UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 xQUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the
quarterly period ended August 31, 2009
 or
 
 oTRANSITION 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 incorporation)
              
              (IRS
      Employer Identification Number)C915
      Jia Hao International Business Center
                116
      Zizhuyuan Road Haidan District
                Beijing,
      China 100097(Address
      of principal executive offices)86-10-5170-9287(Registrant’s
      telephone number, including area
code)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.  x
Yes   o No
  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 whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
 See the definitions of “large accelerated filer”, “accelerated filer” and
smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
      accelerated filer o
              
              Accelerated
      filer oNon-accelerated
      filer x  (Do
      not check if a smaller reporting company)
              
              Smaller
      reporting company o
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 
 o Yes   x No
 
 As of
October 19, 2009 the Issuer had 11,528,493 shares of common stock issued and
outstanding.
  
 
 TABLE
OF CONTENTS
  PagePART
      I Financial Information
                        
                        
                        3Item
      1. Financial Statements.
                        
                        
                        3Consolidated
      Balance Sheets as of August 31, 2009 and May 31, 2009
      (Unaudited)
                        
                        
                        F-1Consolidated
      Statements of Operations for the three months ended August 31, 2009 and
      August 31, 2009 (Unaudited)
                        
                        
                        F-2Consolidated
      Statements of Cash Flows for the three months ended August 31, 2009 and
      August 31, 2008 (Unaudited)
                        
                        
                        F-3Notes
      to Consolidated Financial Statements (Unaudited)
                        
                        
                        F-4Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations.
                        
                        
                        4Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                        
                        
                        8Item
      4T. Controls and Procedures.
                        
                        
                        9PART
      II Other Information
                        
                        
                        9Item
      4. Submission of Matters to a Vote of Security Holders
                        
                        
                        9Item
      6. Exhibits.
                        
                        
                        10Signatures
                        
                        
                        11Exhibits/Certifications
  2
  PART
I-FINANCIAL INFORMATION
 
 ITEM
1. FINANCIAL STATEMENTS
 CHINA INFRASTRUCTURE CONSTRUCTION
CORPORATION
 CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
 
 August
31, 2009 and 2008
 
  Index
      to Consolidated Financial Statements
                    
                    PageConsolidated
      Balance Sheets
                    
                    
                    F-1Consolidated
      Statements of Operations and Comprehensive Income
                    
                    
                    F-2Consolidated
      Statements of Cash Flows
                    
                    
                    F-3Notes
      to Consolidated Financial Statements
                    
                    
                    F-4
  3
  CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 CONSOLIDATED
BALANCE SHEETS
  August 31, 2009
                                      
                                      
                                      May 31, 2009UnauditedAssetsCurrent
      assetsCash
      and cash equivalents
                                      
                                      $
                                      36,655
                                      
                                      
                                      $
                                      921,841Trade
      accounts receivable, net
                                      
                                      
                                      31,274,522
                                      
                                      
                                      
                                      26,438,106Inventories
                                      
                                      
                                      757,089
                                      
                                      
                                      
                                      885,834Total
      current assets
                                      
                                      
                                      32,068,266
                                      
                                      
                                      
                                      28,245,781Property,
      plant and equipment, net
                                      
                                      
                                      7,968,866
                                      
                                      
                                      
                                      5,649,835Other
      receivables
                                      
                                      
                                      438,124
                                      
                                      
                                      
                                      270,819Related
      party receivables
                                      
                                      
                                      17,703
                                      
                                      
                                      
                                      674,289Total
      other assets
                                      
                                      
                                      455,827
                                      
                                      
                                      
                                      945,108Total
      assets
                                      
                                      $
                                      40,492,959
                                      
                                      
                                      $
                                      34,840,724LiabilitiesCurrent
      liabilitiesTrade
      accounts payable
                                      
                                      $
                                      11,579,431
                                      
                                      
                                      $
                                      10,173,765Related
      party payable
                                      
                                      
                                      -
                                      
                                      
                                      
                                      564,419Other
      payables
                                      
                                      
                                      1,979,812
                                      
                                      
                                      
                                      1,730,290Accrued
      expenses
                                      
                                      
                                      345,783
                                      
                                      
                                      
                                      277,329Short
      term loans
                                      
                                      
                                      665,176
                                      
                                      
                                      
                                      -Total
      current liabilities
                                      
                                      
                                      14,570,202
                                      
                                      
                                      
                                      12,745,803Long
      term loans
                                      
                                      
                                      1,807,103
                                      
                                      
                                      
