UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549







FORM
10-Q







x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
quarterly period ended November
30, 2008





o TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from _____ to _____





Commission
File Number 000-51755








CHINA RUNJI CEMENT
INC.


(Exact
name of Registrant as specified in its charter)








Delaware
              
              98-0533824(State
      or other jurisdiction of incorporation or organization)
              
              (IRS
      Employer Identification No.)








Xian
Zhong Town, Han Shan County


Chao Hu City, People’s
Republic of China


(Address
of principal executive offices)








(86) 565
4219871


(Registrant's
telephone number)








Check
whether the registrant (1) filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.   Yes x    No
o







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





Large
Accelerated Filer o   Accelerated
Filer o   Non-accelerated
Filer o   Smaller
Reporting Company x







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







State the
number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date:  January 14, 2009, 78,832,064 shares.




Table of Contents




CHINA RUNJI CEMENT INC.





Form
10-Q for the period ended November 30, 2008





TABLE
OF CONTENTS





PagePART
      I - FINANCIAL INFORMATIONITEM
      1 - FINANCIAL STATEMENTSConsolidated
      Balance Sheets as of November 30, 2008 (Unaudited) and August 31,
      2008
                3Consolidated
      Statements of Operations and Comprehensive Income for the three months
      ended
                  November
      30, 2008 and 2007 (Unaudited)
                4Consolidated
      Statements of Cash Flows for the three months ended November 30, 2008
      and 2007 (Unaudited)
                5Notes
      to Consolidated Financial Statements (Unaudited)
                6 -
      10ITEM
      2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS
                11ITEM
      3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK
                15ITEM
      4 (A) - CONTROLS AND PROCEDURES
                15ITEM
      4 (A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING
                15PART
      II - OTHER INFORMATIONITEM
      1 - LEGAL PROCEEDINGS
                16ITEM
      2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
                16ITEM
      3 - DEFAULTS UPON SENIOR SECURITIES
                16ITEM
      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                16ITEM
      5 - OTHER INFORMATION
                16ITEM
      6 – EXHIBITS
                16SIGNATURES
                16





- 2
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 Table of Contents


PART
I. FINANCIAL INFORMATION





ITEM
I. FINANCIAL STATEMENTS





China
Runji Cement Inc.


Consolidated
Balance Sheets





November
      30,
                                                                                                        
                                                                                                        
                                                                                                        August
      31,2008
                                                                                                        
                                                                                                        
                                                                                                        2008(Unaudited)ASSETSCurrent
      AssetsCash and cash equivalents
                                                                                                        
                                                                                                        $
                                                                                                        392,490
                                                                                                        
                                                                                                        
                                                                                                        $
                                                                                                        415,031Accounts receivable, net
                                                                                                        
                                                                                                        
                                                                                                        5,192,393
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        2,231,363Notes receivable
                                                                                                        
                                                                                                        
                                                                                                        227,092
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        868,593Due from related parties (Note 4)
                                                                                                        
                                                                                                        
                                                                                                        46,380
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        53,516Inventory
                                                                                                        
                                                                                                        
                                                                                                        4,285,487
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        3,275,570Advances
                                                                                                        
                                                                                                        
                                                                                                        2,366,929
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        3,772,367Prepaid expenses and other receivables
                                                                                                        
                                                                                                        
                                                                                                        928,180
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        1,530,022Total
      Current Assets
                                                                                                        
                                                                                                        
                                                                                                        13,438,951
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        12,146,462Property, plant and equipment, net (Note 3)
                                                                                                        
                                                                                                        
                                                                                                        51,447,519
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        51,499,895Intangible
      Assets & Deferred Charges
                                                                                                        
                                                                                                        
                                                                                                        4,561,210
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        4,615,689Total
      Assets
                                                                                                        
                                                                                                        $
                                                                                                        69,447,680
                                                                                                        
                                                                                                        
                                                                                                        $
                                                                                                        68,262,046LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      LiabilitiesPayables and accrued liabilities
                                                                                                        
                                                                                                        $
                                                                                                        17,399,957
                                                                                                        
                                                                                                        
                                                                                                        $
                                                                                                        14,627,928Customer deposit
                                                                                                        
                                                                                                        
                                                                                                        1,469,692
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        1,001,178Short-term loans
                                                                                                        
                                                                                                        
                                                                                                        439,533
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        438,570Due to related parties
                                                                                                        
                                                                                                        
                                                                                                        3,303
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        3,279Taxes payable
                                                                                                        
                                                                                                        
                                                                                                        1,170,129
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        2,042,701Wages payable
                                                                                                        
                                                                                                        
                                                                                                        224,111
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        331,341Total
      Current Liabilities
                                                                                                        
                                                                                                        
                                                                                                        20,706,725
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        18,444,997Due to Related Parties(Note
      4)
                                                                                                        
                                                                                                        
                                                                                                        25,010,915
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        27,801,846Total
      Liabilities
                                                                                                        
                                                                                                        
                                                                                                        45,717,640
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        46,246,843Commitments
      and Contingencies (Note 5)Stockholders'
      EquityPreferred
      Stock: 20,000,000 shares authorized, $0.0001 par
      value,0 shares issued and outstanding at November 30, 2008 and August 31,
      2008
                                                                                                        
                                                                                                        
                                                                                                        -
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        -Common Stock 200,000,000 shares authorized,$0.0001 par
      value,
                                                                                                            78,832,064 shares issued and outstanding
                                                                                                        
                                                                                                        
                                                                                                        7,883
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        7,883Additional paid in capital
                                                                                                        
                                                                                                        
                                                                                                        12,327,962
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        12,327,962Accumulated other comprehensive income
                                                                                                        
                                                                                                        
                                                                                                        2,645,654
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        2,595,790Retained earnings
                                                                                                        
                                                                                                        
                                                                                                        8,748,541
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        7,083,568Total
      stockholders' equity
                                                                                                        
                                                                                                        
                                                                                                        23,730,040
                                                                                                        
                                                                                                        
                                                                                                        
                                                                                                        22,015,203Total
      Liabilities and stockholders' Equity
                                                                                                        
                                                                                                        $
                                                                                                        69,447,680
                                                                                                        
                                                                                                        
                                                                                                        $
                                                                                                        68,262,046







The
accompanying notes are an integral part of these unaudited financial
statements.




- 3
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China
Runji Cement Inc.


Consolidated
Statements of Operations and Comprehensive Income


(UNAUDITED)




For
      the three months endedNovember
      30,2008
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2007Revenue
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                15,750,411
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                10,311,286Cost
      of goods sold
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                13,697,507
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                7,790,594Gross
      Profit
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2,052,904
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2,520,692Operating
      Costs and Expenses:Selling
      expenses
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                72,052
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                16,310G&A
      expenses
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                373,663
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                454,049Depreciation
      of property, plant and equipment
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                37,788
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                21,166Total
      operating costs and expenses
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                483,503
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                491,525Income
      From Operations
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                1,569,401
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2,029,167Interest
      income
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                972
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                1,413Interest
      expenses
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (20,756
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (3,694
                                                                                                                                                )Government
      Subsidies / Grants
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                731,891
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                -Other income
      (expenses)
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (62,784
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                93,414Income
      Before Income Taxes
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2,218,724
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2,120,300Income
      taxes (Note 6)
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                553,751
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                687,684Net
      Income
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                1,664,973
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                1,432,616Other
      Comprehensive IncomeForeign
      currency translation adjustment
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                49,864
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                325,643Comprehensive
      Income
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                1,714,837
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                1,758,259Earnings
      Per Share, Basic and Diluted
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                0.02
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                0.02Weighted
      Average Shares Outstanding  -Basic
      and Diluted
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                78,832,064
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                78,832,064









The
accompanying notes are an integral part of these unaudited financial
statements.


- 4
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 Table of Contents


China
Runji Cement Inc.


Consolidated
Statements of Cash Flows


(UNAUDITED)





For
      the three months ended
                                                                                                      November 30,2008
                                                                                                    
                                                                                                    
                                                                                                    2007Operating
      activitiesNet income
                                                                                                    
                                                                                                    $
                                                                                                    1,664,973
                                                                                                    
                                                                                                    
                                                                                                    $
                                                                                                    1,432,616Adjustments
      to reconcile net income (loss) to net cashprovided by (used in)
      operating activities:Amortization
                                                                                                    
                                                                                                    
                                                                                                    64,560
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    25,298Depreciation expense and cost
                                                                                                    
                                                                                                    
                                                                                                    967,993
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    641,630Impairment of assets
                                                                                                    
                                                                                                    
                                                                                                    -Changes
      in operating assets and liabilities:Accounts receivable, net
                                                                                                    
                                                                                                    
                                                                                                    (2,304,326
                                                                                                    )
                                                                                                    
                                                                                                    
                                                                                                    (1,953,747
                                                                                                    )Advances to suppliers
                                                                                                    
                                                                                                    
                                                                                                    -
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    (2,590,286
                                                                                                    )Prepaid expenses and other receivables
                                                                                                    
                                                                                                    
                                                                                                    604,849
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    (251,973
                                                                                                    )Inventory
                                                                                                    
                                                                                                    
                                                                                                    (1,001,812
                                                                                                    )
                                                                                                    
                                                                                                    
                                                                                                    (34,600
                                                                                                    )Loan to related parties
                                                                                                    
                                                                                                    
                                                                                                    -
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    -Accounts payable and accrued liabilities
                                                                                                    
                                                                                                    
                                                                                                    4,040,687
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    (517,637
                                                                                                    )Customer deposit
                                                                                                    
                                                                                                    
                                                                                                    467,181
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    1,277,908Tax payable
                                                                                                    
                                                                                                    
                                                                                                    (876,264
                                                                                                    )
                                                                                                    
                                                                                                    
                                                                                                    1,121,571Net
      cash provided by (used in) operating activities
                                                                                                    
                                                                                                    
                                                                                                    3,627,841
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    (849,220
                                                                                                    )Investing
      activitiesCollection of loans to related parties
                                                                                                    
                                                                                                    
                                                                                                    7,247
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    13,212Property, plant and equipment additions
                                                                                                    
                                                                                                    
                                                                                                    (802,630
                                                                                                    )
                                                                                                    
                                                                                                    
                                                                                                    (167,300
                                                                                                    )Net
      cash provided by (used in) investing activities
                                                                                                    
                                                                                                    
                                                                                                    (795,383
                                                                                                    )
                                                                                                    
                                                                                                    
                                                                                                    (154,088
                                                                                                    )Financing
      activitiesShort term loan proceeds (repayment)
                                                                                                    
                                                                                                    
                                                                                                    -
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    36,727Loan from related party
                                                                                                    
                                                                                                    
                                                                                                    -
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    1,389,171Proceeds from related party loans (repayment)
                                                                                                    
                                                                                                    
                                                                                                    (2,849,421
                                                                                                    )
                                                                                                    
                                                                                                    
                                                                                                    -Capital contribution
                                                                                                    
                                                                                                    
                                                                                                    -
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    39,114Net
      cash provided by (used in) financing activities
                                                                                                    
                                                                                                    
                                                                                                    (2,849,421
                                                                                                    )
                                                                                                    
                                                                                                    
                                                                                                    1,465,012Effect
      of exchange rate changes on cash and cash equivalents
                                                                                                    
                                                                                                    
                                                                                                    (5,578
                                                                                                    )
                                                                                                    
                                                                                                    
                                                                                                    (673,000
                                                                                                    )Decrease  in
      cash and cash equivalents
                                                                                                    
                                                                                                    
                                                                                                    (22,541
                                                                                                    )
                                                                                                    
                                                                                                    
                                                                                                    (211,296
                                                                                                    )Cash
      and cash equivalents, beginning of year
                                                                                                    
                                                                                                    
                                                                                                    415,031
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    1,400,479Cash
      and cash equivalents, end of year
                                                                                                    
                                                                                                    $
                                                                                                    392,490
                                                                                                    
                                                                                                    
                                                                                                    $
                                                                                                    1,189,183Supplemental
      Disclosures of Cash Flows Information:Interest Paid
                                                                                                    
                                                                                                    $
                                                                                                    20,756
                                                                                                    
                                                                                                    
                                                                                                    $
                                                                                                    25,648Income taxes paid
                                                                                                    
                                                                                                    $
                                                                                                    1,442,353
                                                                                                    
                                                                                                    
                                                                                                    $
                                                                                                    -








The
accompanying notes are an integral part of these unaudited financial
statements.


