UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K





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





For the fiscal year ended August 31, 2010





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 of Organization)

(I.R.S. Employer Identification No.)Xian Zhong Town, Han Shan County

Chao Hu City, Anhui Province

People’s Republic of China  23181

86-565-4219871(Address of principal executive offices) (ZIP Code)

(Registrant’s telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section12 (g) of the Act: Common Stock, $0.0001 par value





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


Yes o      No x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.


Yes x





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant as 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.


Yes x





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated filer o      Accelerated filer o      Non-accelerated filer o      Smaller reporting companyx





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





Aggregate market value of the voting stock of the registrant held by non-affiliates of the registrant as of February 26, 2010 (computed by reference to the closing price of $0.46 per share as of the last business day of the most recently completed second fiscal quarter): $3,818,719





Number of common shares outstanding at December 14, 2010: 78,832,064










TABLE OF CONTENTS





Page(s)PART IItem 1.
Business
3Item 1A.
Risk Factors
9Item 1B.
Unresolved Staff Comments
15Item 2.
Properties
15Item 3.
Legal Proceedings
15PART IIItem 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
15Item 6.
Selected Financial Data
16Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
16Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
18Item 8.
Financial Statements and Supplementary Data
20 - 36Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
37Item 9A.
Controls and Procedures
37Item 9B.
Other Information
37PART IIIItem 10.
Directors, Executive Officers and Corporate Governance
37Item 11.
Executive Compensation
39Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
40Item 13.
Certain Relationships, Related Transactions and Director Independence
41Item 14.
Principal Accounting Fees and Services
41PART IVItem 15.
Exhibits, Financial Statement Schedules
42Signatures
43





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PART I





Item 1.                      Business





Forward-looking Statements





This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.





Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable laws, including the securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results.





As used in this annual report, the terms "we", "us", "our", “the Company”, and "China Runji" mean China Runji Cement Inc. and all of our subsidiaries, unless otherwise indicated.





All dollar amounts refer to US dollars unless otherwise indicated.





Overview





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 many 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.





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.




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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.





Description of Business





Anhui Province Runji Cement Co., Limited (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. On January 8, 2010, Anhui Province Runji Cement Co., Limited increased its registered capital to 85 million RMB.





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.  Although the Chinese government has mandated the elimination of 250 million tons of outdated cement production capacity by 2010, only 60% of the total output in the region is currently 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 10% 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% market share within a 100 miles radius of its facility. Annual production capacity of the Company is two million tons cement and cement clinker. The Company’s main market for cement is in Hefei (Anhui Province), with total sales of 750 thousand tons, representing 75% of our total annual cement production and an additional 25% is sold in Chaohu and its surrounding areas, Moreover, the Company’s main cement clinker market is in Chaohu with total sales of 800 thousand tons in the area, representing 80% of our total annual cement clinker production, and an additional 20% is sold in Hefei.





Organizational Structure





Our current organizational structure is summarized by the illustration below:





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Our Business Plan





§
We plan to raise adequate capital over the next five years for expansion and growth.§
We 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. The newly invested cement clinker production line was put into production in October 2008.§
We invested USD$10 million to establish a waste heat power generator system to convert waste heat into electricity, which was put into operation on October 25, 2009, in order to realize significant savings on electricity costs, to improve our margins and reduce reliance on outside power sources. From October 25, 2009 to August 31, 2010, the waste heat power generator system has generated electricity of 39.6 million kilowatt-hours and saved us USD$3.45 million in electricity costs.





Growth Strategy





The Company’s vision is to be the leading producer of cement and cement products in An Hui Province as well as surrounding provinces and cities. Management intends to grow the Company’s business by pursuing the following strategies:





§
Grow capacity and capabilities in line with market demand increases§
Enhance leading-edge technology through continuous innovation, research and study§
Continue to improve operational efficiencies§
Build a strong market reputation to foster and capture future growth in China





Sales by Product Category





The Company distributes a number of products, including the types of cement listed below. The sales of these types of cement for the last three years in U.S. Dollars are as follows:




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2008


2009


2010P.II52.5


2,339,838



3,298,498



4,059,255P.O42.5


30,232,786



25,071,088



16,501,387P.O32.5


1,746,419



1,207,460



923,200P.C32.5


3,186,918



1,554,558



668,252Cement Clinker


2,959,771



24,506,290



27,911,895





A brief explanation of each type of cement and its uses follows:





P.II52.5 – high strength and good adaptability. Mainly used on large projects where superior intensity is needed, such as large span bridges and beams.





P.O42.5 – high strength and hardens quickly. Mainly used in normal concrete projects, such as high-rise buildings, roadways, viaducts and airplane runways.





P.O32.5 – has low heat of hydration and good durability. Mainly used in commercial and industrial buildings and low intensity concrete projects.





P.C32.5 –has low heat of hydration and high mineral content. Mainly used in commercial and industrial buildings and low intensity concrete projects.





The Market for Cement





The World Market for Cement





Cement production is a global industry. Estimates indicate that global cement production is increasing approximately 3% every year. Worldwide cement production was approximately 2.9 billion tons in 2009, with China accounting for up to 55% of that total.





According to cement sales figures, China is currently the largest producer of cement with India and America being the second and third largest producers. Since the huge demand for cement in America cannot be totally met by cement produced domestically, the U.S. also imports cement from Canada, China, Thailand and other countries. This trend is expected to continue for the next few years.





The China Market for Cement





There are over 100 cement companies in China with annual production capacity of two million tons or more. China’s total cement production was 1.65 billion tons in 2009, and is expected to reach 1.8 billion in 2010.





According to an industry study done by The Freedonia Group, and in their “Cement in China 2012” report published in January 2009, demand for cement in China will rise 6% annually through 2012, driven by rising construction spending. Nonresidential building construction will stay the largest end use, while non-building construction grows the fastest. Contractors will remain the largest market while ready-mix concrete grows most rapidly.,





China’s fixed asset investment increased 30.1% in 2009, and is expected to continue growing at 20%-25% annually in 2010 according to China’s “11th Five Year” plan (2006 – 2010). According to a 2009 Economic Review by the Consulate General of Switzerland Shanghai (the “Review”), since the end of 2008, the Chinese government has implemented a national stimulus package worth RMB 4 trillion (US$ 588 billion), a large proportion of which has been invested in the construction of infrastructure and boosting of domestic consumption.  The Review further states that banks lent out RMB 9.6 trillion in loansthroughout 2009, which was almost 30% of the total GDP.  A considerable portion of bank loans went into property investment, transportation and infrastructural facilities with high demand for cement.





The National Development and Reform Commission NDRC required the elimination of 280 million tons of old technique cement production capacities (wet production technique) during the “11th Five Year” period. Accordingly, analysts anticipate a 25% - 35% cement price hike during the period of 2006 to 2010, driven by an aggressive increase in fixed asset investment and elimination of old capacities.  It is expected that industry consolidation will accelerate and market shares and industry profits will be further concentrated to strong companies.





Restrictions on cement production in developed countries caused a huge export demand in China, with increasing prices and profits in the international market.




6
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The An Hui Province Market for Cement





Anhui is located in the Yangtze River Delta region, where the construction industry is the most developed and demand for cement is most concentrated. Anhui is rich in natural resources such as limestone mineral reserves and coal reserves, which are important in cement production. Also, the Changjiang River is located in Anhui Province, and its waters are very essential to the production of cement.





The Yangtze River Delta Region still plays an important role in the whole country. The entire GDP of this region accounts for 20% of the national sum, with only 2% of China’s land area and 11% of the Chinese population.





In 2009, infrastructure and manufacture investment contributed over 30% in Anhui’s GDP growth. Anhui Provincebenefited from the national stimulus package in infrastructure construction and presented a steady growth rate of 12.9%, surpassing the national average. As a result, there is a strong demand for cement. There are many large projects in the basic facilities area and in real estate development. Both require a significant amount of cement.





Anhui Province produced of 66 million tons of cement and 98 million tons of cement clinker of in 2009, an increase of 10% and 12% over the previous year, respectively, and ranked ninth in cement production in China. In Anhui Province, there are over 170 cement businesses, with total annual output of 66 million tons. However, 85% of the cement businesses lag behind Anhui Runji in terms of output and quality. The businesses that use advanced techniques in cement production are in demand. By the end of July 2010, about 29 million tons of old capacity has been eliminated in Anhui, adding additional growth potential for dry production capacity.





Huge infrastructure spending in Anhui has boosted cement demand, e.g. Hefei Xinqiao International Airport – 4 billion RMB; 675 hectare of area, expected completion by 2012; major highway expansion - 3 billion RMB to expand 60 miles of highway from four lanes to six lanes, expected completion by 2010; Anhui plans to invest 83 billion RMB in transportation and infrastructure construction during the “11th Five Year” period (2006 - 2010).





Our Suppliers





We rely on third party suppliers of the raw materials to manufacture our products.  The main components of our products include electricity, coal, coal ash, iron powder, and limestone.  Our primary suppliers of each are:





Raw Material

SuppliersElectricity

Anhui Electricity Hanshan Power-Supply Co., Ltd.Coal

Wuhu New Energy Commercial & Trading Co., Ltd.Coal

JiangsuYutai Trading Co., Ltd.Coal ash

Caohu Huaxiang Building Material Co., Ltd.Iron Powder

Anhui Hongde Trading Co., Ltd





We believe we are not dependent on any of these suppliers and will be able to replace them, if necessary, without material difficulties.





Competition





Our competition in An Hui Province uses antiquated technology and is not competitive with that of Anhui Runji.





Our Competitive Advantage





Limestone is the most basic ingredient in cement production. We have a huge limestone reserve, which is of high grade. Our reserves are approximately 87 million tons of limestone, which can supply two cement production lines with daily output of 2,500 tons for 40 years. Our limestone reserve is located just 300-500 meters from the production site, significantly reducing transportation cost. All of this is adequate for our long term supply. In addition, the limestone contains over 53% calcium oxide, which enables production of superior quality, such as the high grade P.II 52.5 cement, which is superior to that of other companies.





Anhui Province has a very favorable climate for investment such as in the cement industry.  Local governments offer tax incentives on resource usage, which favors industries such as cement.





We have a favorable location that is less than 100 kilometers away from the provincial capitals of Hefei and Nanjing.  Other cities such as Wuhu, Ma’anshan, and Chaohu are between 20 – 70 kilometers away and also provide a good marketplace.  Our close proximity to the Changjiang River affords us low cost shipping to many locations.





