculate the compensation expenses.

Total $27,422,242 compensation expense

was included in selling, general and administrative expenses.

Stock Issuance For

October 16, 2009, the Company entered into and consummated the sale of

securities pursuant to a Subscription Agreement with a number of institutional

investors (the “Investors”), providing for the sale to the Investors of an

aggregate of approximately 2,564,108 shares of Common Stock for an aggregate

purchase price of approximately $10,000,000 (or $3.90 per Share).

of $8,605,626 had been received and recorded as share capital.

In connection

with the Private Placement, the Company issued to the placement agent warrants

to purchase 153,846 shares of Common Stock exercisable for a period of five

years at an exercise price of $3.90 per share and paid a transaction fee equal

to 8% of the gross proceeds of the Private Placement.

Additionally, the Company

issued to an advisor in the PRC 289,012 shares of Common Stock and paid a

transaction fee equal to 2.5% of the gross proceeds of the Private Placement for

the service provided purely relating to the equity financing.

also issued to one investor 22,000 shares for services provided related to the

fund raising.

Thus, the Company paid $1,394,396 in total and issued 403,431

shares to various parties as fund raising costs.

These costs were classified as

equity and accounted for as common stock issuance cost.

Company also entered into several covenants in the Subscription Agreement, the

breach of which can result in penalties, which are capped at 15% of the

aggregate purchase price of the Private Placement.

These covenants

the Company’s board of directors to be in compliance with the Nasdaq

Corporate Governance standards;

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

on a National Securities Exchange within 24 months of the Closing

of a new full-time chief financial officer, subject to the approval of

certain Investors;

of an internal control consultant for Sarbanes-Oxley 404 compliance;

of additional shares of common stock to the Investors on a pro rata basis

for no additional consideration in the event that the Company’s after tax

net income for each of the fiscal years ending May 31, 2010 and 2011 is

less than $14,000,000 and $18,000,000 respectively subject to certain

adjustments, which number of shares should be equal to the percentage of

variation between the actual net income and the target net

connection with the Subscription Agreement, the Company also entered into an

Investor Relations Escrow Agreement with an escrow agent and an investor

representative, wherein the Company agreed to deposit $120,000 of the proceeds

of the Private Placement into an escrow account (the “IR Escrow Funds”) and to

utilize such IR Escrow Funds for a three-year investor relations program (the

“IR Escrow Agreement”).

In accordance with the Subscription Agreement, the

Company shall retain an investor relations firm within 30 days after the Closing

Date, subject to the approval of the investor representative.

The Company is

obligated to replenish the IR Escrow Funds on the second and third anniversaries

of the Closing Date to bring the balance of such funds to $120,000 as of

October 16, 2009, in connection with the Share Purchase Agreement, the Company

issued 153,846 warrants to Hunter Wise Financial Group, LLC, the Placement

The warrants carry an exercise price of $3.90 and a 5-year term.

Warrants contain standard adjustment provisions upon stock dividend, stock

split, stock combination, recapitalization, and a change of control

Agent Warrants meet the conditions for equity classification pursuant to FASB

ASC 815 “Derivatives and Hedging” and EITF 00-19, “Accounting for Derivative

Financial Instruments Indexed to, and Potentially Settled in, a Company's

Own Stock.” Therefore, these warrants were classified as equity and accounted

for as common stock issuance cost.

November 30, 2009 (Unaudited)

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Employee Welfare Plan

1 unchanged sentence

law and regulations.

The Company makes annual contributions of 14% of all

employees' salaries to an employee welfare plan.

The total expense

for the above plan was $136,237 and $55,638 for the three months ended August

31, 2009 and 2008, respectively.

Segment Reporting

of Financial Accounting Standards No.

131 (SFAS 131), “Disclosure about Segments

of an Enterprise and Related Information” requires use of the management

approach model for segment reporting.

The management approach model is based on

the way a company's management organizes segments within the company for making

operating decisions and assessing performance.

Reportable segments are based on

products and services, geography, legal structure, management structure, or any

other manner in which management disaggregates a company.

management does not disaggregate Company data, the Company has determined that

only one segment exists.

The Company makes contributions to an employee welfare

The total expense for the above plan was $43,488 and $108 for

the three months ended November 30, 2009 and 2008, respectively.

expense for the above plan was $48,161 and $955 for the six months ended

November 30, 2009 and 2008, respectively.

following table reconciles the U.S.

statutory rates to the Company’s effective

tax rate for the six months ended November 30, 2009 and 2008:

Statutory rates

income not recognized in USA

income tax exemption

provision for income taxes

People ’ s Rep ublic of China

Income Tax Laws of the PRC, the Company’s subsidiaries are generally subject to

an Enterprise Income Tax (EIT) at a standard rate of 25% on income reported in

the statutory financial statements after appropriate tax adjustments.

the Company is charged at 0% income tax rate because of a special tax exemption

approved by the PRC tax department.

The income tax expenses for the three

and six months ended November 30, 2009 and 2008 are $0.

