U.S.
SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549














(Mark
One)


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




For the
Fiscal Year Ended May 31, 2009




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 333-146758





CHINA INFRASTRUCTURE
CONSTRUCTION CORPORATION


(Exact
name of registrant as specified in its charter)




Colorado
            
            16-1718190(State
      or other jurisdiction of
            
            (IRS
      Employerincorporation
      or organization)
            
            Identification
      No.)





C915
Jia Hao International Business Center


116
Zizhuyuan Road Haidan District


Beijing,
China 100097


(Address
of principal executive offices)





Issuer’s
telephone number, including area code: 86-10-5170-9287





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





Securities
registered pursuant to Section 12(g) of the Act: Common Stock, no par
value.





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes  ̈ No þ




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  ̈ No þ




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 such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes þNo  ̈




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   ̈
No




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K 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 þ





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
(as defined in Rule 12b-2 of
the Exchange Act). Check one:




Large
      accelerated filer
            o
            
            Non-accelerated
      filer
            oAccelerated
      Filer
            o
            
            Smaller
      reporting company
            þ





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




As of
November 30, 2008 the last day of the Registrant’s most recently completed
second fiscal quarter, there was no established public market for the
Registrant’s common stock.




As of
September 15, 2009, there were outstanding 15,295,500 shares of the
registrant’s common stock, no par value.




Documents
incorporated by reference: None.











China
Infrastructure Construction Corporation




Form
10-K




Table of
Contents




PagePART
      IItem
      1.
                  
                  Description
      of Business
                  
                  1Item
      1A.
                  
                  Risk
      Factors
                  
                  12Item
      2.
                  
                  Description
      of Property
                  
                  19Item
      3.
                  
                  Legal
      Proceedings
                  
                  20Item
      4.
                  
                  Submission
      of Matters to a Vote of Security Holders
                  
                  20PART
      IIItem
      5.
                  
                  Market
      for Registrant’s Common Equity, Related Stockholder
Matters
                  
                  20Item
      7.
                  
                  Management's
      Discussion and Analysis of Financial Condition and Results of
      Operation
                  
                  21Item
      8.
                  
                  Financial
      Statements and Supplementary Data
                  
                  25Item
      9.
                  
                  Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                  
                  25Item
      9A(T).
                  
                  Controls
      and Procedures
                  
                  26Item
      9B.
                  
                  Other
      Information
                  
                  2727PART
      IIIItem
      10.
                  
                  Directors,
      Executive Officers and Corporate Governance
                  
                  27Item
      11.
                  
                  Executive
      Compensation
                  
                  28Item
      12.
                  
                  Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                  
                  30Item
      13.
                  
                  Certain
      Relationships and Related Transactions, and Director
      Independence
                  
                  31Item
      14.
                  
                  Principal
      Accountant Fees and Services
                  
                  3333PART
      IVItem
      15.
                  
                  Exhibits
                  
                  33Signatures
                  
                  
                  
                  34Financial
      Statements
                  
                  F-1




i





PREDICTIVE
STATEMENTS AND ASSOCIATED RISK





Certain
statements in this Report, and the documents incorporated by reference herein,
constitute predictive statements. Such predictive statements involve known and
unknown risks, uncertainties and other factors which may cause deviations in
actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied. Such factors
include, but are not limited to: market and customer acceptance and demand for
our products; our ability to market our products; the impact of competitive
products and pricing; the ability to develop and launch new products on a timely
basis; the regulatory environment, including government regulation in the PRC;
our ability to obtain the requisite regulatory approvals to commercialize our
products; fluctuations in operating results, including spending for research and
development and sales and marketing activities; and other risks detailed from
time-to-time in our filings with the U.S. Securities and Exchange Commission
(the “SEC”).





The words
"believe, expect, anticipate, intend and plan" and similar expressions identify
predictive statements. These statements are subject to risks and uncertainties
that cannot be known or quantified and, consequently, actual results may differ
materially from those expressed or implied by such predictive statements.
Readers are cautioned not to place undue reliance on these predictive
statements, which speak only as of the date they are made.





Unless
otherwise noted, all currency figures in this filing are in U.S. dollars.
References to "yuan" or "RMB" are to the Chinese yuan (also known as the
renminbi). According to the currency exchange website www.xe.com, as of May 31,
2009, US $1.00 = 6.8283 yuan.




ii





PART I




ITEM 1. BUSINESS





Our
Corporate History





China
Infrastructure Construction Corporation (the “Company”) was organized on
February 28, 2003 as Fidelity Aircraft Partners LLC, a Colorado limited
liability company (“Fidelity LLC”). On December 16, 2004, Fidelity LLC converted
itself into Fidelity Aviation Corporation by filing a Statement of Conversion
and Articles of Incorporation with the Colorado Secretary of State. Effective
August 24, 2009, the Company changed its name from Fidelity Aviation Corporation
to China Infrastructure Construction Corporation. The name change is currently
being reviewed by the Financial Industry Regulatory Authority (the
“FINRA”).





The
Company was formed to purchase large commercial (transport category) jet
airframes, salvage the usable aircraft parts and components from them and sell
the parts and components. The Board of Directors evaluated the future market
for our aircraft parts business and resolved not to pursue this line of
business anymore.





Acquisition of
New Line of Business




On
October 8, 2008, the Company entered into a Share Exchange Agreement with (i)
Northern Construction Holdings, Ltd., a Hong Kong limited company (“NCH”); and
(ii) the holder of all of the outstanding voting stock of NCH, Mr. Hongyun Li,
who held the shares on behalf of Mr. Rui Shen, whereby the Company exchanged
12,000,000 voting common shares, or approximately 78% shares of the Company for
100% of the shares of NCH, as described below.





Through
the Share Exchange Agreement, we effectively implemented a reverse acquisition
whereby we issued to the beneficiary Mr. Rui Shen an aggregate of 12,000,000
shares of our common stock, in exchange for all of the issued and outstanding
capital stock of NCH.  NCH thereby became our wholly-owned subsidiary
and Mr. Shen became our controlling stockholder.  We issued these
shares in a private transaction pursuant to the exemption under Regulation D of
the Securities Act.  All of our stock issued to Mr. Shen may be
acquired in the future by Mr. Rong Yang, our Chief Executive Officer and
Chairman, pursuant to a call option held by Mr. Yang.





As a
result of the Share Exchange Agreement, Beijing Fortune Capital Management,
Ltd., a PRC limited liability company (“BFCM”), a 95% owned subsidiary of NCH,
became our indirect majority-owned subsidiary.  Also as a result of
the Share Exchange Agreement, Beijing Chengzhi Qianmao Concrete Co, Ltd., a PRC
corporation (“Beijing Concrete”), the operating company, and a 99.5% owned
subsidiary of BFCM, also became our indirect majority-owned
subsidiary.





For
accounting purposes, the share exchange transaction was treated as a reverse
acquisition with NCH as the acquirer and Fidelity as the acquired party.
 When we refer in this report to business and financial information for
periods prior to the consummation of the reverse acquisition, we are referring
to the business and financial information of NCH on a consolidated basis unless
the context suggests otherwise.





1





Our
current corporate structure is set forth in the following diagram:











History
and Operations of Beijing Concrete





Beijing
Concrete was established in January, 2002. The company specializes in the
production of ready-mixed concrete and other types of special high-performance
concrete for developers and the construction industry.  The company is
certified to produce all types of concrete for residential and commercial
developers as well as industrial companies.





In May
2008, the company completed its reorganization. Through this reorganization,
Beijing Concrete’s original shareholders transferred 99.5% of their shares to
BFCM in exchange for $1.39 million US Dollars. The remaining 0.5% in Beijing
Concrete is owned by Mr. Rong Yang, one of the original founders and
majority shareholders of Beijing Concrete.  BFCM is a joint venture
company established in Beijing, China. BFCM has two shareholders, NCH holding
95% and Beijing Xingyuqing Tech Co., Ltd. holding 5%. As a result of the
reorganization, Beijing Concrete became an indirect subsidiary of
NCH.





Beijing
Concrete owns and operates three production lines of ready-mixed concrete, which
consist of 3 stationary concrete mixers. In addition, it owns 2 concrete
transport vehicle pumps, 35 concrete mixing trucks and 3 bulk cement transport
vehicles.  All pump and transport vehicles are installed with GPS
tracking systems, enabling supervision of quality production and safe
delivery.





Beijing
Concrete currently has an annual output of approximately 1.2 million cubic
meters of concrete. All of the company’s products have passed the ISO9001-2005
Certification Quality System and Integrated Certification System including
Quality Management System Certification, Environmental Management System
Certification and Occupational Health and Safety Management System Certification
issued by Beijing Zhong Jian Xie Certification Centre.




Over the
past six years, Beijing Concrete has enjoyed an average growth rate over 30%
annually. We have successfully expanded our operations from a single production
facility in Beijing to additional production in the nearby city of Tangshan.
Currently, the Company has two prime production facilities each with two
ready-mix HZS120 series concrete production lines. One facility is located in
Beijing’s Nanhaizi area, on the west side of the Yizhuang Economic Development
Zone south of Beijing. The other is located in the Tangshan Development Zone,
about two hundred kilometers east of Beijing, with a combined annual operating
capacity from these two locations of 3.0 million cubic meters. Our management
team has delivered sound historical financial results with the shareholder
equity of our company increasing to $20.9 million in US dollars as of May 31,
2009.





2








Financials
results from fiscal year ended May 31st 2008,
and May 31st 2009
(in US dollars):





2008
                  
                  2009Revenues
                  
                  $39.3
      million
                  
                  $66.8
      millionNet
      Income
                  
                  $4.8
      million
                  
                  $10.5
      million





In July
2008, the Company commenced construction of a mixing concrete batch plant at
Jing-Tang Harbor of Tangshan to expand its operations in Hebei Province. The
construction of the new plant is expected to be completed by 2010 and has a
production capacity of 500,000 cubic meters per annum.





Management
has also mapped out a plan to establish or acquire two production facilities in
Tianjin. Tianjin is one of the largest cities in China and one of the fastest
growing real estate and infrastructure developments in the Bohai Gulf economic
zone, according to the PRC Council.  We estimate that Tianjin city
will require millions of cubic meters of concrete in the next few years.
Management has decided to capture this significant expanding opportunity by
establishing or acquiring two concrete production plants in the Bohai
Gulf.





Management
has also mapped out a plan to establish or acquire one production facility in
Taiyuan, Shanxi Province, where we have already two of our major clients,
namely, Guangzhou Fuli Real Estate Group and China Railway, which have about 3.5
million square meters of residential construction area. We estimate that Taiyuan
will require millions of cubic meters of concrete in the next few
years.





Management
is also considering establishing one or two movable facilities for China Railway
for its projects.




Management
is also dedicated to be the leading “Green Concrete” producer in China. The
“Green Concrete” refers to increasing the green content of the concrete, not
only by reducing the energy and raw material consumption, but also by mixing
various industrial wastes as possible to protect the environment.





Locations





Currently,
the company has two production facilities. One facility is located in the
Nanhaizi area, on the west side of the Yizhuang economic development zone in
Beijing. The other is located at the Tangshan harbor, about two hundred
kilometers from Beijing.





Our
Business





Overview





We are a
producer of advanced ready-mix concrete materials in Beijing, China. We are
committed to conducting our operations with an emphasis on the extensive use of
recycled waste materials, the efficient production of our concrete materials
with minimal energy usage, dust and air pollution, and innovative products,
methods and practices.




We are
able to meet the stringent environmental and technical needs of a rapidly
growing market. The types of projects that we provide concrete for include large
express railways, bridges, tunnels, skyscrapers, dams, and nuclear reactor
infrastructure projects that many competitors are not able to produce due to
technical difficulties, resource and information limitations. Recent projects
for which we have acted as a leading concrete and structural materials provider
include:





• Beijing
Place Plaza





• Beijing
Wanjing International Mansion





•
Tangshan Central Plaza





•
Projects with Beijing 5th Gen
Semiconductor Company





3





•
Projects with Beijing Fuli Real Estate Company





•
Projects with Beijing Tian Yan Garden Real Estate





•
Projects with Beijing Zhongxin Semiconductor Company





• Beijing
Rainbow City Project





Our
Industry





China’s
importance as a producer and user of concrete and concrete products has been
swiftly growing since the 1990s as its economy has opened and become more
developed and vibrant.  China is the world’s largest producer of cement and
the output of cement reached up to 1.38 billion tons in 2008.  Its
production has grown about 10 percent per year over the past two decades and is
now growing even faster to keep up with massive urbanization. Today China
produces roughly half of the total global output of cement, whereas the next
three largest producers, India, Japan, and the United States combined produce
less than 20 percent.





Concrete
product producers will remain the largest market for cement in China, accounting
for approximately 40% of all cement consumption in 2010. The government’s
continued efforts to modernize the country’s infrastructure is exemplified by
such massive projects as the South-North Water Diversion - designed to redirect
water to the northern plains from Central and South China. This project,
scheduled for completion in 2050, will result in annual cement consumption of
over one million metric tons alone.





China
accounts for half of all new building activity in the world and rapid expansion
is expected to continue to 2030 as up to 400 million citizens are expected to
move into urban areas.





Residential
and non-residential buildings in China are increasingly requiring much more
concrete due to, among other reasons, the short supply of wood. China is
currently the largest consumption market of cement worldwide at over $200
billion annually. China’s cement consumption will amount to approximately 44% of
global demand in 2010 and will be greater than current combined consumption of
India and the U.S. by 2010. At the present rate, it is presumed that China will
continue to be an important player in the global construction materials
marketplace for at least the next two decades.




China’s
concrete market is considered highly competitive, with over 100,000 providers.
Global Information Inc. reports that ready-mix concrete companies will benefit
from an extremely favorable outlook in China, where large-scale construction
projects will require significant amounts of ready-mixed concrete. In the
Beijing concrete market, for example, no competitor has greater than a 10%
market share.





Products
and Services





We
specialize in “ready-mixed concrete”, a concrete mixture made at our production
facilities. This is the most common form of concrete, and accounts for nearly
three-fourths of all concrete produced. Ready-mixed concrete is mixed on demand
and is shipped to worksites by concrete mixer trucks.




This
sector in the concrete market is growing at a fast rate, largely due to the
Chinese government’s implementation of Decree #341 in 2004, which bans on-site
concrete production in over 200 cities across China, with the goal of reducing
environmental damages from onsite cement mixing and improves the quality of
cement used in construction. The use of ready-mix concrete minimizes worksite
noise, dirt and congestion. Additionally, most additives used in ready-mix
concrete are environmentally safe. We use at least 34% recyclable components in
our mixtures.





Green
Concrete is the concrete that utilizes industrial waste, or other recycled
materials as part of its raw materials, such as the ash reclaimed from the
power-plant, the grounded wasted steel slag powder, and the wasted ore from
steel mills.  Green Concrete has better performance and properties
than regular concrete in terms of endurance and strength, among other
things.





4





Since the
Green Concrete uses large amounts of industrial waste and reduces the amount of
cement used in the concrete admixture by 27-38%, the Company’s products are
therefore very cost effective and   environmentally friendly as
well:





Features
of “Green Concrete” include:




·      Reduced
cement consumption


·      Reduced
costs of concrete


·      Reduced
costs of construction


·      Reduced
energy consumption


·      Improved
attributes (i.e. strength, endurance, bonding, etc.)