Our main competitors within the Hefei market are Anhui Chaodong Cement Stock Co., Ltd, Anhui Chaohu Tiepeng Cement Factory and Lujiang Dajiang Cement Co., Ltd.  Additionally, there are 10 cement grinding companies with an annual production of over one million tons who compete with us.




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We utilize the advanced modern dry cement production process, which enables high quality production, consumes less energy and is more environmental friendly compared with the traditional wet production process. The production equipment is partially imported from Germany. We also use Siemens DCS (Distributed Computer Control System) auto control system for measuring ingredients and controlling production flow. Our advanced cement techniques lead to low costs and consistent high quality. Our products have a 100% passing rate.





The cement industry is a polluting and heavy energy-consumption industry. The old cement production technique (wet production) consumes two times more energy, emits two times more waste gas and sulfur dioxide and releases three times more dust than the new cement dry production. We have installed highly efficient dust collectors, noise reducing equipment and waste water treatment equipment that complies with the most rigorous Chinese environmental regulations. We are able to constrain emission at 30mg per cubic meter, much lower than the national average of 50mg per cubic meter.





Competitive Advantages and Strategy





Cement





We believe that our product formulations, price points, lower costs, relationships, infrastructure, proven quality, and reputation represent substantial competitive advantages. We are currently able to maintain a substantially lower cost structure than competitors based in An Hui Province and neighboring locations of China.  Furthermore, we believe our competitive advantage in China is protected by significant knowledge of government regulations, business practices, and strong relationships. We are the only producer of PII52.5 cement (the highest quality cement) in the north Changjiang region of Anhui and Jiangsu Provinces, with a 70% market share within a 100 mile radius of its facility.





In comparison to Chinese competitors, we believe we possess superior technological expertise, products, marketing knowledge, and governmental relationships.





Intellectual Property





Our Company logo “Runji” was registered May 21, 2007 in Xianzong town, Hanshan County, Anhui Province.





Customers





For the twelve month period from September 1, 2009 through August 31, 2010, we achieved revenues of $50,063,989. That revenue was in part generated from the following representative customers:





Name of Customer
Products Sold

Sales for the Period

by Customer

(USD$)


% of Sales

for the PeriodHuainan Qiankun Resources Co., Ltd.
PO42.5, PII52.5


9,260,188



18.50
%Anhui Chaohu Qiangsheng Building Material Co., Ltd
PO42.5, PII52.5


5,863,219



11.71
%Chaohu Hengyuan Building Material Co., Ltd.
PO42.5, PII52.5


4,747,875



9.48
%Hefei Tianlu Concret Co., Ltd.
PO42.5, PII52.5


3,506,867



7.01
%Anhui Julong New Building Material Co., Ltd
PO42.5, PII52.5


3,386,638



6.76
%





Our major construction project is the Heifei Binghu Century City commercial apartment project, which will use approximately 200,000 tons of our cement. Another important project is Anhui Economic Technological Development Area Jingdongfang factory project, which will use 15,000 tons of our cement.





Employees





Anhui Runji has a staff of approximately 324 employees in the following ten departments:  Manufacture Control Department, Raw Material Plant, Burning Plant, Ready Product Plant, Machine Repairing Plant, Electronic Department, Laboratory, Financial Department, Supply and Marketing Department, and the General Administrative Offices.  Included in the 324 employees are 33 senior managers, one general manager, three deputy general managers, one chief financial officer and 286 workers.  Anhui Runji believes it is in compliance with local prevailing wage, contractor licensing and insurance regulations, and has good relations with its employees.




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Government Regulations





Our business is regulated in various ways as follows:





1.
Cement Industry Development Policy enacted by the National Development and Reform Commission on October 17, 2006.





2.
Notification regarding rate of tax refund enacted by the Ministry of Finance, National Development and Reform Commission, Department of Commerce, General Administration of Customs and State Administration of Taxation on September 14, 2006.





3.
National Resource Integration Management Methodology enacted by the National Development and Reform Commission, Ministry of Finance and State Administration of Taxation on September 7, 2006.





4.
Cement industry special legislation enacted by the National Development and Reform Commission on October 17, 2006.





5.
Several policy opinions for the cement industry unanimously enacted by the National Development and Reform Commission, Ministry of Finance, Ministry of Land and Resources, Ministry of Construction, Department of Commerce, People's Bank of China, General Administration of Quality Supervision, and National and State Environmental Protection Administration on April 13, 2006.





6.
Notification regarding energy-saving and pollution emission comprehensive working plan enacted by the China National Council in June 3, 2007.





7.
Anhui Province Bulk Cement “Eleventh-Five” Development Plan enacted by Anhui Provincial Government in July 9, 2007.





8.
Anhui Province Industrial Economy “Eleventh-Five” Development Plan enacted by Anhui Provincial Government in August 13, 2007.





9.
Standardization Implement Policy enacted by the National Development and Reform Commission on January 23, 2008.





10.
Anhui Province Bulk Cement and Premix Concrete Development Policy (Protocol) published by Anhui Provincial Government in October 27, 2008 and under asking for public comments.





11.
Document to Promote Corporate Merger and Restructuring issued by China’s State Council on September 6, 2010.





Item 1A.                     Risk Factors





Investing in the Company’s common stock involves a high degree of risk. Prospective investors should carefully consider the risks described below, before purchasing shares of the Company’s common stock. There are numerous and varied risks, known and unknown, that may prevent the Company from achieving its goals. The risks described below are not the only ones the Company will face. If any of these risks actually occurs, the Company’s business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of the Company’s common stock could decline and investors in the Company’s common stock could lose all or part of their investment. The risks and uncertainties described below are not exclusive and are intended to reflect the material risks that are specific to the Company, material risks related to the Company’s industry and material risks related to companies that undertake a public offering or seek to maintain a class of securities that is registered or traded on any exchange or over-the-counter market.





The Company’s future revenues will be derived from the production and distribution of cement products and operating a cement business. There are numerous risks, known and unknown, that may prevent the Company from achieving its goals including, but not limited to, those described below. Additional unknown risks may also impair the Company’s financial performance and business operations. The Company’s business, financial condition and/or results of operations may be materially adversely affected by the nature and impact of these risks. In such case, the market value of the Company’s securities could be detrimentally affected, and investors may lose part or all of their investment. Please refer to the information contained under “Business” in this report for further details pertaining to the Company’s business and financial condition.





Risks Related To Our Company





Unanticipated problems in expanding the Company’s cement business may harm the Company’s business and viability.





The Company’s future cash flow depends on its ability to timely expand its cement business. If the Company’s operations are disrupted and/or the economic integrity of its distribution operation is threatened for unexpected reasons (including, but not limited to, technical difficulties, poor weather conditions, and business interruptions due to terrorism or otherwise), the Company’s business may experience a substantial setback.  Moreover, the occurrence of significant unforeseen conditions or events may require the Company to reexamine its business model. Any change to the Company’s business model may adversely affect its business.




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If the Company does not obtain financing when needed, its business will fail.





As of August 31, 2010, the Company had cash and cash equivalents on hand in the amount of approximately $683,545. The Company anticipates that it will need approximately $30 million to implement its business plan and meet its capital expenditure needs over the next three years. The Company currently does not have any arrangements for additional financing and it may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors, including the market prices for the Company’s products, production costs, availability of credit, prevailing interest rates and the market prices for the Company’s common stock.





The Company’s ability to operate at a profit is partially dependent on market prices of cement.  If cement prices drop too far, the Company will be unable to maintain profitability.





The Company’s results of operations and financial condition will be affected by the selling prices for cement. Prices are subject to and determined by market forces over which the Company has no control. The Company’s revenues will be heavily dependent on the market prices for cement in many markets in China.





The success of the Company’s business depends upon the continuing contributions of its Chief Executive Officer and other key personnel and its ability to attract other employees to expand the business, whereas the loss of key individuals or the Company’s inability to attract new employees could have a negative impact on the Company’s business.





The Company relies heavily on the services of Mr. Shouren Zhao, the President and Chief Executive Officer, and the services of Xiangfei Zeng, the Chief Financial Officer, as well as several other senior management personnel. Loss of the services of any of such individuals would adversely impact other Company’s operations. In addition, the Company believes that its technical personnel represent a significant asset and provide the Company with a competitive advantage over many of the Company’s competitors. The Company believes that its future success will depend upon its ability to retain these key employees and its ability to attract and retain other skilled financial, engineering, technical and managerial personnel. In addition, as a result of a failure to retain qualified personnel the Company may be unable to meet its responsibilities as a public reporting company under the rules and regulations of the SEC. None of the Company’s key personnel are party to any employment agreements. The Company does not currently maintain any “key man” life insurance with respect to any of such individuals.





We experienced low productivity and high production costs in the past when we were delayed in our production of cement, which caused us to experience low profitability.





Our past suggests that delays in producing cement can lead to low productivity and high production costs, which result in low profitability.  If we do not implement growth with an organized and optimal expansion plan, we could continue to experience low profitability.





We have been forced to cease production for periods of time in order to install, maintain and adjust equipment, which resulted in high production costs and low profitability.





In the past, we have had to cease production for periods of time in order to install, maintain and adjust equipment, which resulted in high production costs and low profitability.  In the future, we will be challenged to keep our equipment in working order so that we do not suffer a decrease in profitability.





Future sales of the Company’s equity securities will dilute existing stockholders.





To fully execute its long-term business plan, the Company may need to raise additional equity capital in the future.  Such additional equity capital, when and if it is raised, would result in dilution to the Company’s existing stockholders.





Risks Related to the Cement Business





The economics of the cement industry, which require deliveries within a limited geographic radius of the plant, make deliveries outside of a localized area difficult and unprofitable.





The economics of the cement industry requires delivery of cement within a narrow geographic radius of the plant for the delivered price of cement to be affordable.  Unless a company is willing to build additional plants closer to other markets, its potential to sell to projects within those markets and earn a profit is limited.  Expansion opportunities are costly and limited, as is growth of our business.




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Price competition in the cement market in China is intense, particularly in the production of low standard grade cement, all of which makes it difficult for a producer of high standard grade cement such as our Company to compete on quality alone.