The exemption of

income tax to the Company will last until December 31, 2010 and from year 2011,

the Company will be subject to an income tax at a standard rate of 25%.

were no significant book and tax basis differences.

estimated tax savings due to the tax exemption for the three and six months

ended November 30, 2008 amounted to approximately $520,000 and $940,000,

respectively.

The net effect on earnings per share if the income tax had been

applied would decrease the basic and diluted earnings per share for the three

and six months ended November 30, 2008 by $0.37 and $0.73, respectively.

estimated tax savings due to the tax exemption for the three and six months

ended November 30, 2009 amounted to approximately $500,000 and $1,300,000,

respectively.

The net effect on earnings per share if the income tax had been

applied would decrease the basic and diluted earnings per share for the three

and six months ended November 30, 2009 by $0.08 and $0.32,

respectively.

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Other Income (Expenses)

income was $5,196 and $4,996 for the three and six months ended November 30,

2009, respectively.

It mainly consists of

fines from employees.

income was $288 for the three months ended November 30, 2008.

It mainly consists

of income from selling used newspaper.

Other expenses were $12,266 for the six

months ended November 30, 2008.

It mainly consists of fines for the

Concentration of Credit Risks and Uncertainties

Company’s practical operations are all carried out in the PRC.

Accordingly, The

Company’s business, financial condition, and results of operations may be

influenced by the political, economic and legal environments in the PRC, and by

the general state of the PRC's economy.

Company’s operations in the PRC are subject to specific considerations and

significant risks not typically associated with companies in North America and

Western Europe.

These include risks associated with, among others, the

political, economic and legal environments and foreign currency exchange.

Company’s results may be adversely affected by changes in governmental policies

with respect to laws and regulations, anti-inflationary measures, currency

conversion and remittance abroad, and rates and methods of taxation, among other

Concentration

2 unchanged sentences

material in relation to the Company’s total credit exposure.

Company had sales to two major customers, which represented 24% and 11% of the

Company’s total sales for the three months ended August 31, 2009.

Company had sales to five major customers, which represented 14%,13%,12%,12% and

12% of the Company’s total sales for the three months ended August 31, 2008.

names of the companies are listed below:

Railway Construction Corp.

Sanyuan Corp.

Tianli Construction Corp.

Construction Corp.

Suzhong Construction Corp.

three months ended November 30, 2009, there are four major customers that each

individually comprised more than 10% of the Company’s total sales.

Group 14%, China Construction 14%, Guangzhou Tianli Construction Projects Inc.

11%, and Beijing Sanyuan Construction Inc.

For the six months ended

November 30, 2009, there are three customers that each individually comprised

more than 10% of the Company’s total sales.

(Mingsheng Group 11%, China

Construction 11% and Beijing Sanyuan Construction Inc., 11%).

three months ended November 30, 2008, there are three major customers that each

individually comprised more than 10% of the Company’s total sales.

Suzhong Construction Group 11%, Guangzhou Tianli Construction Projects Inc.

and China Construction 10%) For the six months ended November 30, 2008, there

are four customers that each individually comprised more than 10% of the

Company’s total sales.

(Guangzhou Tianli Construction Projects Inc.

Suzhong Construction Group 11%, China Construction 11%,, and Beijing Sanyuan

Construction Inc.

customers, China Railway Construction Corp.

and Beijing Sanyuan accounted for

29% and 11% of the Company’s accounts receivable balance at August 31, 2009,

China Railway also accounted for 33% of the Company’s accounts receivable

and Beijing Sanyuan, comprised 25%

and 11% of the Company’s accounts receivable balance at November 30, 2009.

Railway Construction Corp.

comprised 33% of the Company’s accounts receivable

balance at May 31, 2009.

Three customers, Guangzhou Tianli Construction Corp.,

Beijing Sanyuan Construction Corp.

and Jiangsu Suzhong Construction Corp.

accounted for 14%, 13% and 11% of the company’s receivable balance at August 31,

five major vendors account for 38% of the Company’s total cost of revenue for

the three months ended August 31, 2009, with one major vendor representing 11%

of the total cost of revenue.

The top five major vendors account for 38% of the

Company’s total cost of revenue for the three months ended August 31, 2008, with

one major vendor representing 16% of the total cost of revenue.

accounted for more than 10% of the Company’s accounts payable at August 31,

One major vendor accounted for 9% of the Company’s accounts

payable at August 31, 2009.

One major vendor accounted for 8% of the Company’s

accounts payable at May 31, 2009.

Two major vendors accounted for

15% and 14% of the Company’s accounts payable at August

INFRASTRUCTURE CONSTRUCTION CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Concentration of Credit Risks and Uncertainties (continued)

five major vendors accounted for 34% of the Company’s total purchases for the

three months ended November 30, 2009, with no one major vendor accounting for

more than 10% of the total purchases.

The top five major vendors accounted for

36% of the Company’s total purchases for the six months ended November 30, 2009,

with one major vendor, Tianjin Zhenxing Cement Company, accounting for 10% of

the total purchases.

five major vendors accounted for 56% of the Company’s total purchases for the

three months ended November 30, 2008, with one major vendor, Tianjin Zhenxing

Cement Company, accounting for 23% of the total purchases.