We have a
product portfolio that serves the diverse needs of our developing customer base
and its unique construction and infrastructure projects. While we mainly
specialize in ready-mix concrete formulations from controlled low-strength
material to high-strength concrete, each specifically formulated to meet the
individual needs of each project, we provide both industry standard and highly
innovative products, including: Green Concrete, Self-dense Concrete, Lightweight
Aggregate Pump-able Concrete, Heavy Concrete, Macro-void Pervious Concrete, C60
Mass Concrete, Color Concrete.





Manufacturing
Process





Introduction
to Concrete





Concrete
      is a mixture of paste and aggregates (sand & rock). The paste is
      usually composed of cement and water, coating the surface of the fine sand
      and coarse aggregates such as rocks and binding them together into a
      rock-like mass known as concrete.
                
                Aggregates
      comprise 60 to 75 percent of the total volume of concrete. The type and
      size of the aggregate mixture depends on the thickness and purpose of the
      final concrete product. A continuous gradation of particle sizes is
      desirable for efficient use of the paste. In addition, aggregates should
      be clean and free from any matter that might affect the quality of the
      concrete.





The key
to achieving a strong, durable concrete rests on the careful proportioning and
mixing of the ingredients. A concrete mixture that does not have enough paste to
fill all the voids between the aggregates will be difficult to place and will
produce rough, honeycombed surfaces and porous concrete. A mixture with an
excess of cement paste will be easy to place and will produce a smooth surface;
however, the resulting concrete will be more likely to crack and be
uneconomical.





A
properly proportioned concrete mixture will possess the desired workability for
the fresh concrete and the required durability and strength for the hardened
concrete. Typically, a mixture is by volume about 10 to 15 percent cement, 60 to
75 percent aggregates and 15 to 20 percent water. Entrained air bubbles in many
concrete mixtures may also take up another 5 to 8 percent.





The
character of concrete is determined by the quality of the paste. The strength of
the paste, in turn, depends on the ratio of water to cement. The water-cement
ratio is the weight of the mixing water divided by the weight of the cement.
High-quality concrete is produced by lowering the water-cement ratio as much as
possible without sacrificing the workability of fresh concrete. Generally, using
less water produces a higher quality concrete provided the concrete is properly
placed, consolidated and cured.





5





Besides
portland cement, the most widely used type of cement around the world, concrete
may contain other cementitious materials including (i) fly ash, a waste
byproduct from coal burning electric power plants; (ii) ground slag, a byproduct
of iron and steel manufacturing; and (iii) silica fume, a waste byproduct from
the manufacture of silicon or ferro-silicon metal. The concrete industry uses
these materials, which would normally have to be disposed in land-fill sites, to
the advantage of concrete. The materials participate in the hydration reaction
and significantly improve the strength, permeability and durability of
concrete.





Admixtures
are generally products used in relatively small quantities to improve the
properties of fresh and hardened concrete. They are used to modify the rate of
setting and strength development of concrete, especially during hot and cold
weather. The most common is an air-entraining agent that develops millions of
tiny air bubbles in concrete, which imparts durability to concrete in freezing
and thawing exposure. Water reducing admixtures enable concrete to be placed at
the required consistency while minimizing the water used in the mixture, thereby
increasing strength and improving durability. A variety of fibers are
incorporated in concrete to control cracking or improve abrasion and impact
resistance.





Manufacturing
Process





The
following is a flow chart of the manufacturing process of our main product—
ready-mix concrete:











Mix
Plants





We own 3
mixing concrete batch plants including 4 production lines, which are stationary,
and plant-mounted mixer that mixes the concrete before it is discharged into a
truck mixer.  And we use the truck mixers primarily as an agitating
haul unit at a central mix operation.





Quality
Control Laboratories





The
proportioning of a concrete mix design should result in an economical and
practical combination of materials to produce concrete with the properties
desired for its intended use, such as workability, strength, durability and
appearance. We have laboratories on the site of each plant, performing quality
control tests (“Q/C Test”) throughout our manufacturing process to ensure that
our products are accustomed to the needs of the customers. During various stages
of the ready-mix concrete manufacturing, the labs inspect the raw materials,
such as the sand, rocks and water, and determine the proportion of the
ingredients of the concrete in accordance with the specifications received from
the customers, before the mixing of aggregates and paste. Right after the mixing
process, the labs will also perform tests on the fluid concrete with respect to
its minimum cement content, air content, slump, maximum size of aggregate,
strength, etc. The Company, over the years, has developed some expertise in
selecting the proportions based on previously developed guidelines and
experience. We have established methods for selecting the proportions for
concrete for each batch and producing environmental friendly concrete with best
performance:





6





·
            We
      utilize fly ash, waste ore, slag or other cementitious materials, which
      enhance concrete properties, to supplement our cement. We aim to have the
      least amount of water that can result in a mixture that can be easily
      placed, consolidated and finished.


·
            Our
      labs also make sure the concrete aggregates are required to meet
      appropriate specifications and in general should be clean, strong and
      durable.


·
            We
      apply some air-entraining and water reducing admixtures into the
      ready-mixed concrete to adjust the rate of setting and strength
      development of our concrete.





The
Company tests the absolute volume of the concrete to determine the safety
factor, through which the Company reduces the costs of cement while still
meeting the criteria of the product specifications. In addition, the Company
applies advanced statistical and orthogonal (two perpendicular right angles)
design techniques in test and data processing, which is a system design property
that facilitates the feasibility and compactness of complex designs. These
processes allow the Company to produce a more cost efficient “Green Concrete”
while maintaining the product’s integrity.





Hydration





After the
aggregates, water, and the cement are combined, the mixture remains in a fluid
condition for about four to six hours during which we use the agitator trucks to
transport, place and finish the concrete in its final location. We have around
80 truck drivers operating and delivering the concrete to customers mainly in
the Beijing area and Tangshan, Hebei Province.





Sales
and Marketing





Our
marketing efforts are geared towards advancing Beijing Concrete as the supplier
of choice for building China’s most modern and challenging projects. We are
constantly seeking ways to raise its profile and leverage additional publicity.
To this end, we plan to expand Beijing Concrete’s presence at leading
construction industry events and in periodicals to build on its successful
reputation. The primary goal when expanding into new markets is to reinforce the
sales effort by promoting positive testimonials and success stories from the
company’s strong base of high profile clients.





The
marketing strategy of the Company relies primarily on direct sales and we
usually develop our market through the following three means: (i) by our sales
department, which consists of 5-6 employees, conducts the market promotion and
development and also collects the feedback from the customers on the Company’s
products; (ii) by the salesmen, currently around 10 people, that we contract
with to expand our client base; and (iii) by references from our current
customers and our raw material suppliers.





Raw
Materials and Suppliers





We rely
on third party suppliers of the raw materials to manufacture our products. The
main components of our products include cement, fly ash, slag, admixture, sand
and gravel. Our primary suppliers of each are:




Raw Material
              
              SuppliersCement
              
              Tianjin
      Zhenxing Cement Factory, Hebei Wushan Cement Factory,
                Hebei
      Luan Xinmaopai Cement FactoryFly
      ash
              
              Beijing
      Xingda Fly Ash Co., Baolu Tongda Co., Zhongxin Shenyuan Fly
                Ash
      Co.Slag
              
              Beijing
      Shenshou Slag Co., Tangshan Slag Co., Beijing Liuhuan Construction
      Trade  Center Co.Sand
              
              Zhuo
      Zhou Hongyuan Sand & Gravel Factory, Zhuozhou Shuishang Leyuan Sand
      & Gravel FactoryGravel
              
              Changqing
      Sand & Gravel Factory, Zhuozhou Shuishang Leyuan Sand & Gravel
      Factory





7




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





Principal
Customers





Our
clients are mostly property developers and industrial companies, as well as PRC
state-owned companies. Some of them are publicly listed, such as Beijing Capital
Steel Group, Tangshan Jiahua Chemical Corporation and Guangzhou Fuli Real Estate
Group, a public company listed on the Hong Kong Stock
Exchange.  Fuli Group’s annual sales are over 1.5 billion US
dollars.  The PRC state-owned companies, which are our customers,
include China Railway, China Construction Group, Beijing Construction
Corporation and Beijing Chemical and Coking. The Company had two major
customers, which represented 25% and 12% of the Company’s total sales for the
fiscal year ended May 31, 2009. And the Company had sales to one major customer,
which represented 17% of the Company’s total sales for the fiscal year ended May
31, 2008.





The
following table summarizes some of the high-end residential and commercial real
estate development projects, which we have completed.





Project
      Names
              
              Year
              
              Concrete
      SuppliedBeijing
      Zhongxin Semiconductor Company
              
              2002
              
              Supplied
      total 140,000 cubic meters400,000
      square meters construction spaceBeijing
      Rainbow City Project
              
              2003
              
              Supplied
      100,000 cubic meters560,000
      square meters construction spaceBeijing
      5th
      Generation semiconductor Company
              
              2004
              
              Supplied
      70,000 cubic meters120,000
      square meter constructionBeijing
      World Trade CBD project
              
              2005
              
              Supplied
      90,000 cubic meters180,000
      square meter construction spaceBeijing
      Wanjing International Mansion
              
              2005-
              
              Supplied
      180,000 cubic meters240,000
      square meters construction space
              
              2006Tangshan
      Central Plaza
              
              2007-
              
              81,000
      cubic meters in total from September56,000
      square meters construction
                (project
      still in progress)
              
              2009
              
              2007
      to April 2009Beijing
      Fuli Real Estate Company
                1.1  million
      construction space
                (project
      still in progress)
              
              2006
              
              755,000
      cubic meters in total from June 2006 to February
      2009





8





Competition





Competitive
Environment





Our
principal market, Beijing, is considered highly competitive. It has enjoyed
stronger economic growth and a higher demand for construction than other regions
of China. There are approximately 130 concrete mixture stations in the Beijing
area. The industry is highly segmented, with no single supplier having greater
than a 10% market share.We currently have an
estimated market share of 3% in the ready mix concrete market in
Beijing.





In our
market, we compete with national, regional and local construction
firms.  Some of our competitors have greater financial and other
resources than us. Our main competitors include Beijing Heng Kun Concrete
Center, Beijing Jian Gong Group Concrete Center, and Beijing Gaoqing Concrete
Company.





We
compete primarily on the basis of quality, technological innovation and price.
We bid on projects which are awarded through a competitive bid process. Projects
are usually awarded to the lowest bidder, although other factors such as shorter
delivery schedules are also taken into consideration.





Our Competitive
Advantages





Comparing
us with other companies in the concrete industry in Beijing and in the Jingjin
area, we believe that Beijing Concrete has the following competitive
advantages:




(1)        Environmentally friendly
products.




Beijing
Concrete produces all types of concrete products as well as specialty concrete
for varied industry uses. After many years of research and experiment, we are
applying approximately 34% of fly ash (from coal fired power plants) and some
mining waste into our concrete products. In doing so, we not only help reduce
environmental wastes but we also increase our product quality. Because we
successfully apply this technology to our products, we have obtained tax
exemptions and other incentives from government organizations. In
accordance with a policy by China’s State Development and Reform Commission (the
“SDRC”), if the percentage of the industrial wastes components in a company’s
concrete mixture exceeds 30%, such company may enjoy the exemptions from income
tax and franchise tax in China.




(2)        Strict and effective quality management
system.





Beijing Concrete
has developed an effective quality management system that covers all aspects of
the company’s operation, including planning, budgeting, purchasing and
production. In every step, we have fully trained, experienced and skilled
employees. They are working in concert to ensure our product’s quality and
timely delivery. From signing contracts to finishing a project, the company has
a quality follow up supervising team to make sure that our concrete matches our
clients’ engineering designs exactly.





Our
quality supervisory staff on each construction site is responsible for
finished product quality. For every previous project completed, we have earned a
100% pass rate. We believe that this effective management puts us at the top of
the industry standard and has allowed the Company to achieve 5% more in profit
for every cubic meter of concrete we produce and deliver.




(3)        We also have lower production costs by
smart outsourcing and quality engineering.




More than
80% of concrete costs come from raw materials, such as cement, sands, fly ash,
gravel, etc. The costs of materials have a direct impact on our production
costs. We compare several suppliers’ quotes before we make final purchases. This
ensures that we have the lowest prices for all of our raw
materials.




In
addition, the percentage of each of the raw materials needed to produce concrete
is also a big factor that affects our production costs. Our research laboratory
led by top professional engineers conducts extensive experiments to ensure that
we have excellent mixing formulas while achieving the required quality. The
scientific formula of each type of concrete, in Management's view, gives us 3-5%
lower costs than our competitors.





9





In short,
our company has significant advantages when compared with companies in the same
industry. We believe our tremendous track record in the industry, effective
management, solid clientele base, lower production costs and higher than the
industry average profit margin puts us at the top in the industry.





Research
and Development





Construction
materials companies are under extreme pressure to respond quickly to industry
demands with new designs and product innovations that support rapidly changing
technical demand and regulatory requirements. We devote a substantial amount of
attention to the research and development of advanced construction materials
that meet the demands of project specific needs while striving to lead the
industry in value, materials and processes. We have sophisticated in house
R&D and testing facilities, a highly technical onsite team, access to highly
specialized market research, cooperation with a leading research institution,
experienced management and advisory board, and close relationships with leading
concrete materials experts. Our research and development expense amounted to
approximately $43,200 and $25,800 for the years ended May 31, 2009 and 2008,
respectively.





Our
research laboratory led by top professional engineers conducts extensive
experiments to ensure that we have excellent mixing formulas while achieving the
required quality. This includes production of innovative concrete admixtures to
supply the company. Admixtures are chemical raw materials used for production of
concrete. Admixture is also one of the key materials that affect the quality of
concrete. Through technology innovation, our admixture products help the company
produce environmentally friendly and energy-saving concrete.





We intend
to conduct research in developing new raw materials. Adoption of new techniques
and materials will help us reduce our cost of production and will help improve
our product quality.





The
Company has dedicated itself to testing and research of ready-mix
concrete.  The Company has been developing and researching the raw
material mixture ratios, which are crucial to the quality of our products, by
our advanced testing facilities and the 17 years of testing experience of our
technical and engineering staff.





Intellectual
Property





We do not
have any patents or other registered intellectual property.





Environmental
Matters




We are
required to comply with environmental protection laws and regulations
promulgated by the Ministry of Construction and the State Environmental
Protection Administration. Some specific environmental regulations apply to
sealed transportation of dust materials and final products, non-open storage of
sand and gravel, as well as reduction of noise and dust pollution on production
site and encouraged use of waste materials. The governmental regulatory
authorities conduct periodic inspections. We have met all the requirements in
the past inspections. We are one of the companies in the industry that have been
awarded the honor of “Green Concrete Producer” by the PRC
government.