Low grade producers of cement in China compete fiercely on price grounds alone.  We are a high quality manufacturer of a variety of cements and we cannot always compete on price with the low quality manufacturer.  The tendency of low quality manufacturers to under price the competition makes it difficult for us to bid and win certain jobs.





We are reliant on sales to the construction industry, which is the largest consumer of our cement.  The construction industry has experienced swings in building patterns that are tied to the macroeconomic cycles in the Chinese economy.  We are at the mercy of these swings in the economy as well.





Cement is used in the construction industry, most notably in private and government building projects.  Such building projects depend on the state of the economy, which in recent years has fluctuated.  Our revenues fluctuate accordingly and it is difficult to manage our business profitably under these conditions.





We are subject to regulation in the environmental area because of the dust that is discharged in the production and use of cement. The National and State Environmental Protection Administration imposes regulation and charges on cement manufacturers, which is an expensive cost to our business.





Environmental regulation, primarily in the area of dust creation in the manufacture of cement imposes significant costs on our operations.  We also spend considerable funds on abatement of environmental issues and in research and development.  The regulatory authorities can be arbitrary in their decisions and make the manufacture of cement a more costly and uncertain business.





Risks Related to Doing Business in the PRC





The Company faces the risk that changes in the policies of the PRC government could have a significant impact upon the business the Company may be able to conduct in the PRC and the profitability of such business.





The PRC’s economy is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans adopted by the government that set national economic development goals. Policies of the PRC government can have significant effects on the economic conditions of the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. Under this direction, the Company believes that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While the Company believes that this trend will continue, there can be no assurance that this will be the case. A change in policies by the PRC government could adversely affect the Company’s interests by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Although the PRC government has been pursuing economic reform policies for more than two decades, there is no assurance that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC's political, economic and social life.





The PRC laws and regulations governing the Company’s current business operations are sometimes vague and uncertain. Any changes in such PRC laws and regulations may have a material and adverse effect on the Company’s business.





There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including but not limited to the laws and regulations governing the Company’s business, or the enforcement and performance of the Company’s arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. The Company and any future subsidiaries are considered foreign persons or foreign funded enterprises under PRC laws, and as a result, the Company is required to comply with PRC laws and regulations. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. The Company cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on the Company’s businesses.





A slowdown or other adverse developments in the PRC economy may materially and adversely affect the Company’s customers, demand for the Company’s products and the Company’s business.





All of the Company’s operations are conducted in the PRC and all of its revenue is generated from sales in the PRC. Although the PRC economy has grown significantly in recent years, the Company cannot assure investors that such growth will continue. A slowdown in overall economic growth, an economic downturn or recession or other adverse economic developments in the PRC could materially reduce the demand for our products and materially and adversely affect the Company’s business.




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Inflation in the PRC could negatively affect our profitability and growth.





While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for the Company’s products rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may have an adverse effect on profitability. In order to control inflation in the past, the PRC government has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. Such an austere policy can lead to a slowing of economic growth. In October 2004, the People’s Bank of China, the PRC’s central bank, raised interest rates for the first time in nearly a decade and indicated in a statement that the measure was prompted by inflationary concerns in the Chinese economy. Repeated rises in interest rates by the central bank would likely slow economic activity in China which could, in turn, materially increase the Company’s costs and also reduce demand for the Company’s products.





Governmental control of currency conversion may affect the value of an investment in the Company.





The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The Company receives all of its revenues in Renminbi, which is currently not a freely convertible currency. Shortages in the availability of foreign currency may restrict the Company’s ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency dominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.





The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents the Company from obtaining sufficient foreign currency to satisfy its currency demands, the Company may not be able to pay certain of its expenses as they come due.





The fluctuation of the Renminbi may materially and adversely affect investments in the Company.





The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. As the Company relies principally on revenues earned in the PRC, any significant revaluation of the Renminbi may materially and adversely affect the Company’s cash flows, revenues and financial condition. For example, to the extent that the Company needs to convert U.S. dollars it receives from an offering of its securities into Renminbi for the Company’s operations, appreciation of the Renminbi against the U.S. dollar could have a material adverse effect on the Company’s business, financial condition and results of operations. Conversely, if the Company decides to convert its Renminbi into U.S. dollars for the purpose of making payments for dividends on its common stock or for other business purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of the Renminbi that the Company converts would be reduced. In addition, the depreciation of significant U.S. dollar denominated assets could result in a charge to the Company’s income statement and a reduction in the value of these assets.





On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an approximately 3.2% appreciation of the Renminbi against the U.S. dollar as of May 15, 2006. While the international reaction to the Renminbi revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the Renminbi against the U.S. dollar.





Because the Company’s principal assets are located outside of the United States and all of the Company’s directors and officers reside outside of the United States, it may be difficult for investors to enforce their rights based on U.S. federal securities laws against the Company and the Company’s officers and directors in the U.S. or to enforce U.S. court judgment against the Company or them in the PRC.





All of the Company’s directors and officers reside outside of the United States. In addition, Anhui Runji is located in the PRC and substantially all of its assets are located outside of the United States; it may therefore be difficult or impossible for investors in the United States to enforce their legal rights based on the civil liability provisions of the U.S. federal securities laws against the Company in the courts of either the U.S. or the PRC and, even if civil judgments are obtained in U.S. courts, to enforce such judgments in PRC courts. Further, it is unclear if extradition treaties now in effect between the United States and the PRC would permit effective enforcement against the Company or its officers and directors of criminal penalties, under the U.S. federal securities laws or otherwise.




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Risks Relating to the Company’s Share Exchange with Anhui Runji





The Company’s Chairman and President, Shouren Zhao, beneficially owns 51.6% of the Company’s outstanding common stock, which gives him control over certain major decisions on which the Company’s stockholders may vote, which may discourage an acquisition of the Company.





As a result of the Share Exchange, most of management of the Company do not beneficially own any of the Company’s outstanding common stock at this point in time, and one of the Company’s officers and directors beneficially owns 51.6% of the Company’s outstanding shares. The interests of this director may differ from the interests of other stockholders. As a result, this officer and director will have the right and ability to control virtually all corporate actions requiring stockholder approval, irrespective of how the Company’s other stockholders may vote, including the following actions:





§
Electing or defeating the election of directors;§
Amending or preventing amendment of the Company’s Certificate of Incorporation or By-laws;§
Effecting or preventing a merger, sale of assets or other corporate transaction; and§
Controlling the outcome of any other matter submitted to the stockholders for vote.





The Company’s stock ownership profile may discourage a potential acquirer from seeking to acquire shares of the Company’s common stock or otherwise attempting to obtain control of the Company, which in turn could reduce the Company’s stock price or prevent the Company’s stockholders from realizing a premium over the Company’s stock price.





As a result of the Share Exchange, Anhui Runji has become an indirect wholly-owned subsidiary of a company that is subject to the reporting requirements of U.S. federal securities laws, which can be expensive.





As a result of the Share Exchange, Anhui Runji has become an indirect wholly-owned subsidiary of a company that is a public reporting company and, accordingly, is subject to the information and reporting requirements of the Exchange Act and other federal securities laws, including compliance with the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC (including reporting of the Share Exchange) and furnishing audited reports to stockholders will cause the Company’s expenses to be higher than they would be if Anhui Runji had remained privately-held and did not consummate the Share Exchange.





In addition, it may be time consuming, difficult and costly for the Company to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. The Company may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures. If the Company is unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, the Company may not be able to obtain the independent accountant certifications required by the Sarbanes-Oxley Act.





Public company compliance may make it more difficult to attract and retain officers and directors.





The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. As a public entity, the Company expects these new rules and regulations to increase compliance costs and to make certain activities more time consuming and costly. As a public entity, the Company also expects that these new rules and regulations may make it more difficult and expensive for the Company to obtain director and officer liability insurance in the future and it may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for the Company to attract and retain qualified persons to serve as directors or as executive officers.





Because Anhui Runji became public by means of a share exchange, the Company may not be able to attract the attention of major brokerage firms.





There may be risks associated with Anhui Runji’s becoming public through a share exchange. Specifically, securities analysts of major brokerage firms may not provide coverage of the Company since there is no incentive to brokerage firms to recommend the purchase of the company’s common stock. No assurance can be given that brokerage firms will, in the future, want to conduct any secondary offerings on behalf of the company.





Risks Relating to the Common Stock





The Company’s stock price may be volatile.





The market price of the Company’s common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond the Company’s control, including the following:




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§
Additions or departures of key personnel;§
Limited “public float” following the Share Exchange, in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for the common stock;§
Sales of the common stock§
The Company’s ability to execute its business plan;§
Operating results that fall below expectations;§
Loss of any strategic relationship;§
Industry developments;§
Economic and other external factors; and§
Period-to-period fluctuations in the Company’s financial results.





In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the Company’s common stock.





There is currently no liquid trading market for the Company’s common stock and the Company cannot ensure that one will ever develop or be sustained.





There is currently no liquid trading market for the Company’s common stock. The Company cannot predict how liquid the market for the Company’s common stock might become. The Company’s common stock is currently approved for quotation on the OTC Bulletin Board trading under the symbol CRJI. The Company cannot ensure that it will be able to satisfy the initial listing standards on a higher exchange, or that its common stock will be accepted for listing on any such exchange. Should the Company fail to satisfy the initial listing standards of such exchanges, or its common stock be otherwise rejected for listing and remain on the OTC Bulletin Board or be suspended from the OTC Bulletin Board, the trading price of the Company’s common stock could suffer, the trading market for the Company’s common stock may be less liquid and the Company’s common stock price may be subject to increased volatility.





The Company’s common stock may be deemed a “penny stock”, which would make it more difficult for investors to sell their shares.





The Company’s common stock is subject to the “penny stock” rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If the Company remains subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for the Company’s securities. If the Company’s securities are subject to the penny stock rules, investors will find it more difficult to dispose of the Company’s securities.





Furthermore, for companies whose securities are quoted on the OTC Bulletin Board, it is more difficult (1) to obtain accurate quotations, (2) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies, and (3) to obtain needed capital.





Offers or availability for sale of a substantial number of shares of the Company’s common stock may cause the price of the Company’s common stock to decline.





If the Company’s stockholders sell substantial amounts of common stock in the public market, or upon the expiration of any statutory holding period, under Rule 144, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of the Company’s common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult the Company’s ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that the Company deems reasonable or appropriate. Additional shares of common stock will be freely tradable upon the earlier of: (i) effectiveness of the registration statement the Company is required to file; and (ii) the date on which such shares may be sold without registration pursuant to Rule 144 under the Securities Act.