The top five major

vendors accounted for 55% of the Company’s total purchases for the six months

ended November 30, 2008, with one major vendor, Tianjin Zhenxing Cement Company,

accounting for 23% of the total purchases.

accounted for more than 10% of the Company’s accounts payable at November 30,

Two major vendors, Wushan Cement Company and Tianjin Zhenxing

Cement Company, accounted for 8% and 6% of the Company’s accounts payable at

November 30, 2009.

No vendor accounted for more than 10% of the Company’s

accounts payable at May 31, 2009.

One major vendor, Zhuozhou

Shuishang Leyuan Shashiliao, accounted for 8% of the Company’s accounts payable

at May 31, 2009.

Company’s exposure to foreign currency exchange rate risk primarily relates to

2 unchanged sentences

the cash flows, revenues, earnings and financial position of the

Recent Accounting Pronouncements

issued SFAS No.

168, The FASB Accounting Standards Codification and the

Hierarchy of Generally Accepted Accounting Principles, on June 29,

2009 and, in doing so, authorized the Codification as the sole source

for authoritative U.S.

168 will be effective for

financial statements issued for reporting periods that end after September 15,

Once it's effective, it will supersede all accounting standards

GAAP, aside from those issued by the SEC.

168 replaces SFAS No.

162 to establish a new hierarchy of GAAP sources for non-governmental entities

under the FASB Accounting Standards Codification.

The Company will evaluate the

impact of SFAS No.

168 upon its effectiveness.

167 amends FASB Interpretation (FIN) No.

46(R), Consolidation of Variable

Interest Entities, by altering how a company determines when an entity that is

insufficiently capitalized or not controlled through voting should be

consolidated.

A company has to determine whether it should provide consolidated

reporting of an entity based upon the entity's purpose and design and the parent

company's ability to direct the entity's actions.

standards will be effective at the start of the first fiscal year beginning

after November 15, 2009, which will mean January 2010 for companies that are on

calendar years.

The guidance will have to be applied for first-quarter filings.

The Company will comply with the disclosure requirements of this statement when

and if it acquires a variable interest entity, upon its

effectiveness.

166 revises SFAS No.

140, Accounting for Transfers and Servicing of Financial

Assets and Extinguishments of Liabilities, and will require entities to provide

more information about sales of securitized financial assets and similar

transactions, particularly if the seller retains some risk to the assets.

statement eliminates the concept of a qualifying special-purpose entity, changes

the requirements for the derecognition of financial assets, and calls upon

sellers of the assets to make additional disclosures about them.

does not believe implementation of SFAS No.

166 will have a material impact on

its financial statements.

Subsequent Events

reviewed subsequent events up through January 14, 2010, which is the date that

the financial statements are issued or are available to be

Principal Officers

December 17, 2009, Mr.

Rong Yang resigned as the Chief Financial Officer of the

Yang’s resignation was not the result of any disagreement with the

Company on any matter relating to the Company’s operations, policies or

December 17, 2009, Ms.

Yiru Shi was appointed as acting Chief Financial Officer

of the Company, and the Company entered into an employment agreement with Ms.

Shi, dated December 17, 2009.

Employment Agreement provides that Ms.

Shi will serve as acting CFO of the

Company for a three-month probation period (the “Probation Period”), at the end

of which the Board will review Ms.

Shi’s performance and approve her appointment

as the Company’s Chief Financial Officer.

The term of the Employment Agreement

is two years, including the Probation Period, with a renewal option upon a

15-day written notice in advance (the “Term”).

Shi will be compensated as

annual salary of $150,000, or $12,500 monthly payable in U.S.

to purchase 300,000 shares of the Common Stock of the Company, exercisable at

$3.90 per share, to vest in two equal installments respectively on December 17,

2010 and December 17, 2011.

Shi’s employment is terminated prior to the

vesting date, any unvested options will be terminated.

If her employment is

terminated after the vesting date, any vested but unexercised options shall

terminate on the 91st day following the date of the termination of her

The details of such options are set forth on the Option

Grant Agreement.

Entered Into Strategic

Alliance Agreement

December 8, 2009, the Company entered into a Strategic Alliance Agreement

for a term of 10 years with Commercial Concrete Mixer Division of China Railway

Construction Group Co., Ltd.

(“CRCG”), a major customer of the Company (the

“Agreement”).

Agreement, the Company will be obligated to build and set up concrete mixing

stations in Xi’an, China and to provide the raw material purchase, internal

accounting, technical and administrative staff of such stations.

The Company and

CRCG will jointly run and operate the concrete mixing stations.

provide the cement for manufacturing the concrete mix in such concrete mixing

stations, and CRCG can purchase the concrete mix at a discounted price.

accordance with the Agreement, each party will lease certain equipment to the

concrete mixing stations.

There are currently no definitive terms for

addition, the Company and CRCG will share 75% and 25% of the annual profits of

such concrete mixing stations in Xi’an, respectively.

The details of such profit

sharing arrangement shall be further agreed upon.

According to the Agreement,

the management team from CRCG to work at the concrete mixing

stations shall be compensated by CRCG.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements