- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended November 30, 2008

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

For the transition period from _____ to _____

Commission File Number 000-51755

CHINA RUNJI CEMENT INC.

(Exact name of Registrant as specified in its charter)

Delaware		98-0533824
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Xian Zhong Town, Han Shan County

Chao Hu City, People’s Republic of China

(Address of principal executive offices)

(86) 565 4219871

(Registrant's telephone number)

Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o Accelerated Filer o Non-accelerated Filer o 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 o No x

State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: January 14, 2009, 78,832,064 shares.

Table of Contents

CHIN A RUNJI CEMENT INC.

Form 10-Q for the period ended November 30, 2008

TABLE OF CONTENTS

			Page

PART I - FINANCIAL INFORMATION

	ITEM 1 - FINANCIAL STATEMENTS

		Consolidated Balance Sheets as of November 30, 2008 (Unaudited) and August 31, 2008	3

		Consolidated Statements of Operations and Comprehensive Income for the three months ended November 30, 2008 and 2007 (Unaudited)	4

		Consolidated Statements of Cash Flows for the three months ended November 30, 2008 and 2007 (Unaudited)	5

		Notes to Consolidated Financial Statements (Unaudited)	6 - 10

	ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		11

	ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		15

	ITEM 4 (A) - CONTROLS AND PROCEDURES		15

	ITEM 4 (A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING		15

PART II - OTHER INFORMATION

	ITEM 1 - LEGAL PROCEEDINGS		16

	ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		16

	ITEM 3 - DEFAULTS UPON SENIOR SECURITIES		16

	ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		16

	ITEM 5 - OTHER INFORMATION		16

	ITEM 6 – EXHIBITS		16

		SIGNATURES	16

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PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

China Runji Cement Inc.

Consolidated Balance Sheets

	November 30,		August 31,
	2008		2008
	(Unaudited)

ASSETS

Current Assets
Cash and cash equivalents	$	392,490	$	415,031
Accounts receivable, net		5,192,393		2,231,363
Notes receivable		227,092		868,593
Due from related parties (Note 4)		46,380		53,516
Inventory		4,285,487		3,275,570
Advances		2,366,929		3,772,367
Prepaid expenses and other receivables		928,180		1,530,022
Total Current Assets		13,438,951		12,146,462

Property, plant and equipment, net (Note 3)		51,447,519		51,499,895
Intangible Assets & Deferred Charges		4,561,210		4,615,689
Total Assets	$	69,447,680	$	68,262,046

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Payables and accrued liabilities	$	17,399,957	$	14,627,928
Customer deposit		1,469,692		1,001,178
Short-term loans		439,533		438,570
Due to related parties		3,303		3,279
Taxes payable		1,170,129		2,042,701
Wages payable		224,111		331,341
Total Current Liabilities		20,706,725		18,444,997

Due to Related Parties (Note 4)		25,010,915		27,801,846

Total Liabilities		45,717,640		46,246,843

Commitments and Contingencies (Note 5)

Stockholders' Equity
Preferred Stock: 20,000,000 shares authorized, $0.0001 par value, 0 shares issued and outstanding at November 30, 2008 and August 31, 2008		-		-
Common Stock 200,000,000 shares authorized, $0.0001 par value, 78,832,064 shares issued and outstanding		7,883		7,883
Additional paid in capital		12,327,962		12,327,962
Accumulated other comprehensive income		2,645,654		2,595,790
Retained earnings		8,748,541		7,083,568
Total stockholders' equity		23,730,040		22,015,203

Total Liabilities and stockholders' Equity	$	69,447,680	$	68,262,046

The accompanying notes are an integral part of these unaudited financial statements.

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China Runji Cement Inc.