- 5
-
 Table of Contents


CHINA
RUNJI CEMENT INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


November
30, 2008


(UNAUDITED)








NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS





The
Company was incorporated as FitMedia Inc., a Delaware corporation, on August 30,
2004.





On
November 1, 2007, the Company closed a reverse merger with Anhui Province Runji
Cement Co., Limited (“Anhui Runji”). Anhui Runji is the accounting acquirer
and the transaction is accounted for as a recapitalization.  The
historical financial statements of Anhui Runji survived the merger and is
presented herein.





Anhui
Runji, a producer and distributor of cement located in Anhui Province in
China, was established in December 2003 with registered capital of RMB 60
million yuan. Anhui Runji started production in October 2005 and specializes in
cement production and sales. The main cement varieties produced are ordinary
silicate cement PO52.5, PO42.5, PO32.5 and PC32.5. Following the commencement of
the second cement clinker production line in October 2008, Anhui Runji currently
has one production line of cement and one of cement clinker; each is
designed to produce 2,500 tons per day.





Anhui
Runji obtained its production license in 2005. Presently, Anhui Runji mainly
focuses production on Runji Brand PII52.5, PO42.5, PO32.5 and PC32.5
cements.  PII52.5 is a high grade, high strength cement that is made
in Anhui and Jiangsu Provinces and the region of north of the
Changjiang River and is used in large infrastructural projects. Anhui Runji
has a rigorous quality control system and received ISO9001 quality system
certification and international accreditation in March 2006. In addition Anhui
Runji passed the national GB/T 19001-2000 standard authentication.





Presently,
Anhui Runji’s main market is in Hefei city and Pukou area of Nanjing, with
60% of the total annual production sold in this area. An additional 30% of total
annual production is sold in the cities surrounding Hefei and Pukou, with
another 10% being sold in Liu’an and Dingyuan in Anhui and Jiangsu. To reflect
its business and business plan, the Company changed its name from “FitMedia
Inc.” to “China Runji Cement Inc.”





NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Basis
of Presentation





The
accompanying unaudited interim consolidated financial statements of the Company
have been prepared in accordance with accounting principles generally accepted
in the United States of America and the rules of the Securities and Exchange
Commission, and should be read in conjunction with August 31, 2008 audited
financial statements of the Company and the notes thereto as included in the
Company’s Form 10-K  filed on December 3, 2008. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year. Notes to the consolidated financial
statements, which would substantially duplicate the disclosure required in the
Company’s June 30, 2008 annual financial statements have been
omitted.





These
accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Ren Ji Cement Investment Co., Ltd (a
BVI corporation), Ren Ji Cement Company Limited (a Hong Kong
corporation), Mass Market Limited (a BVI corporation), and Anhui Province
Runji Cement Co., Ltd. (a PRC corporation). All have been prepared in
accordance with accounting principles generally accepted in the United States of
America (“US GAAP”).





All
significant inter-company balances and transactions have been eliminated in
consolidation.





Use
of Estimates





In
preparing these financial statements, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities in the balance sheets
and revenues and expenses during the year reported. Actual results may differ
from these estimates.




- 6
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 Table of Contents




CHINA
RUNJI CEMENT INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 November
30, 2008
 (UNAUDITED)





NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)




New
Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value
Measurements, to provide guidance for using fair value to measure assets and
liabilities. SFAS No. 157 was to be effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years; however, in February 2008, the FASB issued FASB Staff
Position FAS 157–2, Effective Date of FASB Statement No. 157, which delayed
the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis, for one year. We adopted SFAS No. 157
on September1, 2008 for financial assets and financial liabilities and currently
we do not have any financial assets and financial liabilities. As a result, the
adoption does not have any impact on our financial statements. We will adopt
SFAS No. 157 on September 1, 2009 for our nonfinancial assets and nonfinancial
liabilities, and we have not yet determined the impact, if any, on our
consolidated financial statements.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115. SFAS No. 159 permits entities to choose to measure many financial
instruments and certain other items at fair value that are not currently
required to be measured at fair value. Unrealized gains and losses on items for
which the fair value option has been selected are reported in earnings. SFAS No.
159 also establishes presentation and disclosure requirements designed to
facilitate comparisons between entities that choose different measurement
attributes for similar types of assets and liabilities. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. We have elected
not to apply the provisions of SFAS No. 159..





On
December 4, 2007, the FASB issued SFAS No.141R,Business Combinations (SFAS
No. 141R).  SFAS No. 141R requires the acquiring entity in a business
combination to recognize all the assets acquired and liabilities assumed,
establishes the acquisition date fair value as the measurement objective for all
assets acquired and liabilities assumed, and requires the acquirer to expand
disclosures about the nature and financial effect of the business
combination.  SFAS No. 141R is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008.  We have not
yet determined the impact of the adoption of SFAS No. 141R on our consolidated
financial statements and footnote disclosures.





On
December 4, 2007, the FASB issued SFAS No. 160,Noncontrolling interest in
Consolidated Financial Statements (SFAS No. 160).  SFAS No. 160
requires all entities to report noncontrolling (minority) interests in
subsidiaries as equity in the consolidated financial statements.  The
statement establishes a single method of accounting for changes in a parent’s
ownership interest in a subsidiary that do not result in deconsolidation and
expands disclosures in the consolidated financial statements.  SFAS
No. 160 is effective for fiscal years beginning after December 15, 2008 and
interim periods within those fiscal years.  We have not yet determined
the impact of the adoption of SFAS No. 160 on our consolidated financial
statements and footnote disclosures.