                                      -Total
      liabilities
                                      
                                      
                                      16,377,305
                                      
                                      
                                      
                                      12,745,803Stockholders'
      equityPreferred
      stock, no par value; 10,000,000 shares authorized; no shares issued and
      outstandingCommon
      stock: no par value; 100,000,000 shares authorized;
                                        1,529,550
      shares issued and outstanding
                                      
                                      
                                      1,396,644
                                      
                                      
                                      
                                      1,396,644Retained
      earnings
                                      
                                      
                                      19,662,034
                                      
                                      
                                      
                                      17,755,631Accumulated
      other comprehensive income
                                      
                                      
                                      1,735,603
                                      
                                      
                                      
                                      1,731,951Total
      China Infrastructure Construction Corporation stockholders'
      equity
                                      
                                      
                                      22,794,281
                                      
                                      
                                      
                                      20,884,226Non-controlling
      interests
                                      
                                      
                                      1,321,373
                                      
                                      
                                      
                                      1,210,695Total
      Liabilities and Equity
                                      
                                      $
                                      40,492,959
                                      
                                      
                                      $
                                      34,840,724
 
 See
accompanying notes to consolidated financial statements
  F-1
  CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 AND
COMPREHENSIVE INCOME
  Three
      months
                                            ended August 31, 2009
                                          
                                          
                                          Three
      months
                                            ended August 31, 2008Unaudited
                                          
                                          
                                          UnauditedSales
      revenues
                                          
                                          $
                                          12,255,728
                                          
                                          
                                          $
                                          11,454,976Cost
      of goods sold
                                          
                                          
                                          9,763,017
                                          
                                          
                                          
                                          9,380,714Gross
      profit
                                          
                                          
                                          2,492,711
                                          
                                          
                                          
                                          2,074,262Operating
      expenses:Selling
      expense
                                          
                                          
                                          86,028
                                          
                                          
                                          
                                          123,046General
      and administrative expenses
                                          
                                          
                                          389,140
                                          
                                          
                                          
                                          156,578Total
      operating expenses
                                          
                                          
                                          475,168
                                          
                                          
                                          
                                          279,624Net
      operating income
                                          
                                          
                                          2,017,543
                                          
                                          
                                          
                                          1,794,638Other
      income (expense):Interest
      income
                                          
                                          
                                          -
                                          
                                          
                                          
                                          685Interest  (expense)
                                          
                                          
                                          (472)
                                          
                                          
                                          
                                          -Other
      (expense)
                                          
                                          
                                          (200)
                                          
                                          
                                          
                                          1,958Total
      other income (expense)
                                          
                                          
                                          (672)
                                          
                                          
                                          
                                          2,643Income
      before income taxes
                                          
                                          
                                          2,016,871
                                          
                                          
                                          
                                          1,797,281Income
      taxes provision
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Net
      income
                                          
                                          
                                          2,016,871
                                          
                                          
                                          
                                          1,797,281Less:
      Net income attributable to non-controlling interests
                                          
                                          
                                          110,468
                                          
                                          
                                          
                                          98,414Net
      income attributable to China Infrastructure Construction
      Corporation
                                          
                                          $
                                          1,906,403
                                          
                                          
                                          $
                                          1,698,867Earnings
      per share - basic and diluted
                                          
                                          $
                                          1.25
                                          
                                          
                                          $
                                          1.42Basic
      and diluted weighted average shares outstanding
                                          
                                          
                                          1,529,550
                                          
                                          
                                          
                                          1,200,000Comprehensive
      incomeNet
      income
                                          
                                          
                                          2,016,871
                                          
                                          
                                          
                                          1,797,281Foreign
      currency translation adjustment
                                          
                                          
                                          3,862
                                          
                                          
                                          
                                          125,323Comprehensive
      income
                                          
                                          $
                                          2,020,733
                                          
                                          
                                          $
                                          1,922,604Comprehensive
      income attributable to non-controlling interest
                                          
                                          
                                          110,678
                                          
                                          
                                          
                                          105,275Comprehensive
      income attributable to China Infrastructure Construction
      Corporation
                                          
                                          $
                                          1,910,055
                                          
                                          
                                          $
                                          1,817,329
  See
accompanying notes to consolidated financial statements
  F-2
  CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
  Three
      months
                                        ended August 31, 2009
                                      
                                      
                                      Three
      months
                                        ended August 31, 2008Unaudited
                                      
                                      
                                      UnauditedCash
      flows from operating activities:Net
      income
                                      
                                      $
                                      1,906,403
                                      
                                      
                                      $
                                      1,698,867Adjustments
      to reconcile net income to net cash used
      in  operations:Non-controlling
      Interests
                                      
