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 November 30, 2008


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




FIDELITY AVIATION
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 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 o  (Do
      not check if a smaller reporting company)
            
            Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).





o Yes   x No





As of
January 14, 2009 the Issuer had 15,295,500 shares of common stock issued and
outstanding.







TABLE
OF CONTENTS


PagePART
      I Financial Information
            
            
            3Item 1. Unaudited Financial
      Statements.
            
            
            3Consolidated
      Balance Sheets as of November 30, 2008 and May 31, 2008
            
            
            3Consolidated
      Statements of Operations and Comprehensive Income for the three and six
      months ended November 30, 2008 and 2007
            
            
            4Consolidated
      Statements of Cash Flows for the six months ended November 30, 2008 and
      2007
            
            
            5Notes
      to Consolidated Financial Statements
            
            
            6-12Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations.
            
            
            13Item
      4T. Controls and Procedures.
            
            
            18PART II Other
      Information
            
            
            19Item
      6. Exhibits.
            
            
            19Signatures
            
            
            20Exhibits/Certifications


2




PART
I-FINANCIAL INFORMATION


ITEM
      1.





1.1
            FIDELITY
      AVIATION CORPORATIONConsolidated
      Balance Sheets (unaudited)




November 30,
      2008
                
                
                May
      31, 2008AssetsCurrent
      assetsCash and cash
      equivalents
                
                $
                499,738
                
                
                $
                865,601Trade accounts receivable,
      net
                
                
                18,054,829
                
                
                
                10,035,581Prepayments
                
                
                99,665
                
                
                
                245,495Inventories
                
                
                868,637
                
                
                
                1,316,445Total current
      assets
                
                
                19,522,869
                
                
                
                12,463,122Property
      and equipmentOffice
      trailers
                
                
                1,794,642
                
                
                
                1,765,632Machinery and
      equipment
                
                
                1,330,693
                
                
                
                1,309,183Vehicles
                
                
                1,119,411
                
                
                
                1,101,315Furniture and office
      equipment
                
                
                507,448
                
                
                
                452,431Construction in
      progress
                
                
                1,463,079
                
                
                
                1,439,429Total property and
      equipment
                
                
                6,215,273
                
                
                
                6,067,990Accumulated
      depreciation
                
                
                (2,137,675
                )
                
                
                (1,679,688
                )Net property and
      equipment
                
                
                4,077,598
                
                
                
                4,388,302Other
      receivables
                
                
                1,922,316
                
                
                
                472,451Related party
      receivables
                
                
                -
                
                
                
                236,042Total other
      assets
                
                
                1,922,316
                
                
                
                708,493Total
      assets
                
                $
                25,522,783
                
                
                $
                17,559,917Liabilities
      and stockholders' equityCurrent
      liabilitiesTrade accounts
      payable
                
                $
                8,110,664
                
                
                $
                5,503,200Related party
      payable
                
                
                261,306
                
                
                
                625,252Other
    payables
                
                
                2,255,932
                
                
                
                557,676Accrued
      expenses
                
                
                135,563
                
                
                
                268,156Total
      current liabilities
                
                
                10,763,465
                
                
                
                6,954,284Minority
      Interests
                
                
                1,294,579
                
                
                
                901,345Stockholders'
      equityPreferred stock, no par value;
      10,000,000shares authorized; no shares
      issued andCommon stock; par value
      $0.001;100,000,000 shares authorized;
      15,295,500shares issued and
      outstanding
                
                
                15,296
                
                
                
                15,296Additional paid-in
      capital
                
                
                1,381,348
                
                
                
                1,381,348Retained
      earnings
                
                
                10,568,048
                
                
                
                6,968,391Accumulated other comprehensive
      income
                
                
                1,500,047
                
                
                
                1,339,253Total
      stockholders' equity
                
                
                13,464,739
                
                
                
                9,704,288Total
      Liabilities and stockholders' equity
                
                $
                25,522,783
                
                
                $
                17,559,917


See
accompanying notes to financial statements


3




ITEM
1.  Consolidated Financial Statements





1.2
            FIDELITY
      AVIATION CORPORATIONConsolidated
      Statements of Operations and Comprehensive Income
  (unaudited)