Government
Subsidies





A
government subsidy is recognized only when there is reasonable assurance that
the enterprise will comply with any conditions attached to the grant and the
grant will be received.  The Company is entitled to receive treasury
subsidy of local government in accordance with the “Regulations of
facilitating investment in industrial enterprises” (Article 17 of Han Order
[2002]) which is promulgated on Oct 28, 2002 by the Communist Party Commission
of Han Shan County, Anhui Province and Han Shan County Government of
Anhui Province. According to this regulation, the first three years of
tax payable by the Company after it commenced production to the local government
will be returned to the Company for the purpose of increasing
production.






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CHINA
RUNJI CEMENT INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 November
30, 2008
 (UNAUDITED)







NOTE
3 – PROPERTY, PLANT AND EQUIPMENT





Property,
plant and equipment consist of the following:





30-Nov-08
                          
                          
                          31-Aug-08Building
      – Cost
                          
                          $
                          27,896,384
                          
                          
                          $
                          22,270,871Building
      - Accumulated Depr
                          
                          
                          (2,417,223
                          )
                          
                          
                          (2,103,678
                          )Building
      – Net
                          
                          
                          25,479,161
                          
                          
                          
                          20,167,193Equipment
      & Machinery – Cost
                          
                          
                          31,172,659
                          
                          
                          
                          18,712,633Equipment
      & Machinery - Accumulated Depr
                          
                          
                          (6,262,367
                          )
                          
                          
                          (5,607,996
                          )Equipment
      & Machinery – Net
                          
                          
                          24,910,292
                          
                          
                          
                          13,104,637Automobiles
      – Cost
                          
                          
                          293,506
                          
                          
                          
                          292,862Automobiles
      – Accumulated Depr
                          
                          
                          (110,106
                          )
                          
                          
                          (95,953
                          )Automobiles
      – Net
                          
                          
                          183,400
                          
                          
                          
                          196,909Other
      Equipment – Cost
                          
                          
                          30,633
                          
                          
                          
                          56,880Other
      Equipment - Accumulated Depr
                          
                          
                          (13,940
                          )
                          
                          
                          (11,208
                          )Other
      Equipment – Net
                          
                          
                          16,693
                          
                          
                          
                          45,672Computer
      Equipment – Cost
                          
                          
                          28,287
                          
                          
                          
                          24,982Computer
      Equipment - Accumulated Depr
                          
                          
                          (7,956
                          )
                          
                          
                          (6,670
                          )Computer
      Equipment – Net
                          
                          
                          20,331
                          
                          
                          
                          18,312Total
      Fixed Assets - Net
                          
                          $
                          50,609,877
                          
                          
                          $
                          33,532,723Construction
      in progress
                          
                          
                          837,642
                          
                          
                          
                          17,967,172$
                          51,447,519
                          
                          
                          $
                          51,499,895





NOTE
4 –DUE FROM/TO RELATED PARTIES





(a)           Names
and relationship of related parties





Existing
      relationships with the CompanyNanjin
      Hongren
                    A
      company controlled by shareholderNanjin
      Runji
                    A
      company controlled by shareholderZhao,
      Shouren
                    Shareholder, President
      & CEO of the CompanyYang,
      Xuanjun
                    Shareholder
      of the CompanyChen,
      Zhonghang
                    Relative  of
      Mr. Zhao ShourenWu,
      Qiuchang
                    General
      manager of Anhui Run
ji




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CHINA
RUNJI CEMENT INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 November
30, 2008
 (UNAUDITED)


NOTE
4 –DUE FROM/TO RELATED PARTIES (CONT.)


(b)           Due
from related party consists of the following:





30-Nov-08
                        
                        
                        31-Aug-08Due
      from related party (S/T) – Chen, Zhonghang
                        
                        $
                        43,903
                        
                        
                        $
                        50,592Due
      from related party (S/T) – Wu, Qiuchang
                        
                        
                        2,477
                        
                        
                        
                        2,924$
                        46,380
                        
                        
                        $
                        53,516





(c)           Due
to Related Parties (L/T) consists of the following:





30-Nov-08
                          
                          
                          31-Aug-08Due
      to related party – Nanjin Hongren
                          
                          $
                          16,873,729
                          
                          
                          
                          19,117,328Due
      to related party – Nanjin Runji
                          
                          
                          7,151,552
                          
                          
                          
                          7,135,856Due
      to related party – Zhao, Shouren
                          
                          
                          436,037
                          
                          
                          
                          488,606Due
      to related party – Yang, Xuanjun
                          
                          
                          549,597
                          
                          
                          
                          1,060,056$
                          25,010,915
                          
                          
                          $
                          27,801,846





The above
amounts due to related parties represent loans payable are long-term loans that
are unsecured and non-interest bearing, and the loans usage will depends on the
Company’s business operations.





NOTE
5 – COMMITMENTS AND CONTINGECIES




Social
insurance for employees





According
to the prevailing laws and regulations of the PRC, the Company is required to
cover its employees with medical, retirement and unemployment insurance
programs. Management believes that due to the transient nature of its employees,
the Company does not need to provide all employees with such social insurances,
and has paid the social insurances for the Company’s employees who have
completed three months’ continuous employment with the Company.





In the
event that any current or former employee files a complaint with the PRC
government, the Company may be subject to making up the social insurances as
well as administrative fines. As the Company believes that these fines would not
be material, no provision has been made in this regard.




Tax
issues





The tax
authority of the PRC Government conducts periodic and ad hoc tax filing reviews
on business enterprises operating in the PRC after those enterprises had
completed their relevant tax filings, hence the Company’s tax filings may not be
finalized. It is therefore uncertain as to whether the PRC tax authority may
take different views about the Company’s tax filings which may lead to
additional tax liabilities.