Consolidated Statements of Operations and Comprehensive Income

(UNAUDITED)

	For the three months ended November 30,
	2008			2007

Revenue	$	15,750,411		$	10,311,286

Cost of goods sold		13,697,507			7,790,594

Gross Profit		2,052,904			2,520,692

Operating Costs and Expenses:
Selling expenses		72,052			16,310
G&A expenses		373,663			454,049
Depreciation of property, plant and equipment		37,788			21,166
Total operating costs and expenses		483,503			491,525

Income From Operations		1,569,401			2,029,167

Interest income		972			1,413
Interest expenses		(20,756	)		(3,694	)
Government Subsidies / Grants		731,891			-
Other income (expenses)		(62,784	)		93,414

Income Before Income Taxes		2,218,724			2,120,300
Income taxes (Note 6)		553,751			687,684

Net Income	$	1,664,973		$	1,432,616

Other Comprehensive Income
Foreign currency translation adjustment		49,864			325,643
Comprehensive Income	$	1,714,837		$	1,758,259

Earnings Per Share, Basic and Diluted	$	0.02		$	0.02

Weighted Average Shares Outstanding - Basic and Diluted		78,832,064			78,832,064

The accompanying notes are an integral part of these unaudited financial statements.

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China Runji Cement Inc.

Consolidated Statements of Cash Flows

(UNAUDITED)

	For the three months ended November 30,
	2008			2007

Operating activities
Net income	$	1,664,973		$	1,432,616
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization		64,560			25,298
Depreciation expense and cost		967,993			641,630
Impairment of assets		-
Changes in operating assets and liabilities:
Accounts receivable, net		(2,304,326	)		(1,953,747	)
Advances to suppliers		-			(2,590,286	)
Prepaid expenses and other receivables		604,849			(251,973	)
Inventory		(1,001,812	)		(34,600	)
Loan to related parties		-			-
Accounts payable and accrued liabilities		4,040,687			(517,637	)
Customer deposit		467,181			1,277,908
Tax payable		(876,264	)		1,121,571
Net cash provided by (used in) operating activities		3,627,841			(849,220	)

Investing activities
Collection of loans to related parties		7,247			13,212
Property, plant and equipment additions		(802,630	)		(167,300	)
Net cash provided by (used in) investing activities		(795,383	)		(154,088	)

Financing activities
Short term loan proceeds (repayment)		-			36,727
Loan from related party		-			1,389,171
Proceeds from related party loans (repayment)		(2,849,421	)		-
Capital contribution		-			39,114
Net cash provided by (used in) financing activities		(2,849,421	)		1,465,012

Effect of exchange rate changes on cash and cash equivalents		(5,578	)		(673,000	)

Decrease in cash and cash equivalents		(22,541	)		(211,296	)

Cash and cash equivalents, beginning of year		415,031			1,400,479

Cash and cash equivalents, end of year	$	392,490		$	1,189,183

Supplemental Disclosures of Cash Flows Information:
Interest Paid	$	20,756		$	25,648
Income taxes paid	$	1,442,353		$	-

The accompanying notes are an integral part of these unaudited financial statements.

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CHINA RUNJI CEMENT INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2008

(UNAUDITED)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

The Company was incorporated as FitMedia Inc., a Delaware corporation, on August 30, 2004.

On November 1, 2007, the Company closed a reverse merger with Anhui Province Runji Cement Co., Limited (“Anhui Runji”). Anhui Runji is the accounting acquirer and the transaction is accounted for as a recapitalization. The historical financial statements of Anhui Runji survived the merger and is presented herein.

Anhui Runji, a producer and distributor of cement located in Anhui Province in China, was established in December 2003 with registered capital of RMB 60 million yuan. Anhui Runji started production in October 2005 and specializes in cement production and sales. The main cement varieties produced are ordinary silicate cement PO52.5, PO42.5, PO32.5 and PC32.5. Following the commencement of the second cement clinker production line in October 2008, Anhui Runji currently has one production line of cement and one of cement clinker; each is designed to produce 2,500 tons per day.

