UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q/A
 
 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
 
  ̈TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the
transition period from ___________ to ______________
 
 Commission
File Number: 333-146758
  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    ̈ 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  ̈
                
                Accelerated
      filer  ̈Non-accelerated
      filer  ̈  (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).
 
  ̈ 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 InformationItem
      1. Unaudited Financial Statements.
                                  
                                  2Balance
      Sheets as of November 30, 2008 and May 31, 2008
(Unaudited)
                                  
                                  2Statements
      of Operations for the three and six months ended November 30, 2008 and
      2007 (Unaudited)
                                  
                                  3Statements
      of Cash Flows for the six months ended November 30, 2008 and 2007
      (Unaudited)
                                  
                                  4Notes
      to Financial Statements (Unaudited)
                                  
                                  5Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations.
                                  
                                  13Item
      4T. Controls and Procedures.
                                  
                                  16PART
      II Other InformationItem
      6. Exhibits.
                                  
                                  17Signatures
                                  
                                  18Exhibits/Certifications
 
 EXPLANATORY
NOTE
 
 This
Amendment No. 1 on Form 10-Q/A is being filed to amend our quarterly report on
Form 10-Q for the fiscal quarter ended November 30, 2008, as filed with the
Securities and Exchange Commission (the “Commission”) on January 14, 2009,
to
  l
                    amend our financial
      statements for the quarterly period ended November 30,
  2008
 l
                amend
      Item 4T, "Controls and
Procedures."
  In
addition, we are filing updated certifications pursuant to the Sarbanes-Oxley
Act of 2002 as Exhibits 31.1 and 32.1.
  1
  PART
I-FINANCIAL INFORMATION
 ITEM
1.
 1.1 FIDELITY
AVIATION CORPORATION Consolidated Balance Sheets (unaudited)
 
 November30,2008
                            
                            
                            May31,2008(Restated)AssetsCurrent
      assetsCash
      and cash equivalents
                            
                            $
                            499,738
                            
                            
                            $
                            836,978Trade
      accounts receivable, net
                            
                            
                            18,054,829
                            
                            
                            
                            10,035,581Prepayments
                            
                            
                            99,665
                            
                            
                            
                            245,495Inventories
                            
                            
                            868,637
                            
                            
                            
                            1,316,445Total
      current assets
                            
                            
                            19,522,869
                            
                            
                            
                            12,434,499Property
      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, plant 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
                            
                            
                            $
                            17,531,294Liabilities
      and stockholders' equityCurrent
      liabilitiesTrade
      accounts payable
                            
                            $
                            8,110,664
                            
                            
                            $
                            5,503,200Related
      party payable
                            
                            
                            313,984
                            
                            
                            
                            677,930Other
      payables
                            
                            
                            2,255,932
                            
                            
                            
                            557,676Accrued
      expenses
                            
                            
                            135,563
                            
                            
                            
                            268,156Total
      current liabilities
                            
                            
                            10,816,143
                            
                            
                            
                            7,006,962Minority
      Interests
                            
                            
                            805,930
                            
                            
                            
                            577,995Stockholders'
      equityPreferred
      stock, no par value; 10,000,000 shares authorized; no shares issued and
      outstandingCommon
      stock; no par value; 100,000,000 shares authorized; 15,295,500 shares
      issued and outstanding
                            
                            
                            1,396,644
                            
                            
                            
                            1,368,021Retained
      earnings
                            
                            
                            11,068,309
                            
                            
                            
                            7,294,422Accumulated
      other comprehensive income
                            
                            
                            1,435,757
                            
                            
                            
                            1,283,894Total
      stockholders' equity
                            
                            
                            13,900,710
                            
                            
                            
                            9,946,337Total
      Liabilities and stockholders' equity
                            
                            $
                            25,522,783
                            
                            
                            $
                            17,531,294
 
 See
accompanying notes to financial statements
  2
  ITEM
1.  Consolidated Financial Statements
 
 1.2
                FIDELITY
      AVIATION CORPORATION
 Consolidated
Statements of Operations and Comprehensive Income (unaudited)
  Three monthsended
                                                