Regulation





Our
products and services are subject to regulation by governmental agencies in the
PRC, and Beijing Cityand
Hebei Province. Business and company registrations, along with the products, are
certified on a regular basis and must be in compliance with the laws and
regulations of the PRC and provincial and local governments and industry
agencies, which are controlled and monitored through the issuance of licenses.
All of the Company’s products have passed the ISO9001-2005 Certification Quality
System and Integrated Certification System including Quality Management System
Certification, Environmental Management System Certification and Occupational
Health and Safety Management System Certification issued by the Beijing Zhong
Jian Xie Certification Centre.





10





The
company has been in compliance with all registrations and requirements for the
issuance and maintenance of all licenses and certificates required by the
applicable governing authorities, including the Ministry of Construction and the
Beijing Administration of Industry & Commerce. The Ministry of Construction
awards Level II and Level III qualifications to concrete producers in the PRC
construction industry, based on criteria such as production capacity, technical
qualification, registered capital and capital equipment, as well as performance
on past projects. Level II companies are licensed to produce concrete of all
strength levels as well as special concrete, and Level III producers are
licensed to produce concrete with strength level C60 and below. We are a Level
II concrete producer.





Our
Employees




As of
September 15, 2009, we had 150 employees. The following table sets forth the
number of our full-time employees by department as of September 15,
2009:







Department
                        
                        Number of
                          EmployeesExecutives
      Management & Sales
                        
                        
                        10Technical
      & Engineering Staff
                        
                        
                        15Production
      Staff
                        
                        
                        20Administrative
      Staff
                        
                        
                        25Drivers
      & Heavy Equipment Operators
                        
                        
                        80Total
                        
                        
                        150





As
required by applicable PRC law, we have entered into employment contracts with
most of our officers, managers and employees. We are working towards entering
into employment contracts with those employees who do not currently have
employment contracts with us. We believe that we maintain a satisfactory working
relationship with our employees, and we have not experienced any significant
labor disputes or any difficulty in recruiting staff for our
operations.





Our
employees in China participate in a state pension plan organized by PRC
municipal and provincial governments. We are currently required to contribute to
the plan at the rate of 20% of the average monthly salary.





In
addition, we are required by PRC law to cover employees in China with various
types of social insurance, and we believe that we are in material compliance
with the relevant PRC laws.




Insurance




We
maintain worker's employee insurance for our employees.  We do not
maintain any other business, liability or key employee insurance.




11




ITEM
1A. RISK FACTORS





An
investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below, together with all of the other
information included in this report, before making an investment decision. If
any of the following risks actually occurs, our business, financial condition or
results of operations could suffer. In that case, the trading price of our
common stock could decline, and you may lose all or part of your
investment.





RISKS
RELATED TO OUR BUSINESS





Our
revenue will decrease if the construction and building material industries
experience a downturn, or if the concrete industry in China does not realize an
increase in demand at the pace we expect.




Our
cement and cement products serve as key components in construction and building
projects for a wide range of industries and private and public sector projects.
 Therefore, we are subject to the general changes in economic conditions
affecting many segments of the economy.  Demand for concrete is typically
affected by a number of economic factors, including, but not limited to,
interest rates, market  and government
confidence,  political priorities,  level  of
construction of commercial, government  and residential projects, and
the level of construction financing available. Also, our revenue is dependent
upon the cost and availability of raw materials, the cost of labor, increased
taxes, and other costs of doing business.  If there is a decline in
construction activity in China or a rise in the costs of doing business in
China, demand for our concrete products may decline and our revenue will
decrease.




Competition in
the concrete industry could adversely affect our results of
operations.




We
operate in local and regional markets in China, and many factors affect the
competitive environments we face in any particular market. These factors include
the number of competitors in the market, the pricing policies and financial
strength of those competitors, the total production capacity serving the market,
the barriers to enter the market and the proximity of natural resources, as well
as general economic conditions and demand for construction materials within the
market. Although we believe our products and quality of service are superior,
there is no assurance that existing or new competitors may not receive contracts
for which we compete by reason of events and factors beyond our
control.




Our
growth strategy is capital intensive; without additional capital on favorable
terms we may not accomplish our strategic plan.





Our
expansion plans for the Tianjin region are premised upon our raising sufficient
capital to timely build or acquire two new production plants to accommodate the
increased concrete production needs for that developing
region.  Although we believe that, given our current level of revenue
and net income, our management team, and our track record of
performance, we may be able to raise sufficient capital to carry out our
strategic plan, there can be no assurance that we will do so. Our inability to
raise sufficient capital on favorable terms to fund these new production plants
would negatively impact our projected revenues and our projected
growth.





12





The
construction of the new plant in Tangshan may not be completed if we fail to
obtain a construction permit from the local construction
commission.





A
successful completion of the construction of the new mixing concrete batch plant
in Tangshan city, Hebei Province in China is contingent on the review and
investigation of the local Commission of Construction in Tangshan. A review by
the Tangshan Commission of Construction includes but is not limited to the
proper installation of the facilities, the geographical features of the subsoil
that the foundation of the plant is based on, and the environmental impact of
the facilities.  If we fail to obtain the required permit from the
Tangshan Commission of Construction, we may not be able to operate the new
plant.





We
depend heavily on key personnel, and turnover of key employees and senior
management could harm our business.





Our
future business and results of operations depend in significant part upon the
continued contributions of our key technical and senior management personnel,
including Rong Yang, our Chairman and Chief Executive Officer and Chief
Financial Officer.  They also depend in significant part upon our ability
to attract and retain additional qualified management, technical, marketing and
sales and support personnel for our operations.  If we lose a key employee,
or if we are not able to attract and retain skilled employees as needed, our
business could suffer.  Significant turnover in our senior management could
significantly deplete our institutional knowledge held by our existing senior
management team.  We depend on the skills and abilities of these key
employees in managing the manufacturing, technical, marketing and sales aspects
of our business, any part of which could be harmed by turnover in the
future.





We
expect approximately 60% of our sales revenues will be derived from our ten
largest customers in 2010 and any reduction in revenues from any of these
customers would reduce our revenues and net income.





In fiscal
year 2008, we derived 51.5% of our revenue from our ten largest
customers.  In fiscal year 2009, we derived 48% from our ten largest
customers.  We believe we are favorably diversifying our customer
base to put less reliance on any one customer; however, the loss of a major
customer could significantly decrease our revenues and net income.




Leased
properties and production lines may be terminated due to unexpected
reasons.





We
presently have a ten year lease, signed in 2006, for our Beijing production base
and have built our offices and manufacturing facilities on this site. While we
believe this lease is secure for us, under our laws, the lease could be
terminated for unexpected reasons. In Tangshan, we built our production base on
land owned and provided by our client, Beijing Coking and Chemical Group. We
have a good relationship with this client and expect this relationship to
continue. However, the relationship could terminate for unexpected reasons. We
are currently negotiating to expand plant facilities in Tangshan with an
independent developer, and will report such terms when and if agreed
upon.





Our
intellectual property rights in our proprietary admixture products may be hard
to protect, and litigation to protect our intellectual property rights may be
costly.





One of
our strategies focuses on the development, use and sale of specialty admixture
concrete products.  We currently use such products in our own
operations and sell such products to competitors. These proprietary admixture
products are protected by trade secrets only, and are not patented. Accordingly,
we cannot ensure that a competitor may not be able to duplicate and
commercialize our proprietary products. Litigation may be necessary to enforce
our intellectual property rights and given the relative unpredictability of
China’s legal system and potential difficulties enforcing a court judgment in
China, there is no guarantee litigation would result in an outcome favorable to
us. Further, any such litigation could be costly and divert management away from
our core business. Our financial results could be negatively affected if we
cannot protect or timely develop our admixture products.





13


Our
rapid expansion could significantly strain our resources, management and
operational infrastructure which could impair our ability to meet increased
demand for our products and hurt our business results.





To
accommodate our anticipated growth and to build additional production plants, we
will need to expend capital resources and dedicate personnel to implement and
upgrade our accounting, operational and internal management systems and enhance
our record keeping and contract tracking system.  If we cannot successfully
implement these measures efficiently and cost-effectively, we will be unable to
satisfy the demand for our products, which will impair our revenue growth and
hurt our overall financial performance.





Any
disruption in the supply chain of raw materials and our products could adversely
impact our ability to produce and deliver products.





We depend
upon the purchase of raw materials for the production of our concrete products.
While we have established good relationships with our suppliers, and we
typically pass on any cost increases to our customers, any significant change in
demand or cost or disruption of supply chain could impair our revenue and hurt
our overall financial performance.





Certain
of our existing stockholders have substantial influence over our company, and
their interests may not be aligned with the interests of our other
stockholders.





Mr. Rui
Shen is the beneficial owner of approximately 52% of our common stock.  As
a result, he has significant influence over our business, including decisions
regarding mergers, consolidations and the sale of all or substantially all of
our assets, election of directors and other significant corporate actions. This
concentration of ownership may also have the effect of discouraging, delaying or
preventing a future change of control, which could deprive our stockholders of
an opportunity to receive a premium for their shares as part of a sale of our
company and might reduce the price of our shares.





Environmental
claims or failure to comply with any present or future environmental regulations
may require us to spend additional funds and may harm our results of
operations.





Our
business is subject to environmental, health and safety laws and regulations
that affect our operations, facilities and products in each of the jurisdictions
in which we operate. We believe that we are in compliance with all material
environmental, health and safety laws and regulations related to our products,
operations and business activities. Although we have not suffered material
environmental claims in the past, the failure to comply with any present or
future regulations could result in the assessment of damages or imposition of
fines against us, suspension of production, cessation of our operations or even
criminal sanctions.   The enacting of new regulations could also require us
to acquire costly equipment or to incur other significant expenses.





We
have limited insurance coverage and do not carry any business interruption
insurance, third-party liability insurance for our manufacturing facilities or
insurance that covers the risk of loss of our products in use.





We
presently only carry insurance for the protection of our workers. We do not
carry business interruption insurance, third party liability insurance, or
insurance for any other aspect of our business. If we should suffer from natural
or other unexpected disaster, business or government litigation, or any
uncovered risks of operation, our financial condition may be significantly
impaired.


14


We
do not have any independent directors and there is no assurance that any
independent directors will be appointed.





We are
currently seeking independent directors for our Board of Directors; however we
do not presently have independent directors, and there is no assurance that any
independent directors will be appointed in the future.  While our
non-independent directors owe fiduciary duties to our Company and our
shareholders, they may also determine compensation packages in cash, stock,
benefits and /or a combination of those items that will accrue to their own
benefit.




We
may be exposed to potential risks relating to our internal controls over
financial reporting and our ability to have those controls attested to by our
independent auditors.





As
directed by Section 404 of the Sarbanes-Oxley Act of 2002 or SOX 404, the SEC
adopted rules requiring public companies to include a report of management on
the company’s internal controls over financial reporting in their annual
reports, including Form 10-K.  In addition, the independent registered
public accounting firm auditing a company’s financial statements must also
attest to and report on the operating effectiveness of the company’s internal
controls. These requirements will first apply to our annual report on Form
10-K for the fiscal year ending May 31, 2010 with respect to the filing of
an auditor’s report. We can provide no assurance that we will comply with all of
the requirements imposed thereby. There can be no assurance that we will receive
a positive attestation from our independent auditors, if and when the respective
regulations become applicable to us.  In the event we identify significant
deficiencies or material weaknesses in our internal controls that we cannot
remediate in a timely manner or we are unable to receive a positive attestation
from our independent auditors with respect to our internal controls, investors
and others may lose confidence in the reliability of our financial
statements.





Our
holding company structure may limit the payment of dividends.





We have
no direct business operations, other than our ownership of our subsidiaries.
 While we have no current intention of paying dividends, should we decide
in the future to do so, as a holding company, our ability to pay dividends and
meet other obligations depends upon the receipt of dividends or other payments
from our operating subsidiaries and other holdings and investments.  In
addition, our operating subsidiaries, from time to time, may be subject to
restrictions on their ability to make distributions to us, including as a result
of restrictive covenants in loan agreements, restrictions on the conversion of
local currency into U.S. dollars or other hard currency and other regulatory
restrictions as discussed below.  If future dividends are paid in RMB,
fluctuations in the exchange rate for the conversion of RMB into U.S. dollars
may reduce the amount received by U.S. stockholders upon conversion of the
dividend payment into U.S. dollars.





Chinese
regulations currently permit the payment of dividends only out of accumulated
profits as determined in accordance with Chinese accounting standards and
regulations.  Our subsidiaries in China are also required to set aside a
portion of their after tax profits according to Chinese accounting standards and
regulations to fund certain reserve funds.  Currently, our subsidiaries in
China are the only sources of revenues or investment holdings for the payment of
dividends.  If they do not accumulate sufficient profits under Chinese
accounting standards and regulations to first fund certain reserve funds as
required by Chinese accounting standards, we will be unable to pay any
dividends.


15


RISKS
RELATED TO DOING BUSINESS IN CHINA





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 that 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.  For example, if the China Securities
Regulatory Commission, or CSRC, or another PRC regulatory agency, determines
that CSRC approval is required in connection with the share exchange
transaction, the share exchange transaction may be delayed or cancelled, or we
may become subject to penalties.





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.





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





In recent
years, the Chinese economy has experienced periods of rapid expansion and highly
fluctuating rates of inflation.  During the past ten years, the rate of
inflation in China has been as high as 20.7% and as low as -2.2%.  These
factors have led to the adoption by the Chinese government, from time to time,
of various corrective measures designed to restrict the availability of credit
or regulate growth and contain inflation.  High inflation may in the future
cause the Chinese government to impose controls on credit and/or prices, or to
take other action, which could inhibit economic activity in
China,  reduce demand, materially increase our costs,  and
thereby harm the market for our products and our Company.


16


Governmental
control of currency conversion may affect the value of an investment in the
Company and may limit our ability to receive and use our revenues
effectively.





The
Company receives all of its revenues in Renminbi, which is currently not a
freely convertible currency. 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. Any future restrictions on currency
exchanges may limit our ability to use revenue generated in Renminbi to fund any
future business activities outside China or to make dividend or other payments
in U.S. dollars.  Although the Chinese government introduced regulations in
1996 to allow greater convertibility of the Renminbi for current account
transactions, significant restrictions still remain, including primarily the
restriction that foreign-invested enterprises may only buy, sell or remit
foreign currencies after providing valid commercial documents, at those banks in
China authorized to conduct foreign exchange business. In addition, conversion
of Renminbi for capital account items, including direct investment and loans, is
subject to governmental approval in China, and companies are required to open
and maintain separate foreign exchange accounts for capital account items. We
cannot be certain that the Chinese regulatory authorities will not impose more
stringent restrictions on the convertibility of the Renminbi.





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





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, and the price of our
common stock may be harmed. 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.





Recent PRC State Administration of
Foreign Exchange (“SAFE”) Regulations regarding offshore financing activities by
PRC residents have undergone a number of changes that may increase the
administrative burden the Company faces. The failure by the Company’s
stockholders who are PRC residents to make any required applications and filings
pursuant to such regulations may prevent the Company from being able to
distribute profits and could expose the Company and its PRC resident
stockholders to liability under PRC law.





