o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Delaware
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98-0533824
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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Page
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PART
I - FINANCIAL INFORMATION
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ITEM
1 - FINANCIAL STATEMENTS
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|||
Consolidated
Balance Sheets as of November 30, 2009 and August 31, 2009
(Unaudited)
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3
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||
Consolidated
Statements of Operations and Comprehensive Income for the three months
ended November 30, 2009 and 2008 (Unaudited)
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4
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||
Consolidated
Statements of Cash Flows for the three months ended November 30, 2009 and
2008 (Unaudited)
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5
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Notes
to Unaudited Consolidated Financial Statements
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6
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||
ITEM
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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12
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ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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17
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ITEM
4 (A) - CONTROLS AND PROCEDURES
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17
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ITEM
4 (A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING
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17
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PART
II - OTHER INFORMATION
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ITEM
1 - LEGAL PROCEEDINGS
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18
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ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
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18
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ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
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18
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ITEM
4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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18
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ITEM
5 - OTHER INFORMATION
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18
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ITEM
6 – EXHIBITS
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18
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SIGNATURES
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19
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November
30,
|
August
31,
|
|||||||
2009
|
2009
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash and cash equivalents
|
$ | 85,263 | $ | 752,952 | ||||
Accounts receivable, net (Note 3)
|
6,448,924 | 7,758,060 | ||||||
Accounts receivable from related party (Note 3)
|
127,393 | 120,615 | ||||||
Advances (Note 5)
|
6,331,431 | 6,323,149 | ||||||
Short Term Deferred Assets (Note 7)
|
76,889 | 102,298 | ||||||
Inventory
(Note 4)
|
2,346,376 | 2,015,140 | ||||||
Prepaid
expenses and other receivables
|
2,062,071 | 1,110,522 | ||||||
Total
Current Assets
|
17,478,347 | 18,182,736 | ||||||
Advance
for construction In progress projects (Note 5)
|
3,089,211 | 2,743,828 | ||||||