                                      
                                      110,468
                                      
                                      
                                      
                                      98,414Depreciation
      and amortization
                                      
                                      
                                      253,684
                                      
                                      
                                      
                                      254,664Provision
      for allowance on accounts receivable
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (18,551)Changes
      in operating liabilities and assets:Trade
      accounts receivable
                                      
                                      
                                      (4,831,347)
                                      
                                      
                                      
                                      (5,346,871)Prepayments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      114,336Inventories
                                      
                                      
                                      128,889
                                      
                                      
                                      
                                      590,769Other
      receivables
                                      
                                      
                                      (167,240)
                                      
                                      
                                      
                                      (707,437)Trade
      accounts payable
                                      
                                      
                                      1,403,755
                                      
                                      
                                      
                                      2,339,682Other
      payables
                                      
                                      
                                      248,980
                                      
                                      
                                      
                                      353,454Accrued
      expenses
                                      
                                      
                                      68,399
                                      
                                      
                                      
                                      9,360Net
      cash used in operating activities
                                      
                                      
                                      (878,009)
                                      
                                      
                                      
                                      (613,313)Cash
      flows from investing activities:Fixed
      assets additions
                                      
                                      
                                      (99,242)
                                      
                                      
                                      
                                      (112,337)Proceeds
      from related party receivable
                                      
                                      
                                      656,400
                                      
                                      
                                      
                                      236,042Net
      cash provided by investing activities
                                      
                                      
                                      557,158
                                      
                                      
                                      
                                      123,705Cash
      flows from financing activities:
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Proceeds
      from related party payable
                                      
                                      
                                      -
                                      
                                      
                                      
                                      41,941Payment
      to related party payable
                                      
                                      
                                      (564,419)
                                      
                                      
                                      
                                      -Net
      cash provided by (used in) financing activities
                                      
                                      
                                      (564,419)
                                      
                                      
                                      
                                      41,941Effect
      of rate changes on cash
                                      
                                      
                                      84
                                      
                                      
                                      
                                      9,957Decrease
      in cash and cash equivalents
                                      
                                      
                                      (885,186)
                                      
                                      
                                      
                                      (437,710)Cash
      and cash equivalents, beginning of period
                                      
                                      
                                      921,841
                                      
                                      
                                      
                                      836,978Cash
      and cash equivalents, end of period
                                      
                                      $
                                      36,655
                                      
                                      
                                      $
                                      399,268Supplemental
      disclosures of cash flow information:Interest
      paid in cash
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Income
      taxes paid in cash
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Noncash
      investing and financing activities:Fixed
      assets acquired with loan payable
                                      
                                      $
                                      2,472,279
                                      
                                      
                                      
                                      -
 
 See
accompanying notes to consolidated financial statements
  F-3
  CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 Note
1.   Nature of operations
 
 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.
 
 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 pre-split
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 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.
  F-4
  CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 Note 1.   Nature of
operations (continued)
 
 Subsequent
event
 
 On
September 28, 2009, the Company effectuated a 1-for-10 reverse stock split of
the Company’s common stock, with no par value (the “Common Stock”) (the “Reverse
Stock Split”). Upon the Reverse Stock Split, ten (10) shares of the outstanding
Common Stock were automatically converted into one (1) share of Common Stock.
The Reverse Stock Split, however, did not alter the number of shares the Company
is authorized to issue, but only reduced the number of shares of its Common
Stock issued and outstanding. Any fractional share issued as a result of the
reverse split was rounded up. Immediately before the Reverse Split there were
15,295,500 shares of Common Stock issued and outstanding. Immediately after
giving effect to the Reverse Split, there were 1,529,550 shares of Common Stock
issued and outstanding.
 
 On
October 14, 2009, to provide incentives to the Company’s management and to
adjust the Company’s capital structure, the Company issued to Rui Shen, a
majority shareholder of the Company, an aggregate of 7,031,344 shares of Common
Stock. Immediately prior to this issuance, Mr. Shen was the holder of 800,000
shares (after taking into account the 1-for-10 reverse stock split). Immediately
after the issuance of Shares, Mr. Shen held a total of 7,831,344 shares of
Common Stock, which represented 91.5% of the Company’s Common Stock outstanding
prior to the Private Placement.
 
 On
October 16, 2009, the Company entered into and consummated the sale of
securities pursuant to a Subscription Agreement with a number of institutional
investors (the “Investors”), providing for the sale to the Investors of an
aggregate of approximately 2,564,103 shares of Common Stock for an aggregate
purchase price of approximately $10,000,000 (or $3.90 per Share).
 