SAFE
issued a public notice (the “October Notice”) effective November 1, 2005, which
requires registration with SAFE by the PRC resident stockholders of any foreign
holding company of a PRC entity. Without registration, the PRC entity cannot
remit any of its profits out of the PRC as dividends or otherwise; however, it
is uncertain how the October Notice will be interpreted or implemented regarding
specific documentation requirements for a foreign holding company formed prior
to the effective date of the October Notice, such as in the Company’s case.
While the Company’s PRC counsel advised it that only the PRC resident
stockholders who receive the ownership of the foreign holding company in
exchange for ownership in the PRC operating company are subject to the October
Notice, there can be no assurance that SAFE will not require the Company’s other
PRC resident stockholders to make disclosure. In addition, the October Notice
requires that any monies remitted to PRC residents outside of the PRC be
returned within 180 days; however, there is no indication of what the penalty
will be for failure to comply or if stockholder non-compliance will be
considered to be a violation of the October Notice by the Company or otherwise
affect the Company.





In the
event that the proper procedures are not followed under the SAFE October Notice,
the Company could lose the ability to remit monies outside of the PRC and would
therefore be unable to pay dividends or make other distributions. The Company's
overseas and cross border investment activities could be restricted, and its
ownership structure affected. The Company’s PRC resident stockholders could be
subject to fines, other sanctions and even criminal liabilities under the PRC
Foreign Exchange Administrative Regulations promulgated January 29, 1996, as
amended.  All of this could adversely affect our business and our
prospects.


17


We
may be exposed to liabilities under the Foreign Corrupt Practices Act, and any
determination that we violated the Foreign Corrupt Practices Act could hurt our
business.





We are
subject to the Foreign Corrupt Practices Act, or FCPA, and other laws that
prohibit improper payments or offers of payments to foreign governments and
their officials and political parties by U.S. persons and issuers as defined by
the statute for the purpose of obtaining or retaining business. Our activities
in China create the risk of unauthorized payments or offers of payments by one
of the employees, consultants, sales agents or distributors of our Company, even
though these parties are not always subject to our control. It is our policy to
implement safeguards to discourage these practices by our employees. However,
our existing safeguards and any future improvements may prove to be less than
effective, and the employees, consultants, sales agents or distributors of our
Company may engage in conduct for which we might be held responsible. Violations
of the FCPA may result in severe criminal or civil sanctions, and we may be
subject to other liabilities, which could negatively affect our business,
operating results and financial condition.





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





Beijng
Concrete 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.





The
Company may have difficulty establishing adequate management, legal and
financial controls in the PRC.





The PRC
historically has not adopted a western style of management and financial
reporting concepts and practices, as well as in modern banking, computer and
other control systems. The Company may have difficulty in hiring and retaining a
sufficient number of qualified employees to work in the PRC. As a result of
these factors, the Company may experience difficulty in establishing management,
legal and financial controls, collecting financial data and preparing financial
statements, books of account and corporate records and instituting business
practices that meet western standards.





RISKS
RELATED TO THE MARKET FOR OUR STOCK





Our
common stock is quoted on the OTC Bulletin Board which may have an unfavorable
impact on our stock price and liquidity.





Our
common stock is quoted on the Over-the-Counter Bulletin Board (the “OTCBB”).
 The OTCBB is a significantly more limited market than the New York Stock
Exchange or NASDAQ.  The quotation of our shares on the OTCBB may result in
a less liquid market available for existing and potential stockholders to trade
shares of our common stock, could depress the trading price of our common stock,
could cause high volatility and price fluctuations, and could have a long-term
adverse impact on our ability to raise capital in the future.


18


We
are subject to penny stock regulations and restrictions.





The
Company’s common stock may be 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. 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





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 on the OTCBB for the Company’s common stock,
and there is no assurance that one will develop or be sustained.  The
Company currently does not satisfy the initial listing standards for a higher
exchange than the OTCBB, and cannot ensure that it will be able to satisfy such
listing standards on a higher exchange, or that its common stock will be
accepted for listing on any such exchange.





The
elimination of monetary liability against the Company’s directors, officers and
employees under the Colorado law and the Company’s By-Laws, 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.





Under
Colorado law, a corporation may indemnify its directors, officers, employees and
agents under certain circumstances, including indemnification of such persons
against liability under the Securities Act of 1933, as amended. In addition, a
corporation may purchase or maintain insurance on behalf of its directors,
officers, employees or agents for any liability incurred by him in such
capacity, whether or not the corporation has the authority to indemnify such
person.





The
effect of these provisions may be to eliminate the rights of the Company
and its stockholders (through stockholder’s derivative suits on behalf
of the Company) to recover monetary damages against a director, officer,
employee or agent for breach of fiduciary duty. Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended, may be
provided for directors, officers, employees, agents or persons controlling an
issuer pursuant to the foregoing provisions, the opinion of the SEC is that such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is therefore unenforceable.




ITEM 2. DESCRIPTION OF
PROPERTY




Currently,
we do not own any land, as the PRC does not permit private land ownership. The
Company is leasing land site for their production bases from Beijing Guang Da
Yuan Logistic Company.  In our Beijing production base, we currently lease
a land lot of approximately 22,000 square meters. The term of the lease is 10
years and will expire in 2016. The rent is $51,819 per annum. We built on site
our own buildings and offices of approximately 600 square meters.




In our
Tangshan production base, we are using approximately 5,300 square meters of land
provided by our client, Beijing Coking and Chemical Group. As a result, we do
not pay rent for using this site.  We anticipate being at this site
for two more years while we help complete their Phase III project.  We
are building a new production base in Tangshan at a different location. The
new facility will have a much larger space.





We
believe that all our properties have been adequately maintained, are generally
in good condition and are suitable and adequate for our
business


19


ITEM 3. LEGAL PROCEEDINGS





From time
to time, we may become involved in various lawsuits and legal proceedings
which arise in the ordinary course of business.  However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm our business.  We are
currently not aware of any such legal proceedings or claims that we believe will
have a material adverse affect on our business, financial condition or operating
results.





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





No
matters were submitted to a vote of shareholders during the fourth quarter
of the fiscal year ended May 31, 2009.




PART II





ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES





There is
a limited market for our common stock.




Dividends




We have
not paid dividends on our common stock. We plan to retain future earnings, if
any, for use in our business, and do not anticipate paying dividends on our
common stock in the foreseeable future.





Market
for Our Common Stock




Our
common stock is traded in the over-the-counter market and quotations are
reported on the Over-the-Counter Bulletin Board overseen by the FINRA under the
symbol FAVC. FINRA is currently reviewing our application for the change of name
to China Infrastructure Construction Corporation. The table below sets forth the
high and low bid price for each quarter since there has been a market for our
common stock, as reported by the Yahoo Finance website at
http://finance.yahoo.com/lookup?s=favc.




These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.




High
                    
                    
                    LowYear
      Ended May 31, 2009Fourth
      Quarter
                    
                    $
                    0.00
                    
                    
                    $
                    0.00Third
      Quarter
                    
                    $
                    0.00
                    
                    
                    $
                    0.00Second
      Quarter
                    
                    $
                    0.00
                    
                    
                    $
                    0.00First
      Quarter
                    
                    $
                    0.00
                    
                    
                    $
                    0.00Year
      Ended May 31, 2008Fourth
      Quarter
                    
                    $
                    0.00
                    
                    
                    $
                    0.00





As of
September 15, 2009, there are approximately 60 holders of record of our common
stock.


20


Securities
Authorized for Issuance under Equity Compensation Plan





We do not
currently have any securities authorized for issuance under any equity
compensation plans and we do not have any equity compensation
plans.





Recent
Issuances of Securities





On October
8, 2008, we issued 12,000,000 shares of our common stock to the stockholder of
NCH in exchange for all the issued and outstanding capital stock of Northern
Construction Holdings, Ltd. ("NCH") pursuant to that certain Share Exchange
Agreement dated October 8, 2008.  We did not receive any cash consideration
in connection with the share exchange.  The number of our shares issued to
the stockholder of NCH was determined based on an arms-length negotiation.
 The issuance of our shares to this individual was made in reliance upon
exemptions from the registration requirements of the Securities Act pursuant
to Section 4(2) of the Securities Act and Regulation D promulgated
thereunder.





Penny
Stock Regulations





The SEC
has adopted regulations which generally define a “penny stock” to be an equity
security that has a market price of less than $5.00 per share. Our common stock
falls within the definition of penny stock and is subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000, or annual incomes
exceeding $200,000 or $300,000, together with their spouse).





For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser’s prior written consent to the transaction. Additionally, for any
transaction, other than exempt transactions, involving a penny stock, the rules
require the delivery, prior to the transaction, of a risk disclosure document
mandated by the SEC relating to the penny stock market. The broker-dealer also
must disclose the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer’s presumed control over the market. Finally, monthly
statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
Consequently, the “penny stock” rules may restrict the ability of broker-dealers
to sell our common stock and may affect the ability of investors to sell their
common stock in the secondary market.





ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION





SPECIAL
NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS





CERTAIN
STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE
WHAT ARE KNOWN AS "FORWARD-LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS
ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY
SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS",
"INTENDS", "WILL", "HOPES", "SEEKS", "ANTICIPATES", "EXPECTS "AND THE LIKE OFTEN
IDENTIFY SUCH FORWARD-LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A
STATEMENT IS A FORWARD-LOOKING STATEMENT. SUCH FORWARD-LOOKING STATEMENTS
INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE
PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR
IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES,
INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO
CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR
ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO
PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE
FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS
AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-K AND IN THE COMPANY'S
OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS
CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR
ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.


21


The
"Company", "we," "us," and "our," refer to (i) China Infrastructure Construction
Corporation; (ii) Beijing Chengzhi Qianmao Concrete Corporation Ltd. (“Beijing
Concrete”), (iii) Beijing Fortune Capital Management, Ltd. (“BFCM”)
and (iv) Northern Construction Holdings, Ltd. (“NCH”).





Overview





The
Company’s business was launched in 2003 when it borrowed $125,000 to purchase
two non-flying, narrow-body DC-9-51 airframes without engines and thrust
reversers. The Company salvaged the rotable parts and systems from those
airframes, and our business consisted of selling them to the aviation industry.
Aviation customers for the parts were primarily: 1) aircraft operators,
including leasing companies, charter airlines and scheduled-service airlines
that operate DC-9 and MD-80 aircraft, as well as 2) the maintenance and repair
organizations which service those aircraft. We evaluated the perspectives of our
aircraft parts business and resolved not to pursue this line of business
anymore.




On
October 8, 2008, the Company entered into and consummated the transactions
contemplated under a Share Exchange Agreement with Northern Construction
Holdings, Ltd., a Hong Kong limited company (“NCH”) and its shareholder pursuant
to which the Company purchased from the shareholder of NCH all issued and
outstanding shares of NCH’s common stock in consideration of the issuance of
12,000,000 shares of common stock of Fidelity (the “Share
Exchange”).





The Share
Exchange resulted in (i) a change in control of Fidelity with the shareholder of
NCH owning approximately 78% of issued and outstanding shares of common stock of
Fidelity, (ii) NCH becoming a wholly-owned subsidiary of Fidelity, and (iii)
appointment of certain nominees of the shareholder of NCH as directors and
officers of Fidelity and resignation of John Schoenauer as director, Chief
Executive Officer, Chief Financial Officer, Secretary and Treasurer of
Fidelity.





NCH,
through its subsidiary Beijing Chengzhi Qianmao Concrete Corporation Ltd.
(“Beijing Concrete”) engages in production of ready-mixed concrete and other
special high-performance concrete for developers and the construction industry.
It has two prime production facilities. One facility is located in the Nanhaizi
area, on the west side of the Yizhuang economic development zone in Beijing. The
other is located at the Tangshan harbor, about two hundred kilometers from
Beijing.





Results
of Operations





Fiscal
Year Ended May 31, 2009 Compared to Fiscal Year Ended May 31, 2008





Sales
Revenues





Sales for
the fiscal year ended May 31, 2009 were $66,778,296 as compared to $39,302,543
for the same period last year, an increase of 70%. The increase in sales is
attributable to the successful development of our customers’ network and to the
increase of sales prices. The Company has been implementing a policy of
reciprocal arrangements with its suppliers, whereby the suppliers refer
potential customers to the Company in consideration of awarding more business to
such suppliers. In addition, the Company has been encouraging and rewarding the
non-sales employees for referring business to the Company. Increase of sales
prices proportionally to the increase of cost of raw materials, mainly cement,
and labor costs, also contributed to the increase of revenues.





Costs
of Goods Sold





Cost of
goods sold for the fiscal year ended May 31, 2009 was $53,776,934 as compared to
$33,050,443 for the same period last year, an increase of 63%. The increase in
cost of goods is attributable to the increase of cost of raw materials during
this period and the increase of sales due to the development of our customer
network.


22


Gross
Profit





Gross
profit for the fiscal year ended May 31, 2009 was $13,001,362, an increase of
approximately 108%, as compared to $6,252,100 for the fiscal year ended May 31,
2008. The increase in gross profit is attributable to the increase of sales due
to the successful development of our customers’ network. With improved cost
control activities, our gross margin in the fiscal year ended May 31, 2009 was
approximately 19.5%, which is higher than the 15.9% in the same period last
year.





Selling
Expenses





Selling
expenses for the fiscal year ended May 31, 2009 were $391,789 as compared to
$234,209 for the same period last year, an increase of $157,580, or
approximately 67%. Selling expenses consisted primarily of expenses
relating to after sales services, promotional measures for customers’
network development, and vehicular usage and maintenance. The increase in
selling expenses was primarily due to the increase in sales
revenue.





General
and Administrative Expenses





General
and administrative expenses for the fiscal year ended May 31, 2009 were
$1,311,042, as compared to $756,449 for the same period last year, an increase
of $554,593, or approximately 73%. The increase of the general and
administrative expenses was primarily due to the consummation of the Share
Exchange Agreement and related legal and professional expenses.





Operating
Income





Our
operating income for the fiscal year ended May 31, 2009 was $11,298,531, an
increase of approximately 115% as compared to $5,261,442 for the fiscal year
ended May 31, 2008. The increased income was due to the increased sales revenue
and our budget control on operating expenses.





Income
Taxes





During
the fiscal year ended May 31, 2009, our business operations were solely
conducted by our subsidiaries incorporated in the PRC and we are governed by the
PRC Enterprise Income Tax Laws.  PRC enterprise income tax is
calculated based on taxable income determined under PRC GAAP. In accordance with
the Income Tax Laws, a PRC domestic company is subject to enterprise income tax
at the rate of 25%.





However,
our PRC subsidiary is considered by the respective tax authorities a resource
multipurpose utilization enterprise, which qualifies it for an exemption from
income tax until December 31, 2010.





Net
Income





Net
income was $10,461,209 for the fiscal year ended May 31, 2009, compared to
$4,802,337 in the last fiscal year, an increase of $5,658,872 or approximately
118%. The increase was primarily due to the increased sales and our budget
control on operating expenses during the fiscal year ended May 31,
2009.





Liquidity
and Capital Resources





As of May
31, 2009, we had cash and cash equivalents of $921,841. We have historically
funded our working capital needs from operations, advance payments from
customers, bank borrowings, and capital from shareholders. Our working capital
requirements are influenced by the level of our operations, the numerical and
dollar volume of our project contracts, the progress of our contract execution,
and the timing of accounts receivable collections.


