UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q10-Q/A

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

For the quarterly period ended November 30, 2010August 31, 2011
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

China Infrastructure Construction Corporation
 (Exact name of registrant as specified in its charter)
 
Colorado 16-1718190
(State or other jurisdiction of incorporation) (IRS Employer Identification Number)

Shidai Caifu Tiandi Suite 1906-1909
1 Hangfeng Road Fengtai District
Beijing, China 100070
(Address of principal executive offices)

86-10-5809-0217
(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was Required to submit and post such files).
¨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“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)
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,October 24, 2011, there were outstanding 12,930,62013,180,620 shares of the registrant’s common stock, no par value.
 
 
 
 

TABLE OF CONTENTS
 
Page
PART I Financial Information
F-1
Item 1. Financial Statements.F-1
Consolidated Balance Sheets as of November 30, 2010 (Unaudited) and May 31, 2010F-1
Consolidated Statements of Income And Comprehensive Income for the three and six months ended November 30, 2010 and 2009 (Unaudited)F-2
Consolidated Statements of Cash Flows for the six months ended November 30, 2010 and November 30, 2009 (Unaudited)F-3
Notes to Consolidated Financial Statements (Unaudited)F-4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.3
Item 4T. Controls and Procedures12
PART II Other Information
13
Item 6. Exhibits.13
Signatures14
Exhibits/Certifications
2

PART I-FINANCIAL INFORMATION
CHINA INFRASTRUCTURE CONSTRUCTION CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF NOVEMBER 30, 2010 AND MAY 31, 2010

  November 30,      May 31,     
   2010  2010 
  (UNAUDITED)    
Assets      
Current assets      
Cash and cash equivalents $803,470  $1,102,879 
Restricted cash  69,409   146,089 
Trade accounts receivable, net  66,786,773   53,411,689 
Other receivables  381,786   950,671 
Inventories  533,472   575,452 
Total current assets  68,574,910   56,186,780 
         
Property, plant and equipment, net  7,618,902   7,995,701 
         
Prepayments  5,004,059   1,289,007 
Other receivables - long term  5,366,335   4,955,648 
Related party receivables  1,225,696   1,286,945 
Total other assets  11,596,090   7,531,600 
         
Total assets $87,789,902  $71,714,081 
         
Liabilities and equity        
Current liabilities        
Trade accounts payable $16,472,613  $13,376,119 
Related party payable  681,306   47,125 
Other payables  3,908,353   2,217,307 
Current portion of capital lease obligations  2,230,000   1,949,183 
Accrued expenses  500,611   491,885 
Tax payable  1,036,799   - 
Shares to be issued  77,700   - 
Bank loan payable  -   1,317,600 
Total current liabilities  24,907,382   19,399,219 
         
Long-term liabilities        
Long-term portion of capital lease obligations  1,474,775   2,185,820 
Total long-term liabilities  1,474,775   2,185,820 
         
Total liabilities  26,382,157   21,585,039 
         
Stockholders' equity        
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding  -   - 
Common stock: no par value; 100,000,000 shares authorized; 12,930,620 and 12,815,620 shares issued and outstanding as of November 30, 2010 and May 31, 2010  42,916,468   42,252,295 
Retained earnings  13,175,921   4,321,221 
Accumulated other comprehensive income  2,671,276   1,509,314 
Total China Infrastructure Construction Corporation stockholders' equity  58,763,665   48,082,830 
         
Noncontrolling interests  2,644,080   2,046,212 
         
Total liabilities and equity $87,789,902  $71,714,081 
EXPLANATORY NOTE

The accompanying notes are an integral partpurpose of this statement.
F-1

CHINA INFRASTRUCTURE CONSTRUCTION CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2010 AND 2009
(UNAUDITED)Amendment No. 1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended August 31, 2011, filed with the Securities and Exchange Commission on October 24, 2011 (the "Form 10-Q"), is solely to furnish Exhibit 101 to the Form 10-Q. Exhibit 101 provides the financial statements and related notes from the Form 10-Q formatted in XBRL (Extensible Business Reporting Language).