Three
      months ended
                          
                          
                          Three
      months ended
                          
                          
                          Six
      months ended
                          
                          
                          Six
      months endedNovember
      30, 2008
                          
                          
                          November
      30, 2007
                          
                          
                          November
      30, 2008
                          
                          
                          November
      30, 2007Sales
      revenues
                          
                          $
                          15,565,149
                          
                          
                          $
                          7,528,138
                          
                          
                          $
                          27,020,125
                          
                          
                          $
                          14,488,403Cost
      of goods sold
                          
                          
                          12,870,609
                          
                          
                          
                          6,215,475
                          
                          
                          
                          22,251,323
                          
                          
                          
                          11,761,929Gross
      profit
                          
                          
                          2,694,540
                          
                          
                          
                          1,312,663
                          
                          
                          
                          4,768,802
                          
                          
                          
                          2,726,474Operating
      expensesSelling
      expense
                          
                          
                          131,916
                          
                          
                          
                          416,268
                          
                          
                          
                          254,962
                          
                          
                          
                          709,264Other
      general and administrative
                          
                          
                          367,560
                          
                          
                          
                          129,054
                          
                          
                          
                          509,626
                          
                          
                          
                          290,631Total
      operating expenses
                          
                          
                          499,476
                          
                          
                          
                          545,322
                          
                          
                          
                          764,588
                          
                          
                          
                          999,895Operating
      income
                          
                          
                          2,195,064
                          
                          
                          
                          767,341
                          
                          
                          
                          4,004,214
                          
                          
                          
                          1,726,579Other
      income (expense)Interest
      income (expense)
                          
                          
                          258
                          
                          
                          
                          (14,636
                          )
                          
                          
                          943
                          
                          
                          
                          (25,983
                          )Other
      income (expense)
                          
                          
                          288
                          
                          
                          
                          5,692
                          
                          
                          
                          (12,266
                          )
                          
                          
                          11,273Total
      other income (expense)
                          
                          
                          546
                          
                          
                          
                          (8,944
                          )
                          
                          
                          (11,323
                          )
                          
                          
                          (14,710
                          )Income
      before income taxes
                          
                          
                          2,195,610
                          
                          
                          
                          758,397
                          
                          
                          
                          3,992,891
                          
                          
                          
                          1,711,869Income
      Taxes
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Income
      before minority interests
                          
                          
                          2,195,610
                          
                          
                          
                          758,397
                          
                          
                          
                          3,992,891
                          
                          
                          
                          1,711,869Minority
      Interests
                          
                          
                          217,872
                          
                          
                          
                          73,945
                          
                          
                          
                          393,234
                          
                          
                          
                          166,907Net
      income
                          
                          $
                          1,977,738
                          
                          
                          $
                          684,452
                          
                          
                          $
                          3,599,657
                          
                          
                          $
                          1,544,962Foreign
      Currency Translation Adjustment
                          
                          
                          (748
                          )
                          
                          
                          197,783
                          
                          
                          
                          160,794
                          
                          
                          
                          297,656Comprehensive
      Income
                          
                          $
                          1,976,990
                          
                          
                          $
                          882,235
                          
                          
                          $
                          3,760,451
                          
                          
                          $
                          1,842,618Earnings
      Per Share - Basic and Diluted
                          
                          $
                          0.13
                          
                          
                          $
                          0.04
                          
                          
                          $
                          0.24
                          
                          
                          $
                          0.10Basic
      and diluted shares outstanding
                          
                          
                          15,295,500
                          
                          
                          
                          15,295,500
                          
                          
                          
                          15,295,500
                          
                          
                          
                          15,295,500


See
accompanying notes to financial statements




4





ITEM
1.  Consolidated Financial Statements





1.3
            FIDELITY
      AVIATION CORPORATIONConsolidated
      Statements of Cash Flows (unaudited)




Six
      months ended
              
              
              Six
      months endedNovember
      30, 2008
              
              
              November
      30, 2007Cash
      flows from operating activities:Net
      income
              