23


The
following table sets forth a summary of our cash flows for the periods
indicated:





12 Months Ended
                        May 312009
                      
                      
                      2008Net
      cash provided by operating activities
                      
                      $
                      2,277,902
                      
                      
                      $
                      4,870,154Net
      cash (used in) investing activities
                      
                      
                      (2,375,085)
                      
                      
                      
                      (810,357)Net
      cash provided by (used in) financing activities
                      
                      
                      123,861
                      
                      
                      
                      (3,494,350)Effect
      of exchange rate change on cash and cash equivalents
                      
                      
                      58,185
                      
                      
                      
                      89,840Net
      increase in cash and cash equivalents
                      
                      
                      84,863
                      
                      
                      
                      655,287Cash
      and cash equivalents, beginning balance
                      
                      
                      836,978
                      
                      
                      
                      181,691Cash
      and cash equivalents, ending balance
                      
                      
                      921,841
                      
                      
                      
                      836,978





Operating
Activities





Net cash
provided by operating activities was $2,277,902 for the fiscal year ended May
31, 2009, whereas an amount of $4,870,154 in net cash was provided by operating
activities for the corresponding period of 2008. The net cash reflects the
revenues generated by the operations of Beijing Concrete.





Investing
Activities





Net cash
used in investing activities was $2,375,085 during the fiscal year 2009. It was
primarily used for construction of new production facility in
Tangshan.





Financing
Activities





There was
$123,861 of cash provided by financing activities during the fiscal year ended
May 31, 2009, as a result of receipt of payables from related
parties.





Critical
Accounting Policies and Estimates





Management's
discussion and analysis of its financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
Our financial statements reflect the selection and application of accounting
policies which require management to make significant estimates and judgments.
See note 3 to our consolidated financial statements, "Summary of Significant
Accounting Policies." Management bases its estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions. We believe that the following reflect the more
critical accounting policies that currently affect our financial condition and
results of operations.





Revenue
recognition





The
Company receives revenue from sales of concrete products. We recognize revenue
when all four revenue recognition criteria have been met: persuasive evidence of
an arrangement exists, we have delivered the product, the fee is fixed or
determinable and collection is reasonably assured. Our product delivered to
customers would be checked on site by customers and once the products are
accepted by customers they will sign the check or notes payable. There is no
warranty issue after the delivery.





The
Company recognizes its revenues net of value-added taxes (“VAT”). The Company is
subject to VAT which is levied at the rate of 6% on the invoiced value of sales.
However, the Company enjoys a free VAT policy according to the national policy,
which encourages the development of the cement industry if the manufacturer
satisfies the environmental protection requirements. The Company has enjoyed the
free VAT policy from January 1, 2006 and has been reviewed every year by the
local tax bureau.


24


Use
of estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the combined
financial statements and accompanying notes. Management believes that the
estimates utilized in preparing its financial statements are reasonable and
prudent. Actual results could differ from these estimates.





Inventories





Inventories
are stated at the lower of cost, determined on a weighted average basis, and net
realizable value. Net realizable value is the estimated selling price, in the
ordinary course of business, less estimated costs to complete and
dispose.





Off-Balance
Sheet Arrangements





The
Company does not have any off-balance sheet arrangements.





ITEM 8.  FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA





The
following table presents selected financial data for the Company on a
consolidated basis for the fiscal years ended May 31, 2009 and 2008,
respectively.





We
derived the selected financial data set forth below from the Company's
consolidated audited statements of operations for the fiscal years ended May 31,
2009 and 2008 and the consolidated audited balance sheets as at May 31, 2009 and
2008, each of which is included in this report. You should read the following
summary financial data in conjunction with the consolidated financial statements
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this report.





For Year Ended
                      May 31,2009
                    
                    
                    2008Gross
      revenues
                    
                    $
                    66,778,296
                    
                    
                    $
                    39,302,543Net
      operating income
                    
                    
                    11,298,531
                    
                    
                    
                    5,261,442Net
      income
                    
                    
                    10,461,209
                    
                    
                    
                    4,802,337Total
      assets
                    
                    
                    34,840,724
                    
                    
                    
                    17,531,294Total
      liabilities
                    
                    $
                    12,745,803
                    
                    
                    $
                    7,006,962





The
Company's consolidated audited financial statements for the fiscal years ended
May 31, 2009 and 2008, together with the report of the independent certified
public accounting firm thereon and the notes thereto, are presented beginning at
page F-1.




ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE




We
changed our independent registered public accounting firm effective October 10,
2008 from Ronald R. Chadwick, P.C. (“Chadwick”) to Child, Van Wagoner &
Bradshaw, PLLC. Information regarding the change in the independent registered
public accounting firm was disclosed in our Current Report on Form 8-K
filed with the SEC on October 10, 2008.  There were no disagreements
with Chadwick or any reportable events requiring disclosure under
Item 304(b) of Regulation S-K.


25


ITEM
9A(T). CONTROLS AND PROCEDURES





Disclosure
Controls and Procedures





As
required by Rule 13a-15 under the Exchange Act, our management, including our
Chief Executive Officer and our Chief Financial Officer, evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures as of May 31, 2009.





Disclosure
controls and procedures refer to controls and other procedures designed to
ensure that information required to be disclosed in the reports we file or
submit under the Securities Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC 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. In
designing and evaluating our disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating and
implementing possible controls and procedures.




Management
conducted its evaluation of disclosure controls and procedures under the
supervision of our chief executive officer and our chief financial officer.
Based on that evaluation, management concluded that because of the material
weakness in internal control over financial reporting described below, our
disclosure controls and procedures were not effective as of May 31,
2009.





Management’s
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act.  Our internal control over
financial reporting is designed to provide reasonable assurance regarding the
(i) effectiveness and efficiency of operations, (ii) reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, and (iii) compliance
with applicable laws and regulations.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.





Management
assessed the effectiveness of our internal control over financial reporting as
of May 31, 2009. In making this assessment, we used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control - Integrated Framework. Based on our assessment,
we determined that, as of May 31, 2009, our internal control over financial
reporting was ineffective based on those criteria.




During
our assessment of the effectiveness of internal control over financial reporting
as of May 31, 2009, management identified the following significant
deficiencies:





-
            Accounting
      and Finance Personnel’s Lack of US GAAP expertise. Our current accounting
      staff is relatively new and inexperienced, and needs substantial training
      to meet the higher demands of being a US public company. The accounting
      skills and understanding necessary to fulfill the requirements of US GAAP
      based reporting, including the skills of subsidiary financial statements
      consolidations, are inadequate and were inadequately supervised. The lack
      of sufficient and adequately trained accounting and finance personnel
      resulted in a restatement of the consolidated financial statements of NCH,
      a direct wholly-owned subsidiary of the Company, for the fiscal years
      ended May 31, 2008 and 2007 to correct an error in certain minority
      interest ownership accounting.


26


-
            Lack
      of Internal Audit Function – We lack qualified resources to perform the
      internal audit functions properly. In addition, the scope and
      effectiveness of the internal audit function are yet to be
      developed.




The
Company’s management determined that the number and nature of these significant
deficiencies, when aggregated, amounted to a material weakness.




Remediation
Initiative




The
Company plans to take the following actions to remediate the material weakness:
(i) hire additional English speaking personnel in the administrative division,
(ii) continue to implement its written control and accountability policies for
administrative personnel, and (iii) start search for US GAAP knowledgeable
financial professionals. Additionally, during the fiscal year ended May 31,
2009, the Company’s staff in the accounting department gained more expertise in
internal audit functions. We plan to continue to take measures to remediate the
material weakness as soon as practicable including providing US GAAP training to
our staff in the accounting department.




A
material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control over financial reporting that
is less severe than a material weakness, yet important enough to merit attention
by those responsible for oversight of the company's financial
reporting.





Auditor
Attestation





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management’s report in this annual
report.





Changes
in Internal Controls over Financial Reporting





Except as
described above, there were no changes in our internal controls over financial
reporting during the fourth quarter of the fiscal year ended May 31, 2009 that
have materially affected, or are 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 are the officers and directors of the Company as of the date of this
report. All of our officers and directors are residents of the PRC. As a result,
it may be difficult for investors to effect service of process within the United
States upon them or to enforce judgments obtained in the United States courts
against them in the PRC.




Name
                    
                    Age
                    
                    PositionRong
      Yang
                    
                    48
                    
                    Chairman,
      President, CEO, CFO and DirectorBingchuan
      Xiao
                    
                    49
                    
                    Director


27


Rong
Yang (CEO, President and Director)





Mr. Yang
is the Chairman and Chief Executive of Beijing Chengzhi Qianmao Concrete Co.,
Ltd. He is also the original founder of the company.  Mr. Yang has
over 20 years experience in the concrete industry. In the mid 80’s, he started
his career by joining China Railway Construction (“CRC”), one of the largest
construction groups in China as well as in Asia.  Before Mr. Yang
founded Beijing Concrete, he was the project manager for one of CRC’s subsidiary
companies. Bringing all his management experience and sales resources, Mr. Yang
founded Beijing Concrete in 2002 and he has been the key executive leading the
company successfully to date.





Bingchuan
Xiao (Director)





Prior to
becoming a Director of the Company on November 5, 2008, Bingchuan Xiao, age 49,
has been working as the Deputy Manager of Xing Yu Qing Technical Trading Co.,
Ltd., a Chinese private company, since May 2007. From May 2001 to April 2007,
Mr. Xiao worked as a consultant and representative of SOS Kinderdorf
International, the umbrella organization in China that unites all autonomous
national SOS Children's Villages. Mr. Xiao graduated from Guangzhou Institute of
Foreign Languages with a degree of Bachelor of Arts in English Literature and
Linguistics.




Audit
Committee





We have
not yet appointed an audit committee. Our board of directors currently acts as
our audit committee. At the present time, we believe that the members of
board of directors are collectively capable of analyzing and evaluating our
financial statements and understanding internal controls and procedures for
financial reporting.





Audit
Committee Financial Expert





Our board
of directors is in the process of finding an “audit committee financial expert”
as defined in Regulation S-K.





Compensation
Committee





We
do not presently have a compensation committee. Our board of directors
currently acts as our compensation committee.




Section
16(a) Beneficial Reporting Compliance




Not
applicable.




Code
of Ethics




We have
not yet adopted a Code of Ethics. We intend to adopt a Code of Ethics in the
near future.




ITEM 11. EXECUTIVE
COMPENSATION




Summary
of Executive Compensation





The
following table reflects the compensation paid to our principal executive
officer and executive officers who have earned more than $100,000 in any of the
previous two fiscal years.


28


Summary
Compensation Table





Name and Principal
                        Position
                      Year
                      
                      Salary
      ($)
                      
                      
                      Total
      ($)Rong
      Yang
                      2009
                      
                      $
                      122,900
                      
                      
                      $
                      122,900Chairman,
      President, CEO and CFO of Fidelity Aviation Corporation
                      2008
                      
                      $
                      15,600
                      
                      
                      $
                      15,600John
      Schoenauer(1)
                      2009
                      
                      $
                      0.00
                      
                      
                      $
                      0.00Chairman,
      President and CEO of Fidelity Aviation Corporation
                      2008
                      
                      $
                      0.00
                      
                      
                      $
                      0.00





(1)
            John
      Schonauer tendered his resignation as President, CFO and Treasurer of the
      Company on October 8, 2008.  Mr. Schoenauer voluntarily resigned
      and did not express disagreement with any policies or actions of the
      Company.





Employment
Agreements





On
December 19, 2009, Beijing Concrete entered into an employment agreement with
Mr. Yang as its Chief Executive Officer. The employment agreement has a
five-year term that provides for automatic one-year extension, beginning on the
first anniversary of the date of the employment agreement, unless either Beijing
Concrete or Mr. Yang gives a 30-day prior notice of termination.
Mr. Yang will receive a base salary at a rate of RMB 840,000 per year or
approximately $122,900. Mr. Yang’s employment agreement provides that he
may also be eligible for an annual discretionary bonus in an amount of up to 25%
of his base salary dependent upon the company’s financial performance. The
employment agreement also provides that Mr. Yang shall be entitled during the
employment period to (i) a car with a driver, and (ii) paid annual leave of 20
days.





Compensation
Discussion and Analysis





We intend
to provide our named executive officers (as defined in Item 402 of Regulation
S-K) with a competitive base salary that is in line with their roles and
responsibilities when compared to peer companies of comparable size in similar
locations.





It is not
uncommon for PRC private companies in northeastern China to have base salaries
as the sole form of compensation. The base salary level is established and
reviewed based on the level of responsibilities, the experience and tenure of
the individual and the current and potential contributions of the individual.
The base salary is compared to the list of similar positions within comparable
peer companies and consideration is given to the executive’s relative experience
in his or her position.  Base salaries are reviewed periodically and at the
time of promotion or other changes in responsibilities.




We plan
to implement a more comprehensive compensation program, which takes into account
other elements of compensation, including, without limitation, short and
long-term compensation, cash and non-cash, and other equity-based compensation
such as stock options. We expect that this compensation program will be
comparable to the programs of our peer companies and aimed to retain and attract
talented individuals.





We will
also consider forming a compensation committee to oversee the compensation of
our named executive officers. The majority of the members of the compensation
committee would be independent directors.





Additional
Narrative Disclosure





We have
no plans that provide for the payment of retirement benefits, or benefits that
will be paid primarily following retirement, including, but not limited to, tax
qualified defined benefit plans, supplemental executive retirement plans, tax
qualified defined contribution plans and non-qualified defined contribution
plans.


29


There are
no contracts agreements, plans or arrangements, whether written or oral, that
provide for payment to a named executive officer at, following, or in connection
with the resignation, retirement or other termination of a named executive
officer or a change in control or the company or a change in the executive
officers responsibilities following a change in control, with respect to each
named executive officer.





Director
Compensation




During
the fiscal year ended May 31, 2009, we did not pay our directors any
compensation for their services as our directors.  In the future, we may
adopt a policy of paying independent directors a fee for their attendance at
board and committee meetings.  We do reimburse each director for reasonable
travel expenses related to such director’s attendance at board of directors and
committee meetings.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS





The
following table sets forth as of the date of this report, certain information
with respect to the beneficial ownership of our voting securities by (i) each
person or group owning more than 5% of the Company’s securities, (ii) each
director, (iii) each executive officer, and (iv) all executive officers and
directors as a group.