  THREE MONTHS ENDED NOVEMBER 30,  SIX MONTHS ENDED NOVEMBER 30, 
   2010  2009  2010  2009 
             
Sales Revenue, Net $25,930,120  $19,155,132  $47,117,650  $31,410,860 
                 
Cost of goods sold  18,703,068   14,655,122   33,757,085   24,504,167 
                 
Gross profit  7,227,052   4,500,010   13,360,565   6,906,693 
                 
General and administrative expenses  1,851,878   28,794,545   3,294,188   29,183,485 
                 
Net operating income (loss)  5,375,174   (24,294,535)  10,066,377   (22,276,792)
                 
Other income (expense):                
Interest income  450   -   994   - 
Interest expense  (51,574)  (3,183)  (103,207)  (3,655)
Other income  8,482   4,996   18,666   4,996 
Other expense  (8,877)  -   (8,877)  - 
Total other (expense)  (51,519)  1,813   (92,424)  1,341 
                 
Net income (loss) before income taxes  5,323,655   (24,292,722)  9,973,953   (22,275,451)
                 
Income taxes  174,175   -   580,930   - 
                 
Net income (loss)  5,149,480   (24,292,722)  9,393,023   (22,275,451)
                 
Less: Net income attributable to noncontrolling interests  271,229   173,666   538,323   284,134 
                 
Net income (loss) attributable to China Infrastructure Construction Corporation $4,878,251  $(24,466,388) $8,854,700  $(22,559,585)
                 
Earnings (loss) per share - basic and diluted $0.38  $(3.72) $0.68  $(5.60)
                 
Basic and dilutive weighted average shares outstanding  12,930,620   6,578,625   12,929,992   4,026,345 
                 
Comprehensive income                
                 
Net income (loss)  5,149,480   (24,292,722)  9,393,023   (22,275,451)
                 
Foreign currency translation adjustment  985,304   (194,921)  1,221,507   (191,269)
                 
Comprehensive income (loss) $6,134,784  $(24,487,643) $10,614,530  $(22,466,720)
                 
Comprehensive income attributable to non-controlling interests $320,500  $173,525  $597,868  $274,571 
                 
Comprehensive income (loss) attributable to China Infrastructure Construction Corporation $5,814,284  $(24,661,168) $10,016,662  $(22,741,291)

The accompanying notes are an integral part of this statement.
F-2

CHINA INFRASTRUCTURE CONSTRUCTION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2010 AND 2009
(UNAUDITED)

  November 30, 
  
2010
  
2009
 
       
Cash flows from operating activities:      
Net income (loss) $9,393,023  $(22,275,451)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:        
Loss from property, plant and equipment disposal  8,877   - 
Depreciation  873,212   548,431 
Shares issued for compensation  393,950   27,422,242 
Stock option expenses  347,923   - 
Changes in operating liabilities and assets:        
Trade accounts receivable  (11,812,272)  (11,186,190)
Prepayments  (3,637,611)  - 
Inventories  56,639   (281,126)
Other receivables  311,844   (1,064,571)
Trade accounts payable  2,710,530   2,353,912 
Other payables  1,599,842   738,976 
Accrued expenses and tax payable  23,230   81,826 
Tax payable  1,024,659   - 
Net cash provided by (used in) operating activities  1,293,846   (3,661,951)
         
Cash flows from investing activities:        
Property, plant, and equipment additions  (336,332)  (754,827)
Property, plant, and equipment disposal  37,135   - 
Payments to related party receivable  (93,000)  (163,458)
Proceeds from related party receivable  31,751   - 
Net cash used in investing activities  (360,446)  (918,285)
         
Cash flows from financing activities:        
Shares issued for cash  -   8,605,625 
Restricted cash  76,680   (158,089)
Proceeds from Bank loan payable and capital lease obligations  31,111   1,466,200 
Payment to Bank loan payable and capital lease obligations  (1,902,024)  - 
Proceeds from related party payable  540,894   237,278 
Payments to related party payable  -   - 
Net cash provided by (used in) financing activities  (1,253,339)  10,151,014 
         