                                                
                                                Three monthsended
                                                
                                                
                                                Six monthsended
                                                
                                                
                                                Six monthsendedNovember 30,2008
                                                
                                                
                                                November 30,2007
                                                
                                                
                                                November 30,2008
                                                
                                                
                                                November 30,2007(Restated)
                                                
                                                
                                                (Restated)
                                                
                                                
                                                (Restated)
                                                
                                                
                                                (Restated)Sales
      revenues
                                                
                                                $
                                                15,565,149
                                                
                                                
                                                $
                                                7,528,138
                                                
                                                
                                                $
                                                27,020,125
                                                
                                                
                                                $
                                                14,488,403Cost
      of goods sold
                                                
                                                
                                                12,870,609
                                                
                                                
                                                
                                                6,532,382
                                                
                                                
                                                
                                                22,251,323
                                                
                                                
                                                
                                                12,308,321Gross
      profit
                                                
                                                
                                                2,694,540
                                                
                                                
                                                
                                                995,756
                                                
                                                
                                                
                                                4,768,802
                                                
                                                
                                                
                                                2,180,082Selling
      expense
                                                
                                                
                                                131,916
                                                
                                                
                                                
                                                99,361
                                                
                                                
                                                
                                                254,962
                                                
                                                
                                                
                                                162,872Other
      general and administrative
                                                
                                                
                                                367,560
                                                
                                                
                                                
                                                129,054
                                                
                                                
                                                
                                                509,626
                                                
                                                
                                                
                                                290,631Total
      operating expenses
                                                
                                                
                                                499,476
                                                
                                                
                                                
                                                228,415
                                                
                                                
                                                
                                                764,588
                                                
                                                
                                                
                                                453,503Net
      operating income
                                                
                                                
                                                2,195,064
                                                
                                                
                                                
                                                767,341
                                                
                                                
                                                
                                                4,004,214
                                                
                                                
                                                
                                                1,726,579Other
      income (expense)Interest
      expense
                                                
                                                
                                                258
                                                
                                                
                                                
                                                (14,636
                                                )
                                                
                                                
                                                943
                                                
                                                
                                                
                                                (25,983
                                                )Other
      expense
                                                
                                                
                                                288
                                                
                                                
                                                
                                                5,692
                                                
                                                
                                                
                                                ( 12,266
                                                )
                                                
                                                
                                                11,273Total
      other income (expense)
                                                
                                                
                                                546
                                                
                                                
                                                
                                                (8,944
                                                )
                                                
                                                
                                                (11,323
                                                )
                                                
                                                
                                                (14,710
                                                )Net
      income before income taxes
                                                
                                                
                                                2,195,610
                                                
                                                
                                                
                                                758,397
                                                
                                                
                                                
                                                3,992,891
                                                
                                                
                                                
                                                1,711,869Income
      Taxes
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Net
      income before minority interests
                                                
                                                
                                                2,195,610
                                                
                                                
                                                
                                                758,397
                                                
                                                
                                                
                                                3,992,891
                                                
                                                
                                                
                                                1,711,869Minority
      Interests
                                                
                                                
                                                120,590
                                                
                                                
                                                
                                                40,514
                                                
                                                
                                                
                                                219,004
                                                
                                                
                                                
                                                93,725Net
      income
                                                
                                                $
                                                2,075,020
                                                
                                                
                                                $
                                                717,883
                                                
                                                
                                                $
                                                3,773,887
                                                
                                                
                                                $
                                                1,618,144Foreign
      Currency Translation Adjustment
                                                
                                                
                                                17,087
                                                
                                                
                                                
                                                186,954
                                                
                                                
                                                
                                                151,863
                                                
                                                
                                                
                                                281,359Comprehensive
      Income
                                                
                                                $
                                                2,092,107
                                                
                                                
                                                $
                                                904,837
                                                
                                                
                                                $
                                                3,925,750
                                                
                                                
                                                $
                                                1,899,503Earning
      Per Share - Basic and Diluted
                                                
                                                $
                                                0.15
                                                
                                                
                                                $
                                                0.06
                                                
                                                
                                                $
                                                0.29
                                                
                                                
                                                $
                                                0.13Basic
      and diluted shares outstanding
                                                
                                                
                                                13,904,000
                                                
                                                
                                                
                                                12,000,000
                                                
                                                
                                                