Name & Address of
                            Beneficial Owner
                          
                          Office
                          
                          Title of Class
                          
                          Amount and
                            Nature
                            of Beneficial
                            Ownership(1)
                          
                          
                          Percent of
                            Class(2)Officers and DirectorsRong
      Yang
                            C915
      Jia Hao International Business Center
                            116
      Zizhuyuan Road Haidan District
                            Beijing,
      China 100097 (3)
                          
                          Chairman,
      CEO, CFO and President
                          
                          Common
      Stock
                          
                          
                          0
                          
                          
                          
                          0
                          %Bingchuan
      Xiao
                            C915
      Jia Hao International Business Center
                            116
      Zizhuyuan Road Haidan District
                            Beijing,
      China 100097
                          
                          Director
                          
                          Common
      Stock
                          
                          
                          0
                          
                          
                          
                          0
                          %All
      officers and directors as a group (2 persons named above)
                          
                          
                          
                          Common
      Stock
                          
                          
                          
                          
                          
                          
                          0
                          %5%
      Securities HolderRui
      Shen
                            3814
      Ballentree Way
                            Duluth,
      GA 30097 (3)
                          
                          
                          
                          Common
      Stock
                          
                          
                          8,000,000
                          
                          
                          
                          52.3
                          %





(1)
              Beneficial
      Ownership is determined in accordance with the rules of the SEC and
      generally includes voting or investment power with respect to
      securities.


30




(2)
            As of the date of this
      report, we had 15,295,500 shares of our common stock
      outstanding.





(3)
            Under
      that certain Call Option Agreement between Mr. Yang and Mr. Shen, the then
      holder of 12,000,000 shares of our common stock, Mr. Yang was granted an
      option to purchase all of the stock held by Mr. Shen over the course of
      approximately three years in installments, for a total purchase price of
      one thousand two hundred dollars, upon occurrence of certain events as
      described below. Under the Call Option Agreement, Mr. Yang can assign the
      right to purchase the shares to third
parties.





Event
                                
                                SharesEntry
      by Mr. Yang and the Company into a binding employment agreement for a term
      of not less than five years for Mr. Yang to serve as the Company’s
      Chairman and Chief Executive Officer
                                
                                
                                4,000,000The
      Company and its subsidiaries achieving not less than $5,000,000 in
      after-tax net income, as determined under United States Generally Accepted
      Accounting Principles consistently applied (“US GAAP”) for the fiscal year
      ended May 31, 2009
                                
                                
                                3,000,000The
      Company and its subsidiaries achieving not less than $9,000,000 in
      after-tax profits, as determined under US GAAP, for the fiscal year ending
      May 31, 2010
                                
                                
                                3,000,000The
      Company and its subsidiaries achieving not less than $14,000,000 in
      after-tax profits, as determined under US GAAP, for the fiscal year ending
      May 31, 2011.
                                
                                
                                2,000,000





On
December 19, 2009, Mr. Yang entered into a binding employment agreement with the
Company for a term of five years and exercised option to assign to certain third
parties the purchase from Mr. Shen of 4,000,000 shares in
aggregate.




ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





Transactions
with related persons





The
following includes a summary of transactions for the last fiscal years ended May
31, 2009 and 2008, in which we were a participant, and in which any related
person had a direct or indirect material interest (other than compensation
described under “Executive Compensation”).  We believe the terms obtained
or consideration that we paid or received, as applicable, in connection with the
transactions described below were comparable to terms available or the amounts
that would be paid or received, as applicable, in arm's-length
transactions.





Total
outstanding amount of related party payables was $564,419 and $677,930 as of May
31, 2009 and 2008, respectively. These payables bear no interest and have no
fixed payment terms. Currently, the related party payable consists of the
following:





May 31, 2009
                  
                  
                  May 31, 2008Rong
      Yang (Chairman)
                  
                  $
                  372,489
                  
                  
                  $
                  133,120Lao
      Zhan (common shareholder)
                  
                  
                  -
                  
                  
                  
                  524,416Heng
      Jian (20% owned by a common shareholder)
                  
                  
                  -
                  
                  
                  
                  20,394Liao
      Shunjun (Chairman’s brother-in-law)
                  
                  
                  98,723
                  
                  
                  
                  -RongHua
      Chang Shen Transportation (20% owned by a common
    shareholder)
                  
                  
                  93,207
                  
                  
                  
                  -$
                  564,419
                  
                  
                  $
                  677,930




31





Total
outstanding amount of related party receivables was $674,289 and $236,042 as of
May 31, 2009 and 2008, respectively. The receivables from related party
consisted of the following:





May 31, 2009
                  
                  
                  May 31, 2008Lao
      Zhan (common shareholder)
                  
                  $
                  465,332
                  
                  
                  $
                  -Yang
      Ming (Chairman Yang Rong’s brother)
                  
                  
                  187,490
                  
                  
                  
                  144,375Heng
      Jian (20% owned  by a common shareholder )
                  
                  
                  20,736
                  
                  
                  
                  -RongHua
      Chang Shen Transportation (20% owned by a common
    shareholder)
                  
                  
                  -
                  
                  
                  
                  91,667Beijing
      Yihua Daxin Investment (holding company)
                  
                  
                  731
                  
                  
                  
                  -$
                  674,289
                  
                  
                  $
                  236,042




Except as
set forth in our discussion above, none of our directors, director nominees or
executive officers has been involved in any transactions with us or any of our
directors, executive officers, affiliates or associates which are required to be
disclosed pursuant to the rules and regulations of the SEC.




Policies
and Procedures for Review, Approval or Ratification of Transactions with Related
Persons





As we
increase the size of our board of directors and gain independent directors, we
expect to prepare and adopt a written related-person transactions policy that
sets forth our policies and procedures regarding the identification, review,
consideration and approval or ratification of “related-persons transactions.”
 For purposes of our policy only, a “related-person transaction” will be a
transaction, arrangement or relationship (or any series of similar transactions,
arrangements or relationships) in which we and any “related person” are
participants involving an amount that exceeds $120,000.  Transactions
involving compensation for services provided to us as an employee, director,
consultant or similar capacity by a related person will not be covered by this
policy.  A related person will be any executive officer, director or a
holder of more than five percent of our common stock, including any of their
immediate family members and any entity owned or controlled by such
persons.





We
anticipate that, where a transaction has been identified as a related-person
transaction, the policy will require management to present information regarding
the proposed related-person transaction to our audit committee (or, where
approval by our audit committee would be inappropriate, to another independent
body of our board of directors) for consideration and approval or ratification.
 Management’s presentation will be expected to include a description of,
among other things, the material facts, the direct and indirect interests of the
related persons, the benefits of the transaction to us and whether any
alternative transactions are available.





To
identify related-person transactions in advance, we are expected to rely on
information supplied by our executive officers, directors and certain
significant stockholders.  In considering related-person transactions, our
board of directors will take into account the relevant available facts and
circumstances including, but not limited to:





·
            the risks, costs and benefits to
      us;





·
            the impact on a director's
      independence in the event the related person is a director, immediate
      family member of a director or an entity with which a director is
      affiliated;





·
            the terms of the
      transaction;





·
            the availability of other sources
      for comparable services or products;
and





·
            the terms available to or from,
      as the case may be, unrelated third parties or to or from our employees
      generally.


32





We also
expect that the policy will require any interested director to excuse himself or
herself from deliberations and approval of the transaction in which the
interested director is involved.





ITEM 14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES





The
following lists fees billed by Child, Van Wagoner & Bradshaw, PLLC,
current auditors for the Company, for the years ended May 31, 2009 and
2008:




2009
                
                
                2008Audit
      Fees
                
                $
                80,000
                
                
                $
                100,000Audit
      Related Fees
                
                
                12,000
                
                
                
                -Tax
      Fees
                
                
                -
                
                
                
                -All
      Other Fees
                
                
                -
                
                
                
                -




In the
event that we should require substantial non-audit services, the audit committee
would pre-approve such services and fees.




PART IV





ITEM 15. EXHIBITS





Number
                
                Description2.1
                
                Share
      Exchange Agreement by and between the Company and Northern Construction
      Holdings, Ltd. (1);3.1
                
                Articles
      of Incorporation of the Company (2);3.2
                
                Articles
      of Amendment3.3
                
                By-laws
      of the Company (2);4.1
                
                Specimen
      of Common Stock Certificate;10.1
                
                Form
      of Call Option Agreement dated as of October 8, 2008 by and between Rui
      Shen and Rong Yang (3);10.2
                
                Form
      of Employment Agreement dated as of December 19, 2008 by and between Rong
      Yang and Beijing Concrete;16.1
                
                Letter
      of Ronald R. Chadwick, P.C. to the SEC dated October 9, 2008
      (1);21.1
                
                List
      of Subsidiaries;31.1
                
                Certifications
      of Rong Yang pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002;32.1
                
                Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of
2002;




Footnotes:





(1)
            Incorporated by reference to the
      Current Report on Form 8-K filed by the Company with the SEC on October
      10, 2008.





(2)
            Incorporated by reference to the
      Registration Statement on Form SB-2 filed by the Company with the SEC on
      October 17, 2007.





(3)
            Incorporated by reference to the
      Current Report on Form 8-K/A filed by the Company with the SEC on April
      29, 2009.


33


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.




CHINA
      INFRASTRUCTURE
                      CONSTRUCTION
      CORPORATIONDate:
      September 15, 2009
                    By:
                    /s/
      Rong YangRong
      Yang, CEO and CFO(principal
      executive officer, principal
                      financial
      officer and principal
                      accounting
      officer)





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf of
the Registrant in the capacities and on September 15, 2009.




/s/
      Rong YangRong
      Yang, Director





/s/
      Bingchuan XiaoBingchuan
      Xiao, Director


34




Douglas W.Child, CPA
                  Marty D. Van
      Wagoner, CPA
                  J. Russ
      Bradshaw, CPA
                  William R. Denney, CPA
                  Russell E. Anderson, CPA
                  Scott L.
      Farnes
                  1284 W.Flint Meadow
      Dr. #D
                    Kaysville,
      Utah 84037
                    Telephone
      801.927.1337
                    Facsimile
      801.927.1344

                      
                      5296 S.
      Commerce Dr. #300
                      Salt Lake
      City, Utah 84107
                      Telephone
      801.281.4700
                      Facsimile
      801.281.4701
                      SuiteA,
      5/F
                        Max Share
      Centre
                        373King’s
      Road
                        North Point,
      Hong Kong
                        Telephone
      852.21.555.333
                        Facsimile
      852.21.165.222
                      
                      www.cpaone.net
                REPORT OF INDEPENDENT REGISTERED
      PUBLIC ACCOUNTING FIRM
                  
                  To The Board of Directors and
      Stockholders of
                  
                  China Infrastructure Construction
      Corporation
                  Beijing,
      China
                  
                  We have audited the accompanying
      consolidated balance sheets of China Infrastructure Construction
      Corporation (the Company) as of May 31, 2009 and 2008, and the related
      consolidated statements of operations and comprehensive income, cash
      flows, and changes in stockholders’ equity for the years ended May 31,
      2009 and 2008. These consolidated financial statements are the
      responsibility of the Company's management. Our responsibility is to
      express an opinion on these consolidated financial statements based on our
      audits.

                    
                    We conducted our audits in
      accordance with the standards of the Public Company Accounting Oversight
      Board (United States of America). Those standards require that we plan and
      perform the audits to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. 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 also includes examining, on a test
      basis, evidence supporting the amounts and disclosures in the financial
      statements, 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 provide a reasonable
      basis for our opinion.

                      
                      In our opinion, the consolidated
      financial statements referred to above present fairly, in all material
      respects, the financial position of China Infrastructure Construction
      Corporation as of May 31, 2009 and 2008, and the results of its operations
      and its cash flows for the years ended May 31, 2009 and 2008, in
      conformity with accounting principles generally accepted in the United
      States of America.

                        
                        Child, Van Wagoner & Bradshaw,
      PLLC
                        Salt Lake City, Utah
                        September 2,
      2009


35




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


CONSOLIDATED
FINANCIAL STATEMENTS





May
31, 2009 and 2008







Index
      to Consolidated Financial Statements
                      
                      PageConsolidated
      Balance Sheets
                      
                      
                      F-1Consolidated
      Statements of Operations and Comprehensive Income
                      
                      
                      F-2Consolidated
      Statement of Changes in Stockholders’ Equity
                      
                      
                      F-3Consolidated
      Statements of Cash Flows
                      
                      
                      F-4Notes
      to Consolidated Financial Statements
                      
                      
                      F-5










CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


CONSOLIDATED
BALANCE SHEETS




May 31, 2009
                    
                    
                    May 31, 2008AssetsCurrent
      assetsCash
      and cash equivalents
                    
                    $
                    921,841
                    
                    
                    $
                    836,978Net
      trade accounts receivable
                    
                    
                    26,438,106
                    
                    
                    
                    10,035,581Prepayments
                    
                    
                    -
                    
                    
                    
                    245,495Inventories
                    
                    
                    885,834
                    
                    
                    
                    1,316,445Total
      current assets
                    
                    
                    28,245,781
                    
                    
                    
                    12,434,499Property,
      plant and equipment, net
                    
                    
                    5,649,835
                    
                    
                    
                    4,388,302Other
      receivables
                    
                    
                    270,819
                    
                    
                    
                    472,451Related
      party receivables
                    
                    
                    674,289
                    
                    
                    
                    236,042Total
      other assets
                    
                    
                    945,108
                    
                    
                    
                    708,493Total
      assets
                    
                    $
                    34,840,724
                    
                    
                    $
                    17,531,294Liabilities
      and stockholders’ equityCurrent
      liabilitiesTrade
      accounts payable
                    
                    $
                    10,173,765
                    
                    
                    $
                    5,503,200Related
      party payable
                    
                    
                    564,419
                    
                    
                    
                    677,930Other
      payables
                    
                    
                    1,730,290
                    
                    
                    
                    557,676Accrued
      expenses
                    
                    
                    277,329
                    
                    
                    
                    268,156Total
      current liabilities
                    
                    
                    12,745,803
                    
                    
                    
                    7,006,962Minority
      interests
                    
                    
                    1,210,695
                    
                    
                    
                    577,995Stockholders'
      equityPreferred
      stock, no par value; 10,000,000 shares authorized; no shares issued and
      outstandingCommon
      stock: no par value; 100,000,000 shares authorized;15,295,500
      shares issued and outstanding
                    
                    
                    1,396,644
                    
                    
                    
                    1,368,021Retained
      earnings
                    
                    
                    17,755,631
                    
                    
                    
                    7,294,422Accumulated
      other comprehensive income
                    
                    
                    1,731,951
                    
                    
                    
                    1,283,894Total
      stockholders' equity
                    
                    
                    20,884,226
                    
                    
                    
                    9,946,337Total
      Liabilities and stockholders’ equity
                    
                    $
                    34,840,724
                    
                    
                    $
                    17,531,294





See
accompanying notes to consolidated financial statements




F-1








CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME




Year ended May 31, 2009
                    
                    
                    Year ended May 31, 2008Sales
      revenues
                    
                    $
                    66,778,296
                    
                    
                    $
                    39,302,543Cost
      of goods sold
                    
                    
                    53,776,934
                    
                    
                    
                    33,050,443Gross
      profit
                    
                    
                    13,001,362
                    
                    
                    
                    6,252,100Operating
      expenses:Selling
      expense
                    
                    
                    391,789
                    
                    
                    
                    234,209General
      and administrative expenses
                    
                    
                    1,311,042
                    
                    
                    
                    756,449Total
      operating expenses
                    
                    
                    1,702,831
                    
                    
                    
                    990,658Net
      operating income
                    
                    
                    11,298,531
                    
                    
                    
                    5,261,442Other
      income (expense):Interest
      (expense)
                    
                    
                    (2,097)
                    