Effect of rate changes on cash  20,530   10,510 
         
(Decrease) Increase in cash and cash equivalents  (299,409)  5,581,288 
Cash and cash equivalents, beginning of period  1,102,879   921,841 
Cash and cash equivalents, end of period $803,470  $6,503,129 
         
Supplemental disclosures of cash flow information:        
Interest paid in cash $102,044  $- 
Income taxes paid in cash $-  $- 
Non-cash investing activities:        
Acquisition of property, plant and equipment through loan payable $-  $- 
Disposal of property, plant and equipment through other receivable $    $2,073,287 
Related party receivable offset by payable to related party payable $   $674,289 

The accompanying notes are an integral part of this statement.
F-3
CHINA INFRASTRUCTURE CONSTRUCTION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 2010
(UNAUDITED)

1.Nature of operations

China Infrastructure Construction Corporation (“China Infrastructure”), formerly Fidelity Aviation Corporation, 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 evaluated the future market for aircraft parts business and resolved not to pursue this line of business anymore.

On October 8, 2008, China Infrastructure entered into and consummated the transactions contemplated under a Share Exchange Agreement with Northern Construction Holdings, Ltd., a Hong Kong limited company (“NCH”) and its shareholder pursuant to which China Infrastructure issued 1,200,000 (12,000,000 pre-reverse split) shares of China Infrastructure common stock (the “Share Exchange”) in exchange for all issued and outstanding common stock of NCH.

The Share Exchange resulted in (i) a change in control of China Infrastructure with the shareholder of NCH owning approximately 78% of the issued and outstanding shares of common stock of China Infrastructure, (ii) NCH becoming a wholly-owned subsidiary of China Infrastructure, and (iii) appointment of certain nominees of the shareholder of NCH as directors and officers of China Infrastructure and resignation of John Schoenauer as director, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of China Infrastructure.

As a result of the Share Exchange Agreement, Beijing Fortune Capital Management Co., Ltd. (“BFCM”), a 95% owned subsidiary of NCH, became our indirect majority-owned subsidiary.  Also as a result of the Share Exchange Agreement, Beijing Chengzhi Qianmao Concrete Co., Ltd., (“Beijing Concrete”), the operating company, and a 99.5% owned subsidiary of BFCM, also became our indirect 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 orNo other intangibles are not recorded. All references to NCH common stock have been restated to reflect the equivalent numbers of China Infrastructure common shares.
F-4

On January 15, 2010, Beijing Concrete increased its registered capital from RMB 15 million (approximately $2.2 million) to RMB 30 million (approximately $4.4 million) and BFCM increased its investment in Beijing Concrete accordingly. Its share capital increased from RMB 10 million (approximately $1.47 million) to RMB 15 million (approximately $2.2 million). As a result, BFCM owns 99.67% of Beijing Concrete from January 15, 2010.

On February 1, 2010, Beijing Concrete formed a subsidiary, Shanxi Hongruida Concrete Ltd. (“Hongruida”) and contributed RMB 10 million (approximately $1.47 million) to its capital. Beijing Concrete is the sole shareholder of Hongruida. Hongruida was organized to implement the 10-year strategic cooperative agreement with one of the Company’s major clients, China Railway Construction Group Co., Ltd (“CRCG”). Under the Agreement, the Company and CRCG will jointly manage the concrete mixing stations to be operated by Hongruida. CRCG will provide the cement for manufacturing the concrete mix in such concrete mixing stations, and will be able to purchase the concrete mix at discounted prices. Also, in accordance with the Agreement, each party will lease certain equipment to the concrete mixing stations. The Company and CRCG will share 75% and 25% of the annual profits of such concrete mixing stations in Xi’an. Hongruida commenced its operations at the end of March 2010.

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. 

The Company through its subsidiaries in Hong Kong and the People’s Republic of China (“PRC” or “China”), engages in the production of ready-mixed concrete for developers and the construction industry in the PRC. In addition, we have a technical service agreement with an independently owned concrete mixture station, pursuant to which we are paid by percentages of sales for technical support provided.