              $
              3,599,657
              
              
              $
              1,544,962Adjustments
      to reconcile net incometo
      net cash (used) provided by operations:Minority
      interest
              
              
              393,234
              
              
              
              166,907Depreciation
      and amortization
              
              
              428,309
              
              
              
              247,725Provision
      for allowance on accounts receivable
              
              
              -
              
              
              
              -Provision
      for allowance on other receivables
              
              
              -
              
              
              
              -Changes
      in operating assets and liabilities:Trade
      accounts receivable
              
              
              (7,810,510
              )
              
              
              (5,553,689
              )Prepayments
              
              
              149,847
              
              
              
              (184,390
              )Inventories
              
              
              464,598
              
              
              
              (11,386
              )Other
      receivables
              
              
              (1,470,035
              )
              
              
              (234,109
              )Trade
      accounts payable
              
              
              2,498,816
              
              
              
              1,895,674Other
      payables
              
              
              1,584,832
              
              
              
              2,803,517Accrued
      expenses
              
              
              (30,501
              )
              
              
              (6,402
              )Net
      cash (used) provided by operations
              
              
              (191,753
              )
              
              
              668,809Cash
      flows from investing activities:Purchases
      of plant and equipment
              
              
              (47,580
              )
              
              
              (790,943
              )Construction
      in progress
              
              
              -
              
              
              
              (25,847
              )Net
      cash used in investing activities
              
              
              (47,580
              )
              
              
              (816,790
              )Cash
      flows from financing activities:Proceeds
      from short term notes payable
              
              
              -
              
              
              
              245,842Proceeds
      from related party payable
              
              
              (136,586
              )
              
              
              -Net
      cash (used) provided by financing activities
              
              
              (136,586
              )
              
              
              245,842Effect
      of rate changes on cash
              
              
              10,056
              
              
              
              7,821(Decrease)
      increase in cash and cash equivalents
              
              
              (365,863
              )
              
              
              105,682Cash
      and cash equivalents, beginning of period
              
              
              865,601
              
              
              
              181,691Cash
      and cash equivalents, end of period
              
              $
              499,738
              
              
              $
              287,373Supplemental
      disclosures of cash flow information:Interest
      paid in cash
              
              $
              -
              
              
              $
              23,352Income
      taxes paid in cash
              
              $
              -
              
              
              $
              -




See
accompanying notes to financial statement


5


ITEM
1.  Consolidated Financial Statements





1.4
            Notes
      to Consolidated Financial
Statements





1.   Nature
of operations





Fidelity
Aviation Corporation (“Fidelity”) 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 is currently evaluating the future market for the aircraft
parts business in light of economic conditions.





On
October 8, 2008, Fidelity 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 Fidelity 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.





As a
result of the Share Exchange Agreement, Beijing Fortune Capital Management Co.,
Ltd. (“BFCM”), a 99.5% 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., 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 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.





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.




6





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 People’s Republic of China. Changing political
climates in the PRC could have a significant effect on the Company’s
business.





Principles of
Consolidation





The
consolidated financial statements include the financial statements of Fidelity
Aviation Corporation, and its wholly-owned and majority-owned subsidiaries. All
significant intercompany 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.





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.




7





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 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 17% on the invoiced value of
sales. 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 enjoys the free
VAT policy from January 1st, 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.





Property and
Equipment





Property
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 ccounts
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
  8




3.
              Summary of Significant Accounting Policies
      (continued)




Construction-in-progress





All
facilities purchased for installation, self-made or subcontracted are accounted
for under construction-in-progress. Construction-in-progress is recorded at
acquisition cost, including cost of facilities, installation expenses and the
interest capitalized during the course of construction for the purpose of
financing the project. Upon completion and readiness for use of the project, the
cost of construction-in-progress is to be transferred to fixed
assets.





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
Financial 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 six months ended November
30, 2008 and 2007 to be capitalized and deferred to future periods.





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.