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CHINA
RUNJI CEMENT INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


November
30, 2008


(UNAUDITED)







NOTE
6 – INCOME TAXES





The
Company‘s Enterprise Income Tax (“EIT”) rates has been reduced to 25% from 33%
starting from January 1, 2008.




Three
      months ended November 30, 2008
                  
                  
                  Three
      months ended November 30, 2007Income
      Taxes
                  
                  $
                  553,751
                  
                  
                  $
                  687,684





There are
no significant temporary and permanent differences between book and tax
income.





NOTE
7 - OPERATING RISK





Country
risk





The
Company has significant investments in the PRC. The operating results of the
Company may be adversely affected by changes in the political and social
conditions in the PRC and by changes in Chinese government policies with respect
to laws and regulations, anti-inflationary measures, currency conversion and
remittance abroad, and rates and methods of taxation, among other things. There
can be no assurance; however, those changes in political and other conditions
will not result in any adverse impact.





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ITEM
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





GENERAL
DESCRIPTION OF BUSINESS





Introduction





China
Runji was incorporated as FitMedia Inc., a Delaware company, on August 30, 2004.
FitMedia was a development stage company that planned to sell prenatal yoga DVDs
through small retail stores and others and it also planned to sell its fitness
DVDs through its Internet site www.fitmedia.net. It
completed its prenatal yoga DVD for sale and began marketing it in January
2007.





In
October 2007, the management of FitMedia determined that it was in the best
interests of the stockholders of FitMedia to agree to a share exchange with
Anhui Province Runji Cement Co., Limited, a Chinese company that is engaged in
the business of distributing cement across provinces in mainland
China.  As part of the share exchange and reverse merger, FitMedia
ceased engaging in the health and fitness business.





On
October 9, 2007,  FitMedia entered into a Share Exchange Agreement
(the “Exchange Agreement”) by and among FitMedia, Timothy Crottey, the President
and majority shareholder of FitMedia (“Crottey”), Shouren Zhao, a citizen and
resident of the People’s Republic of China and owner of 100% of the share
capital of Ren Ji Cement Investment Company Limited (“Zhao”); Ren Ji Cement
Investment Company., Ltd., a British Virgin Islands corporation (“Renji
Investment”) and owner of 100% of the share capital of Ren Ji Cement Company
Limited; Ren Ji Cement Company Limited, a corporation organized and existing
under the laws of the Hong Kong SAR of the People’s Republic of China (“HK
Renji”) and owner of 100% of the share capital of Anhui Province Runji Cement
Co., Ltd.; and Anhui Province Runji Cement Co., Ltd., a corporation organized
under the laws of the People’s Republic of China (“Anhui Runji”).  For
purposes of the Exchange Agreement, Zhao was referred to as the “Ren
Shareholder,” and Renji Investment, HK Renji and Anhui Runji were referred to as
the “Renji Subsidiaries.”  Upon closing of the share exchange
transaction (the “Share Exchange”) contemplated under the Exchange Agreement on
November 1, 2007, the Ren Shareholder transferred all of his share capital in
Renji Investment to FitMedia in exchange for an aggregate of 55,000,000 shares
of common stock of the FitMedia, thus causing the Renji Subsidiaries to become
direct and indirect wholly-owned subsidiaries of FitMedia.





On
October 9, 2007, FitMedia entered into a Stock Purchase Agreement (the “Stock
Purchase Agreement”) by and among FitMedia, Crottey, and the Ren Shareholder,
pursuant to which the Ren Shareholder, as Purchaser, at closing on November 1,
2007, acquired 18,500,000 shares (the “Stock Purchase”) of common stock of
FitMedia from Crottey for $540,000.00.





In
addition, pursuant to the terms and conditions of the Exchange
Agreement:





·
            Demand
      and piggy-back registration rights were granted to the Ren Shareholder
      with respect to shares of the Company’s restricted common stock to be
      acquired by him at closing in a Regulation S
  offering.


·
            On
      the Closing Date, the current officers of FitMedia resigned from such
      positions and the persons chosen by Anhui Runji were appointed as the
      officers of FitMedia, notably Shouren Zhao, as Chairman, CEO and President
      and Yichun Jiang as CFO.


·
            On
      the Closing Date, Crottey resigned from his position as a director
      effective upon the expiration of the ten day notice period required by
      Rule 14f-1, at which time additional persons designated by Anhui Runji
      were appointed as directors of FitMedia, notably Liming Bi and Xuanjun
      Yang.


·
            On
      the Closing Date, FitMedia paid and satisfied all of its “liabilities” as
      such term is defined by U.S. GAAP as of the
  closing.


·
            As
      of the Closing, the parties consummated the transactions contemplated by
      the Stock Purchase Agreement.





On
January 8, 2008, FitMedia changed its name to China Runji Cement Inc. and
increased its authorized common stock from 80,000,000 shares to 200,000,000
shares.





As a
result of the closing of the Share Exchange, China Runji became the owner of a
leading cement production and distribution company in mainland China through its
ownership of Anhui Runji. Using cost effective production techniques, while
building a strong brand image, Anhui Runji is a strong competitor in the central
China cement market.





Anhui
Runji is a producer and distributor of cement, primarily in An Hui Province of
central China and neighboring locations, which was founded in December
2003.  Its initial capital was 60,000,000 RMB and there were two
founding shareholders who owned such capital in a ratio of 60% to
40%.  Anhui Runji is located in Xianzong Town,
Hanshan County, An Hui Province, where the factory occupies an area of 418
mu, and its limestone mine comprises an area of 1,000 mu.  The Anhui
Runji factory, limestone reserve and storing mine together comprise an area of
approximately 50,000 square meters.





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Summary
of the Operations of Anhui Runji





Anhui
Province Runji Cement Co., Ltd. (www.chinarunji.com),
a private company located in Anhui Province in China, was established in
December 2003 with registered capital of 60 million RMB.  The Company
started production in October 2005 and specializes in cement production and
sales. The main cement varieties produced are ordinary silicate cement P.O52.5,
P.O42.5, P.O32.5 and P.C32.5. At present, the Company has one cement production
line and one cement clinker production line. The production capacity of
each line amounts to 2,500 tons per day and one million tons per
year.