 2.   Basis
of Presentation
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article
210.8-03 of Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. All such adjustments are
of a normal recurring nature. Operating results for the three month period
ended August 31, 2009, are not necessarily indicative of the results that may be
expected for the fiscal year ending May 31, 2010.  For further
information refer to the consolidated financial statements and footnotes thereto
included in the Company’s annual report for the year ended May 31, 2009.
  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. Non-controlling interests consist of other stockholders’
ownership interests in majority-owned subsidiaries of the Company.
 
 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
 
 August 31, 2009
                      
                      
                      May 31, 2009Office
      trailers
                      
                      $
                      1,916,083
                      
                      
                      $
                      902,319Machinery
      and equipment
                      
                      
                      4,481,723
                      
                      
                      
                      2,922,504Motor
      vehicles
                      
                      
                      467,953
                      
                      
                      
                      466,117Furniture
      and office equipment
                      
                      
                      459,586
                      
                      
                      
                      462,300Construction
      in progress
                      
                      
                      3,306,394
                      
                      
                      
                      3,305,813Total
      property, plant and equipment
                      
                      
                      10,631,739
                      
                      
                      
                      8,059,053Accumulated
      depreciation
                      
                      
                      (2,662,873
                      )
                      
                      
                      (2,409,218
                      )Net
      property, plant and equipment
                      
                      $
                      7,968,866
                      
                      
                      $
                      5,649,835
 
 Depreciation
expense included in general and administrative expenses for the three months
ended August 31, 2009 and 2008 was $52,617 and $60,670, respectively.
Depreciation expense included in cost of sales for the three months ended August
31, 2009 and 2008 was $201,067 and $193,994, respectively.
 
 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 August 31, 2009, the costs involved with construction in progress were
$3,306,394.
 
 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
advertising and promotion costs are expensed as incurred. The Company did not
incur any advertising costs during the three months ended August 31, 2009 and
2008.
  F-8
 
 CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 3.   Summary
of Significant Accounting Policies (continued)
 
 General and administrative
expenses
 
 General
and administrative expenses represent salaries and benefits, depreciation and
amortization, allowance for impairment loss and other general and administrative
expenses. The Company expenses General and administrative expenses as
incurred.
 
 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 August 31, 2009 and
2008.  There are no material timing differences and therefore no
deferred tax asset or liability as of August 31, 2009 and 2008. There are no net
operating loss carry forwards as of August 31, 2009 and 2008.
 
 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 three months ended August 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 three months ended August 31, 2009 and 2008 are as
follows:
 
 August
      31, 2009
                        
                        August
      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.   Trade Accounts
Receivable
 
 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.
 
 August
      31, 2009
                              
                              
                              May
      31, 2009Trade
      accounts receivable
                              
                              $
                              31,586,505
                              
                              
                              $
                              26,750,034Allowance
      for doubtful accounts
                              
                              
                              (311,983)
                              
                              
                              
                              (311,928)Net
      trade accounts receivable
                              
                              $
                              31,274,522
                              
                              
                              $
                              26,438,106
 
 5. 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 $438,124 and $270,819 as of August 31, 2009 and May 31,
2009, respectively. There is no provision made for the other receivables at
August 31, 2009 and May 31, 2009.
 
 6.  
Inventory
 
 Inventory
is stated at weighted average cost and consisted of the following:
 August
      31, 2009
                          
                          
                          May
      31, 2009Raw
      materials
                          
                          $
                          757,089
                          
                          
                          $
                          885,834
  F-10
  CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 7.  
Other Payables
 
 Other
payables consist of the following as of August 31, 2009 and May 31,
2009:
  August
      31, 2009
                          
                          
                          May
      31, 2009Commission
      payable
                          
                          $
                          1,591,540
                          
                          
                          $
                          1,541,579Staff  and
      other companies deposit
                          
                          
                          388,272
                          
                          
                          
                          188,711Total
      other payables
                          
                          $
                          1,979,812
                          
                          
                          $
                          1,730,290
 
 Commission
expense has been included in cost of goods sold.
 