Anhui Runji obtained its production license in 2005. Presently, Anhui Runji mainly focuses production on Runji Brand PII52.5, PO42.5, PO32.5 and PC32.5 cements. PII52.5 is a high grade, high strength cement that is made in Anhui and Jiangsu Provinces and the region of north of the Changjiang River and is used in large infrastructural projects. Anhui Runji has a rigorous quality control system and received ISO9001 quality system certification and international accreditation in March 2006. In addition Anhui Runji passed the national GB/T 19001-2000 standard authentication.

Presently, Anhui Runji’s main market is in Hefei city and Pukou area of Nanjing, with 60% of the total annual production sold in this area. An additional 30% of total annual production is sold in the cities surrounding Hefei and Pukou, with another 10% being sold in Liu’an and Dingyuan in Anhui and Jiangsu. To reflect its business and business plan, the Company changed its name from “FitMedia Inc.” to “China Runji Cement Inc.”

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with August 31, 2008 audited financial statements of the Company and the notes thereto as included in the Company’s Form 10-K filed on December 3, 2008. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements, which would substantially duplicate the disclosure required in the Company’s June 30, 2008 annual financial statements have been omitted.

These accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Ren Ji Cement Investment Co., Ltd (a BVI corporation), Ren Ji Cement Company Limited (a Hong Kong corporation), Mass Market Limited (a BVI corporation), and Anhui Province Runji Cement Co., Ltd. (a PRC corporation). All have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

All significant inter-company balances and transactions have been eliminated in consolidation.

Use of Estimates

In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the year reported. Actual results may differ from these estimates.

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CHINA RUNJI CEMENT INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2008

(UNAUDITED)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

New Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements, to provide guidance for using fair value to measure assets and liabilities. SFAS No. 157 was to be effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years; however, in February 2008, the FASB issued FASB Staff Position FAS 157–2, Effective Date of FASB Statement No. 157, which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, for one year. We adopted SFAS No. 157 on September1, 2008 for financial assets and financial liabilities and currently we do not have any financial assets and financial liabilities. As a result, the adoption does not have any impact on our financial statements. We will adopt SFAS No. 157 on September 1, 2009 for our nonfinancial assets and nonfinancial liabilities, and we have not yet determined the impact, if any, on our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses on items for which the fair value option has been selected are reported in earnings. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We have elected not to apply the provisions of SFAS No. 159..

On December 4, 2007, the FASB issued SFAS No.141R, Business Combinations ( SFAS No. 141R). SFAS No. 141R requires the acquiring entity in a business combination to recognize all the assets acquired and liabilities assumed, establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to expand disclosures about the nature and financial effect of the business combination. SFAS No. 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We have not yet determined the impact of the adoption of SFAS No. 141R on our consolidated financial statements and footnote disclosures.

On December 4, 2007, the FASB issued SFAS No. 160, Noncontrolling interest in Consolidated Financial Statements (SFAS No. 160). SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. The statement establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation and expands disclosures in the consolidated financial statements. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. We have not yet determined the impact of the adoption of SFAS No. 160 on our consolidated financial statements and footnote disclosures.

Government Subsidies

A government subsidy is recognized only when there is reasonable assurance that the enterprise will comply with any conditions attached to the grant and the grant will be received. The Company is entitled to receive treasury subsidy of local government in accordance with the “Regulations of facilitating investment in industrial enterprises” (Article 17 of Han Order [2002]) which is promulgated on Oct 28, 2002 by the Communist Party Commission of Han Shan County, Anhui Province and Han Shan County Government of Anhui Province. According to this regulation, the first three years of tax payable by the Company after it commenced production to the local government will be returned to the Company for the purpose of increasing production.