                                                12,952,000
                                                
                                                
                                                
                                                12,000,000
 See
accompanying notes to financial statements
  3
  ITEM
1.  Consolidated Financial Statements
 
 1.3
                FIDELITY
      AVIATION CORPORATION
 Consolidated
Statements of Cash Flows (unaudited)
  Six months ended
                      
                      
                      Six months endedNovember 30, 2008
                      
                      
                      November 30, 2007(Restated)
                      
                      
                      (Restated)Cash
      flows from operating activities:Net
      income
                      
                      $
                      3,773,887
                      
                      
                      $
                      1,618,144Adjustments
      to reconcile net income to net cash provided by (used in)
      operations:Minority
      Interests
                      
                      
                      219,004
                      
                      
                      
                      93,725Depreciation
      and amortization
                      
                      
                      428,309
                      
                      
                      
                      247,725Changes
      in operating liabilities and assets: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 provided by (used in) 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
                      
                      
                      -
                      
                      
                      
                      245,842Repayments
      to Related party
                      
                      
                      (136,586
                      )
                      
                      
                      -Net
      cash provided by (used in) financing activities
                      
                      
                      (136,586
                      )
                      
                      
                      245,842Effect
      of rate changes on cash
                      
                      
                      10,056
                      
                      
                      
                      7,821Increase
      (decrease) 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
  4
  ITEM
1.  Consolidated Financial Statements
 
 1.4     Notes
to Consolidated Financial Statements
 
 The
interim consolidated financial statements included herein, presented in
accordance with United States generally accepted accounting principles and
stated in US dollars, have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. These statements reflect all adjustments, consisting
of normal recurring adjustments, which, in the opinion of management, are
necessary for fair presentation of the information contained therein. It is
suggested that these interim consolidated financial statements be read in
conjunction with the financial statements of the Company for the year ended May
31, 2008 and notes thereto. The Company follows the same accounting policies in
the preparation of interim reports.
 
 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 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 issued 12,000,000 shares of  Fidelity 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 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, Beijng 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 Fidelity common
shares.
 
 When we
refer in this report to business and financial information for periods prior to
the consummation of the reverse acquisition, we are referring to the business
and financial information of NCH on a consolidated basis unless the context
suggests otherwise.
 
 2.       Basis
of Presentation
 
 The
accompanying financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (“US GAAP”). This
basis differs from that used in the statutory accounts of the Company, which
were prepared in accordance with the accounting principles and relevant
financial regulations applicable to enterprises in the PRC. All necessary
adjustments have been made to present the financial statements in accordance
with US GAAP.
  5
  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.
 
 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.
  6
  3.       Summary
of Significant Accounting Policies (continued)
 
 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 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
 
 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.
 
 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 $1,922,316 and $472,451 as of November 30, 2008 and May
31, 2008, respectively. There is no provision made for the other receivables at
November 30, 2008 and May 31, 2008.
 
 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. These loans bear
no interest and have no fixed payment terms. Total outstanding amount of related
party payable was $313,984 and $677,930 as of November 30, 2008 and May 31,
2008, respectively.
 
 Other Payables
 
 Other
payables consist of the following as of November 30, 2008 and May 31,
2008:
 
 November 30, 2008
                        
                        
                        May 31, 2008Commission
      payable
                        
                        $
                        1,984,787
                        
                        
                        $
                        407,205Staff
      deposit
                        
                        
                        271,145
                        
                        
                        
                        150,471Total
      other payables
                        
                        $
                        2,255,932
                        
                        
                        $
                        557,676
  7
  3.       Summary
of Significant Accounting Policies (continued)
 
 Minority Interests
 
 Minority
interests consist of other stockholders’ ownership interests in majority-owned
subsidiaries of the Company, which is about 5.8% of the total ownership. As of
November 30, 2008 and May 31, 2008, the balance of minority interests was
$805,930 and $577,995 respectively.
 
 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.
 
 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%.
 
 The
current income tax expense and deferred tax expenses for the fiscal quarters
ended November 30, 2008 and 2007 are as follows:
 
 For the three months ended
                        
                        
                        For the six months endedNov.2008
                        
                        
                        Nov.2007
                        
                        
                        Nov.2008
                        
                        
                        Nov.2007Current
      tax expense
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Deferred
      tax expense
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -$
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
  8
  3.       Summary
of Significant Accounting Policies (continued)
 
 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.
 