 8.   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 zero and $564,419 as of August
31, 2009 and May 31, 2009, respectively. These payables bear no interest and
have no fixed payment terms. Currently, the related party payable consists of
the following:
 
 August
      31, 2009
                          
                          
                          May
      31, 2009Rong
      Yang (Chairman)
                          
                          $
                          -
                          
                          
                          $
                          372,489Liao
      Shunjun (Chairman’s brother-in-law)
                          
                          
                          -
                          
                          
                          
                          98,723RongHua
      Chang Shen Transportation (20% owned by a common
    shareholder)
                          
                          
                          -
                          
                          
                          
                          93,207$
                          -
                          
                          
                          $
                          564,419
 
 Total
outstanding amount of related party receivables was $17,703 and $674,289 as of
August 31, 2009 and May 31, 2009, respectively. These receivables require no
interest and have no fixed re-payment terms. Currently, the receivables from
related party consist of the following:
 
 August
      31, 2009
                          
                          
                          May
      31, 2009Lao
      Zhan (common shareholder)
                          
                          $
                          -
                          
                          
                          $
                          465,332Yang
      Ming (Chairman Yang Rong’s brother)
                          
                          
                          -
                          
                          
                          
                          187,490Heng
      Jian (20% owned  by a common shareholder )
                          
                          
                          -
                          
                          
                          
                          20,736Rong
      Yang (Chairman)
                          
                          
                          17,703
                          
                          
                          
                          -Beijing
      Yihua Daxin Investment (holding company)
                          
                          
                          -
                          
                          
                          
                          731$
                          17,703
                          
                          
                          $
                          674,289
  F-11
  CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 9.
Loans payables
 
 During
the three months ended August 31, 2009, the Company acquired machinery with
loans payable amounted to $2,472,279. The loan with interest at 6.76% requires
thirty six monthly interest plus principal payment of $56,000 and one $476,751
payment due on November 2009.
 August
      31,2009$
                            2,472,279Less:
      current portion
                            
                            
                            (665,176
                            )Loan
      term loans, less current portion
                            
                            $
                            1,807,103
 Future
maturities of long term loans are as follows:
 2010
                          
                          $
                          665,1762011
                          
                          
                          1,141,9272012
                          
                          
                          665,176$
                          2,472,279
 
 10.
Non-controlling Interests
 
 Non-controlling
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
August 31, 2009 and May 31, 2009, the balance of minority interests was
$1,321,373 and $1,210,695 respectively.
 
 11.
Earnings Per Share
  Earnings
(loss) per share for the three months ended August 31, 2009 and 2008 is
determined by dividing net income (loss) for the periods by the weighted average
number of both basic and diluted shares of common stock and common stock
equivalents outstanding. At August 31, 2009 and 2008, there were no dilutive
securities.
  Three
      months ended August 31,2009
                        
                        
                        2008Numerator
      for basic and diluted EPS-
      Net income attributable to China Infrastructure Construction
      Corporation
                        
                        $
                        1,906,403
                        
                        
                        $
                        1,698,867Denominator
      for basic and diluted EPS-
      Weighted average shares of common stock outstanding
                        
                        
                        1,529,550
                        
                        
                        
                        1,200,000EPS–
      basic and diluted
                        
                        $
                        1.25
                        
                        
                        $
                        1.42
  F-12
  CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 12.
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 $136,237 and $55,638 for the three months ended August
31, 2009 and 2008, respectively.
 
 13.
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.
 
 14.
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 24% and 11% of the
Company’s total sales for the three months ended August 31, 2009. And the
Company had sales to five major customers, which represented 14%,13%,12%,12% and
12% of the Company’s total sales for the three months ended August 31, 2008. The
names of the companies are listed below:
 
 31-Aug-09
                    
                    
                    31-Aug-08China
      Railway Construction Corp.
                    
                    
                    24
                    %
                    
                    
                    12
                    %Beijing
      Sanyuan Corp.
                    
                    
                    11
                    %
                    
                    
                    13
                    %Guangzhou
      Tianli Construction Corp.
                    
                    
                    -
                    
                    
                    
                    14
                    %China
      Construction Corp.
                    
                    
                    -
                    
                    
                    
                    12
                    %Jiangsu
      Suzhong Construction Corp.
                    
                    
                    -
                    
                    
                    
                    12
                    %
 
 Two
customers, China Railway Construction Corp. and Beijing Sanyuan accounted for
29% and 11% of the Company’s accounts receivable balance at August 31, 2009,
China Railway also accounted for 33% of the Company’s accounts receivable
balance at May 31, 2009. Three customers, Guangzhou Tianli Construction Corp.,
Beijing Sanyuan Construction Corp. and Jiangsu Suzhong Construction Corp.
accounted for 14%, 13% and 11% of the company’s receivable balance at August 31,
2008.
 