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CHINA RUNJI CEMENT INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2008

(UNAUDITED)

NOTE 3 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	30-Nov-08			31-Aug-08

Building – Cost	$	27,896,384		$	22,270,871
Building - Accumulated Depr		(2,417,223	)		(2,103,678	)
Building – Net		25,479,161			20,167,193

Equipment & Machinery – Cost		31,172,659			18,712,633
Equipment & Machinery - Accumulated Depr		(6,262,367	)		(5,607,996	)
Equipment & Machinery – Net		24,910,292			13,104,637

Automobiles – Cost		293,506			292,862
Automobiles – Accumulated Depr		(110,106	)		(95,953	)
Automobiles – Net		183,400			196,909

Other Equipment – Cost		30,633			56,880
Other Equipment - Accumulated Depr		(13,940	)		(11,208	)
Other Equipment – Net		16,693			45,672

Computer Equipment – Cost		28,287			24,982
Computer Equipment - Accumulated Depr		(7,956	)		(6,670	)
Computer Equipment – Net		20,331			18,312

Total Fixed Assets - Net	$	50,609,877		$	33,532,723

Construction in progress		837,642			17,967,172

	$	51,447,519		$	51,499,895

NOTE 4 –DUE FROM/TO RELATED PARTIES

(a) Names and relationship of related parties

	Existing relationships with the Company

Nanjin Hongren	A company controlled by shareholder

Nanjin Runji	A company controlled by shareholder

Zhao, Shouren	Shareholder, President & CEO of the Company

Yang, Xuanjun	Shareholder of the Company

Chen, Zhonghang	Relative of Mr. Zhao Shouren

Wu, Qiuchang	General manager of Anhui Run ji

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CHINA RUNJI CEMENT INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2008

(UNAUDITED)

NOTE 4 –DUE FROM/TO RELATED PARTIES (CONT.)

(b) Due from related party consists of the following:

	30-Nov-08			31-Aug-08

Due from related party (S/T) – Chen, Zhonghang		$	43,903	$	50,592
Due from related party (S/T) – Wu, Qiuchang			2,477		2,924
		$	46,380	$	53,516

	30-Nov-08		31-Aug-08

Due to related party – Nanjin Hongren	$	16,873,729		19,117,328
Due to related party – Nanjin Runji		7,151,552		7,135,856
Due to related party – Zhao, Shouren		436,037		488,606
Due to related party – Yang, Xuanjun		549,597		1,060,056

	$	25,010,915	$	27,801,846

The above amounts due to related parties represent loans payable are long-term loans that are unsecured and non-interest bearing, and the loans usage will depends on the Company’s business operations.

NOTE 5 – COMMITMENTS AND CONTINGECIES

Social insurance for employees

According to the prevailing laws and regulations of the PRC, the Company is required to cover its employees with medical, retirement and unemployment insurance programs. Management believes that due to the transient nature of its employees, the Company does not need to provide all employees with such social insurances, and has paid the social insurances for the Company’s employees who have completed three months’ continuous employment with the Company.

In the event that any current or former employee files a complaint with the PRC government, the Company may be subject to making up the social insurances as well as administrative fines. As the Company believes that these fines would not be material, no provision has been made in this regard.

Tax issues

The tax authority of the PRC Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises had completed their relevant tax filings, hence the Company’s tax filings may not be finalized. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s tax filings which may lead to additional tax liabilities.

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CHINA RUNJI CEMENT INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2008

(UNAUDITED)

NOTE 6 – INCOME TAXES

The Company‘s Enterprise Income Tax (“EIT”) rates has been reduced to 25% from 33% starting from January 1, 2008.

	Three months ended November 30, 2008		Three months ended November 30, 2007

Income Taxes	$	553,751	$	687,684

There are no significant temporary and permanent differences between book and tax income.

NOTE 7 - OPERATING RISK

Country risk

The Company has significant investments in the PRC. The operating results of the Company may be adversely affected by changes in the political and social conditions in the PRC and by changes in Chinese government policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. There can be no assurance; however, those changes in political and other conditions will not result in any adverse impact.

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL DESCRIPTION OF BUSINESS

Introduction

China Runji was incorporated as FitMedia Inc., a Delaware company, on August 30, 2004. FitMedia was a development stage company that planned to sell prenatal yoga DVDs through small retail stores and others and it also planned to sell its fitness DVDs through its Internet site www.fitmedia.net . It completed its prenatal yoga DVD for sale and began marketing it in January 2007.