 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.
 
 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.
 
 As the
Company sells its product, concrete, throughout China, it is not needed to
report revenues by segment.
 
 Restatement of Previously Issued Financial
Statements
 
 Subsequent
to the issuance of the consolidated financial statements for the three months
ended November 30, 2008 and 2007, we noted minority interest ownership has not
been accounted for properly. Beijing Fortune Capital Management Co., Ltd owns
99.5% of Beijing Concrete, however, 95% was used in our previously reported
consolidated financial statements.
 
 Accordingly,
these accompanying consolidated financial statements have been restated for the
items mentioned above from the amounts previously reported.
 
 Restated
                      
                      
                      As
      previouslyreportedNovember 30, 2008Liabilities
      and stockholders' equityCurrent
      liabilitiesTrade
      accounts payable
                      
                      $
                      8,110,664
                      
                      
                      $
                      8,110,664Related
      party payable
                      
                      
                      313,984
                      
                      
                      
                      261,306Other
      payables
                      
                      
                      2,255,932
                      
                      
                      
                      2,255,932Accrued
      expenses
                      
                      
                      135,563
                      
                      
                      
                      135,563Total
      current liabilities
                      
                      
                      10,816,143
                      
                      
                      
                      10,763,465Minority
      Interests
                      
                      
                      805,930
                      
                      
                      
                      1,294,579Stockholders'
      equityCommon
      stock; no par value, 100,000,000 shares authorized; 15,295,500 shares
      issued and outstanding
                      
                      
                      1,396,644
                      
                      
                      
                      15,296Additional
      paid-in capital
                      
                      
                      0
                      
                      
                      
                      1,381,348Retained
      earnings
                      
                      
                      11,068,309
                      
                      
                      
                      10,568,048Accumulated
      other comprehensive income
                      
                      
                      1,435,757
                      
                      
                      
                      1,500,047Total
      stockholders' equity
                      
                      
                      13,900,710
                      
                      
                      
                      13,464,739Total
      Liabilities and stockholders' equity
                      
                      $
                      25,522,783
                      
                      
                      $
                      25,522,783
  9


3.           Summary
of Significant Accounting Policies (continued)




Restatement of Previously Issued Financial Statements
(continued)





In addition to the minority interest ownership
we  have reclassified 2007’s cost and expenses accounts because
amounts previously reported were not properly grouped.





The
cumulative effect of the accounts that have been revised in the statement of
operation is presented as follows:


Three months ended November 30, 2008
                  
                  
                  Three months ended November 30, 2007Restated
                  
                  
                  As previously reported
                  
                  
                  Restated
                  
                  
                  As previously reportedCost of goods
      sold
                  
                  $
                  12,870,609
                  
                  
                  $
                  12,870,609
                  
                  
                  $
                  6,532,382
                  
                  
                  $
                  6,215,475Gross
profit
                  
                  
                  2,694,540
                  
                  
                  
                  2,694,540
                  
                  
                  
                  995,756
                  
                  
                  
                  1,312,663Operating
      expensesSelling
    expense
                  
                  
                  131,916
                  
                  
                  
                  131,916
                  
                  
                  
                  99,361
                  
                  
                  
                  416,268Other general and
      administrative
                  
                  
                  367,560
                  
                  
                  
                  367,560
                  
                  
                  
                  129,054
                  
                  
                  
                  129,054Total operating
      expenses
                  
                  
                  499,476
                  
                  
                  
                  499,476
                  
                  
                  
                  228,415
                  
                  
                  
                  545,322Minority
      Interests
                  
                  
                  120,590
                  
                  
                  
                  217,872
                  
                  
                  
                  40,514
                  
                  
                  
                  73,945Net income
                  
                  $
                  2,075,020
                  
                  
                  $
                  1,977,738
                  
                  
                  $
                  717,883
                  
                  
                  $
                  684,452Foreign
      Currency Translation Adjustment
                  
                  
                  17,087
                  
                  
                  
                  (748
                  )
                  
                  
                  186,954
                  
                  
                  