Property,
plant and equipment, net (Note 6)
|
54,281,423 | 51,766,946 | ||||||
Intangible
Assets & Deferred Charges (Note 7)
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4,515,689 | 4,416,306 | ||||||
Total
Assets
|
$ | 79,364,670 | $ | 77,109,816 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts payables and accrued liabilities (Note 8)
|
$ | 20,818,228 | $ | 19,477,476 | ||||
Short-term
loans (Note 9)
|
13,330,404 | 13,301,615 | ||||||
Long-term
loan-current portion (Note 11)
|
758,145 | 733,143 | ||||||
Due to related parties (S/T)(Note 10)
|
16,999,217 | 16,816,524 | ||||||
Taxes
payable and other
|
360,574 | 739,405 | ||||||
Total
Current Liabilities
|
52,266,568 | 51,068,163 | ||||||
Long-Term
loan-non-current portion (Note 11)
|
37,130 | 235,174 | ||||||
Total
Liabilities
|
52,303,698 | 51,303,337 | ||||||
Commitments
and Contingencies (Note 12)
|
- | - | ||||||
Stockholders'
Equity
|
||||||||
Preferred Stock: 20,000,000 shares authorized, $0.0001 par
value
|
||||||||
No shares issued and outstanding
|
- | - | ||||||
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
|
2,590,473 | 2,535,914 | ||||||
Retained
earnings
|
12,134,654 | 10,934,720 | ||||||
Total
Stockholders' Equity
|
27,060,972 | 25,806,479 | ||||||
Total
Liabilities and Stockholders' Equity
|
$ | 79,364,670 | $ | 77,109,816 |
For
the three months ended
November
30,
|
||||||||
2009
|
2008
|
|||||||
Revenue
|
$ | 10,930,701 | $ | 15,750,411 | ||||
Cost
of goods sold
|
10,225,190 | 13,697,507 | ||||||
Gross
Profit
|
705,511 | 2,052,904 | ||||||
Operating
Costs and Expenses:
|
||||||||
Selling
expenses
|
86,647 | 72,052 | ||||||
G&A
expenses
|
625,380 | 373,663 | ||||||
Depreciation
of property, plant and equipment
|
39,566 | 37,788 | ||||||
Total
operating costs and expenses
|
751,593 | 483,503 | ||||||
Income
From Operations
|
(46,082 | ) | 1,569,401 | |||||
Interest
income
|
- | 972 | ||||||
Interest
expenses
|
(222,098 | ) | (20,756 | ) | ||||
Government
Subsidies / Grants
|
1,875,336 | 731,891 | ||||||
Other
income (expenses)
|
(3,975 | ) | (62,784 | ) | ||||
Income
Before Income Taxes
|
1,603,181 | 2,218,724 | ||||||
Income
taxes
|
403,247 | 553,751 | ||||||
Net
Income
|
1,199,934 | 1,664,973 | ||||||
Other
Comprehensive Income
|
||||||||
Foreign
currency translation adjustment
|
54,559 | 49,864 | ||||||
Comprehensive
Income
|
$ | 1,254,493 | $ | 1,714,837 | ||||
Earnings
Per Share - Basic and Diluted
|
$ | 0.02 | $ | 0.02 | ||||
Weighted
Average Shares Outstanding- Basic and Diluted
|
78,832,064 | 78,832,064 |
For
the three months ended November 30,
|
||||||||
2009
|
2008
|
|||||||
Operating
activities
|
||||||||
Net income
|
$ | 1,199,934 | $ | 1,664,973 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used
in) operating activities:
|
||||||||
Amortization
|
69,289 | 64,560 | ||||||
Depreciation, expense and cost
|
1,159,684 | 967,993 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable, net
|
1,319,321 | (2,304,326 | ) | |||||
Advances to suppliers
|
5,334 | - | ||||||
Prepaid expenses and other receivables
|
(949,992 | ) | 604,849 | |||||
Inventory
|
(326,896 | ) | (1,001,812 | ) | ||||
Accounts payable and accrued liabilities
|
1,298,818 | 4,040,687 | ||||||
Customer Deposit
|
- | 467,181 | ||||||
Tax payable
|
(380,423 | ) | (876,264 | ) | ||||
Net
cash provided by (used in) operating activities
|
3,395,069 | 3,627,841 | ||||||
Investing
activities
|
||||||||
Collection of loans to related parties
|
- | 7,247 | ||||||
Property, plant and equipment additions
|
(3,902,162 | ) | (802,630 | ) | ||||
Net
cash provided by (used in) investing activities
|
(3,902,162 | ) | (795,383 | ) | ||||
Financing
activities
|
||||||||
Short term loan proceeds