9





3.
            Summary
      of Significant Accounting Policies
(continued)





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 accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (“SFAS 109”). Under SFAS 109 deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment. The Company has recorded no deferred tax
assets or liabilities as of November 30, 2008 and 2007.  There are no
material timing differences and therefore no deferred tax asset or liability as
of November 30, 2008 and 2007. There are no net operating loss carry forwards as
of November, 2008 and 2007.





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 0% income tax expense for the fiscal quarters ended November 30, 2008
and 2007.  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%.





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.





Basic and Diluted Earnings
Per Share





Earnings
per share are calculated in accordance with Statement of Financial Accounting
Standards No. 128 ("SFAS No. 128"), "Earnings per share". Basic net earnings per
share are based upon the weighted average number of common shares outstanding.
Diluted net earnings per share are 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.




10





3.
            Summary
      of Significant Accounting Policies
(continued)





Recent
pronouncements




In
December 2007, the Financial Accounting Standards Board (the “FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 141 (Revised 2007),
BUSINESS COMBINATIONS. This revision to SFAS No. 141 requires an acquirer to
recognize the assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree at the acquisition date, at their fair values as of the
acquisition date, with limited exceptions. This revision also requires that
acquisition-related costs be recognized separately from the assets acquired and
that expected restructuring costs be recognized as if they were a liability
assumed at the acquisition date and recognized separately from the business
combination. In addition, this revision requires that if a business combination
is achieved in stages, that the identifiable assets and liabilities, as well as
the non-controlling interest in the acquiree, be recognized at the full amounts
of their fair values.




In
December 2007, the FASB issued SFAS No. 160, NONCONTROLLING INTERESTS IN
CONSOLIDATED FINANCIAL STATEMENTS, an amendment of ARB. No. 51. The objective of
this statement is to improve the relevance, comparability, and transparency of
the financial statements by establishing accounting and reporting standards for
the noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. The Company believes that this statement will not have any impact on
its financial statements, unless it deconsolidates a subsidiary.




In March
2008, the FASB issued SFAS No. 161, DISCLOSURES ABOUT DERIVATIVE INSTRUMENTS AND
HEDGING ACTIVITIES (an amendment to SFAS No. 133). This statement is effective
for financial statements issued for fiscal year and interim periods beginning
after November 15, 2008 and requires enhanced disclosures with respect to
derivative and hedging activities. The Company will comply with the disclosure
requirements of this statement if it utilizes derivative instruments or engages
in hedging activities upon its effectiveness.




In April
2008, the FASB issued FASB Staff Position No. 142-3, DETERMINATION OF THE USEFUL
LIFE OF INTANGIBLE ASSETS (“FSP No. 142-3”) to improve the consistency between
the useful life of a recognized intangible asset (under SFAS No. 142) and the
period of expected cash flows used to measure the fair value of the intangible
asset (under SFAS No. 141(R)). FSP No. 142-3 amends the factors to be considered
when developing renewal or extension assumptions that are used to estimate an
intangible asset’s useful life under SFAS No. 142. The guidance in the new staff
position is to be applied prospectively to intangible assets acquired after
December 31, 2008. In addition, FSP No.142-3 increases the disclosure
requirements related to renewal or extension assumptions. The Company does not
believe implementation of FSP No. 142-3 have a material impact on its financial
statements.




In May
2008, the FASB issued statement No. 162, THE HIERARCHY OF GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES. This statement identifies the ources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). This statement is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, “the Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles”.




11




3.
            Summary of Significant
      Accounting Policies
(continued)




In May
2008, the FASB issued Statement No. 163, ACCOUNTING FOR FINANCE GUARANTEE
INSURANCE CONTRACTS - AN INTERPRETATION OF FASB STATEMENT NO. 60. The premium
revenue recognition approach for a financial guarantee insurance contract links
premium revenue recognition to the amount of insurance protection and the period
in which it is provided. For purposes of this statement, the amount of insurance
protection provided is assumed to be a function of the insured principal amount
outstanding, since the premium received requires the insurance enterprise to
stand ready to protect holders of an insured financial obligation from loss due
to default over the period of the insured financial obligation. This Statement
is effective for financial statements issued for fiscal years beginning after
December 15, 2008.