 The top
five major vendors account for 38% of the Company’s total cost of revenue for
the three months ended August 31, 2009, with one major vendor representing 11%
of the total cost of revenue. The top five major vendors account for 38% of the
Company’s total cost of revenue for the three months ended August 31, 2008, with
one major vendor representing 16% of the total cost of revenue.
 
 No vendor
accounted for more than 10% of the Company’s accounts payable at August 31,
2009.  One major vendor accounted for 9% of the Company’s accounts
payable at August 31, 2009. One major vendor accounted for 8% of the Company’s
accounts payable at May 31, 2009. Two major vendors accounted for
15%  and 14% of  the Company’s accounts payable at August
31, 2008.
 
 F-13
  CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 14.
Concentration of Credit Risks and Uncertainties (continued)
 
 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.
 
 15.
Recent Accounting Pronouncements
 
 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. The Company will evaluate the
impact of SFAS No. 168 upon its effectiveness.
 
 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, which will mean January 2010 for companies that are on
calendar years. The guidance will have to be applied for first-quarter filings.
The Company will comply with the disclosure requirements of this statement when
and if it acquires a variable interest entity, upon its
effectiveness.
 
 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. The Company
does not believe implementation of SFAS No. 166 will have a material impact on
its financial statements.
  F-14
  ITEM
2.   MANAGEMENT’S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
 
 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.
 
 The
"Company", "we," "us," and "our," refer to (i) China Infrastructure Construction
Corporation (formerly Fidelity Aviation Corporation); (ii) Beijing Chengzhi
Qianmao Concrete Corporation Ltd. (“Beijing Concrete”), Beijing Fortune Capital
Management, Ltd. (“BFCM”), and (iii) Northern Construction Holdings, Ltd.
(“NCH”)
 
 Overview
 
 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.
 
 Acquisition
of New Line of Business
  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 pre-split shares of common stock of the Company (the “Share
Exchange”).
  4
 
 The Share
Exchange resulted in (i) a change in control of the Company with the shareholder
of NCH owning approximately 78% of issued and outstanding shares of common stock
of the Company, (ii) NCH becoming a wholly-owned subsidiary of the Company, and
(iii) appointment of certain nominees of the shareholder of NCH as directors and
officers of the Company and resignation of John Schoenauer as director, Chief
Executive Officer, Chief Financial Officer, Secretary and Treasurer of the
Company.
 
 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.
 
 Recent
Developments
 
 On
September 28, 2009, the Company effectuated a 1-for-10 reverse stock split of
the Company’s common stock, with no par value (the “Common Stock”) (the “Reverse
Stock Split”). Upon the Reverse Stock Split, ten (10) shares of the outstanding
Common Stock were automatically converted into one (1) share of Common Stock.
The Reverse Stock Split, however, did not alter the number of shares the Company
is authorized to issue, but only reduced the number of shares of its Common
Stock issued and outstanding. Any fractional share issued as a result of the
reverse split will be rounded up. Immediately before the Reverse Split there
were 15,295,500 shares of Common Stock issued and outstanding. Immediately
after giving effect to the Reverse Split, there were 1,529,550 shares of Common
Stock issued and outstanding.
 
 On
October 14, 2009, to provide incentives to the Company’s management and to
adjust the Company’s capital structure, the Company issued to Rui Shen, a
majority shareholder of the Company, an aggregate of 7,031,344 shares of Common
Stock. Immediately prior to this issuance, Mr. Shen was the holder of 800,000
shares (after taking into account the 1-for-10 reverse stock split). Immediately
after the issuance of Shares, Mr. Shen held a total of 7,831,344 shares of
Common Stock, which represented 91.5% of the Company’s Common Stock outstanding
prior to the Private Placement.
 
 On
October 16, 2009, the Company entered into and consummated the sale of
securities pursuant to a Subscription Agreement with a number of institutional
investors (the “Investors”), providing for the sale to the Investors of an
aggregate of approximately 2,564,103 shares of Common Stock for an aggregate
purchase price of approximately $10,000,000 (or $3.90 per Share).
 
 Results
of Operations
 
 Three
months ended August 31, 2009 Compared to Three months ended August 31,
2008
 
 Sales
Revenues
 
 Sales for
the three months ended August 31, 2009 were $12,255,728 as compared to
$11,454,976 for the same period last year, an increase of 7.0%. The increase in
sales is attributable to the increase of volume by 3.9% and increase of unit
price by 3%.
 
 Costs
of Goods Sold
 
 Cost of
goods sold for the three months ended August 31, 2009 was $9,763,017 as compared
to $9,380,714 for the same period last year, an increase of 4.1%, which was
primarily due to an increase of sales by 7.0%.
 