|
878,928 | - | ||||||
Short term loan repayment
|
(878,928 | ) | - | |||||
Proceeds/(repayment) of related party loans
|
146,488 | (2,849,421 | ) | |||||
Principle payment of the sale-leaseback financing
|
(175,126 | ) | - | |||||
Net
cash provided by (used in) financing activities
|
(28,638 | ) | (2,849,421 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
|
(131,958 | ) | (5,578 | ) | ||||
Increase
(decrease) in cash and cash equivalents
|
(667,689 | ) | (22,541 | ) | ||||
Cash
and cash equivalents, beginning of year
|
752,952 | 415,031 | ||||||
Cash
and cash equivalents, end of year
|
$ | 85,263 | $ | 392,490 | ||||
Supplemental
Disclosures
|
||||||||
Interest Paid
|
$ | 98,225 | $ | 20,756 | ||||
Income taxes paid
|
$ | 403,247 | $ | 1,442,353 | ||||
Noncash
Investing and Financing Activities
|
||||||||
Reclassification of CIP to Property, Plant & Equipment
|
$ | 7,160,024 | $ | - | ||||
Transfer to CIP from Advances
|
$ | 3,496,594 | $ | - |
30-Nov-09
|
31-Aug-09
|
|||||||
Notes
Receivable
|
$ | 580,978 | $ | 199,148 | ||||
Accounts
Receivable –Trade
|
$ | 5,867,946 | $ | 7,558,912 | ||||
Accounts
Receivable from related party
|
127,393 | 120,615 | ||||||
Allowance
for Doubtful Accounts
|
- | - | ||||||
$ | 6,576,317 | $ | 7,878,675 |
30-Nov-09
|
31-Aug-09
|
|||||||
Raw
Materials
|
$
|
303,034
|
$
|
702,529
|
||||
Packaging
Materials
|
29,772
|
25,138
|
||||||
Semi-Finished
Goods
|
1,322,298
|
292,376
|
||||||
Finished
Goods
|
852,316
|
871,976
|
||||||
Supplies
|
(161,044)
|
123,121
|
||||||
$
|
2,346,376
|
$
|
2,015,140
|
30-Nov-09
|
31-Aug-09
|
|||||||
Advances
to suppliers
|
$ | 6,331,431 | $ | 6,323,149 | ||||
Advance
for Construction In Progress projects
|
3,089,211 | 2,743,828 | ||||||
Advances
|
$ | 9,420,642 | $ | 9,066,977 |
30-Nov-09
|
31-Aug-09
|
|||||||
Building
– Cost
|
$
|
28,515,642
|
$
|
28,423,400
|
||||
Building
- Accumulated Depr
|
(3,754,164
|
)
|
(3,407,631
|
)
|
||||
Building
– Net
|
24,761,478
|
25,015,769
|
||||||
Equipment
& Machinery – Cost
|
38,483,171
|
31,245,848
|
||||||
Equipment
& Machinery - Accumulated Depr
|
(9,286,696
|
)
|
(8,464,956
|
)
|
||||
Equipment
& Machinery – Net
|
29,196,475
|
22,780,892
|
||||||
Automobiles
– Cost
|
293,459
|
292,828
|
||||||
Automobiles
– Accumulated Depr
|
(165,846
|
)
|
(151,579
|
)
|
||||
Automobiles
– Net
|
127,613
|
141,249
|
||||||
Other
Equipment – Cost
|
31,031
|
30,964
|
||||||
Other
Equipment - Accumulated Depr
|
(18,157
|
)
|
(16,648
|
)
|
||||
Other
Equipment – Net
|
12,874
|
14,316
|
||||||
Computer
Equipment – Cost
|
32,911
|
32,841
|
||||||
Computer
Equipment - Accumulated Depr
|
(13,549
|
)
|
(11,960
|
)
|
||||
Computer
Equipment – Net
|
19,362
|
20,881
|
||||||
Total
Fixed Assets - Net
|
$
|
54,117,802
|
$
|
47,973,107
|
||||
Construction
in progress
|
163,621
|
3,793,839
|
||||||
$
|
54,281,423
|
$
|
51,766,946
|
30-Nov-09
|
31-Aug-09
|
|||||||
Mineral
exploration right-Shihuishi
|
$ | 3,404,349 | $ | 3,428,391 | ||||
Mineral
exploration right-Shayan
|
217,705 | 224,399 | ||||||
Land
acquisition compensation
(Compensating
fee for mine and forest)
|
520,417 | 535,359 | ||||||
Planting
fee in working place
|
205,610 | 47,953 | ||||||
Compensating
fee for stone materials in Baxiong Village
|
15,985 | 16,444 | ||||||
Compensating
fee for limekiln and drought land in Baxiong Village
|
13,901 | 14,301 | ||||||
Compensating
fee for sandstone land in Qiaomai Village
|
87,908 | 90,433 | ||||||
Debt
issue cost
|
49,814 | 59,026 | ||||||
$ | 4,515,689 | $ | 4,416,306 | |||||
Short
term deferred asset - Guarantee
fee related to loan
|
$ | 76,889 | $ | 102,298 |
30-Nov-09
|
31-Aug-09
|
|||||||
Accounts
payable
|
$
|
14,451,939
|
$
|
12,424,023
|
||||