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 adjustmentschanges have been made to present the financial statements in accordance with US GAAP. Operating results forForm 10-Q. This Amendment No. 1 to the six-month period ended November 30, 2010 are not necessarily indicativeForm 10-Q continues to speak as of the results that may be expected for the fiscal year ending May 31, 2011. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report for the year ended May 31, 2010. 

F-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 PRC. Changing political climates in the PRC could have a significant effect on the Company’s business.

Control by Principal Stockholders

The directors, executive officers and their affiliates or related parties own, beneficially and in the aggregate, the majority of the voting power of the registered capital of the Company. Accordingly, the directors, executive officers and their affiliates, if they voted their shares uniformly, would have the ability to control the approval of most corporate actions, including increasing the authorized capital stock of the Company and the dissolution, merger or sale of the Company’s assets.

Principles of Consolidation

The consolidated financial statements include the financial statements of China Infrastructure and its wholly-owned and majority-owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. The Company’s foreign subsidiaries have fiscal year ends of May 31 and the results are consolidated up to that date. Noncontrolling interests consist of other stockholders’ ownership interests in majority-owned subsidiaries of the Company.

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 theoriginal filing date of the financial statementsForm 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
F-6
original Form 10-Q.

Cash and Cash Equivalents

ForPursuant to rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus 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 entitySections 11 or agency.

Restricted Cash

In accordance with the Escrow Agreement and the Subscription Agreement (note 12) signed by China Infrastructure Construction Corporation, Trillion Growth China General Partner and Anslow & Jaclin, LLP (the “Escrow Agent”) in October 2009, the Company was required to keep with the Escrow Agent $120,000 immediately on the Closing Date12 of the Subscription Agreement. This fund can only be disbursed when certain criteriaSecurities Act of 1933, as amended, are met. The escrow account also keeps $38,089deemed not filed for purposes of attorney fees as a covenant for future services. As of November 30, 2010 and May 31, 2010, the amount not disbursed was $69,409 and $146,089, respectively, and these are included in restricted cash in the consolidated balance sheets. Deposits held in the escrow account are not insured by any government entity or agency.

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 regular assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness and the economic environment. These factors continuously change and can have an impact on collections and the Company’s estimation process. These impacts may be material. Management reviews and maintains an allowance for doubtful accounts that reflects management’s best estimate of potentially uncollectible trade receivables. Certain accounts receivable amounts are charged off against allowances after a designated period of collection efforts. Subsequent cash recoveries are recognized as income in the period when they occur. Allowance for doubtful debts amounted to $407,619 and $397,042 as of November 30, 2010 and May 31, 2010, respectively.
F-7

Inventories

Inventories are stated at the lower of cost, determined on a weighted average basis, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. Inventories consistSection 18 of the following:

  November 30, 2010    May 31, 2010 
Raw materials  $533,472  $575,452 

Property and Equipment

Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are charged to expense as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation related to property and equipment is reported in cost of revenues. Property, plant and equipment are depreciated over their estimated useful lives as follows:

Office trailers10 years
Machinery and equipment3-8 years
Furniture and office equipment5-8 years
Motor vehicles3-5 years

Impairment of Long-Lived and Intangible Assets

Long-lived assets of the Company are reviewed annually to assess whether the carrying value has become impaired according to the guidelines established in FASB Codification (ASC) 360. The Company considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives. As of November 30, 2010, the Company expects these assets to be fully recoverable. No impairment of assets was recorded in the periods reported.
F-8

Accumulated Other Comprehensive Income

Accumulated other comprehensive income represents foreign currency translation adjustments.

Revenue Recognition

The Company receives revenue from sales of concrete products and from provision of concrete pumping services and consulting services. The Company's revenue recognition policies are in compliance with ASC 605 (previously Staff Accounting Bulletin 104). Sales revenue is recognized at the date of shipment to customers or services have been rendered when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Our sales are non-returnable. Therefore, we do not estimate deductions or allowance for sales returns. Sales are presented net of any discounts, reward, or incentive given to customers.  Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Our products delivered to customers are checked on site by customers and, once the products are accepted by customers, they will sign the acceptance notice. There is no warranty issue after the delivery.