Provisions of the Company’s Certificate of Incorporation and Delaware law could deter a change of control, which could discourage or delay offers to acquire the Company.





Provisions of the Company’s Certificate of Incorporation and Delaware law may make it more difficult for someone to acquire control of the Company or for the Company’s stockholders to remove existing management, and might discourage a third party from offering to acquire the Company, even if a change in control or in management would be beneficial to stockholders. For example, the Company’s Certificate of Incorporation allows the Company to issue shares of preferred stock without any vote or further action by stockholders.




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Volatility in the Company’s common stock price may subject the Company to securities litigation.





The market for the Company’s common stock is characterized by significant price volatility when compared to seasoned issuers, and the Company expects that its share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. The Company may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.





The elimination of monetary liability against the Company’s directors, officers and employees under the Company’s Articles of Incorporation and Delaware  law, and the existence of indemnification rights to the Company’s directors, officers and employees may result in substantial expenditures by the Company and may discourage lawsuits against the Company’s directors, officers and employees.





The Company’s Certificate of Incorporation contains a provision that provides for indemnification of directors and officers against any and all expenses, including amounts paid upon judgments, counsel fees and amounts paid in settlement by any such person in any proceeding that they are made a party to by reason of being or having been directors or officers of the Company, except in relation to matters as to which any such director or officer shall be adjudged to be liable for his own negligence or misconduct in the performance of his duties.  Such indemnification shall be in addition to any other rights to which those indemnified may be entitled under any law, by law, agreement, vote of shareholder or otherwise.  The Company may also have contractual indemnification obligations under its employment agreements with its executive officers. The foregoing indemnification obligations could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which the Company may be unable to recoup. These provisions and resultant costs may also discourage the Company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by the Company’s stockholders against the Company’s directors and officers even though such actions, if successful, might otherwise benefit the Company and its stockholders.





Item 1B.                  Unresolved Staff Comments





None.





Item 2.                  Properties





Our headquarters are located in Xian Zhong Town, Han Shan County, Anhui Province, with our plant and facilities occupying 51,989.87m2.  Our company holds a property ownership certificate for this parcel.





Item 3.                   Legal Proceedings





We know of no material, active or pending legal proceedings against us, our subsidiaries or our property, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholders are an adverse party or have a material interest adverse to us.





PART II




Item 5.                   Market for Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities




Market Information





There is a limited public market for our common shares. Our common shares are quoted for trading on the OTC Bulletin Board under the symbol “CRJI.” The market for our stock is highly volatile. We cannot assure you that there will be a market in the future for our common stock. OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.





Our common shares became eligible for quotation on the OTC Bulletin Board on July 6, 2006, but no trades were made until November 2006.





The following table shows the high and low prices of our common shares on the OTC Bulletin Board. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:




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Period

Hi


LowSep 1, 2008 – Nov 30, 2008

$
1.01


$
1.01Dec 1, 2008 – Feb 28, 2009

$
1.00


$
1.00Mar 1, 2009 – May 31, 2009

$
0.58


$
0.58Jun 1, 2009 – Aug 31, 2009

$
0.58


$
0.58Sep 1, 2009 – Nov 30, 2009

$
0.55


$
0.25Dec 1, 2009 – Feb 28, 2010

$
0.51


$
0.24Mar 1, 2010 – May 31, 2010

$
0.45


$
0.10Jun 1, 2010 – Aug 31, 2010

$
0.24


$
0.04





From September 1 to December 13, 2010, the highest and lowest prices of our common shares on the OTC Bulletin Board were $0.30 per share and $0.04 per share. On December 13, 2010, the closing price of our common stock on the OTC Bulletin Board on the last day it traded before the filing of this Annual Report was $0.28 per share.





We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future.





Holders





As of December 14, 2010, there were 129 holders of record of our common stock.





Dividends





Holders of our common stock are entitled to dividends if declared by the Board of Directors out of funds legally available therefore. As of August 31, 2010, no cash dividends have been declared.





We do not intend to issue any cash or stock dividends in the near future. We intend to retain earnings, if any, to finance the development and expansion of our business. Our future dividend policy will be subject to the discretion of the Board of Directors and will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions and other factors.





Equity Compensation Plans





As of August 31, 2010, we did not have any equity compensation plans.





Recent Sales of Unregistered Securities





We have not made any previously unreported sales of unregistered securities from September 1, 2009 to August 31, 2010.





Item 6.                     Selected Financial Data





Not applicable.





Item 7.                      Management’s Discussion and Analysis of Financial Condition and Results of Operations





Forward-Looking Statements





This report contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including, "could" "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.





While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this Annual Report.




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Results of Operations





Fiscal Year Ended August 31, 2010 Compared to the Fiscal Year Ended August 31, 2009.





Revenues.  We generated revenues of $50,063,989 for the year ended August 31, 2010, a decrease of $5,573,905 or 10.0%, compared to $55,637,894 for the year ended August 31, 2009. The decrease in revenue is primarily attributable to an overall reduction in sales of our cement products, which amounted to 207,761 tons or 22.7%.
 
 Gross Profit.  We achieved a gross profit of $3,257,884 for the year ended August 31, 2010, a decrease of $540,844 or 14.2%, compared to $3,798,728 for the year ended August 31, 2009. The decrease in gross profit is mostly due to a decline in cement prices partially offset by a decrease in the unit cost. The unit price of cement decreased $1.80 per ton in 2010 compared year over year, while the cost of sales decreased $1 per ton in the same corresponding period.
 
 Selling Expenses.  We incurred selling expenses of $254,150 for the year ended August 31, 2010, a decrease of $108,839 or 30.0%, compared to $362,989 for the year ended August 31, 2009. The decrease in selling expenses is mainly attributable to a reduction in sales service fee of $83,077.
 
 General and Administrative Expenses.  We incurred general and administrative expenses of $2,843,077 for the year ended August 31, 2010, an increase of $803,985 or 39.4%, compared to $2,039,092 for the year ended August 31, 2009. Among the increased general and administrative expenses were the bad debt expenses of $192,913, sewage charges of $166,084 and other miscellaneous expenses of $215,767.
 
 Interest Expenses.The interest expense was $997,680 for the year ended August 31, 2010, an increase of $579,397 or 138.5%, compared to $418,283 for the year ended August 31, 2009. The reason for the increase is due to the increased interest rate on the short term loans and longer borrowing period compared with last year.
 
 Government Subsidy.We had government subsidy granted from Hanshan government of $1,574,765 for the year ended August 31, 2010, a decrease of $1,703,101 or 51.96% compared to $3,277,866 for the year ended August 31, 2008.
 
 Net Income.  Net income for the 2010 fiscal year was $416,997, compared to net income of $2,908,459 for the 2009 fiscal year.  The decrease is attributable to the decreased gross profit and increased expenses.
 
 Liquidity and Capital Resources
 
 As of August 31, 2010 and 2009, cash and cash equivalents totaled $683,545 and $752,952, respectively.
 
 The net cash provided by operations increased by $6,366,255 to $9,139,082 for the year ended August 31, 2010 from $2,772,827 for 2009 fiscal year. The increased net cash from operations was primarily due to the contribution from advance to suppliers amounting to $5,522,327 and accounts payable and accrued liabilities amounting to $853,048. During the 2010 fiscal year, we used a total $(1,920,100) in investing activities compared to $(4,947,511) for 2009, a decrease of $3,080,921. The decrease was mainly attributable to $3,259,346 accounts payable related to the fixed assets purchase.
  During the 2010 fiscal year, we used a total of $(6,263,533) in financing activities compared to net cash provided by financing activities of $2,669,980 for the 2009 fiscal year, a decrease of $8,933,513.  The decrease was primarily due to the payment for the short term loans.
  Off-Balance Sheet Arrangements





We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.





Inflation





The effect of inflation on our revenue and operating results has not been significant.





Critical Accounting Policies





Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.





Impairment of Long-Lived Assets





The Company evaluates potential impairment of long-lived assets, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which requires the Company to (a) recognize an impairment loss only if the carrying amount of a long-lived asset is not recoverable from its undiscounted cash flows and (b) measure an impairment loss as the difference between the carrying amount and fair value of the asset. The Company believes that long-lived assets in the accompanying balance sheets are appropriately valued at August 31, 2010.




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Foreign Currency Translation





The functional currency of the Company is the Renminbi (“RMB”), the PRC’s currency. The Company maintains its financial statements using the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective periods.





For financial reporting purposes, the financial statements of the Company, which are prepared using the RMB, are translated into the Company’s reporting currency, United States Dollars. Balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholder’s equity.





Fair Value of Financial Instruments





The Company's financial instruments include cash equivalents, accounts receivable, other receivables, accounts payable, accrued expenses, value-added taxes, short-term and long-term bank loans, and loans payable to related parties. The carrying amounts of financial instruments other than long-term obligations approximate fair value due to their short maturities. Long-term obligations approximate fair value based upon rates currently available for similar instruments.





Item 7A.                      Quantitative and Qualitative Disclosures about Market Risk





Credit Risk





The Company is exposed to credit risk from its cash in bank, fixed deposits, bills and accounts receivable. The credit risk on cash in bank and fixed deposits is limited because the counterparties are recognized financial institutions. Bills and accounts receivable are subjected to credit evaluations.





Foreign Exchange Risk





The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions. Since July 2005, the Renminbi has no longer been pegged to the U.S. Dollar. Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, PRC authorities may lift restrictions on fluctuations in the Renminbi exchange rate and lessen intervention in the foreign exchange market.





Because all of our earnings and cash assets are denominated in Renminbi, but our reporting currency is the U.S. dollar, fluctuations in the exchange rate between the U.S. dollar and the Renminbi will affect our balance sheet and our earnings per share in U.S. dollars. In addition, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue in the future that will be exchanged into U.S. dollars and earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.





Most of our transactions are settled in Renminbi and U.S. dollars. In the opinion of the directors, we are not exposed to significant foreign currency risk.





Inflation





Inflationary factors, such as increases in the cost of raw materials and overhead costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of sales revenue if the selling prices of our products do not increase with these increased costs.