Other
Payables
|
6,242,519
|
6,952,818
|
||||||
Accrued
liabilities
|
123,770
|
100,635
|
||||||
Payables
and accrued liabilities
|
$
|
20,818,228
|
$
|
19,477,476
|
30-Nov-09
|
31-Aug-09
|
|||||||
Xian
Zong Credit Bank
|
$
|
878,928
|
$
|
438,519
|
||||
PuFa
Bank WenHu business branch
|
4,248,151
|
4,239,022
|
||||||
ICBC
Hanshan
|
2,929,759
|
2,923,464
|
||||||
Huishang
Bank Sales Department
|
5,273,566
|
5,262,235
|
||||||
Runfeng
company
|
-
|
438,375
|
||||||
$
|
13,330,404
|
$
|
13,301,615
|
Borrowing
bank
|
Amount
|
Starting
date
|
Maturity
date
|
Interest
rate (monthly)
|
||||
* Xian
Zong Credit Bank
|
878,928
|
2009-11-16
|
2010-11-16
|
0.8835%
|
||||
** PuFa
Bank WenHu business branch
|
4,248,151
|
2009-4-30
|
2010-4-30
|
0.4425%
|
||||
*** ICBC
Hanshan
|
2,929,759
|
2009-6-26
|
2010-6-26
|
0.4425%
|
||||
****
Huishang Bank Sales Department
|
5,273,566
|
2009-6-22
|
2010-6-22
|
0.4425%
|
Existing
relationships with the Company
|
|
Nanjing
Hongren
|
A
company controlled by shareholder
|
Nanjing
Runji
|
A
company controlled by shareholder
|
Zhao,
Shouren
|
Shareholder
& president & CEO of the Company
|
Yang,
Xuanjun
|
Shareholder
of the Company
|
30-Nov-09
|
31-Aug-09
|
|||||||
Due
to related party – Nanjing Hongren
|
$
|
8,296,916
|
8,279,088
|
|||||
Due
to related party – Nanjing Runji
|
7,150,399
|
7,135,035
|
||||||
Due
to related party – Zhao, Shouren
|
686,461
|
611,899
|
||||||
Due
to related party – Yang, Xuanjun
|
862,993
|
788,052
|
||||||
Miscellaneous
|
2,448
|
2,450
|
||||||
$
|
16,999,217
|
16,816,524
|
Year
Ended
30-Nov-09
|
Year
Ended
31-Aug-09
|
|||||||
Long-term
loan – Anhui Yuanzhong (current portion)
|
$ | 758,145 | $ | 733,143 | ||||
Long-term
loan – Anhui Yuanzhong (Non-current portion)
|
37,130 | 235,174 | ||||||
$ | 795,275 | $ | 968,317 |
Three
months ended
30-Nov-09
|
Three
months ended
30-Nov-08
|
|||||||
Income
Taxes
|
$ | 403,247 | $ | 553,751 |
§
|
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.
|
§
|
We
plan to raise adequate capital over the next five years for expansion and
growth.
|
§
|
We
plan to construct a third production line in late 2010, which will have a
daily cement clinker production capacity of 5,000 tons or 1.5 million tons
annually, respectively. 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.
|
|
|
For
the Three Months Ended
|
||||||||||
|
|
30-Nov-09
|
|
30-Nov-08
|
|
Difference
|
||||||
Revenue
|
|
USD
|
|
%
|
|
USD
|
|
%
|
|
USD
|
|
%
|
|
|
10,930,701
|
|
100%
|
|
15,750,411
|
|
100%
|
|
(4,819,710)
|
|
-31%
|
PO
42.5
|
|
3,284,720
|
|
30%
|
|
10,053,656
|
|
64%
|
|
(6,768,936)
|
|
-67%
|
PO
32.5
|
|
207,388
|
|
2%
|
|
578,733
|
|
4%
|
|
(371,345)
|
|
-64%
|
PC
32.5
|
|
148,889
|
|
1%
|
|
922,440
|
|
6%
|
|
(773,551)
|
|
-84%
|
PII
52.5
|
|
1,211,749
|
|
11%
|
|
856,336
|
|
5%
|
|
355,413
|
|
42%
|
Clinker
|
|
6,077,955
|
|
56%
|
|
3,339,246
|
|
21%
|
|
2,738,709
|
|
82%
|
|
|
For
the Three Month Period Ended
|
||||||||||
|
|
30-Nov-09
|
|
30-Nov-08
|
|
Difference
|
||||||
Volume
|
|
Ton
|
|
%
|
|
Ton
|
|
%
|
|
Ton
|
|
%
|
|
|
381,104
|
|
100%
|
|
410,579
|
|
100%
|
|
(29,475)
|
|
-7%
|
PO
42.5
|
|
99,326
|
|
26%
|
|
245,131
|
|
60%
|
|
(145,805)
|
|
-59%
|
PO
32.5
|
|
6,325
|
|
2%
|
|
13,805
|
|
3%
|
|
(7,480)
|
|
-54%
|
PC
32.5
|
|
5,016
|
|
1%
|
|
24,413
|
|
6%
|
|
(19,397)
|
|
-79%
|
PII
52.5
|
|
32,370
|
|
8%
|
|
18,236
|
|
4%
|
|
14,134
|
|
78%
|
Clinker
|
|
238,067
|
|
62%
|
|
108,994
|
|
27%
|
|
129,073
|
|
118%
|
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 Company's 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
|
CHINA
RUNJI CEMENT INC.
|
||
Date: January
14, 2010
|
By:
|
/s/ Shouren Zhao
|
Shouren
Zhao
Chairman
and Chief Executive
Officer
|