The
Company obtained its production license in 2005. Presently, the Company mainly
focuses production on Runji Brand cement P.II52.5, P.O42.5, P.O32.5 P.C32.5 as
well as cement clinker.  P.II52.5 is a high grade, high strength
cement that is made for Anhui and Jiangsu Provinces and the region north of
the Changjiang River and is used in large infrastructure projects. The
cement clinker is the semi-finished ingredient of cement, which is able to be
processed into different categories of cement products.





The
Company produces cement through the advanced dry production
process, an energy efficient and environmentally friendly cement
production technique, as only 60% of the total output in the region is produced
by dry process. The Company has a rigorous quality control system and received
ISO9001 quality system certification and international accreditation in March
2006.  In addition, our Company passed the national GB/T 19001-2000
standard authentication. The Company’s pollution control exceeds the
national standard and received “green building material” certification in
2007.





The
Company has an abundant supply of high quality raw materials. The Company has
obtained a 30 year mining right for 87 million tons of limestone reserve, which
can supply two cement clinker production lines with a daily output of 2,500 tons
for 40 years.





Presently,
the Company is one of the largest cement producers and distributors in the north
Changjiang region of Anhui, with a 12% market share within a 100 mile radius of
its facility. The Company is the only producer of P.II52.5 cement (the highest
quality cement) in the north Changjiang region of Anhui and Jiangsu Provinces,
with 70% P.II52.5 cement market share within a 100 miles radius of its
facility. The Company’s main market is in Hefei, around 70% of our total
cement products are sold in the area. An additional 20-30% of total annual
production is sold in Hanshan county. The Company is also an important cement
clinker provider in the area after the second production line was put into
production in October, 2008.





The
Company’s net sales to customers for the three months ended November 30, 2008
and November 30, 2007, were $15,750,411 and $10,311,286,
respectively.





Anhui
Runji’s Plan of Operation




·
            We
      plan to raise adequate capital over the next five years for expansion and
      growth.·
            We
      have invested over USD$50 million to build up one cement production line
      with daily production of 2,500 tons and one cement clinker production line
      with daily production of 2,500 tons in 2008. The newly invested cement
      clinker production line was put into production in October
      2008.


·
            We
      plan to complete the investment of USD$10 million to establish a waste
      heat power generator system to convert waste heat into electricity in
      2009, which is expected to save about USD$4.6 million per year in
      electricity costs. After the completion of the generator system, we will
      significantly improve our margins and reduce reliance on outside power
      sources.


·
            We
      plan to construct a third production line within two years, which will
      have a daily cement clinker production capacity of 5,000 tons or 1.5
      million tons annually. We have submitted to the Anhui government an
      application for approval of the third production line. Upon
      completion, our total cement production capacity will reach 3.6 million
      tons per year, and cement clinker production will reach 3 million tons per
      year, controlling 30% of the market share within a 100 miles radius of our
      production facility.





RESULTS OF OPERATIONS FOR
THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007





The
following discussion should be read in conjunction with the financial statements
included in this report and is qualified in its entirety by the
foregoing.





FORWARD
LOOKING STATEMENTS





Certain
statements in this report, including statements of our expectations, intentions,
plans and beliefs, including those contained in or implied by "Management's
Discussion and Analysis" and the Notes to Financial Statements, are
"forward-looking statements", within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
subject to certain events, risks and uncertainties that may be outside our
control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”,
“will”, and similar expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made. We undertake no obligation to
update or revise any forward-looking statements. These forward-looking
statements include statements of management's plans and objectives for our
future operations and statements of future economic performance, information
regarding our expansion and possible results from expansion, our expected
growth, our capital budget and future capital requirements, the availability of
funds and our ability to meet future capital needs, the realization of our
deferred tax assets, and the assumptions described in this report underlying
such forward-looking statements. Actual results and developments could differ
materially from those expressed in or implied by such statements due to a number
of factors, including, without limitation, those described in the context of
such forward-looking statements.





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Revenues





We
generated all of our revenue by primarily selling cement products. Revenues
increased by $5,439,125 or 52.75% to $15,750,411 for the three months ended
November 30, 2008 from $10,311,286 for the same corresponding period in
2007.  The increase is primarily the result of increased sales volume
in general, and PO42.5 grade cement and cement clinker in particular; which is
attributed to the start of operation of the second production line during this
quarter. The increased retail price for cement products also contributed to the
increase in our revenue. The breakdown of our revenue is shown as
follows:





For
      the Three Month Period Ended30-Nov-08
                                                            
                                                            30-Nov-07
                                                            
                                                            DifferenceRevenue
                                                            
                                                            USD
                                                            
                                                            %
                                                            
                                                            USD
                                                            
                                                            %
                                                            
                                                            USD
                                                            
                                                            
                                                            %15,750,411
                                                            
                                                            100%
                                                            
                                                            10,311,286
                                                            
                                                            100%
                                                            
                                                            5,439,125PO
      42.5
                                                            
                                                            10,053,656
                                                            
                                                            64%
                                                            
                                                            7,996,325
                                                            
                                                            78%
                                                            
                                                            2,057,331
                                                            
                                                            
                                                            -14%PO
      32.5
                                                            
                                                            578,733
                                                            
                                                            4%
                                                            
                                                            196,456
                                                            
                                                            2%
                                                            
                                                            382,277
                                                            
                                                            
                                                            2%PC
      32.5
                                                            
                                                            922,440
                                                            
                                                            6%
                                                            
                                                            804,356
                                                            
                                                            8%
                                                            
                                                            118,084
                                                            
                                                            
                                                            -2%PII
      52.5
                                                            
                                                            856,336
                                                            
                                                            5%
                                                            
                                                            930,850
                                                            
                                                            9%
                                                            
                                                            (74,514
                                                            )
                                                            
                                                            -4%Clinker
                                                            
                                                            3,339,246
                                                            
                                                            21%
                                                            
                                                            383,299
                                                            
                                                            4%
                                                            
                                                            2,955,947
                                                            
                                                            
                                                            17%





Note: 1)
Comparing with the same period last year, the revenue of PO42.5 increased
by $2,057,331 to $10,053,656 for the three months ended November 30, 2008
from $7,996,325 for the same corresponding period in 2007; and
that  of cement clinker increased by $2,955,947 to $3,339,246 for the
three months ended November 30, 2008 from $383,299 for the same corresponding
period in 2007; 2) the percentage of revenue of cement clinker increased to 21%
for the three months ended November 30, 2008 from 4% for the same corresponding
period in 2007, following the second cement clinker production line that was put
into production.