18
 Table of Contents




Company’s Operations are All in China





All of our operations are conducted in China and are subject to various political, economic, and other risks and uncertainties inherent in conducting business in China. Among other risks, the Company’s operations are subject to the risks of: restrictions on transfer of funds; quotas; domestic tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations. Additional information regarding such risks can be found under the heading “Risk Factors” located in Item 1A on page 9 of this Form 10-K.





19
 Table of Contents





Item 8.                         Financial Statements and Supplementary Data
  CHINA RUNJI CEMENT INC.
 
 TABLE OF CONTENTS
 TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEAR ENDED AUGUST 31, 2010
  Page(s)Report of Independent Registered Public Accounting Firm
21Consolidated Balance Sheets as of August 31, 2010 and 2009
22Consolidated Statements of Operations and Comprehensive Income for the Years Ended August 31, 2010 and 2009
23Consolidated Statements of Cash Flows for the Years Ended August 31, 2010 and 2009
24Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended August 31, 2010 and 2009
25Notes to the Consolidated Financial Statements
26 - 36
 
 20
 Table of Contents
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 To The Board of Directors and Stockholders
 China Runji Cement Inc.
 Xian Zhong Town, Han Shan County
 Chao Hu City, People’s Republic of China
 
 We have audited the accompanying consolidated balance sheets of China Runji Cement Inc. (the “Company”) as of August 31, 2010 and 2009 and the related consolidated statements of operations and comprehensive income, cash flows and changes in stockholders’ equity for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
 
 We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of China Runji Cement Inc. as of August 31, 2010 and 2009 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
 
 /s/ MaloneBailey, LLP
 www.malonebailey.com
 Houston, Texas
 December 14, 2010
  21
 Table of Contents
 
 China Runji Cement Inc.
 Consolidated Balance Sheets
 As of August 31, 2010 and 2009
  August 31,


August 31,2010


2009ASSETSCurrent assetsCash and cash equivalents


683,545



752,952Accounts receivable, net of allowance for doubful account of $193,339 and zero

as of 08/31/2010 and 08/31/2009, respectively


9,364,751



7,758,060Accounts receivable from related party


212,374



120,615Advances to suppliers


826,994



6,323,149Inventory


2,090,248



1,892,019Other receivables


1,678,279



1,110,522Other current assets


294,420



225,419Total current assets


15,150,611



18,182,736Advance for construction in progress projects


467,225



2,550,200Property, plant and equipment, net


54,801,428



51,921,848Intangible assets & deferred charges


4,357,468



4,416,306Total assets


74,776,732



77,071,090LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable and accrued liabilities


23,805,922



19,612,349Short-term loans


14,094,478



13,301,615Long-term loan-current portion


236,148



733,143Due to related parties


10,625,700



16,816,524Taxes payable and other


970,841



1,833,662Total current liabilities


49,733,089



52,297,293Long-term loan- non-current portion


-



235,174Total liabilities


49,733,089



52,532,467Stockholders' equityPreferred stock: 20,000,000 shares authorized,

$0.0001 par value, no shares issued and outstanding


-



-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


15,984,109



12,327,962Accumulated other comprehensive income


2,623,937



2,535,914Retained earnings


6,427,714



9,666,864Total stockholders' squity


25,043,643



24,538,623Total liabilities and stockholders' equity


74,776,732



77,071,090
 
 See accompanying notes to the Consolidated Financial Statements.
  22
 Table of Contents
 
 China Runji Cement Inc.
 Consolidated Statements of Operations and Comprehensive Income
 For the years ended August 31, 2010 and 2009
 
 August 31,


August 31,2010


2009Revenue

$
50,063,989


$
55,637,894Cost of goods sold


46,806,105



51,839,166Gross profit


3,257,884



3,798,728Operating costs and expenses:Selling expenses


254,150



362,989General & administrative expenses


2,843,077



2,039,092Depreciation on office equipment


181,652



190,401Total operating  expenses


3,278,879



2,592,482Income (loss) from operations


(20,995
)


1,206,246Other income (expenses)Interest expense


(997,680
)


(418,283
)Government subsidies/grants and other income


1,574,765



3,277,866Income before income taxes


556,090



4,065,829Income taxes expense


139,093



1,157,370Net income

$
416,997


$
2,908,459Other comprehensive income (loss)Foreign currency translation adjustment


88,023



(59,876
)Comprehensive income

$
505,020


$
2,848,583Earnings per share - basic and diluted

$
0.01


$
0.04Weighted average shares outstanding - basic and diluted


78,832,064



78,832,064
  
 See accompanying notes to the Consolidated Financial Statements.
  23
 Table of Contents
 
 China Runji Cement Inc.
 Consolidated Statements of Cash Flows
 For the years ended August 31, 2010 and 2009
 
 August 31,


August 31,2010


2009Operating activitiesNet income

$
416,997


$
2,908,459Adjustments to reconcile net incometo net cash provided by (used in) operating activities:Amortization


548,480



273,412Depreciation expense


5,107,531



4,266,895Allowance for doubful account


193,339



-Changes in operating assets and liabilities:Accounts receivable


(1,700,381
)


(4,772,788
)Advances to suppliers


5,522,327



(4,753,727
)Inventory


(190,398
)


1,260,054Changes in other receivables


(563,160
)


472,002Other current assets


(19,493
)


-Accounts payable and accrued liabilities


853,048



3,652,488Tax payable


(870,411
)


(533,968
)Net cash provided by operating activities


9,139,028



2,772,827Investing activitiesChanges in due from related parties


-



53,510Cash paid for intangible assets and deferred expenses


(520,000
)


-Cash paid for property, plant and equipment additions


(1,920,100
)


(5,001,021
)Net cash used in investing activities


(2,440,100
)


(4,947,511
)Financing activitiesShort term loan proceeds


14,059,672



13,301,616Short term loan (repayment)


(13,327,397
)


(438,520
)Debt issue cost






(176,857
)(Repayments) of due to related parties


(6,261,252
)


(10,984,576
)Proceeds from sale-leaseback financing


-



1,491,186Principle payment of the sale-leaseback financing


(734,556
)


(522,869
)Net cash (used in) provided by financing activities


(6,263,533
)


2,669,980Effect of exchange rate changes on cash and cash equivalents


(504,856
)


(157,375
)Increase (decrease) in cash and cash equivalents


(69,407
)


337,921Cash and cash equivalents, beginning of year


752,952



415,031Cash and cash equivalents, end of year

$
683,545


$
752,952Supplemental disclosuresInterest paid

$
711,624


$
317,708Income taxes paid

$
600,945


$
1,445,088Non-cash investing activity:Construction in progress transferred to fixed assets

$
11,190,582


$
8,303,741Advance transfer to CIP

$
7,436,547


$
-Retained earning transferred to paid in capital

$
3,656,147


$
-Accounts payable related to the fixed assets purchase

$
3,259,346


$
-
 
 
 See accompanying notes to the Consolidated Financial Statements.
  24
 Table of Contents
 
 China Runji Cement Inc.
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 For the years ended August 31, 2010 and 2009
  Additional


Accumulated OtherCommon Stock


Paid In


Comprehensive


RetainedShares


Amount


Capital


Income


Earnings


TotalPar ($ 0.0001)Balances, August 31, 2008


78,832,064


$
7,883


$
12,327,962


$
2,595,790


$
6,758,405


$
21,690,040Currency translation


-



-



-



(59,876
)


-



(59,876
)Net income


-



-



-



-



2,908,459



2,908,459Balances, August 31, 2009


78,832,064


$
7,883


$
12,327,962


$
2,535,914


$
9,666,864


$
24,538,623Distribution


-



-



3,656,147







(3,656,147
)


-Currency translation


-



-



-



88,023







88,023Net income


-



-



-



-



416,997



416,997Balances, August 31, 2010


78,832,064


$
7,883


$
15,984,109


$
2,623,937


$
6,427,714


$
25,043,643
  
 The accompanying notes are an integral part of these financial statements.
  25
 Table of Contents
 
 CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
 
 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 are 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. 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
 
 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) and Anhui Province Runji Cement Co., Ltd. (a PRC corporation), and 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.
 
 Reclassifications
 
 Certain prior year amounts have been reclassified to conform to the 2010 presentation.
 
 New Accounting Pronouncements
 
 In October 2009, the FASB issued Accounting Standards Update, 2009-13, Revenue Recognition (Topic 605) “Multiple Deliverable Revenue Arrangements - A Consensus of the FASB Emerging Issues Task Force.”  This update provides application guidance on whether multiple deliverables exist, how the deliverables should be separated and how the consideration should be allocated to one or more units of accounting.  This update establishes a selling price hierarchy for determining the selling price of a deliverable.  The selling price used for each deliverable will be based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific or third-party evidence is available.  The Company will be required to apply this guidance prospectively for revenue arrangements entered into or materially modified after January 1, 2011; however, earlier application is permitted.   Management is in the process of evaluating the impact of adopting this standard on the Company’s financial statements.
 26
 Table of Contents
 
 CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
  NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Cash and Cash Equivalents
 
 Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less. Cash deposits with banks are held in financial institutions in China, which has no federally insured deposit protection. Accordingly, the Company has a concentration of credit risk related to these uninsured deposits.
 
 Accounts Receivable
 
 Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management judgment and estimates are made in connection with establishing the allowance for doubtful accounts. Specifically, the Company analyzes the aging of accounts receivable balances, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in our customer payment terms. Significant changes in customer concentration or payment terms, deterioration of customer credit-worthiness or weakening in economic trends could have a significant impact on the collectability of receivables and the Company’s operating results. The allowance of doubtful account is accrued based on the AR identified uncollectible.  The allowances for doubtful accounts are $193,339 and zero as of August 31, 2010 and August 31, 2010 respectively.
 
 Inventories
 
 Inventories, which are primarily comprised of raw materials, packaging materials, semi-finished goods, and finished goods, are stated at the lower of cost or market, using the moving average (“MA”) method. Cost being determined on the basis of a moving average. The Company evaluates the need for reserves associated with obsolete, slow-moving and non-salable inventory by reviewing net realizable values on a periodic basis.
 
 Property and Equipment
 
 Property and equipment are recorded at cost and depreciated using the straight-line method, with an estimated 5% salvage value of original cost, over the estimated useful lives of the assets as follows:
 Building
20 yearsmanufacturing machinery & equipment
8 yearselectronic equipment & automobiles
5 yearsoffice equipment
5 years
 
 Expenditures for repairs and maintenance, which do not improve or extend the expected useful lives of the assets, are expensed as incurred while major replacements and improvements are capitalized.
 