                    
                    
                    (40,312
                    )Other
      (expense)
                    
                    
                    (228,502)
                    
                    
                    
                    (138,468
                    )Total
      other income (expense)
                    
                    
                    (230,599)
                    
                    
                    
                    (178,780
                    )Net
      income before income taxes
                    
                    
                    11,067,932
                    
                    
                    
                    5,082,662Income
      taxes
                    
                    
                    -
                    
                    
                    
                    -Net
      income before minority interests
                    
                    
                    11,067,932
                    
                    
                    
                    5,082,662Minority
      interests
                    
                    
                    606,723
                    
                    
                    
                    280,325Net
      income
                    
                    $
                    10,461,209
                    
                    
                    $
                    4,802,337Foreign
      currency translation adjustment
                    
                    
                    474,034
                    
                    
                    
                    892,678Comprehensive
      income
                    
                    $
                    10,935,243
                    
                    
                    $
                    5,695,015Earning
      per share - basic and diluted
                    
                    $
                    0.74
                    
                    
                    $
                    0.40Basic
      and diluted weighted average shares outstanding
                    
                    
                    14,130,465
                    
                    
                    
                    12,000,000





See
accompanying notes to consolidated financial statements





F-2




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY





Accumulated OtherCommon Stock
                              
                              
                              Retained
                              
                              
                              ComprehensiveShares
                              
                              
                              Amount
                              
                              
                              Earnings
                              
                              
                              Income
                              
                              
                              TotalsBalance:
      May 31, 2007
                              
                              
                              12,000,000
                              
                              
                              $
                              1,368,021
                              
                              
                              $
                              5,729,730
                              
                              
                              $
                              391,216
                              
                              
                              $
                              7,488,967Foreign
      currency translation adjustment
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              892,678
                              
                              
                              
                              892,678Net
      income
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              4,802,337
                              
                              
                              
                              
                              
                              
                              
                              4,802,337Dividend
      Paid
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (3,237,645
                              )
                              
                              
                              -
                              
                              
                              
                              (3,237,645
                              )Balance:
      May 31, 2008
                              
                              
                              12,000,000
                              
                              
                              $
                              1,368,021
                              
                              
                              $
                              7,294,422
                              
                              
                              $
                              1,283,894
                              
                              
                              $
                              9,946,337Shares
      effectively issued to former shareholder as part of the recapitalization
      on 10/8/2008
                              
                              
                              3,295,500
                              
                              
                              
                              28,623
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              28,623Foreign
      currency translation adjustment
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              448,057
                              
                              
                              
                              448,057Net
      income
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              10,461,209
                              
                              
                              
                              -
                              
                              
                              
                              10,461,209Balance:
      May 31, 2009
                              
                              
                              15,295,500
                              
                              
                              $
                              1,396,644
                              
                              
                              $
                              17,755,631
                              
                              
                              $
                              1,731,951
                              
                              
                              $
                              20,884,226





See
accompanying notes to consolidated financial statements





F-3








CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


CONSOLIDATED
STATEMENTS OF CASH FLOWS




Year ended May 31, 2009
                                  
                                  
                                  Year ended May 31, 2008Cash
      flows from operating activities:Net
      income
                                  
                                  $
                                  10,461,209
                                  
                                  
                                  $
                                  4,802,337Adjustments
      to reconcile net income to net cash provided by
operations:Minority
      Interest
                                  
                                  
                                  606,723
                                  
                                  
                                  
                                  280,325Depreciation
      and amortization
                                  
                                  
                                  695,464
                                  
                                  
                                  
                                  610,200Provision
      for allowance on accounts receivable
                                  
                                  
                                  18,900
                                  
                                  
                                  
                                  288,030Changes
      in operating liabilities and assets:Trade
      accounts receivable
                                  
                                  
                                  (16,117,557)
                                  
                                  
                                  
                                  (2,485,354)Prepayments
                                  
                                  
                                  247,541
                                  
                                  
                                  
                                  (84,800)Inventories
                                  
                                  
                                  448,959
                                  
                                  
                                  
                                  75,262Other
      receivables
                                  
                                  
                                  219,695
                                  
                                  
                                  
                                  (358,017)Trade
      accounts payable
                                  
                                  
                                  4,539,958
                                  
                                  
                                  
                                  1,942,866Other
      payables
                                  
                                  
                                  1,152,541
                                  
                                  
                                  
                                  423,612Accrued
      expenses
                                  
                                  
                                  4,469
                                  
                                  
                                  
                                  (40,759)Customer
      deposits
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (583,548)VAT
      tax payable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net
      cash provided by operating activities
                                  
                                  
                                  2,277,902
                                  
                                  
                                  
                                  4,870,154Cash
      flows from investing activities:Fixed
      assets additions
                                  
                                  
                                  (46,544)
                                  
                                  
                                  
                                  (839,019)Deposits
      - construction in progress
                                  
                                  
                                  (1,826,851)
                                  
                                  
                                  
                                  (1,370,069)Payments
      to related party receivable
                                  
                                  
                                  (501,690)
                                  
                                  
                                  
                                  -Payments
      from related party receivable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,398,731Net
      cash used by investing activities
                                  
                                  
                                  (2,375,085)
                                  
                                  
                                  
                                  (810,357)Cash
      flows from financing activities:Payment
      for short-term notes payable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (685,035)Proceeds
      from related party payable
                                  
                                  
                                  123,861
                                  
                                  
                                  
                                  615,859Payment
      to related party payable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Dividend
      paid
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (3,228,152)Dividend
      paid to minority interest
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (197,022)Net
      cash provided (used) by financing activities
                                  
                                  
                                  123,861
                                  
                                  
                                  
                                  (3,494,350)Effect
      of rate changes on cash
                                  
                                  
                                  58,185
                                  
                                  
                                  
                                  89,840Increase
      in cash and cash equivalents
                                  
                                  
                                  84,863
                                  
                                  
                                  
                                  655,287Cash
      and cash equivalents, beginning of period
                                  
                                  
                                  836,978
                                  
                                  
                                  
                                  181,691Cash
      and cash equivalents, end of period
                                  
                                  $
                                  921,841
                                  
                                  
                                  $
                                  836,978Supplemental
      disclosures of cash flow information:Interest
      paid in cash
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  50,589Income
      taxes paid in cash
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -





See
accompanying notes to consolidated financial statements




F-4




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





Note
1.   Nature of operations





China
Infrastructure Construction Corporation (“China Infrastructure”), formerly
Fidelity Aviation Corporation, was organized on February 28, 2003 as Fidelity
Aircraft Partners LLC, a Colorado limited liability company (“Fidelity LLC”). On
December 16, 2004, Fidelity LLC converted itself into Fidelity Aviation
Corporation by filing a Statement of Conversion and Articles of Incorporation
with the Colorado Secretary of State. Fidelity was formed to purchase large
commercial (transport category) jet airframes, salvage the usable aircraft parts
and components from them and sell the parts and components. The Board of
Directors evaluated the future market for aircraft parts business and resolved
not to pursue this line of business anymore.





On
October 8, 2008, China Infrastructure entered into and consummated the
transactions contemplated under a Share Exchange Agreement with Northern
Construction Holdings, Ltd., a Hong Kong limited company (“NCH”) and its
shareholder pursuant to which China Infrastructure issued 12,000,000 shares
of  China Infrastructure common stock (the “Share Exchange”) in
exchange for all issued and outstanding common stock of NCH.





The Share
Exchange resulted in (i) a change in control of China Infrastructure with the
shareholder of NCH owning approximately 78% of issued and outstanding shares of
common stock of China Infrastructure, (ii) NCH becoming a wholly-owned
subsidiary of China Infrastructure, and (iii) appointment of certain nominees of
the shareholder of NCH as directors and officers of China Infrastructure and
resignation of John Schoenauer as director, Chief Executive Officer, Chief
Financial Officer, Secretary and Treasurer of China
Infrastructure.





As a
result of the Share Exchange Agreement, Beijing Fortune Capital Management Co.,
Ltd. (“BFCM”), a 95% owned subsidiary of NCH, became our indirect majority-owned
subsidiary.  Also as a result of the Share Exchange Agreement, Beijing
Chengzhi Qianmao Concrete Co., Ltd., (“Beijing Concrete”), the operating
company, and a 99.5% owned subsidiary of BFCM, also became our
indirect majority-owned subsidiary.





For
accounting purposes, the share exchange transaction was treated as a capital
transaction where the acquiring corporation issued stock for the net monetary
assets of the shell corporation, accompanied by a recapitalization. The
accounting is similar in form to a reverse acquisition, except that goodwill or
other intangibles are not recorded.  All references to NCH common
stock have been restated to reflect the equivalent numbers of China
Infrastructure common shares.





When we
refer in this report to business and financial information for periods prior to
the consummation of the reverse acquisition, we are referring to the business
and financial information of NCH on a consolidated basis unless the context
suggests otherwise.





2.   Basis
of Presentation





The
accompanying financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (“US GAAP”). This
basis differs from that used in the statutory accounts of the Company, which
were prepared in accordance with the accounting principles and relevant
financial regulations applicable to enterprises in the PRC.  All
necessary adjustments have been made to present the financial statements in
accordance with US GAAP.





F-5





CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





3.   Summary
of Significant Accounting Policies





Economic and Political
Risks





The
Company faces a number of risks and challenges as a result of having primary
operations and marketing in the PRC. Changing political climates in the PRC
could have a significant effect on the Company’s business.





Control by Principal
Stockholders





The
directors, executive officers and their affiliates or related parties own,
beneficially and in the aggregate, the majority of the voting power of the
registered capital of the Company. Accordingly, the directors, executive
officers and their affiliates, if they voted their shares uniformly, would have
the ability to control the approval of most corporate actions, including
increasing the authorized capital stock of the Company and the dissolution,
merger or sale of the Company’s assets.





Principles of
Consolidation





The
consolidated financial statements include the financial statements of China
Infrastructure, and its wholly-owned and majority-owned subsidiaries. All
significant inter-company balances and transactions have been eliminated in
consolidation. The Company’s foreign subsidiaries have fiscal year ends of May
31 and the results are consolidated up to that date. Minority interests consist
of other stockholders’ ownership interests in majority-owned subsidiaries of the
Company.





Reclassifications




Certain
prior year amounts on the consolidated balance sheets have been reclassified to
conform to current classifications.  Such reclassification has no
effect on net income.





Cash and Cash
Equivalents





For
purposes of the statements of cash flows, cash and cash equivalents includes
cash on hand and demand deposits held by banks. Deposits held in financial
institutions in the PRC are not insured by any government entity or
agency.





Accumulated Other
Comprehensive Income





Accumulated
other comprehensive income represents foreign currency translation
adjustments.





Trade Accounts
Receivable





The
Company extends unsecured credit to its customers in the ordinary course of
business but mitigates the associated risks by performing credit checks and
actively pursuing past due accounts. Trade accounts receivable are recognized
and carried at original invoice amount less an allowance for any uncollectible
amounts. An allowance for doubtful accounts is established and determined based
on management’s assessment of known requirements, aging of receivables, payment
history, the customer’s current credit worthiness and the economic
environment.





F-6




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





3.   Summary
of Significant Accounting Policies (continued)





Revenue
Recognition





The
Company receives revenue from sales of concrete products. We recognize revenue
when all four revenue recognition criteria have been met: persuasive evidence of
an arrangement exists, we have delivered the product, the fee is fixed or
determinable and collection is reasonably assured. Our products





delivered
to customers would be checked on site by customers and, once the products are
accepted by customers, they will sign the check or notes payable. There is no
warranty issue after the delivery.





The
Company recognizes its revenues net of value-added taxes (“VAT”).  The
Company is subject to VAT which is levied at the rate of 6% on the invoiced
value of sales. However, the Company enjoys a free VAT policy according to the
national policy, which encourages the development of the cement industry if
the manufacturer satisfies the environmental protection requirements. The
Company has enjoyed the free VAT policy from January 1, 2006 and has been
reviewed every year by the local tax bureau.





Shipping Income and
Expense





EITF
00-10 “Accounting for Shipping
and Handling fees and Costs” establishes standards for the classification
of shipping and handling costs. All amounts billed to a customer related to
shipping and handling are classified as revenue. All costs incurred by the
Company for shipping and handling are included in cost of sales.





Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosures of
contingent assets and liabilities, at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.




Inventories





Inventories
are stated at the lower of cost, determined on a weighted average basis, and net
realizable value. Net realizable value is the estimated selling price, in the
ordinary course of business, less estimated costs to complete and
dispose.




F-7




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





3.   Summary
of Significant Accounting Policies (continued)





Property and
Equipment





Property,
plant and equipment are carried at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the useful lives of
the assets. Major renewals are capitalized and depreciated; maintenance and
repairs that do not extend the life of the respective assets are charged to
expense as incurred. Upon disposal of assets, the cost and related accumulated
depreciation are removed from the accounts and any gain or loss is included in
income. Depreciation related to property and equipment is reported in cost of
revenues. Property, plant and equipment are depreciated over their estimated
useful lives as follows:





Office
      trailers
              
              10
      yearsMachinery
      and equipment
              
              3-8
      yearsFurniture
      and office equipment
              
              5-8
      yearsMotor
      vehicles
              
              3-5
      years




May 31, 2009
                    
                    
                    May 31, 2008Office
      trailers
                    
                    $
                    902,319
                    
                    
                    $
                    888,329Machinery
      and equipment
                    
                    
                    2,922,504
                    
                    
                    
                    2,831,518Motor
      vehicles
                    
                    
                    466,117
                    
                    
                    
                    456,283Furniture
      and office equipment
                    
                    
                    462,300
                    
                    
                    
                    452,431Deposits
      – construction in progress
                    
                    
                    3,305,813
                    
                    
                    
                    1,439,429Total
      property, plant and equipment
                    
                    
                    8,059,053
                    
                    
                    
                    6,067,990Accumulated
      depreciation
                    
                    
                    (2,409,218
                    )
                    
                    
                    (1,679,688
                    )Net
      property, plant and equipment
                    
                    $
                    5,649,835
                    
                    
                    $
                    4,388,302





Depreciation
expense included in general and administrative expenses for the fiscal year
ended May 31, 2009 and 2008 was $208,509 and $121,105, respectively.
Depreciation expense included in cost of sales for the fiscal year ended May 31,
2009 and 2008 was $486,955 and $489,095, respectively.





Construction
in progress represents direct costs of construction and design fees incurred for
the Company’s new project in Tangshan. All construction costs associated with
this project are accumulated and capitalized as construction in progress. The
construction in progress is closed out to the appropriate asset classification
when the project is substantially complete, occupied, or placed into service. No
depreciation is provided until it is completed and ready for its intended use.
At May 31, 2009, the costs involved with construction in progress were
$3,305,813.





Impairment of Long-Lived and
Intangible Assets





Long-term
assets of the Company are reviewed annually to assess whether the carrying value
has become impaired according to the guidelines established in Statement of
Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets.”  No impairment of assets was
recorded in the periods reported.





Advertising
Costs





The
Company expenses non-direct advertising costs as incurred. The Company did not
incur any direct response advertising costs during the years ended May 31, 2009
and 2008 to be capitalized and deferred to future periods.