Reward or incentive given to our customers is an adjustment of the selling prices of our products; therefore, the consideration is characterized as a reduction of revenue when recognized in our income statement.

The Company recognizes its revenues net of value-added taxes (“VAT”).  The Company is subject to VAT which is levied at the rate of 6% on the invoiced value of sales. However, the Company enjoys a free VAT policy according to the national policy, which encourages the development of the cement industry if the manufacturer satisfies the environmental protection requirements. The Company has enjoyed the free VAT policy from January 1, 2006 and has been reviewed every year by the local tax bureau.

Cost of Goods Sold

Cost of goods sold consists primarily of the costs of the raw materials, freight charges, direct labor, depreciation of plant and machinery, warehousing cost and overhead associated with the manufacturing process and commission expenses.

F-9

Shipping Income and Expense

ASC 605-45-20 “Shipping and Handling 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.

Advertising Costs

The Company expenses advertising costs as incurred.  Advertising expenses charged to operations were $0 for the six months ended November 30, 2010 and 2009, respectively. Advertising costs, if any, are included in selling, general and administrative expense on the income statement.

Foreign Currency and Comprehensive Income

The accompanying financial statements are presented in US dollars. The functional currency of the Company is U.S. Dollars and that of Beijing Concrete is the Renminbi (“RMB”) of the PRC. The financial statements are translated into US dollars from RMB at period-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 in accordance with ASC 740 (formerly SFAS 109, “Accounting for Income Taxes.”) Under the asset and liability method as required by ASC 740 (formerly SFAS 109), deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Under ASC 740, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. 
F-10

ASC 740 (formerly FIN 48) clarifies the accounting and disclosure for uncertain tax positions and prescribes a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Under ASC 740, evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met.

The Company’s operations are subject to income and transaction taxes in the United States, Hong Kong, and the PRC jurisdictions. Significant estimates and judgments are required in determining the Company’s worldwide provision for income taxes. Some of these estimates are based on interpretations of existing tax laws or regulations, and as a result the ultimate amount of tax liability may be uncertain. However, the Company does not anticipate any events that would lead to changes to these uncertainties.

USA

The Company and its subsidiaries are subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. As the Group has no income generated in the United States, there was no tax expense or tax liability due to the Internal Revenue Service of the United States as of November 30, 2010 and May 31, 2010.
F-11

Hong Kong

As the Group has no income generated in Hong Kong, there was no tax expense or tax liability due to the tax rule of Hong Kong as of November 30, 2010 and May 31, 2010.

PRC

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.

Beijing Concrete is subject to a special tax exemption approved by the PRC tax department. 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 a standard rate of 25%.

BFCM has an accumulated operating loss, thus there is no income tax expense for BFCM. The Company has not recorded deferred taxes, as valuation allowances were provided because all significant differences in tax basis and financial statement amounts are permanent differences.

  For the six months ended November 30, 
  2010  2009 
Income tax expenses      
Current tax $-  $- 
Change in deferred tax assets  128,645   3,196 
Change in valuation allowance  (128,645)  (3,196) 
Total $-  $- 

Hongruida is subject to a 25% income tax rate. According to Chinese tax law, the income tax will be calculated at the year end. As of November 30, 2010, the Company has accrued income tax payable of $1,032,164 for income tax expenses for Hongruida.

The current income tax expense and deferred tax expense for the three and six months ended November 30, 2010 and 2009 are as follows:

F-12


  Three Months Ended November 30,  Six Months Ended November 30, 
  2010  2009  2010  2009 
Current tax expense $174,175  $-  $580,930  $- 
Deferred tax expense $-  $-  $-  $- 

Restrictions on Transfer of Assets Out of the PRC

Dividend payments by the Company are limited by certain statutory regulations in the PRC. No dividends may be paid by the Company without first receiving prior approval from the Foreign Currency Exchange Management Bureau. However, no such restrictions exist with respect to loans and advances.