 When property or equipment is retired or disposed of, the cost and accumulated depreciation are removed from the accounts, with any resulting gains or losses being included in net income or loss in the year of disposition.
 
 Construction in Progress
 
 Construction in progress represents direct costs of construction or acquisition and design fees incurred. Capitalization of these costs ceases and the construction in progress is transferred to property and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed.
 
 Impairment of Long-Lived Assets
 
 The Company evaluates potential impairment of long-lived assets, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which requires the Company to (a) recognize an impairment loss only if the carrying amount of a long-lived asset is not recoverable from its undiscounted cash flows and (b) measure an impairment loss as the difference between the carrying amount and fair value of the asset. The Company believes that long-lived assets in the accompanying balance sheets are appropriately valued at August 31, 2010.
 
 Intangible Assets
 
 The Company’s intangible assets are stated at cost less accumulated amortization and are mainly comprised of limestone and sandstone mining rights. Mining rights are related to mines the Company occupies in Anhui Province, PRC and are being amortized on a straight-line basis over a period of 30 years.
 27
 Table of Contents
 
 CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
 
 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 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 October 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 to the local government after it commenced production will be returned to the Company. The Company received $1,604,340 and $3,249,975 government subsidies during 2010 and 2009 respectively.
 
 Revenue Recognition
 
 The Company recognizes revenue when the significant risks and rewards of ownership have been transferred pursuant to PRC law, including such factors as when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, sales and value-added tax laws have been complied with, and collectability is reasonably assured. The Company generally recognizes revenue when its products are shipped.
 
 Comprehensive Income
 
 The Company has adopted SFAS No. 130, "Reporting Comprehensive Income," which establishes standards for reporting and displaying comprehensive income, its components, and accumulated balances in a full-set of general-purpose financial statements. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments.
 
 Concentration of Credit Risk
 
 Financial instruments which potentially expose the Company to concentrations of credit risk, consist of cash and accounts receivable as of August 31, 2010 and 2009. The Company performs ongoing evaluations of its cash position and credit evaluations to ensure collections and minimize losses.
 
 A portion of the Company’s cash at August 31, 2010 and 2009 is maintained at various financial institutions in the PRC which do not provide insurance for amounts on deposit. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.
 
 For the years ended August 31, 2010 and 2009, the Company’s sales were mainly made to customers located in the PRC. In addition, total accounts receivables as of August 31, 2010 and 2009 also arose from customers located in the PRC.
 
 A significant percentage of the Company’s business is generated from a small number of customers. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.
 
 The Company operates principally in the PRC and grants credit to its customers in this geographic region. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.
 
 Income Taxes
 
 The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
 
 Foreign Currency Translation
 
 The functional currency of the Company is the Renminbi (“RMB”), the PRC’s currency. The Company maintains its financial statements using the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective periods.
 28
 Table of Contents
 
 CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
 
 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 The financial statements of the Company are translated into United States dollars in accordance with Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency Translation,” using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for the equity. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income.
 
 Related Parties
 
 A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
 
 Earnings Per Share
 
 Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.
 
 Fair Value of Financial Instruments
 
 The Company's financial instruments include cash equivalents, accounts receivable, other receivables, accounts payable, accrued expenses, value-added taxes, short-term and long-term bank loans, and loans payable to related parties. The carrying amounts of financial instruments other than long-term obligations approximate fair value due to their short maturities. Long-term obligations approximate fair value based upon rates currently available for similar instruments.
 
 NOTE 3 – CORRECTIONS OF IMMATERIAL ERROR


Subsequent to the issuance of our consolidated financial statements for the fiscal year ended August 31, 2009, In connection with our determination of the government subsidy as non-taxable income, we received communication from local tax authority that the government subsidies and tax refunds should be subject to the PRC’s income tax and recorded as taxable income. As a result, the income tax expense and income tax payable at August 31, 2009 were understated.  Accordingly, as described below, certain previously reported amounts included in our consolidated financial statements have been corrected to reflect the correction of this error. In addition, we also identified errors in accruals for property taxes and the timely transfer of construction-in-progress that were completed to fix assets. We believe the effects of these errors are not material to our previously issued consolidated financial statements. Our conclusion that the errors were not material included an evaluation of both quantitative and qualitative factors as well as the guidance provided by SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.
  29
 Table of Contents
  CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
  NOTE 3 – CORRECTIONS OF IMMATERIAL ERROR (CONTINUED)
 As previously reported


Adjustment


As adjustedBalance sheet as of August 31, 2009Advance for construction in progress


2,743,828



(193,628
)


2,550,200Property, plant and equipment, net


51,766,946



154,902



51,921,848Total Assets


77,109,816



(38,726
)


77,071,090Accounts payable and accrued liabilities


19,477,476



134,873



19,612,349Taxes payable and other


739,405



1,094,257



1,833,662Current liabilities


51,068,163



1,229,130



52,297,293Total liabilities


51,303,337



1,229,130



52,532,467Retained earnings


10,934,720



(1,267,856
)


9,666,864Total stockholder's equity


25,806,479



(1,267,856
)


24,538,623Statement of operations for the fiscal year ended August 31, 2009G&A expenses


1,904,219



134,873



2,039,092Depreciation of property, plant and equipment


151,675



38,726



190,401Total operating expenses


2,418,883



173,599



2,592,482Income before income taxes


4,239,428



(173,599
)


4,065,829Income tax expense


388,276



769,094



1,157,370Net income


3,851,152



(942,693
)


2,908,459Comprehensive income


3,791,276



(942,693
)


2,848,583Earnings per share, basic and diluted


0.05



(0.01
)


0.04Statement of cash flow for the fiscal year ended August 31, 2009Net income


3,851,152



(942,693
)


2,908,459Depreciation expense


4,228,169



38,726



4,266,895Changes in operating assets and liabilities:Accounts payable and accrued liabilities


3,517,615



134,873



3,652,488Variance in tax payable


(1,303,062
)


769,094



(533,968
)Balance sheet as of August 31, 2008Taxes payable and other


2,374,042



325,163



2,699,205Current liabilities


46,246,843



325,163



46,572,006Total liabilities


46,246,843



325,163



46,572,006Retained earnings


7,083,568



(325,163
)


6,758,405Stockholder's equity


22,015,203



(325,163
)


21,690,040Statement of operations for the fiscal year ended August 31, 2008Income tax expense


2,216,504



325,163



2,541,667Net income


6,962,683



(325,163
)


6,637,520Comprehensive income


8,766,859



(325,163
)


8,441,696Earnings per share, basic and diluted


0.09



-



0.09Statement of cash flow for the fiscal year ended August 31, 2008Net income


6,962,683



(325,163
)


6,637,520Changes in operating assets and liabilities:Variance in tax payable


560,420



325,163



885,583
   NOTE 4 – ACCOUNTS RECEIVABLE
  Year Ended


Year Ended31-Aug-10


31-Aug-09Notes receivable

$
138,118


$
199,148Accounts receivable –trade

$
9,419,972


$
7,558,912Accounts receivable from related party


212,374



120,615Allowance for doubtful accounts


(193,339
)


-$
9,577,125


$
7,878,675
  The related party sales were $212,374 and $120,615 for the year ended August 31, 2010 and 2009. The related party is an entity controlled by the President and CEO of the Company.
 
 The accounts receivable amount of $2,539,569 and $2,923,464 at August 31, 2010 and 2009 respectively, is used as a securitization for the ICBC Hanshan bank loan at August 31, 2010.
 30
 Table of Contents
 
 CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
 NOTE 5 – INVENTORY
 
 Inventory consists of the following:
  Year Ended

31-Aug-10


Year Ended

31-Aug-09Raw materials

$
741,645


$
702,529Packaging materials


27,258



25,138Semi-finished goods


599,178



292,376Finished goods


722,167



871,976$
2,090,248


$
1,892,019
 NOTE 6 – ADVANCES TO SUPPLIERS
 
 Advances to suppliers consist of the following:
 
 Year Ended

31-Aug-10


Year Ended

31-Aug-09Advances to suppliers

$
826,994


$
6,323,149Advance for construction in progress projects


467,225



2,743,828Advances

$
1,294,219


$
9,066,977
 
 Advances to suppliers represent amounts prepaid for raw materials. Advances for construction in progress projects represents amounts prepaid for Construction in Progress. The advances are applied against amounts due to the supplier as the materials are received.
 
 NOTE 7 – PROPERTY, PLANT AND EQUIPMENT
 
 Property, plant and equipment consist of the following:
 Year Ended


Year Ended31-Aug-10


31-Aug-09Building

$
32,320,411


$
28,617,028Equipment & machinery


39,325,188



31,245,848Automobiles


319,917



292,828Other equipment


31,092



30,964Computer equipment


32,977



32,841Construction in progress


32,114



3,793,839Total property, plant and equipment (gross)


72,061,699



64,013,348Accumulated depreciation


(17,260,271
)


(12,091,500
)Total property, plant and equipment (net)


54,801,428



51,921,848
 31
 Table of Contents
  CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
  NOTE 8 – INTANGIBLE ASSETS & DEFERRED CHARGES
 
 Intangibles and deferred charges include the following:
  Year Ended


Year Ended31-Aug-10


31-Aug-09

TermsMineral exploration right-Shihuishi

$
3,316,634


$
3,428,391

30 yearsMineral exploration right-Shayan


196,562



224,399

10 yearsLand acquisition compensation (compensating fee for mine and forest)


473,066



535,359

10 yearsPlanting fee in working place


221,363



47,953

3 yearsCompensating fee for stone materials in Baxiong Village


14,531



16,444

10 yearsCompensating fee for limekiln and drought land in Baxiong Village


12,637



14,301

10 yearsCompensating fee for sandstone land in Qiaomai Village


100,839



90,433

10 yearsDebt issue cost


21,836



59,026

2 yearsTotal intangible assets & deferred charges

$
4,357,468


$
4,416,306






NOTE 9 – BANK LOANS
 
 Short term loans consist of:
 
 Year Ended

31-Aug-10


Year Ended

31-Aug-09Xian Zong Credit Bank

$
880,670


$
438,519PuFa Bank WenHu Business Branch


4,256,568



4,239,022ICBC Hanshan


2,953,564



2,923,464Huishang Bank Sales Department


5,284,015



5,262,235Runfeng Company


737,661



438,375$
14,094,478


$
13,301,615
  The details for the Company’s bank loans are as follows:
 