F-8




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





3.   Summary
of Significant Accounting Policies (continued)





Foreign Currency and
Comprehensive Income





The
accompanying financial statements are presented in US dollars. The functional
currency is the Renminbi (“RMB”) of the PRC. The financial statements are
translated into US dollars from RMB at year-end exchange rates for assets and
liabilities, and weighted average exchange rates for revenues and expenses.
Capital accounts are translated at their historical exchange rates when the
capital transactions occurred.





On July
21, 2005, the PRC changed its foreign currency exchange policy from a fixed
RMB/USD exchange rate into a flexible rate under the control of the PRC’s
government. We use the Closing Rate Method in currency translation of the
financial statements of the Company.





RMB is
not freely convertible into the currency of other nations. All such exchange
transactions must take place through authorized institutions. There is no
guarantee the RMB amounts could have been, or could be, converted into US
dollars at rates used in translation.





Income
Taxes





The
Company has implemented SFAS No.109 “Accounting for Income Taxes”, which
provides for a liability approach to accounting for income taxes. Deferred
income taxes result from the effect of transactions that are recognized in
different periods for financial and tax reporting purposes. The Company has
recorded no deferred tax assets or liabilities as of May 31, 2009 and
2008.  There are no material timing differences and therefore no
deferred tax asset or liability as of May 31, 2009 and 2008. There are no net
operating loss carry forwards as of May 31, 2009 and 2008.





Under the
Income Tax Laws of the PRC, the Company’s subsidiaries are generally subject to
an income tax at an effective rate of 25% on income reported in the statutory
financial statements after appropriate tax adjustments. Currently, the Company
is charged at 0% income tax expense for the fiscal years ended May 31, 2009 and
2008.  The exemption of income tax to the Company will last until
December 31, 2010 and from year 2011, the Company will be subject to an income
tax at an effective rate of 25%. The current income tax expense and deferred tax
expense for the fiscal years ended May 31, 2009 and 2008 are as
follows:





May 31, 2009
                    
                    May 31, 2008Current
      tax expense
                    
                    $
                    -
                    
                    
                    $
                    -Deferred
      tax expense
                    
                    $
                    -
                    
                    
                    $
                    -





Restrictions on Transfer of
Assets Out of the PRC





Dividend
payments by the Company are limited by certain statutory regulations in the PRC.
No dividends may be paid by the Company without first receiving prior approval
from the Foreign Currency Exchange Management Bureau. However, no such
restrictions exist with respect to loans and advances.





F-9




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





3.   Summary
of Significant Accounting Policies (continued)





Basic and Diluted Earnings
Per Share





Earnings
per share is calculated in accordance with Statement of Financial Accounting
Standards No. 128 ("SFAS No. 128"), "Earnings per share". Basic net earnings per
share is based upon the weighted average number of common shares outstanding.
Diluted net earnings per share is based on the assumption that all dilutive
convertible shares and stock options were converted or exercised. Dilution is
computed by applying the treasury stock method.





4.   Allowance for Doubtful
Accounts





We
maintain an allowance for doubtful accounts which reflects our best estimate of
potentially uncollectible trade receivables. We regularly review our trade
receivables allowances by considering such factors as historical experience,
credit-worthiness, the age of the trade receivable balances and current economic
conditions that may affect a customer’s ability to pay.





May 31, 2009
                      
                      
                      May 31, 2008Trade
      accounts receivable
                      
                      $
                      26,750,034
                      
                      
                      $
                      10,323,611Allowance
      for doubtful accounts
                      
                      
                      (311,928)
                      
                      
                      
                      (288,030)Net
      trade accounts receivable
                      
                      $
                      26,438,106
                      
                      
                      $
                      10,035,581





5. Prepayments





Prepayments
consist of the prepaid expenses and the monies deposited with the suppliers for
purchasing vehicles and raw material. The total outstanding amount was Nil and
$245,495 as of May 31, 2009 and May 31, 2008, respectively. There is no
provision made for the prepayment at May 31, 2009 and May 31, 2008.





6.  Other Receivables





Other
receivables consist of insurance claims and the temporary lending to the staff
with no fixed repayment date and with no interest bearing on it. The allowances
on the other accounts receivable are recorded when circumstances indicate
collection is doubtful for particular accounts receivable.  The
Company provides for allowances on a specific account basis. The total
outstanding amount was $270,819 and $472,451 as of May 31, 2009 and May 31,
2008, respectively. There is no provision made for the other receivables at May
31, 2009 and May 31, 2008.





7.  
Inventory





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




May 31, 2009
                    
                    
                    May 31, 2008Raw materials
                    
                    $
                    885,834
                    
                    
                    $
                    1,316,445





F-10





CHINA INFRASTRUCTURE
CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





8.  
Other Payables





Other
payables consist of the following as of May 31, 2009 and 2008:




May 31, 2009
                      
                      
                      May 31, 2008Commission
      payable
                      
                      $
                      1,541,579
                      
                      
                      $
                      407,205Staff  and
      other companies deposit
                      
                      
                      188,711
                      
                      
                      
                      150,471Total
      other payables
                      
                      $
                      1,730,290
                      
                      
                      $
                      557,676





Commission
expense has been included in cost of goods sold.





9.   Related Party
Transactions





Parties,
which can be a corporation or individual, are considered to be related if the
Company has the ability, directly or indirectly, to control the other party or
exercise significant influence over the other party in making financial and
operating decisions. Companies are also considered to be related if they
are subject to common control or common significant influence.





Total
outstanding amount of related party payable was $564,419 and $677,930 as of May
31, 2009 and 2008, respectively. These payables bear no interest and have no
fixed payment terms. Currently, the related party payable consists of the
following:





May 31, 2009
                    
                    
                    May 31, 2008Rong
      Yang (Chairman)
                    
                    $
                    372,489
                    
                    
                    $
                    133,120Lao
      Zhan (common shareholder)
                    
                    
                    -
                    
                    
                    
                    524,416Heng
      Jian (20% owned by a common shareholder)
                    
                    
                    -
                    
                    
                    
                    20,394Liao
      Shunjun (Chairman’s brother-in-law)
                    
                    
                    98,723
                    
                    
                    
                    -RongHua
      Chang Shen Transportation (20% owned by a common
    shareholder)
                    
                    
                    93,207
                    
                    
                    
                    -$
                    564,419
                    
                    
                    $
                    677,930





Total
outstanding amount of related party receivables was $674,289 and $236,042 as of
May 31, 2009 and 2008, respectively. These receivables require no interest and
have no fixed re-payment terms. Currently, the receivables from related party
consist of the following:





May 31, 2009
                        
                        
                        May 31, 2008Lao
      Zhan (common shareholder)
                        
                        $
                        465,332
                        
                        
                        $Yang
      Ming (Chairman Yang Rong’s brother)
                        
                        
                        187,490
                        
                        
                        
                        144,375Heng
      Jian (20% owned  by a common shareholder )
                        
                        
                        20,736
                        
                        
                        
                        -RongHua
      Chang Shen Transportation (20% owned by a common
    shareholder)
                        
                        
                        -
                        
                        
                        
                        91,667Beijing
      Yihua Daxin Investment (holding company)
                        
                        
                        731
                        
                        
                        
                        -$
                        674,289
                        
                        
                        $
                        236,042




F-11




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





10.
Operating Lease Commitment





As of May
31, 2009, the Company was committed to minimum rentals for the leased land under
long-term non-cancellable operating leases as follows:





Fiscal
      Year Ended May 31,2010
                      
                      $
                      51,8192011
                      
                      
                      51,8192012
                      
                      
                      51,8192013
                      
                      
                      51,8192014
                      
                      
                      51,819Thereafter
                      
                      
                      67,822Total:
                      
                      $
                      326,917





11.
Minority Interests





Minority
interests consist of other stockholders’ ownership interests in majority-owned
subsidiaries of the Company, which is about 5.48% of the total ownership. As of
May 31, 2009 and 2008, the balance of minority interests was $1,210,695 and
$577,995 respectively.





12.
Earnings Per Share




Earnings
(loss) per share for the years ended May 31, 2009 and 2008 is determined by
dividing net income (loss) for the periods by the weighted average number of
both basic and diluted shares of common stock and common stock equivalents
outstanding. At May 31, 2009 and 2008, there were no dilutive
securities.




Years
      ended May 31,2009
                    
                    
                    2008Numerator
      for basic and diluted EPS-
      Net income from continuing operations
                    
                    $
                    10,461,209
                    
                    
                    $
                    4,802,337Denominator
      for basic and diluted EPS-
      Weighted average shares of common stock outstanding
                    
                    
                    14,130,465
                    
                    
                    
                    12,000,000EPS
      from continuing operations – basic and diluted
                    
                    $
                    0.74
                    
                    
                    $
                    0.40




F-12




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





13.
Employee Welfare Plan




The
Company has established its own employee welfare plan in accordance with Chinese
law and regulations. The Company makes annual contributions of 14% of all
employees' salaries to an employee welfare plan.  The total expense
for the above plan was $221,927 and $23,499 for the years ended May 31, 2009 and
2008, respectively.





14.
Segment Reporting





Statement
of Financial Accounting Standards No. 131 (SFAS 131), “Disclosure about Segments
of an Enterprise and Related Information” requires use of the management
approach model for segment reporting. The management approach model is based on
the way a company's management organizes segments within the company for making
operating decisions and assessing performance. Reportable segments are based on
products and services, geography, legal structure, management structure, or any
other manner in which management disaggregates a company.





Since
management does not disaggregate Company data, the Company has determined that
only one segment exists.





15.
Concentration of Credit Risks and Uncertainties





Concentration
of credit risk exists when changes in economic, industry or geographic factors
similarly affect groups of counter parties whose aggregate credit exposure is
material in relation to the Company’s total credit exposure.





The
company had sales to two major customers, which represented 25% and 12% of the
Company’s total sales for the fiscal year ended May 31, 2009. And the Company
had sales to one major customer, which represented 17% of the Company’s total
sales for the fiscal year ended May 31, 2008.





One
customer accounted for 33% of the Company’s accounts receivable balance at May
31, 2009. One customer accounted for 10% of the Company’s accounts receivable
balance at May 31, 2008.





The top
five major vendors account for 50% of the Company’s total cost of revenue for
the fiscal year ended May 31, 2009 with one major vendor representing 23% of the
total cost of revenue. The top five major vendors account for 45% of the
Company’s total cost of revenue for the fiscal year ended May 31, 2008, with one
major vendor representing 19% of the total cost of revenue.





No vendor
accounted for more than 10% of the Company’s accounts payable at May 31,
2009.  One major vendor accounted for 8% of the Company’s accounts
payable at May 31, 2009. One major vendor accounted for 24% of the Company’s
accounts payable at May 31, 2008.





The
Company’s exposure to foreign currency exchange rate risk primarily relates to
cash and cash equivalents and short-term investments, denominated in the U.S.
dollar. Any significant revaluation of RMB may materially and adversely affect
the cash flows, revenues, earnings and financial position of the
Company.





F-13





CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





16. Fair Value of Financial
Instruments





Statement
of Financial Accounting Standards No. 107 (SFAS 107), “Disclosures about Fair
Value of Financial Instruments” requires disclosure of the fair value of
financial instruments held by the Company. SFAS 107 defines the fair value of
financial instruments as the amount at which the instrument could be exchanged
in a current transaction between willing parties. The Company considers the
carrying amount of cash, accounts receivable, other receivables, related party
receivables, accounts payable, accrued expenses and other payables to
approximate their fair values because of the short period of time between the
origination of such instruments and their expected realization and their current
market rate of interest.





17.
Contingencies





The
Company has not, historically, carried any property or casualty insurance. No
amounts have been accrued for any liability that could arise from the lack of
insurance. Management feels the chances of such an obligation arising are
remote.





Deposits
in banks in the PRC are not insured by any government entity or agency, and are
consequently exposed to risk of loss. Management believes the probability of a
bank failure, causing loss to the Company, is remote.





18.
Recent Accounting Pronouncements





In
December 2007, the FASB issued SFAS No. 141R, "Business Combinations"
("SFAS No. 141R"). SFAS No. 141R amends SFAS 141 and provides
revised guidance for recognizing and measuring identifiable assets and goodwill
acquired, liabilities assumed, and any non-controlling interest in the acquiree.
It also provides disclosure requirements to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. It is effective for fiscal years beginning on or after
December 15, 2008 and will be applied prospectively. We are currently
evaluating the impact of adopting SFAS No. 141R on our consolidated
financial statements.





In
December 2007, the Financial Accounting Standards Board issued SFAS No. 160,
“Non-controlling Interests in Consolidated Financial Statements-an amendment of
ARB No. 51”. SFAS No. 160 establishes accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 will become effective as of the beginning of the
Company's fiscal year beginning after December 15, 2008. The Company is
currently evaluating the impact that the adoption of SFAS No. 160 will have on
its consolidated financial condition or results of operations.





In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts”. This statement clarifies accounting standards applicable
to financial guarantee insurance contracts and specifies certain disclosures.
This statement is effective for financial statements issued for fiscal years
beginning after December 15, 2008, except certain disclosures are effective for
periods beginning after June 30, 2008. This statement will be
effective for financial statements issued  for fiscal years
beginning after December 15, 2008.  The Company does not expect the
adoption of SFAS 163 will have a material impact on its financial condition or
results of operation.





On June
12, 2009 the FASB issued two statements that amended the guidance for
off-balance-sheet accounting of financial instruments: SFAS No. 166, Accounting for Transfers of
Financial Assets, and SFAS No. 167, Amendments to FASB Interpretation
No.46(R).





F-14




CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION.


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





18.  Recent
Accounting Pronouncements (continued)





SFAS No.
166 revises SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, and
will require entities to provide more information about sales of securitized
financial assets and similar transactions, particularly if the seller retains
some risk to the assets. The statement eliminates the concept of a qualifying
special-purpose entity, changes the requirements for the derecognition of
financial assets, and calls upon sellers of the assets to make additional
disclosures about them.





SFAS No.
167 amends FASB Interpretation (FIN) No. 46(R), Consolidation of Variable Interest
Entities, by altering how a company determines when an entity that is
insufficiently capitalized or not controlled through voting should be
consolidated. A company has to determine whether it should provide consolidated
reporting of an entity based upon the entity's purpose and design and the parent
company's ability to direct the entity's actions.





The
standards will be effective at the start of the first fiscal year beginning
after November 15, 2009. The guidance will have to be applied for the
second-quarter filing.





The FASB
issued SFAS No. 168, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles, on June 29, 2009 and, in
doing so, authorized the Codification as the sole source for authoritative U.S.
GAAP.   SFAS No. 168 will be effective for financial statements
issued for reporting periods that end after September 15, 2009.  Once
it's effective, it will supersede all accounting standards in U.S. GAAP, aside
from those issued by the SEC.  SFAS No. 168 replaces SFAS No. 162 to
establish a new hierarchy of GAAP sources for non-governmental entities under
the FASB Accounting Standards Codification.





19.
Subsequent Events





There are
no subsequent events.  The Company has evaluated subsequent events
from the balance sheet date through September 2, 2009.





F-15