Cost
of Goods Sold





Our cost
of goods sold for the three months ended November 30, 2008 was $13,697,507,
compared to $7,790,594 for the same corresponding period in 2007, an increase of
$5,906,913 or approximately 76%. This is attributed
to an increase in our sales volume and increase in the production
costs. The production costs increase is because the second production line
was not operating in full capacity in the month of September 2008.





Gross
Profit





Our gross
profit decreased by $467,788 or approximately 18.6% to $2,052,904 for the
three months ended November 30, 2008 from $2,520,692 for the same period in
2007. The decrease was primarily due to the stepping up process to full
production capacity in the early operating stage of the second production
line.





Operating
Expenses





Total
operating expenses for the three months ended November 30, 2008 was $483,503,
compared to $491,525 for the same period in 2007, a decrease of $8,022 or
approximately 1.6%. A reduction in general and administrative expenses
contributed to the decrease.





Interest
Expenses





Our
interest expense forthe three months ended
November 30, 2008 and November 30, 2007 was $20,756 and $3,694,
respectively.





Liquidity
and Capital Resources





Net cash
flows provided by (used in) operating activities for the three months ended
November 30, 2008 and November 30, 2007 were $3,627,841 and $(849,220),
respectively. This was primarily due to a decrease in advances to suppliers
and an increase in accounts payable and accrued liabilities.





Net cash
flows used in investing activities for the three months ended November 30, 2008
and November 30, 2007 were $(795,383) and $(154,088). This was due mainly
to increased expenditures for property, plant and equipment in connection with
the development of the second production line.





Net cash
flows provided by (used in) financing activities for the three months ended
November 30, 2008 and November 30, 2007 were $(2,849,421) and $1,465,012,
respectively. This was due mainly to repayment of related party
loans.





Overall,
we have funded most of our cash needs from inception through November 30, 2008
with operating activities and loans from related parties.





On
November 30, 2008, we had cash and cash equivalents of $392,490 on hand. We
anticipate raising funds through an equity or debt offering or with a strategic
partner in the coming year.





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CRITICAL
ACCOUNTING POLICIES





The
discussion and analysis of the Company’s financial condition presented in this
section are based upon the unaudited consolidated financial statements of China
Runji Cement Inc., which have been prepared in accordance with the generally
accepted accounting principles in the United States.  During the
preparation of the financial statements China Runji Cement Inc. is required to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities.  On an ongoing basis, China Runji Cement Inc. evaluates
its estimates and judgments, including those related to sales, returns, pricing
concessions, bad debts, inventories, investments, fixed assets, intangible
assets, income taxes and other contingencies. China Runji Cement Inc. bases its
estimates on historical experience and on various other assumptions that it
believes are reasonable under current conditions.  Actual results may
differ from these estimates under different assumptions or
conditions.





In
response to the SEC’s Release No. 33-8040, “Cautionary Advice Regarding
Disclosure About Critical Accounting Policy,” China Runji Cement Inc. identified
the most critical accounting principles upon which its financial status depends.
 China Runji Cement Inc. determined that those critical accounting
principles are related to the use of estimates, inventory valuation, revenue
recognition, income tax and impairment of intangibles and other long-lived
assets. China Runji Cement Inc. presents these accounting policies in the
relevant sections in this management’s discussion and analysis, including the
Recently Issued Accounting Pronouncements discussed below.





Revenue Recognition. China
Runji Cement Inc. recognizes sales when the revenue is realized or realizable,
and has been earned, in accordance with SEC Staff Accounting Bulletin No. 104,
“Revenue Recognition in Financial Statements”. China Runji Cement Inc.’ sales
are related to sales of product. Revenue for product sales is recognized as risk
and title to the product transfer to the customer, which usually occurs at the
time shipment is made. Substantially all of China Runji Cement Inc.’
products are sold FOB (“free on board”) shipping point. Title to the product
passes when the product is delivered to the freight carrier.





Sales
revenue represents the invoiced value of goods, net of a value-added tax (VAT).
 All of China Runji Cement Inc.’s products that are sold in the China are
subject to a Chinese value-added tax at a rate of 17% of the gross sales price
or at a rate approved by the Chinese local government.  This VAT may be
offset by VAT paid by China Runji Cement Inc. on raw materials and other
materials included in the cost of producing their finished product.





Accounts Receivable, Trade and
Allowance for Doubtful Accounts. China Runji Cement Inc.’ business
operations are conducted in the People's Republic of China. During the normal
course of business, China Runji Cement Inc. extends unsecured credit to its
customers.  Management reviews accounts receivable on a regular basis to
determine if the allowance for doubtful accounts is adequate.  An estimate
for doubtful accounts is recorded when collection of the full amount is no
longer probable.





Inventories. Inventories are
stated at the lower of cost or market using the weighted average method. China
Runji Cement Inc. reviews its inventory on a regular basis for possible obsolete
goods or to determine if any reserves are necessary for potential obsolescence.