 Borrowing bank

Amount

Starting

date

Maturity

date

Interest rate

(monthly)*
Xianzhong Credit Bank

$
880,670

2009-11-17

2010-11-16

0.8835%**
PuFa Bank WenHu Business Branch


4,256,568

2010-05-05

2011-04-27

0.5310%***
ICBC Hanshan


2,953,564

2010-03-15

2011-03-15

0.6058%****
Huishang Bank Sales Department


5,284,015

2010-07-22

2011-07-21

0.5310%Runfeng Company


737,661

2010-05-26

2011-05-25

0.8835%
  *
The loan from the Xianzhong Credit Bank was pledged in collateral of machine equipment in value of RMB 25,173,720 or $3,694,954.
 **
The loan from the Wenhu branch of PuFa Bank was pledged in collateral of the Company’s building and land user right.
 ***
The loan from the Hanshan branch of ICBC Bank is securitized by an accounts receivable balance of $2,539,569 at August 31, 2010.
 ****
The loan from the sales department of Huishang Bank was guaranteed by Anhui Province Credit Guarantee (Group) Co., Ltd.
 32
 Table of Contents
  CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
  NOTE 10 – DUE TO RELATED PARTIES (Short Term)
 
 (a)           Names and relationship of related parties
 
 Existing relationships with the CompanyNanjin Hongren
A company controlled by shareholderNanjin Runji
A company controlled by shareholderYang, Xuanjun
Shareholder of the CompanyZhao, Shouren
Shareholder, president & CEO of the Company
 
 (b)           Due to Related Parties (Short Term) consists of the following:
 
 Year Ended

31-Aug-10


Year Ended

31-Aug-09Due to related party – Nanjin Hongren

$
5,622,218



8,279,088Due to related party – Nanjin Runji


4,424,912



7,135,035Due to related party – Zhao, Shouren


59,611



611,899Due to related party – Yang, Xuanjun


515,677



788,052Miscellaneous


3,282



2,450$
10,625,700



16,816,524
 
 As of August 31, 2010 and 2009, the outstanding debt owed to Shouren Zhao totaled $59,611 and $611,899, respectively, loaned to the Company on a short-term basis in order to finance its operations.  The terms of the loan are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.
 
 As of August 31, 2010 and 2009, the outstanding debt owed to Xuanjun Yang, a director, totaled $515,677 and $788,052, respectively, loaned to the Company on a short-term basis in order to finance its operations.  The terms of the loan are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.
 
 As of August 31, 2010 and 2009, the outstanding debt owed to Nanjin Hongren, a related company, owned by Zhao and Yang, totalled $5,622,218 and $8,279,088, respectively, loaned to the Company on a short-term basis in order to finance its operations.  The terms of the loans are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.
 
 As of August 31, 2010 and 2009, the outstanding debt owed to Nanjin Runji, a related company, owned by Zhao and Yang, totalled $4,424,912 and $7,135,035, respectively, loaned to the Company on a short-term basis in order to finance its operations.  The terms of the loans are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.
 
 The above amounts due to related parties represent loans payable, are short-term loans that are unsecured and non-interest bearing, and the loans usage will depend on the Company’s business operations.
 33
 Table of Contents
 
 CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
  NOTE 11 – LONG TERM LOAN
 
 On April 3, 2009, the company signed a two year sale lease-back contract with Anhui Yuanzhong leasing company. On February 8, 2010, Yuanzhong leasing company signed the contract with Guodi Finance Anhui Branch to transfer the remaining lease to Guodi Finance Anhui Branch. All the contract terms remain the same as before the transfer took place.
 
 The details for the Company’s long-term loan are as follows:
 Year Ended


Year Ended31-Aug-10


31-Aug-09Long-term loan  – Guodi Financing Anhui Branch (current portion)

$
236,148


$
-Long-term loan  – Anhui Yuanzhong (current portion)


-



733,143Long-term loan – Anhui Yuanzhong (Non-current portion)


-



235,174$
236,148


$
968,317
 
 NOTE 12 – COMMITMENTS AND CONTINGECIES
 
 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 have 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.
 
 NOTE 13 – INCOME TAXES
 
 The Company’s Enterprise Income Tax (“EIT”) rate of 25%,
 Year Ended

31-Aug-10


Year Ended

31-Aug-09Income before income taxes

$
556,090


$
4,065,829Permanent differences:


282



563,651Income Taxes (at 25% tax rate)

$
139,093


$
1,157,370
 
 34
 Table of Contents
 CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009
 
 NOTE 13 – INCOME TAXES (CONTINUED)
 A reconciliation between the income tax computed at the U.S. statutory rate and the Group’s provision for income tax is as follows:
 
 Year endedAugust 31,


August 31,2010


2009U.S. statutory rate


34.00
%


34.00
%Foreign income not recognized in the U.S.


(34.00
)%


(34.00
)%PRC preferential enterprise income tax rate


25.00
%


25.00
%Others permanent differences


0.00
%


3.47
%Provision for income tax


25.00
%


28.47
%
 There are no significant temporary differences between book and tax income. 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 have 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.
 
 The Company’s corporate income tax liability is $651,263 and $1,094,257 as of August 31, 2010 and 2009.
 
 35
 Table of Contents


CHINA RUNJI CEMENT INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED AUGUST 31, 2010 AND 2009





NOTE 14 - 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.
 
 Source of Supply
 
 The Company purchases components for its products from a number of suppliers. However, on occasion, a customer’s specifications may require us to purchase components from a specific supplier. The Company does not have any long term contracts with any of its suppliers, and the Company believes that alternative suppliers are available. Although the Company has not been subject to shortages for any of its components, since it does not have long-term contracts, the Company may be subject to cutbacks and price increases which it may not be able to pass on to its customers in the event that the demand for components generally exceeds the capacity of its suppliers.


36
 Table of Contents





Item 9.                        Changes in and Disagreements with Accountants on Accounting and Financial Disclosure





None.





Item 9A.                      Controls and Procedures




Evaluation of Disclosure Controls and Procedures
 
 We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of August 31, 2010. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.
 
 Management Report on Internal Control Over Financial Reporting
 
 Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Based on the evaluation performed, our management concluded there is a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
 
 The material weakness relates to the lack of personnel with the appropriate knowledge of generally accepted accounting principles (GAAP) and SEC reporting experience, coupled with a lack of segregation of duties and minimal staffing. To remedy this material weakness, management is actively searching for competent candidates and working with outside consultants in the financial reporting process.
 
 This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report in this annual report
 
 Changes in Internal Control Over Financial Reporting
 
 During the fourth fiscal quarter of 2010, we implemented the following measures to improve our internal control over financial reporting:
 
 (1)   Engaged outside consultants to assist in our assessment of the effectiveness of the company’s internal control over financial reporting; and
 
 (2)   Developed and instituted new internal control procedures to strengthen our month-end close and financial reporting processes.
 
 We believe these measures have strengthened our internal control over financial reporting and disclosure controls and procedures.
 
 Our senior executives and our Board of Directors are committed to achieving and maintaining a strong control environment, high ethical standards, and financial reporting integrity. This commitment has been and will continue to be communicated to and reinforced with our employees and to external stakeholders.
 
 In addition, under the direction of the Board of Directors, management will continue to review and make changes to the overall design of our internal control environment, as well as policies and procedures to improve the overall effectiveness of internal control over financial reporting and our disclosure controls and procedures.
 
 Except for the changes discussed above, there was no change in our internal control over financial reporting that occurred during the fourth quarter of 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 Item 9B.                     Other Information





None.




PART III





Item 10.                       Directors, Executive Officers and Corporate Governance





The following table sets forth the name, age, and position of our executive officers and directors of as of August 31, 2010.





Name

Age

PositionShouren Zhao

53

Chairman, Chief Executive Officer and PresidentXiangfei Zeng

40

Chief Financial OfficerXuanjun Yang

53

DirectorLiming Bi

43

Director




37
 Table of Contents




The directors will serve as directors until our next annual shareholder meeting or until a successor is elected who accepts the position. Officers hold their positions at the will of the Board of Directors, absent any employment agreement. There are no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of our affairs.





Biographies





Shouren Zhao,Chairman, Chief Executive Officer and President – 53





Mr. Zhao has extensive experience in construction management. He established Tongshi Dajiangnan Cement Factory in Hainan in 1992 with an annual production of 200 thousand tons. From 1997-2002, he established, capitalized and managed Shanghai Jiangxin Co., Ltd, Zhejiang Hengtong Textile Co., Ltd, Jiangxi Hengtong Real Estate Co., Ltd.  In 2003, he established a joint venture known as Nanjing Hongren Real Estate Co., Ltd. Also in 2003, he established the joint venture known as Anhui Runji.  Mr. Zhao received an award as Hainan Province’s “Entrepreneur of the Year,” as Shaoxing’s “Model Worker.”





Xiangfei Zeng, Chief Financial Officer – 40





Ms. Xiangfei Zeng has over 15 years' experience in corporate finance, financial control and accounting management. Before joining the Company, Ms. Zeng was the financial controller of China World Trade Corporation (CWTD.OB) beginning in November 2004. From 2002 to 2004, Ms. Zeng was the CFO of Fenet Software Co., Ltd. From 1999 to 2002, she was the financial analysis manager in the China center of Zhuhai Oplink Communication Inc. (NASDAQ: OPLK).  From 1993 to 1999, she was the accountant and financial manager in Shenzhen Techo Telecom Co., Ltd. (Shenzhen Stock Exchange: 000555). Ms. Zeng is a China certified senior accountant and familiar with both China GAAP and US GAAP. She acquired a Bachelor's Degree in Economics at Sun Yat-Sen University in 1993.





Xuanjun Yang, Director – 53





Mr. Yang has a degree in engineering.  From 1973 – 1980, he performed construction work for Zhejiang Zhuji Wuxie Handicraft Industry Community. From 1980-1993, he was a team leader on a major construction project.  From 1997 – 2003, he was a shareholder of Jiangxi Hengtong Real Estate Company and Nanjing Jinbo Real Estate company.  From 2003 to date, he has been a shareholder of Nanjing Hongren Real Estate company and Anhui Runji.