In June
2008, the FASB issued FASB Staff Position Emerging Issues Task Force (EITF) No.
03-6-1, DETERMINING WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT
TRANSACTIONS ARE PARTICIPATING SECURITIES (“FSP EITF No. 03-6-1”). Under FSP
EITF No. 03-6-1, unvested share-based payment awards that contain rights to
receive nonforfeitable dividends (whether paid or unpaid) are participating
securities, and should be included in the two-class method of computing EPS. FSP
EITF No. 03-6-1 is effective for fiscal years beginning after December 15, 2008,
and interim periods within those years, and is not expected to have a
significant impact on the Company’s financial statements.




None of
the above new pronouncements has current application to the Company, but may be
applicable to the Company’s future financial reporting.






12


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-Q 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) Fidelity Aviation Corporation;
(ii) Northern Construction Holdings, Ltd, (“NCH”); (iii) Beijing Chengzhi
Qianmao Concrete Corporation Ltd. (“Beijing Concrete”) and (iv) Beijing Fortune
Capital Management Co., Ltd.





Overview





Fidelity’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.
We salvaged the rotable parts and systems from those airframes, and our business
consisted of selling them to the aviation industry. Aviation customers for
Fidelity’s 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 (MRO’s)
which service those aircraft. We are currently evaluating the future market for
our aircraft parts business.




On
October 8, 2008, Fidelity 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 Fidelity 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”).




13





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





Three
Months Ended November 30, 2008 Compared to Three Months Ended November 30,
2007





Sales
Revenues





Sales for
the three months ended November 30, 2008 were $15,565,149 as compared to
$7,528,138 for the same period of 2007, an increase of 107%. The increase in
sales is attributable to the increase of sales prices during this period and the
development of our customer network. Our sales price increased proportionally to
the increase of cost of raw materials, mainly cement, and labor
costs.





Cost
of Goods Sold





Cost of
goods sold for the three months ended November 30, 2008 was $12,870,609 as
compared to $6,215,475 for the same period of 2007, an increase of 107%. 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.





Gross
Profit





Gross
profit for the three months ended November 30, 2008 was $2,694,540, an increase
of approximately 105%, as compared to $1,312,663 for the three months ended
November 30, 2007. The increase in gross profit is attributable to the increase
of sales due to the development of our customer network. Because cost of goods
increased almost proportionally to the increase of sales, our gross margin in
the three months ended November 30, 2008 was approximately 17.3%, which is
approximately the same as 17.4% in the same period last year.




14




Selling
Expenses





Selling
expenses for the three months ended November 30, 2008 were $131,916 as compared
to $416,268 for the same period of 2007, a decrease of $284,352, or
approximately 68%. Selling expenses consisted primarily of after sales
service expenses. The decrease in selling expenses was primarily due to tight
control of budget.





General
and Administrative Expenses





General
and administrative expenses for the three months ended November 30, 2008 were
$367,560, as compared to $129,054 for the same period of 2007, an increase of
$238,506, or approximately 185%. 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 three months ended November 30, 2008 was $2,195,064, an
increase of 186% as compared to $767,341 for the three months ended November 30,
2007. The increased income was due to the increased sales revenue and our budget
control on operating expenses.





Income
Taxes





During
the three months ended November 30, 2008, 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 $1,977,738 for the three months ended November 30, 2008, compared to
$684,452 in the same period last year, an increase of $1,293,286 or
approximately 189%. The increase was primarily due to the increased sales and
our budget control on operating expenses during the three months ended November
30, 2008.




15




Six
Months Ended November 30, 2008 Compared to Six Months Ended November 30,
2007





Sales
Revenues





Sales for
the six months ended November 30, 2008 were $27,020,125 as compared to
$14,488,403 for the same period of 2007, an increase of 86%.  The
increase in sales is attributable to the increase of sales prices during this
period and the development of our customer network.