In October 2007, the management of FitMedia determined that it was in the best interests of the stockholders of FitMedia to agree to a share exchange with Anhui Province Runji Cement Co., Limited, a Chinese company that is engaged in the business of distributing cement across provinces in mainland China. As part of the share exchange and reverse merger, FitMedia ceased engaging in the health and fitness business.

On October 9, 2007, FitMedia entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among FitMedia, Timothy Crottey, the President and majority shareholder of FitMedia (“Crottey”), Shouren Zhao, a citizen and resident of the People’s Republic of China and owner of 100% of the share capital of Ren Ji Cement Investment Company Limited (“Zhao”); Ren Ji Cement Investment Company., Ltd., a British Virgin Islands corporation (“Renji Investment”) and owner of 100% of the share capital of Ren Ji Cement Company Limited; Ren Ji Cement Company Limited, a corporation organized and existing under the laws of the Hong Kong SAR of the People’s Republic of China (“HK Renji”) and owner of 100% of the share capital of Anhui Province Runji Cement Co., Ltd.; and Anhui Province Runji Cement Co., Ltd., a corporation organized under the laws of the People’s Republic of China (“Anhui Runji”). For purposes of the Exchange Agreement, Zhao was referred to as the “Ren Shareholder,” and Renji Investment, HK Renji and Anhui Runji were referred to as the “Renji Subsidiaries.” Upon closing of the share exchange transaction (the “Share Exchange”) contemplated under the Exchange Agreement on November 1, 2007, the Ren Shareholder transferred all of his share capital in Renji Investment to FitMedia in exchange for an aggregate of 55,000,000 shares of common stock of the FitMedia, thus causing the Renji Subsidiaries to become direct and indirect wholly-owned subsidiaries of FitMedia.

On October 9, 2007, FitMedia entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) by and among FitMedia, Crottey, and the Ren Shareholder, pursuant to which the Ren Shareholder, as Purchaser, at closing on November 1, 2007, acquired 18,500,000 shares (the “Stock Purchase”) of common stock of FitMedia from Crottey for $540,000.00.

In addition, pursuant to the terms and conditions of the Exchange Agreement:

·	Demand and piggy-back registration rights were granted to the Ren Shareholder with respect to shares of the Company’s restricted common stock to be acquired by him at closing in a Regulation S offering.

·	On the Closing Date, the current officers of FitMedia resigned from such positions and the persons chosen by Anhui Runji were appointed as the officers of FitMedia, notably Shouren Zhao, as Chairman, CEO and President and Yichun Jiang as CFO.

·	On the Closing Date, Crottey resigned from his position as a director effective upon the expiration of the ten day notice period required by Rule 14f-1, at which time additional persons designated by Anhui Runji were appointed as directors of FitMedia, notably Liming Bi and Xuanjun Yang.

·	On the Closing Date, FitMedia paid and satisfied all of its “liabilities” as such term is defined by U.S. GAAP as of the closing.

·	As of the Closing, the parties consummated the transactions contemplated by the Stock Purchase Agreement.

On January 8, 2008, FitMedia changed its name to China Runji Cement Inc. and increased its authorized common stock from 80,000,000 shares to 200,000,000 shares.

As a result of the closing of the Share Exchange, China Runji became the owner of a leading cement production and distribution company in mainland China through its ownership of Anhui Runji. Using cost effective production techniques, while building a strong brand image, Anhui Runji is a strong competitor in the central China cement market.

Anhui Runji is a producer and distributor of cement, primarily in An Hui Province of central China and neighboring locations, which was founded in December 2003. Its initial capital was 60,000,000 RMB and there were two founding shareholders who owned such capital in a ratio of 60% to 40%. Anhui Runji is located in Xianzong Town, Hanshan County, An Hui Province, where the factory occupies an area of 418 mu, and its limestone mine comprises an area of 1,000 mu. The Anhui Runji factory, limestone reserve and storing mine together comprise an area of approximately 50,000 square meters.