 Gross
Profit
 
 Gross
profit for the three months ended August 31, 2009 was $2,492,711, an increase of
approximately 20.2%, as compared to $2,074,262 for the three months ended August
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 three months ended August 31, 2009
was approximately 20.3% of the total sales, which is higher than the 18.1% in
the same period last year, which is due to the increase of sales unit price by
3% while the unit cost of goods sold remains stable.
  5
 
 Selling
Expenses
 
 Selling
expenses for the three months ended August 31, 2009 were $86,028 as
compared to $123,046 for the same period last year, a decrease of $37,018,
or approximately 30.1%. Selling expenses consisted primarily of expenses
relating to after sales services, promotional measures for customers’
network development, and vehicular usage and maintenance. The decrease in
selling expenses was primarily due to fewer promotions and less customer
development since we had a sufficient number of repeat customers and existing
backlog.
 
 General
and Administrative Expenses
 
 General
and administrative expenses for the three months ended August 31, 2009 were
$389,140, as compared to $156,578 for the same period last year, an increase of
$232,562, or approximately 149%. The increase of the general and administrative
expenses was primarily due to increase of the salaries and the increase of the
cost of reception of visitors for fundraising purposes and other miscellaneous
expenses.
 
 Operating
Income
 
 Our
operating income for the three months ended August 31, 2009 was $2,017,543, an
increase of approximately 12.4% as compared to $1,794,638 for the three months
ended August 31, 2008. The increased income was due to the increased sales
revenue and our budget control on operating expenses.
 
 Income
Taxes
 
 During
the three months ended August 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 $1,906,403 for the three months ended August 31, 2009, compared to
$1,698,867 in the last fiscal year, an increase of $207,536 or approximately
12.2%. The increase was primarily due to the increased sales and our budget
control on operating expenses during the three months ended August 31,
2009.
 
 Liquidity
and Capital Resources
 
 As of
August 31, 2009, we had cash and cash equivalents of $36,655. 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.
 
 The
following table sets forth a summary of our cash flows for the periods
indicated:
  6
 
 Three Months Ended
                      August 312009
                    
                    
                    2008Net
      cash (used in) operating activities
                    
                    $
                    (878,009)
                    
                    
                    $
                    (613,313)Net
      cash provided by investing activities
                    
                    
                    557,158
                    
                    
                    
                    123,705Net
      cash provided by (used in) financing activities
                    
                    
                    (564,419)
                    
                    
                    
                    41,941Effect
      of exchange rate change on cash and cash equivalents
                    
                    
                    84
                    
                    
                    
                    9,957Net
      decrease in cash and cash equivalents
                    
                    
                    (885,186)
                    
                    
                    
                    (437,710)Cash
      and cash equivalents, beginning balance
                    
                    
                    921,841
                    
                    
                    
                    836,978Cash
      and cash equivalents, ending balance
                    
                    
                    36,655
                    
                    
                    
                    399,268
 
 Operating
Activities
 
 Net cash
used in operating activities was $878,009 for the three months ended August 31,
2009, whereas an amount of $613,313 in net cash was used by operating activities
for the corresponding period of 2008. The net cash reflects the revenues and
change of receivables and payables generated by the operations of Beijing
Concrete.
 
 Investing
Activities
 
 Net cash
provided by investing activities was $557,158 for the three months ended August
31, 2009. It was primarily used for purchasing fixed assets and provided by
change in related party receivable.
 
 Financing
Activities
 
 There was
$564,419 of cash used in financing activities during the three months ended
August 31, 2009, as a result of payment of payables to 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.
 
 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.
  7
 
 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
3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 
 Foreign
Exchange Risk
 
 While our
reporting currency is the US dollar, all of our revenues and costs are
denominated in RMB and all our assets and liabilities are denominated in RMB. As
a result, we are exposed to foreign exchange risk as our revenues and results of
operations may be affected by fluctuations in the exchange rate between the US
Dollar and RMB. If the RMB depreciates against the US Dollar, the value of our
RMB revenues and assets as expressed in our US Dollar consolidated financial
statements will decline.
 
 The RMB
is currently freely convertible under the “current account”, which includes
dividends, trade and service-related foreign exchange transactions, but not
under the “capital account”, which includes foreign direct investment. On May
19, 2007, the People’s Bank of China announced a policy to expand the maximum
daily floating range of RMB trading prices against the U.S. dollar in the
inter-bank spot foreign exchange market from 0.3% to 0.5%. While the
international reactions to the RMB revaluation and widening of the RMB’s daily
trading band have generally been positive, with the increased floating range of
the RMB’s value against foreign currencies, the RMB may appreciate or depreciate
significantly in value against the U.S. dollar or other foreign currencies in
the long term, depending on the fluctuation of the basket of currencies against
which it is currently valued.
 