Financial Instruments

ASC 825 (formerly SFAS 107, “Disclosures about Fair Value of Financial Instruments”) defines financial instruments and requires disclosure of the fair value of those instruments. ASC 820 (formerly SFAS 157, “Fair Value Measurements”), adopted July 1, 2008, defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for current receivables and payables, including short-term loans, qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments, their expected realization and, if applicable, the stated rate of interest is equivalent to rates currently available. The three levels are defined as follows:
¨Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

¨Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

¨Level 3: inputs to the valuation methodology are unobservable and significant to the fair value.

The Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with ASC 820 (formerly SFAS 157).

F-13

Stock-Based Compensation

The Company records stock-based compensation expense pursuant to ASC 718 (formerly SFAS 123R, “Share Based Payment.”) The Company uses the Black-Scholes option pricing model which requires the input of highly complex and subjective variables including the expected life of options granted and the Company’s expected stock price volatility over a period equal to or greater than the expected life of the options. Because changes in the subjective assumptions can materially affect the estimated value of the Company’s employee stock options, it is management’s opinion that the Black-Scholes option pricing model may not provide an accurate measure of the fair value of the Company’s employee stock options. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.

Stock-based compensation expense is recognized based on awards expected to vest, and there were no estimated forfeitures as the Company has a short history of issuing options. ASC 718 (formerly SFAS 123R) requires forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

Basic and Diluted Earnings Per Share

The Company reports earnings per share in accordance with the provisions of ASC 260 (formerly SFAS No. 128, "Earnings Per Share.") ASC 260 requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. 
The following is a reconciliation of the basic and diluted earnings per share:

The following is a reconciliation of the basic and diluted earnings per share for the three and six months ended November 30, 2010 and 2009:

F-14

  
THREE MONTHS ENDED
NOVEMBER 30,
  
SIX MONTHS ENDED
NOVEMBER 30,
 
  2010  2009  2010  2009 
Net income (loss) for earnings per share attributable to China Infrastructure Construction Corporation $4,878,251  $(24,466,388) $8,854,700  $(22,559,585)
                 
Weighted average shares used in basic computation  12,930,620   6,578,625   12,929,992   4,026,345 
                 
Diluted effect of warrants and options  -   -   -   - 
                 
Weighted average shares used in diluted computation  12,930,620   6,578,625   12,929,992   4,026,345 
                 
Earnings (loss) per share, basic $0.38  $(3.72) $0.68  $(5.60)
                 
Earnings (loss) per share, diluted $0.38  $(3.72) $0.68  $(5.60)

Statement of Cash Flows

In accordance with FASB ASC 230, cash flows from the Company's operations is calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

Segment Reporting

ASC 280 “Segment reporting” (formerly SFAS 131) requires use of the management approach model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

Since management does not disaggregate Company data, the Company has determined that only one segment exists.
F-15

Recent Accounting Pronouncements

In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. We are currently evaluating the impact that adoption will have on our consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. We do not expect it to have a significant impact on our consolidated financial statements.

In October 2009, the FASB issued Accounting Standards Update, 2009-13, Revenue Recognition (Topic 605): Multiple Deliverable Revenue Arrangements - A Consensus of the FASB Emerging Issues Task Force.” This update provides application guidance on whether multiple deliverables exist, how the deliverables should be separated and how the consideration should be allocated to one or more units of accounting. This update establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific or third-party evidence is available. The Company will be required to apply this guidance prospectively for revenue arrangements entered into or materially modified after January 1, 2011; however, earlier application is permitted. Management is in the process of evaluating the impact of adopting this ASC update on the Company’s financial statements.