Cost
of Goods Sold





Cost of
goods sold for the six months ended November 30, 2008 was $22,251,323 as
compared to $11,761,929 for the same period of 2007, an increase of 89%. 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.





Gross
Profit





Gross
profit for the six months ended November 30, 2008 was $4,768,802, an increase of
approximately 75%, as compared to $2,726,474 for the three months ended November
30, 2007. The increase in gross profit is attributable to the increase of sales
due to the development of our customer network. Because of increasing market
competition, our gross margin in the six months ended November 30, 2008 was
approximately 17.6%, which is 1.2% less than 18.8% in the same period last
year.





Selling
Expenses





Selling
expenses for the six months ended November 30, 2008 were $254,962 as compared to
$709,264 for the same period of 2007, a decrease of $454,302, or approximately
64%. Selling expenses consisted primarily of after sales service expenses. The
decrease in selling expenses was primarily due to tight control of
budget.





General
and Administrative Expenses





General
and administrative expenses for the six months ended November 30, 2008 were
$509,626, as compared to $290,631 for the same period of 2007, an increase of
$218,995, or approximately 75%. 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





Income
from operations for the six months ended November 30, 2008 was $4,004,214, an
increase of 132% as compared to $1,726,579 for the six months ended November 30,
2007. The increased income was due to the increased sales revenue and our budget
control on operating expenses.




16




Income
Taxes





During
the six months ended November 30, 2008, 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 $3,599,657 for the six months ended November 30, 2008, compared with
$1,544,962 in the same period last year, an increase of $2,054,695 or
approximately 133%.  The increase was primarily due to the increased
sales and our budget control on operating expenses during the six months ended
November 30, 2008.





Liquidity and Capital
Resources





As of
November 30, 2008, we had cash and cash equivalents of $499,738. 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:




Six Months Ended
              November
      302008
            
            
            2007Net
      cash provided by / (used in) operating activities
            
            $
            (191,753
            )
            
            $
            668,809Net
      cash used in investing activities
            
            
            (47,580
            )
            
            
            (816,790
            )Net
      cash provided by (used in) by financing activities
            
            
            (136,586
            )
            
            
            245,842Effect
      of exchange rate change on cash and cash equivalents
            
            
            10,056
            
            
            
            7,821Net
      (decrease) increase in cash and cash equivalents
            
            
            (365,863
            )
            
            
            105,682Cash
      and cash equivalents, beginning balance
            
            
            865,601
            
            
            
            181,691Cash
      and cash equivalents, ending balance
            
            
            499,738
            
            
            
            287,373




17




Operating
Activities





Net cash
used by operating activities was $191,753 for the six months ended November 30,
2008, whereas an amount of $668,809 of net cash was provided by operating
activities for the corresponding period of 2007. The net cash reflects the
revenues generated by the operations of Beijing Concrete.





Investing
Activities





Net cash
used in investing activities was $47,580 during the six months ended November
30, 2008. It was primarily used for purchasing machines and
equipment.





Financing
Activities





$136,586
of cash was used for six months ended November 30, 2008 for payment to related
party payables.





Off-Balance
Sheet Arrangements





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




ITEM 4T. CONTROLS AND
PROCEDURES.





Disclosure
Controls and Procedures





The
Securities and Exchange Commission defines the term “disclosure controls and
procedures” to mean a company's 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.




18




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 are designed to provide reasonable assurance of
achieving the objectives of timely alerting them to material information
required to be included in our periodic SEC reports and of ensuring that such
information is recorded, processed, summarized and reported with the time
periods specified.  Our chief executive officer and chief financial officer
also concluded that our disclosure controls and procedures were effective as of
the end of the period covered by this report to provide reasonable assurance of
the achievement of these objectives.





Changes
in Internal Control over Financial Reporting





There was
no change in the Company's internal control over financial reporting during the
period ended November 30, 2008, that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.





PART
II-OTHER INFORMATION





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.


19




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.





FIDELITY
AVIATION CORPORATION





By:
            /s/
      Rong YangRong
      Yang,
              Chief
      Executive Officer, Chief Financial Officer, Director


Date:
 January 14, 2009




20