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Summary of the Operations of Anhui Runji

Anhui Province Runji Cement Co., Ltd. ( www.chinarunji.com ), a private company located in Anhui Province in China, was established in December 2003 with registered capital of 60 million RMB. The Company started production in October 2005 and specializes in cement production and sales. The main cement varieties produced are ordinary silicate cement P.O52.5, P.O42.5, P.O32.5 and P.C32.5. At present, the Company has one cement production line and one cement clinker production line. The production capacity of each line amounts to 2,500 tons per day and one million tons per year.

The Company obtained its production license in 2005. Presently, the Company mainly focuses production on Runji Brand cement P.II52.5, P.O42.5, P.O32.5 P.C32.5 as well as cement clinker. P.II52.5 is a high grade, high strength cement that is made for Anhui and Jiangsu Provinces and the region north of the Changjiang River and is used in large infrastructure projects. The cement clinker is the semi-finished ingredient of cement, which is able to be processed into different categories of cement products.

The Company produces cement through the advanced dry production process, an energy efficient and environmentally friendly cement production technique, as only 60% of the total output in the region is produced by dry process. The Company has a rigorous quality control system and received ISO9001 quality system certification and international accreditation in March 2006. In addition, our Company passed the national GB/T 19001-2000 standard authentication. The Company’s pollution control exceeds the national standard and received “green building material” certification in 2007.

The Company has an abundant supply of high quality raw materials. The Company has obtained a 30 year mining right for 87 million tons of limestone reserve, which can supply two cement clinker production lines with a daily output of 2,500 tons for 40 years.

Presently, the Company is one of the largest cement producers and distributors in the north Changjiang region of Anhui, with a 12% market share within a 100 mile radius of its facility. The Company is the only producer of P.II52.5 cement (the highest quality cement) in the north Changjiang region of Anhui and Jiangsu Provinces, with 70% P.II52.5 cement market share within a 100 miles radius of its facility. The Company’s main market is in Hefei, around 70% of our total cement products are sold in the area. An additional 20-30% of total annual production is sold in Hanshan county. The Company is also an important cement clinker provider in the area after the second production line was put into production in October, 2008.

The Company’s net sales to customers for the three months ended November 30, 2008 and November 30, 2007, were $15,750,411 and $10,311,286, respectively.

Anhui Runji’s Plan of Operation

·	We plan to raise adequate capital over the next five years for expansion and growth.
·	We have invested over USD$50 million to build up one cement production line with daily production of 2,500 tons and one cement clinker production line with daily production of 2,500 tons in 2008. The newly invested cement clinker production line was put into production in October 2008.

We plan to complete the investment of USD$10 million to establish a waste heat power generator system to convert waste heat into electricity in 2009, which is expected to save about USD$4.6 million per year in electricity costs. After the completion of the generator system, we will significantly improve our margins and reduce reliance on outside power sources.

We plan to construct a third production line within two years, which will have a daily cement clinker production capacity of 5,000 tons or 1.5 million tons annually. We have submitted to the Anhui government an application for approval of the third production line. Upon completion, our total cement production capacity will reach 3.6 million tons per year, and cement clinker production will reach 3 million tons per year, controlling 30% of the market share within a 100 miles radius of our production facility.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007

The following discussion should be read in conjunction with the financial statements included in this report and is qualified in its entirety by the foregoing.

FORWARD LOOKING STATEMENTS

Certain statements in this report, including statements of our expectations, intentions, plans and beliefs, including those contained in or implied by "Management's Discussion and Analysis" and the Notes to Financial Statements, are "forward-looking statements", within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are subject to certain events, risks and uncertainties that may be outside our control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. These forward-looking statements include statements of management's plans and objectives for our future operations and statements of future economic performance, information regarding our expansion and possible results from expansion, our expected growth, our capital budget and future capital requirements, the availability of funds and our ability to meet future capital needs, the realization of our deferred tax assets, and the assumptions described in this report underlying such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the context of such forward-looking statements.