Liming Bi, Director – 43





Mr. Bi is a university graduate. He has been working at our company for many years in production technology, facility management and quality control. In 2003, Mr. Bi acted as Construction Deputy Commander in Chief and Production Deputy General Manager, responsible for technology R&D. He has significant experience in cement making and business management.





Meetings of Our Board of Directors





China Runji’s Board of Directors held no meetings during the year ended August 31, 2010.





Anhui Runji’s Board of Directors held no meetings during the year ended August 31, 2010.





Audit Committee





The functions of the Audit Committee are currently carried out by our Board of Directors. Our Board of Directors has determined that we do not have a financial expert on our Board of Directors carrying out the duties of the Audit Committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director of the Company and to be a member of the Audit Committee or otherwise perform Audit Committee functions outweighs the benefits of having a financial expert on the Audit Committee.





Significant Employees





Other than the directors and officer described above, we do not expect any other individuals to make a significant contribution to our business.





Family Relationships





There are no family relationships among our officers or directors. However, Ting Zhao, Executive Director of Anhui Runji is the son of Shouren Zhao, Chairman, CEO and President of China Runji.




38
 Table of Contents





No Legal Proceedings





None of our directors, executive officers, promoters or control persons has been involved in any of the following events during the past five years:





Ÿ
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;Ÿ
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);Ÿ
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; orŸ
being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.





Section 16(a) Beneficial Ownership Compliance Reporting





Section 16(a) of the Exchange Act requires a company’s directors and officers, and persons who own more than ten-percent (10%) of the company’s common stock, to file with the Securities and Exchange Commission reports of ownership on Form 3 and reports of change in ownership on Forms 4 and 5 if the company has a class of securities registered under Section 12 of the Exchange Act.  Inasmuch as we had a class of securities registered under Section 12 of the Exchange Act during the year ended August 31, 2010, our officers, directors or 10% shareholders were required to file ownership reports.  We are current in our Section 16(a) beneficial ownership reporting.





Code of Ethics





We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions because we have not yet finalized the content of such a code.





Item 11.                         Executive Compensation





The following table sets forth, as of August 31, 2010, the compensation paid to our Chairman, Chief Executive Officer and President and our Chief Financial Officer during the last three completed fiscal years. No other officers or directors received annual compensation in excess of $100,000 during the last three complete fiscal years.





Name of Officer

Year

Salary

Bonus

Stock

Awards

Option

Awards

Non-Equity Incentive Plan Compensation

Nonqualified Deferred Compensation

All

Other Compensation

TotalShouren Zhao

2010

-

-

-

-

-

-

-

02009

-

-

-

-

-

-

-

02008

5,033

-

-

-

-

-

-

5,033Xiangfei Zeng

2010

-

-

-

-

-

-

-

02009

-

-

-

-

-

-

-

02008

-

-

-

-

-

-

-

0





We made no grants of stock options or stock appreciation rights since our inception to August 31, 2010.





Pension, Retirement or Similar Benefit Plans





There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.





39
 Table of Contents





Compensation Committee





We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.





Compensation of Directors





We did not pay our directors any compensation for services rendered as a director in the year ended August 31, 2010.





We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors. The Board of Directors may award special remuneration to any director undertaking any special services on behalf of our company other than services ordinarily required of a director. No director received and/or accrued any compensation for his services as a director, including committee participation and/or special assignments.





Change of Control





As of August 31, 2010, we had no pension plans or compensatory plans or other arrangements that provide compensation on the event of termination of employment or change in control of the Company.




Item 12.                       Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


The following table sets forth, as of December 14, 2010, the stock ownership of all persons known to beneficially own 5% or more of the Company's Common Stock and all directors and officers of the Company, individually and as a group. Each person has sole voting and investment power over the shares indicated, except as noted. There was no other person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the address for each stockholder is Xian Zhong Town, Han Shan County, Chao Hu City, Anhui Province, People’s Republic of China.





Named and Address of Beneficial Owner

Amount and Nature of Beneficial Ownership

Percent (%)

of Class(1)5% OwnersCai Ying Jiang

27,872,000
(2)

35.4
%Wei Chu Meng

40,700,000
(3)

51.6
%Jing Yang

6,072,000


7.7
%Qiong Yang

6,000,000


7.6
%Min Yan Zhao

7,000,000


8.8
%Ting Zhao

7,700,000


9.8
%Executive OfficersShouren Zhao

Chairman, CEO and President

40,700,000
(4)

51.6
%DirectorsShouren Zhao

Chairman, CEO and President

40,700,000
(4)

51.6
%Xuanjun Yang, Director

27,872,000
(5)

35.4
%Officers and Directors as a Group (2 individuals)

68,572,000


87.0
%





(1)
There are 78,832,064 shares of common stock issued and outstanding as of December 14, 2010.





(2)
Cai Ying Jiang is the wife of Xuanjun Yang and owns 6,800,000 shares of common stock.  In addition, she beneficially owns her husband’s 9,000,000 shares of common stock, her daughter Jing Yang’s 6,072,000 shares and her daughter Qiong Yang’s 6,000,000 shares.





(3)
Wei Chu Meng is the wife of Shouren Zhao and owns 7,500,000 shares of common stock.  In addition, she beneficially owns her husband’s 18,500,000 shares of common stock, her daughter Min Yan Zhao’s 7,000,000 shares and her son Ting Zhao’s 7,700,000 shares.





(4)
Shouren Zhao is the Chairman and CEO of China Runji and owns 18,500,000 shares of common stock.  In addition, he beneficially owns his wife Wei Chu Meng’s 7,500,000 shares of common stock, his daughter Min Yan Zhao’s 7,000,000 shares and his son Ting Zhao’s 7,700,000 shares.





(5)
Xuanjun Yang is a director of China Runji and owns 9,000,000 shares of common stock.  In addition, he beneficially owns his wife Cai Ying Jiang’s 6,800,000 share of common stock, his daughter Jing Yang’s 6,072,000 shares and his daughter Qiong Yang’s 6,000,000 shares.




40
 Table of Contents




Item 13.                      Certain Relationships, Related Transactions, and Director Independence





As of the fiscal year ended August 31, 2009, Shouren Zhao loaned $611,899 to the Company on a short-term basis in order to finance its operations.  The terms of the loan are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.





As of the fiscal year ended August 31, 2009, Xuanjun Yang, a director, loaned $788,052 to the Company on a short-term basis in order to finance its operations.  The terms of the loan are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.





As of the fiscal year ended August 31, 2009, Nanjin Hongren and Nanjin Runji, related companies owned by Zhao and Yang, loaned $8,279,088 and $7,135,035, repectively, to the Company on a short-term basis in order to finance its operations.  The terms of the loans are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.





As of the fiscal year ended August 31, 2010, Shouren Zhao loaned $59,611 to the Company on a short-term basis in order to finance its operations.  The terms of the loan are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.





As of the fiscal year ended August 31, 2010, Xuanjun Yang, a director, loaned $515,677 to the Company on a short-term basis in order to finance its operations.  The terms of the loan are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.





As of the fiscal year ended August 31, 2010, Nanjin Hongren and Nanjin Runji, related companies owned by Zhao and Yang, loaned $5,622,218 and $4,424,91, repectively, to the Company on a short-term basis in order to finance its operations.  The terms of the loans are non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s need in operation.





Except for the transactions described above, there are no proposed transactions and no transactions during the past two years to which the Company was (or is) a party, and in which any officer, director, or principal stockholder, or their affiliates or associates, was also a party.





Director Independence





Our securities are quoted on the OTC Bulletin Board, which does not have any director independence requirements.  Once we engage further directors and officers, we will develop a definition of independence and scrutinize our Board of Directors with regard to this definition.





Item 14.                       Principal Accounting Fees and Services





Audit and Non-Audit Fees





The following table represents fees for the professional audit services and fees billed for other services rendered by our auditors for the audit of our annual financial statements for the years ended August 31, 2010 and August 31, 2009 and any other fees billed for other services rendered by our auditors during these periods.





41
 Table of Contents




Malone & Bailey, PC





Period from September 1, 2009 to August 31, 2010Audit fees

$
105,000Audit-related fees


0Tax fees


0All other fees

$
105,000TotalPeriod from September 1, 2008 to August 31, 2009Audit fees

$
92,000Audit-related fees


0Tax fees


0All other fees


0Total

$
92,000





Since our inception, our Board of Directors, performing the duties of the Audit Committee, reviews all audit and non-audit related fees at least annually. The Board of Directors as the Audit Committee pre-approved all audit related services in the year ended August 31, 2010.




PART IV





Item 15.                      Exhibits and Financial Statement Schedules





(a) (1) Financial Statements





See “Table of Contents to Consolidated Financial Statements” set forth on page 20.





(a) (2) Financial Statement Schedules





None. The financial statement schedules are omitted because they are inapplicable or the requested information is shown in our financial statements or related notes thereto.





Exhibits





Exhibit Number

Exhibit Description3.1

Articles of Incorporation of the Company (1)3.2

Bylaws of the Company (1)10.1

Share Exchange Agreement between, among others, Fitmedia, Shouren Zhao and Timothy Crottey (2)10.2

Stock Purchase Agreement between Fitmedia, Shouren Zhao and Timothy Crottey (2)21.1

List of SubsidiariesRen Ji Cement Investment Co., Ltd., incorporated in British Virgin IslandsRen Ji Cement Company, Ltd. incorporated in Hong KongAnhui Province Runji Cement Co., Ltd. incorporated in China31.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





(1)
Incorporated by reference from Exhibit 3 to FitMedia’s Registration Statement on Form SB-2, filed with the Commission on May 13, 2005(2)
Included as exhibits on our Form 8-K filed with the Commission on November 7, 2007.





42
 Table of Contents





SIGNATURES




Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Company has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.





CHINA RUNJI CEMENT INC.Date:  December 14, 2010
By:
/s/ Shouren ZhaoShouren Zhao,Chairman, Chief Executive Officer and President

(principal executive officer)








Pursuant to the requirements of the Exchange Act, this Report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.





Name and Title

Date/s/ Shouren Zhao

December 14, 2010Shouren Zhao,

Chairman, Chief Executive Officer and President

(principal executive officer)/s/ Xiangfei Zeng

December 14, 2010Xiangfei ZengChief Financial Officer(principal financial officer and accounting officer)/s/ Xuanjun Yang

December 14, 2010Xuanjun Yang

Director/s/ Liming Bi

December 14, 2010Liming Bi

Director