                  197,783Comprehensive
      Income
                  
                  $
                  2,092,107
                  
                  
                  $
                  1,976,990
                  
                  
                  $
                  904,837
                  
                  
                  $
                  882,235Earning Per Share - Basic
      and
                  
                  $
                  0.15
                  
                  
                  $
                  0.13
                  
                  
                  $
                  0.06
                  
                  
                  $
                  0.04Basic and diluted
      shares
                  
                  
                  13,904,000
                  
                  
                  
                  15,295,500
                  
                  
                  
                  12,000,000
                  
                  
                  
                  15,295,500





Six months ended November 30, 2008
                      
                      
                      Six months ended November 30, 2007Restated
                      
                      
                      As previously
                        reported
                      
                      
                      Restated
                      
                      
                      As previously
                        reportedCost
      of goods sold
                      
                      $
                      22,251,323
                      
                      
                      $
                      22,251,323
                      
                      
                      $
                      12,308,321
                      
                      
                      $
                      11,761,929Gross
      profit
                      
                      
                      4,768,802
                      
                      
                      
                      4,768,802
                      
                      
                      
                      2,180,082
                      
                      
                      
                      2,726,474Operating
      expensesSelling
      expense
                      
                      
                      254,962
                      
                      
                      
                      254,962
                      
                      
                      
                      162,872
                      
                      
                      
                      709,264Other
      general and administrative
                      
                      
                      509,626
                      
                      
                      
                      509,626
                      
                      
                      
                      290,631
                      
                      
                      
                      290,631Total
      operating expenses
                      
                      
                      764,588
                      
                      
                      
                      764,588
                      
                      
                      
                      453,503
                      
                      
                      
                      999,895Minority
      Interests
                      
                      
                      219,004
                      
                      
                      
                      393,234
                      
                      
                      
                      93,725
                      
                      
                      
                      166,907Net
      income
                      
                      $
                      3,773,887
                      
                      
                      $
                      3,599,657
                      
                      
                      $
                      1,618,144
                      
                      
                      $
                      1,544,962Foreign
      Currency Translation
                      
                      
                      151,863
                      
                      
                      
                      160,794
                      
                      
                      
                      281,359
                      
                      
                      
                      297,656Comprehensive
      Income
                      
                      $
                      3,925,750
                      
                      
                      $
                      3,760,451
                      
                      
                      $
                      1,899,503
                      
                      
                      $
                      1,842,618Earning
      Per Share - Basic and Diluted
                      
                      $
                      0.29
                      
                      
                      $
                      0.24
                      
                      
                      $
                      0.13
                      
                      
                      $
                      0.10Basic
      and diluted shares outstanding
                      
                      
                      12,952,000
                      
                      
                      
                      15,295,500
                      
                      
                      
                      12,000,000
                      
                      
                      
                      15,295,500


10


3.           Summary
of Significant Accounting Policies (continued)





Restatement of Previously Issued Financial Statements
(continued)





The cumulative effect of this change on
the statement of cash flow is presented as follows:





SixmonthsendedNovember30,2008
                                
                                
                                SixmonthsendedNovember30,2007(Restated)
                                
                                
                                AsPreviously
                                  Reported
                                
                                
                                (Restated)
                                
                                
                                AsPreviously
                                  ReportedCashflows from operating
      activities:Net income
                                
                                $
                                3,773,887
                                
                                
                                
                                3,599,657
                                
                                
                                $
                                1,618,144
                                
                                
                                $
                                1,544,962Adjustments to reconcile net
      income to net cash provided by
      operations:Minority
      Interests
                                
                                
                                219,004
                                
                                
                                
                                393,234
                                
                                
                                
                                93,725
                                
                                
                                
                                166,907





4.            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 sources 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


4.           Recent
pronouncements (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) Beijing Chengzhi Qianmao Concrete Corporation Ltd. (“Beijing Concrete”) and
(iii) Northern Construction Holdings, Ltd, (“NCH”).





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”).





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.


13


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 last year, 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.





Costs
of Goods Sold





Cost of
goods sold for the three months ended November 30, 2008 was $12,870,609 as
compared to $6,532,382 for the same period last year, an increase of 97%. 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 170%, as compared to $995,756 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. With improved cost
control activities, our gross margin in the three months ended November 30, 2008
was approximately 17.3%, which is higher than 13.2% in the same period last
year.