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Revenues

We generated all of our revenue by primarily selling cement products. Revenues increased by $5,439,125 or 52.75% to $15,750,411 for the three months ended November 30, 2008 from $10,311,286 for the same corresponding period in 2007. The increase is primarily the result of increased sales volume in general, and PO42.5 grade cement and cement clinker in particular; which is attributed to the start of operation of the second production line during this quarter. The increased retail price for cement products also contributed to the increase in our revenue. The breakdown of our revenue is shown as follows:

	For the Three Month Period Ended
	30-Nov-08		30-Nov-07		Difference
Revenue	USD	%	USD	%	USD		%
	15,750,411	100%	10,311,286	100%	5,439,125
PO 42.5	10,053,656	64%	7,996,325	78%	2,057,331		-14%
PO 32.5	578,733	4%	196,456	2%	382,277		2%
PC 32.5	922,440	6%	804,356	8%	118,084		-2%
PII 52.5	856,336	5%	930,850	9%	(74,514	)	-4%
Clinker	3,339,246	21%	383,299	4%	2,955,947		17%

Note: 1) Comparing with the same period last year, the revenue of PO42.5 increased by $2,057,331 to $10,053,656 for the three months ended November 30, 2008 from $7,996,325 for the same corresponding period in 2007; and that of cement clinker increased by $2,955,947 to $3,339,246 for the three months ended November 30, 2008 from $383,299 for the same corresponding period in 2007; 2) the percentage of revenue of cement clinker increased to 21% for the three months ended November 30, 2008 from 4% for the same corresponding period in 2007, following the second cement clinker production line that was put into production.

Cost of Goods Sold

Our cost of goods sold for the three months ended November 30, 2008 was $13,697,507, compared to $7,790,594 for the same corresponding period in 2007, an increase of $5,906,913 or approximately 76%. This is attributed to an increase in our sales volume and increase in the production costs. The production costs increase is because the second production line was not operating in full capacity in the month of September 2008.

Gross Profit

Our gross profit decreased by $467,788 or approximately 18.6% to $2,052,904 for the three months ended November 30, 2008 from $2,520,692 for the same period in 2007. The decrease was primarily due to the stepping up process to full production capacity in the early operating stage of the second production line.

Operating Expenses

Total operating expenses for the three months ended November 30, 2008 was $483,503, compared to $491,525 for the same period in 2007, a decrease of $8,022 or approximately 1.6%. A reduction in general and administrative expenses contributed to the decrease.

Interest Expenses

Our interest expense for the three months ended November 30, 2008 and November 30, 2007 was $20,756 and $3,694, respectively.

Liquidity and Capital Resources

Net cash flows provided by (used in) operating activities for the three months ended November 30, 2008 and November 30, 2007 were $3,627,841 and $(849,220), respectively. This was primarily due to a decrease in advances to suppliers and an increase in accounts payable and accrued liabilities.

Net cash flows used in investing activities for the three months ended November 30, 2008 and November 30, 2007 were $(795,383) and $(154,088). This was due mainly to increased expenditures for property, plant and equipment in connection with the development of the second production line.

Net cash flows provided by (used in) financing activities for the three months ended November 30, 2008 and November 30, 2007 were $(2,849,421) and $1,465,012, respectively. This was due mainly to repayment of related party loans.

Overall, we have funded most of our cash needs from inception through November 30, 2008 with operating activities and loans from related parties.

On November 30, 2008, we had cash and cash equivalents of $392,490 on hand. We anticipate raising funds through an equity or debt offering or with a strategic partner in the coming year.