In February 2010, the FASB issued Accounting Standards Update 2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements,” or ASU 2010-09. ASU 2010-09 primarily rescinds the requirement that, for listed companies, financial statements clearly disclose the date through which subsequent events have been evaluated. Subsequent events must still be evaluated through the date of financial statement issuance; however, the disclosure requirement has been removed to avoid conflicts with other SEC guidelines. ASU 2010-09 was effective immediately upon issuance and was adopted in February 2010.
F-16

In July 2010, the FASB issued Accounting Standards Update 2010-20 which amend “Receivables” (Topic 310). ASU 2010-20 is intended to provide additional information to assist financial statement users in assessing an entity’s risk exposures and evaluating the adequacy of its allowance for credit losses. The disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. The amendments in ASU 2010-20 encourage, but do not require, comparative disclosures for earlier reporting periods that ended before initial adoption. However, an entity should provide comparative disclosures for those reporting periods ending after initial adoption. The Company does not expect the adoption of ASU 2010-20 to have a significant impact on its consolidated financial statements.

The Company has reviewed the Accounting Standards Updates up through 2010-29.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

4.Property, Plant and Equipment

Plant and equipment consist of the following:

  
 November 30, 2010  May 31, 2010 
Office trailers $926,600  $902,556 
Machinery and equipment  9,301,305   8,292,669 
Motor vehicles  693,566   1,452,308 
Furniture and office equipment  582,860   509,611 
Construction in progress  610,973   421,716 
Total property, plant and equipment  12,115,304   11,578,860 
Accumulated depreciation  (4,496,402)  (3,583,159)
Net property, plant and equipment $7,618,902  $7,995,701 

Depreciation expense included in general and administrative expenses for the three months ended November 30, 2010 and 2009 was $36,180 and $52,799, respectively. Depreciation expense included in general and administrative expenses for the six months ended November 30, 2010 and 2009 was $104,983 and $106,353, respectively. Depreciation expense included in cost of sales for the three months ended November 30, 2010 and 2009 was $406,708 and $241,481, respectively. Depreciation expense included in cost of sales for the six months ended November 30, 2010 and 2009 was $768,229 and $442,078, respectively.
F-17

Construction in progress represents direct costs of construction and design fees incurred for the Company’s new project in Tangshan. All construction costs associated with this project are accumulated and capitalized as construction in progress. The construction in progress is closed out to the appropriate asset classification when the project is substantially complete, occupied, or placed into service. No depreciation is provided until it is completed and ready for its intended use.
Interest costs totaling $0 were capitalized into construction in progress for the six months ended November 30, 2010 and 2009.

5.Prepayments

Prepayments consist of the prepaid expenses and the monies deposited with the suppliers for purchasing vehicles and raw material. The total outstanding amount was $5,004,059 and $1,289,007 as of November 30, 2010 and May 31, 2010, respectively. There is no provision made for the prepayment at November 30, 2010 and May 31, 2010.

6.Other Receivables

Other receivables in current assets amounted to $381,786 and $950,671 as of November 30, 2010 and May 31, 2010, respectively.

Other receivables in long-term assets amounted to $5,366,335 and $4,955,648 as of November 30, 2010 and May 31, 2010, respectively.

As of November 30, 2010, other receivables include approximately $3.32 million related to construction in progress disposal to an unrelated party. On February 28, 2010, we sold construction in progress in Tangshan to an unrelated third party at a price of approximately $3.8 million. The amount will be due in 4 annual equal installments starting September 1, 2010. The receivable is unsecured, interest free, and with fixed repayment dates. Other receivables also include insurance claims and deposits that are due from unrelated parties, interest free, unsecured, and with no fixed repayment date, and advances to employees for business purposes.

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. There is no provision made for the other receivables at November 30, 2010 and May 31, 2010.

F-18

7.Other Payables

Other payables in current liabilities consist of the following as of November 30, 2010 and May 31, 2010

   November 30, 2010    May 31, 2010 
Commission payable $2,426,225  $1,488,213 
Payable to CRCG (note 1)  736,867   265,838 
Staff and other companies deposit  745,261   463,256 
Total other payables $3,908,353  $2,217,307 

Commission expense has been included in cost of goods sold.