Selling
Expenses





Selling expenses for the three months
endedNovember 30, 2008were $131,916as compared to $99,361for the same period last year,an increaseof $32,555, or approximatelyincrease of 32.7%. Selling expenses consisted primarily
ofafter sales serviceexpenses. Theincrease in selling expenses was primarily
due topromoting sales
revenue.





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 last year, 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 $2,075,020 for the three months ended November 30, 2008, compared to
$717,883 in the same period last year, an increase of $1,357,137 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.


14


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 last year, 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.





Costs
of Goods Sold





Cost of
goods sold for the six months ended November 30, 2008 was $22,251,323 as
compared to $12,308,321 for the same period last year, an increase of 81%. 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 118.7%, as compared to $2,180,082 for the six 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 control
activities, our gross margin in the six months ended November 30, 2008 was
approximately 17.6%, which is 2.6% higher than 15.0% in the same period last
year.





Selling
Expenses





Selling expenses for thesix
months ended November 30, 2008 were $254,962 as compared to $162,872 for the
same period last year, an increase of $92,090, or approximately an increase of
56.5%. Selling expenses consisted primarily of after sales service expenses.
Theincrease in selling expenses was primarily
due topromoting sales
revenue.





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 last year, 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.





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 $3,773,887 for the six months ended November 30, 2008, compared with
$1,618,144 in the same period last year, an increase of $2,155,743 or
approximately 133%.  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




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) 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





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 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, since there was no
substantial revenue for the same period last year for the Company.





Investing
Activities





Net cash
used in investing activities is $47,580 during the first two quarters of fiscal
year 2008. It was primarily used for the purpose of purchasing some machines and
equipment.





Financing
Activities





$136,586
of cash was used for six months ended November 30, 2008 for the purpose of
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.


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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 at that time that our
disclosure controls and procedures were effective as of the end of the period
covered by this report. In view of the material weakness in our internal control
over financial reporting because of the error in our financial statements as
described below in more detail, management now believes 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





On
February 25, 2009, the Board of Directors of the Company concluded, based on the
recommendation of management, that certain minority interest ownership had not
been accounted for properly in the consolidated financial statements of Northern
Construction Holdings, Ltd. (“NCH”), a direct wholly-owned subsidiary of the
Company, for the fiscal years ended May 31, 2008 and 2007, which financial
statements should therefore be restated to correct this error. Beijing Fortune
Capital Management Co., Ltd., a direct 95% owned subsidiary of NCH, owns 99.5%
of Beijing Chengzhi Quianmo Concrete Co, Ltd. However, 95% ownership figure was
used in our previously reported 2008 and 2007 consolidated financial statements.
Consequently, the consolidated financial statements of the Company for the
fiscal quarter ended November 30, 2008 included in the Company’s quarterly
report on Form 10-Q filed with the Commission on January 14, 2009 contained the
same error. Management has discussed this matter with Child Van Wagoner &
Bradshaw, PLLC, the Company’s independent registered public accounting
firm.





On April
13, 2009, the Company filed a current report on Form 8-K which included the
restated audited consolidated financial statements of NCH for the fiscal years
ended May 31, 2008 and 2007 together with the audit opinion reissued by the
Company’s independent registered public accounting firm. We are filing this
amended report on Form 10-Q/A for the fiscal quarter ended November 30, 2008 to
reflect the correct minority interest ownership of Beijing Chengzhi Quianmo
Concrete Co, Ltd.





The
management considered the impact of this error on the effectiveness of the
Company’s internal control over financial reporting and determined that it
amounted to a material weakness. As a result, management no longer believes that
the Company's internal controls over financial reporting were
effective.





A
material weakness (within the
meaning of PCAOB Auditing Standard No. 5)is a control deficiency, or a
combination of control deficiencies, that result in more than a remote
likelihood that a material misstatement of the annual or interim consolidated
financial statements will not be prevented or detected.





We are
working with our independent registered public accounting firm to remedy the
foregoing material weakness. We are working to refine our internal controls over
financial reporting to prevent future errors of a similar nature and are making
progress in this area.





Except as
described above, 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.


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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,
                  DirectorDate:
       May 22,
2009


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