 Credit
Risk
 
 We have
not experienced significant credit risk, as most of our customers are long-term
customers with excellent payment records. We review our accounts receivable on a
regular basis to determine if the allowance for doubtful accounts is adequate at
each quarter-end. We extend 270 to 300 day trade credit to our largest
customers, which tend to be well-established and large businesses, and we have
not seen any major customer’s accounts receivable go uncollected beyond 365 days
or experienced any material write-off of accounts receivable in the
past.
 
 Inflation
Risk
 
 In recent
years, China has not experienced significant inflation, and thus inflation has
not had a material impact on our results of operations. According to the
National Bureau of Statistics of China (NBS) (www.stats.gov.cn), the change in
Consumer Price Index (CPI) in China was 1.5%, 4.7% and 5.9% in 2006, 2007 and
2008, respectively. Inflationary factors, such as increases in the cost of our
products and overhead costs, could impair our operating results. Although we do
not believe that inflation has had a material impact on our financial position
or results of operations to date, a high rate of inflation may have an adverse
effect on our ability to maintain current levels of gross margin and selling,
general and administrative expenses as a percentage of sales revenue if the
selling prices of our products do not increase with these increased
costs.
  8
 
 ITEM
4T.   CONTROLS AND PROCEDURES.
 
 Disclosure
Controls and Procedures
 
 The
Securities and Exchange Commission defines the term “disclosure controls and
procedures” to mean controls and other procedures of an issuer that are designed
to ensure that information required to be disclosed in the reports that it files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by an issuer in the reports that it files
or submits under the Securities Exchange Act of 1934 is accumulated and
communicated to the issuer’s management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.  The
Company maintains such a system of controls and procedures in an effort to
ensure that all information which it is required to disclose in the reports it
files under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified under the SEC's rules
and forms and that information required to be disclosed is accumulated and
communicated to principal executive and principal financial officers to allow
timely decisions regarding disclosure.
  As of the
end of the period covered by this report, we carried out an evaluation, under
the supervision and with the participation of our chief executive officer and
chief financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures.  Based on this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure
controls and procedures were not effective as of the end of the period covered
by this report.
  Changes
in Internal Control over Financial Reporting
 
 There was
no change in the Company's internal control over financial reporting during the
period ended August 31, 2009, that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.
 
 PART
II-OTHER INFORMATION
 
 ITEM
1A.  RISK FACTORS.
 
 The risk
factors included in our Annual Report on Form 10-K for the fiscal year ended May
31, 2009 have not materially changed as of August 31, 2009.
 
 ITEM
4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
 
 The
Special Meeting of Shareholders of the Company was held on May 19, 2009.
 At the meeting, the following matters were submitted to a vote of the
stockholders of the Company:
 
 The
approval of the change of the Company’s name from Fidelity Aviation Corporation
to China Infrastructure Construction Corporation.  A summary of votes
on a pre-split basis  is shown below:
 
 For
                  
                  Against
                  
                  Abstain8,264,040
                  
                  0
                  
                  0
 
 The
approval of the Board of Directors of the Company to proceed with a 1-for-10
reverse stock split of the outstanding common stock, no par value, of the
Company.  A summary of votes on a pre-split basis is shown
below:
 
 For
                  
                  Against
                  
                  Abstain8,000,120
                  
                  263,920
                  
                  0
  9
 
 The
approval of the amendment to the Articles of Incorporation of the Company to
allow any action by the Company’s shareholders by written consent of the holders
of a majority of shares entitled to vote in lieu of a meeting.  A
summary of votes on a pre-split basis is shown below:
 
 For
                  
                  Against
                  
                  Abstain8,000,120
                  
                  263,920
                  
                  0
 
 ITEM
6.   EXHIBITS.
 
 (a) The
following exhibits are filed herewith:
 
 31.1
              Certifications
      by the Chief Executive Officer and Chief Financial Officer pursuant to
      Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as
      amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.
  32.1
              Certifications
      by the Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
  10
  SIGNATURES
 
 Pursuant
to the requirements 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 CORPORATION
  By:
                  /s/
      Rong YangRong
      Yang,
                    Chief
      Executive Officer, Chief Financial
                    Officer,
      Director
 
 Date:
 October 20, 2009
  11