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CRITICAL ACCOUNTING POLICIES

The discussion and analysis of the Company’s financial condition presented in this section are based upon the unaudited consolidated financial statements of China Runji Cement Inc., which have been prepared in accordance with the generally accepted accounting principles in the United States. During the preparation of the financial statements China Runji Cement Inc. is required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, China Runji Cement Inc. evaluates its estimates and judgments, including those related to sales, returns, pricing concessions, bad debts, inventories, investments, fixed assets, intangible assets, income taxes and other contingencies. China Runji Cement Inc. bases its estimates on historical experience and on various other assumptions that it believes are reasonable under current conditions. Actual results may differ from these estimates under different assumptions or conditions.

In response to the SEC’s Release No. 33-8040, “Cautionary Advice Regarding Disclosure About Critical Accounting Policy,” China Runji Cement Inc. identified the most critical accounting principles upon which its financial status depends. China Runji Cement Inc. determined that those critical accounting principles are related to the use of estimates, inventory valuation, revenue recognition, income tax and impairment of intangibles and other long-lived assets. China Runji Cement Inc. presents these accounting policies in the relevant sections in this management’s discussion and analysis, including the Recently Issued Accounting Pronouncements discussed below.

Revenue Recognition . China Runji Cement Inc. recognizes sales when the revenue is realized or realizable, and has been earned, in accordance with SEC Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements”. China Runji Cement Inc.’ sales are related to sales of product. Revenue for product sales is recognized as risk and title to the product transfer to the customer, which usually occurs at the time shipment is made. Substantially all of China Runji Cement Inc.’ products are sold FOB (“free on board”) shipping point. Title to the product passes when the product is delivered to the freight carrier.

Sales revenue represents the invoiced value of goods, net of a value-added tax (VAT). All of China Runji Cement Inc.’s products that are sold in the China are subject to a Chinese value-added tax at a rate of 17% of the gross sales price or at a rate approved by the Chinese local government. This VAT may be offset by VAT paid by China Runji Cement Inc. on raw materials and other materials included in the cost of producing their finished product.

Accounts Receivable, Trade and Allowance for Doubtful Accounts. China Runji Cement Inc.’ business operations are conducted in the People's Republic of China. During the normal course of business, China Runji Cement Inc. extends unsecured credit to its customers. Management reviews accounts receivable on a regular basis to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is recorded when collection of the full amount is no longer probable.

I nventories. Inventories are stated at the lower of cost or market using the weighted average method. China Runji Cement Inc. reviews its inventory on a regular basis for possible obsolete goods or to determine if any reserves are necessary for potential obsolescence.

Income Taxes . China Runji Cement Inc. has adopted Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (SFAS 109). SFAS 109 requires the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consist of taxes currently due plus deferred taxes. Since China Runji Cement Inc. had no operations within the United States there is no provision for US income taxes and there are no deferred tax amounts at December 31, 2006 and 2005. The charge for taxation is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probably that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when they related to income taxes levied by the same taxation authority and the Company intends to settle current tax assets and liabilities on a net basis.

Recently Issued Accounting Pronouncements

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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, operations of the Company are exposed to fluctuations in interest rates. These fluctuations can vary the costs of financing and investing yields. In view of the financing arrangements during the first three months of 2009, the Company is not currently subject to significant market risk.

ITEM 4(A) - CONTROLS AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer (the principal executive officer and principal financial officer, respectively) of the Company have concluded, based on their evaluation as of November 30, 2008, that the design and operation of the Company's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")) are effective to ensure that information required to be disclosed in the reports filed or submitted by the Company under the Exchange Act is accumulated, recorded, processed, summarized and reported to the management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding whether or not disclosure is required.

During the quarter ended November 30, 2008, there were no changes in the internal controls of the Company over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the internal controls of the Company over financial reporting.

ITEM 4(A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING

(a) The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of November 30, 2008.

(b) This quarterly report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

(c) There were no changes in the Company's internal controls over financial reporting, known to the chief executive officer or the chief financial officer that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

None.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 – EXHIBITS

31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934

31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934

32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. SS. 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. SS. 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.