Income Taxes. China Runji
Cement Inc. has adopted Statement of Financial Accounting Standards No. 109,
“Accounting for Income Taxes” (SFAS 109).  SFAS 109 requires the
recognition of deferred income tax liabilities and assets for the expected
future tax consequences of temporary differences between income tax basis and
financial reporting basis of assets and liabilities.  Provision for income
taxes consist of taxes currently due plus deferred taxes. Since China Runji
Cement Inc. had no operations within the United States there is no provision for
US income taxes and there are no deferred tax amounts at December 31, 2006 and
2005. The charge for taxation is based on the results for the year as adjusted
for items, which are non-assessable or disallowed.  It is calculated using
tax rates that have been enacted or substantively enacted by the balance sheet
date.





Deferred
tax is accounted for using the balance sheet liability method in respect of
temporary differences arising from differences between the carrying amount of
assets and liabilities in the financial statements and the corresponding tax
basis used in the computation of assessable tax profit.  In principle,
deferred tax liabilities are recognized for all taxable temporary differences,
and deferred tax assets are recognized to the extent that it is probably that
taxable profit will be available against which deductible temporary differences
can be utilized. Deferred tax is calculated at the tax rates that are expected
to apply to the period when the asset is realized or the liability is settled.
 Deferred tax is charged or credited in the income statement, except when
it related to items credited or charged directly to equity, in which case the
deferred tax is also dealt with in equity. Deferred tax assets and liabilities
are offset when they related to income taxes levied by the same taxation
authority and the Company intends to settle current tax assets and liabilities
on a net basis.





Recently
Issued Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value
Measurements, to provide guidance for using fair value to measure assets and
liabilities. SFAS No. 157 was to be effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years; however, in February 2008, the FASB issued FASB Staff
Position FAS 157–2, Effective Date of FASB Statement No. 157, which delayed the
effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis, for one year. We adopted SFAS No. 157
on September1, 2008 for financial assets and financial liabilities and currently
we do not have any financial assets and financial liabilities. As a result, the
adoption does not have any impact on our financial statements. We will adopt
SFAS No. 157 on September 1, 2009 for our nonfinancial assets and nonfinancial
liabilities, and we have not yet determined the impact, if any, on our
consolidated financial statements.





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In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115. SFAS No. 159 permits entities to choose to measure many financial
instruments and certain other items at fair value that are not currently
required to be measured at fair value. Unrealized gains and losses on items for
which the fair value option has been selected are reported in earnings. SFAS No.
159 also establishes presentation and disclosure requirements designed to
facilitate comparisons between entities that choose different measurement
attributes for similar types of assets and liabilities. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. We have elected
not to apply the provisions of SFAS No. 159..





On
December 4, 2007, the FASB issued SFAS No.141R,Business Combinations (SFAS
No. 141R).  SFAS No. 141R requires the acquiring entity in a business
combination to recognize all the assets acquired and liabilities assumed,
establishes the acquisition date fair value as the measurement objective for all
assets acquired and liabilities assumed, and requires the acquirer to expand
disclosures about the nature and financial effect of the business
combination.  SFAS No. 141R is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008.  We have not
yet determined the impact of the adoption of SFAS No. 141R on our consolidated
financial statements and footnote disclosures.





On
December 4, 2007, the FASB issued SFAS No. 160,Noncontrolling interest in
Consolidated Financial Statements (SFAS No. 160).  SFAS No. 160
requires all entities to report noncontrolling (minority) interests in
subsidiaries as equity in the consolidated financial statements.  The
statement establishes a single method of accounting for changes in a parent’s
ownership interest in a subsidiary that do not result in deconsolidation and
expands disclosures in the consolidated financial statements.  SFAS
No. 160 is effective for fiscal years beginning after December 15, 2008 and
interim periods within those fiscal years.  We have not yet determined
the impact of the adoption of SFAS No. 160 on our consolidated financial
statements and footnote disclosures





ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





In the
normal course of business, operations of the Company are exposed to fluctuations
in interest rates. These fluctuations can vary the costs of financing and
investing yields. In view of the financing arrangements during the first three
months of 2009, the Company is not currently subject to significant market
risk.





ITEM
4(A) - CONTROLS AND PROCEDURES





The Chief
Executive Officer and Chief Financial Officer (the principal executive officer
and principal financial officer, respectively) of the Company have concluded,
based on their evaluation as of November 30, 2008, that the design and operation
of the Company's "disclosure controls and procedures" (as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange
Act")) are effective to ensure that information required to be disclosed in the
reports filed or submitted by the Company under the Exchange Act is accumulated,
recorded, processed, summarized and reported to the management, including the
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding whether or not disclosure is required.





During
the quarter ended November 30, 2008, there were no changes in the internal
controls of the Company over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act) that have materially affected, or are reasonably likely
to materially affect, the internal controls of the Company over financial
reporting.





ITEM
4(A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING





(a)           The
Company’s management is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Securities Exchange Act of 1934, as amended). Management conducted an
evaluation of the effectiveness of the Company’s internal control over financial
reporting based on the criteria set forth in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on this evaluation, management has concluded that the
Company’s internal control over financial reporting was effective as of November
30, 2008.





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





(c)           There
were no changes in the Company's internal controls over financial reporting,
known to the chief executive officer or the chief financial officer that
occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the Company's internal control
over financial reporting.





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PART
II - OTHER INFORMATION





ITEM
1 - LEGAL PROCEEDINGS





None.





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





None.





ITEM
3 - DEFAULTS UPON SENIOR SECURITIES





None.





ITEM
4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





ITEM
5 - OTHER INFORMATION





None.





ITEM
6 – EXHIBITS




31.1
            Certification
      of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule
      15d-14(a) of the Securities Exchange Act of 193431.2
            Certification
      of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule
      15d-14(a) of the Securities Exchange Act of 193432.1
            Certification
      of the Chief Executive Officer Pursuant to 18 U.S.C. SS. 1350 Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  200232.2
            Certification
      of the Chief Financial Officer Pursuant to 18 U.S.C. SS. 1350 Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002








SIGNATURES





Pursuant
to the requirements of the Exchange Act, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.








CHINA
      RUNJI CEMENT INC.Date:  January
      14, 2009
                By:
                /s/ Shouren
      ZhaoShouren
      Zhao
                  Chairman
      and Chief Executive
Officer





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