8.Accrued Expenses

Accrued expenses amounted to $500,611 and $491,885 as of November 30, 2010 and May 31, 2010, respectively. The accrued expenses mainly include accrued land lease expenses, accrued electricity and utility expenses, and accrued interest.

9.Related Party Transactions

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

Total outstanding amount of related party payable was $681,306 and $47,125 as of November 30, 2010 and May 31, 2010, respectively. These payables bear no interest and have no fixed payment terms. Currently, the related party payable consists of the following:

F-19


   November 30, 2010    May 31, 2010 
Rong Yang (Chairman) $681,306  $47,125 
  Total $681,306  $47,125 

Total outstanding amount of related party receivables was $1,225,696 and $1,286,945 as of November 30, 2010 and May 31, 2010, respectively. These receivables require no interest and have no fixed re-payment terms. Currently, the receivables from related party consist of the following:

   November 30, 2010    May 31, 2010 
Yang Ming (Chairman Yang Rong’s brother) $161,000(1) $147,817 
Guiping Liao (CEO’s wife)  1,044,696(1)  1,126,661 
Xi Yang (CEO’s son)  20,000(1)   12,467 
  $1,225,696  $1,286,945 
(1)The purpose of these related party receivables are for business purposes such as travel advances and advances to vendors paid through related parties.

10.Debt

Bank Loan Payable

On October 16, 2009, the Company borrowed $1,466,000 from Beijng Bank. The loan is unsecured, and with an annual interest rate of 5.31%. $1,317,600 of the total amount is guaranteed by an unrelated party. The due dates are as follows: $146,400 due on July 16, 2010, $292,800 due on August 16, 2010, $439,200 due on September 16, 2010, and $439,200 due on October 16, 2010. Interest expenses are due on the 16th of every third month. As of November 30, 2010 and May 31, 2010, the loan payable to bank amounted to $0 and $1,317,600, respectively. There is no interest expense capitalized into construction in progress for the three and six months ended November 30, 2010 and 2009.

Interest

Total interest expense and financial charges for the three months ended November 30, 2010 and 2009 on all debt amounted to $51,574 and $3,183, respectively. Total interest expense and financial charges for the six months ended November 30, 2010 and 2009 on all debt amounted to $103,207 and $3,655, respectively. Total interest income for the three months ended November 30, 2010 and 2009 amounted to $450 and $0, respectively. Total interest income for the six months ended November 30, 2010 and 2009 amounted to $994 and $0, respectively.
F-20

Capital Leases

In July 2009, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $1,774,368 with an annual interest rate of 6.76%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for three years, with total payments of approximately $1,965,343. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $22,106 was paid by the Company related to this lease. The minimum payments for the remaining lease term of 19 months from December 2010 to June 2012 are as follows:

Total lease payment $1,272,753 
Less imputed interest  83,205 
Total capital lease obligation as of November 30, 2010  1,189,548 
Less current maturity  662,398 
Capital lease obligation – long-term portion as of November 30, 2010 $527,150 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011
 $728,614 
2012  544,139 
2013  - 
Total $1,272,753 

In November 2009, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $187,392 with an annual interest rate of 5.94%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for three years, with total payments of approximately $205,050. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $2,811 was paid by the Company related to this lease. The minimum payments for the remaining lease term of 28 months from December 2010 to March 2013 are as follows:

F-21

Total lease payment
 $169,580 
Less imputed interest  11,976 
Total capital lease obligation as of November 30, 2010  157,604 
Less current maturity  67,869 
Capital lease obligation – long-term portion as of November 30, 2010 $89,735 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011 $76,019 
2012  81,866 
2013  11,695 
Total $169,580 

In December 2009, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $545,779 with an annual interest rate of 5.94%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for three years, with total payments of approximately $597,200. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $6,822 was paid by the Company related to this lease. The minimum payments for the remaining lease term of 29 months from December 2010 to April 2013 are as follows:

Total lease payment
 $596,078 
Less imputed interest  50,017 
Total capital lease obligation as of November 30, 2010  546,061 
Less current maturity  269,043 
Capital lease obligation – long-term portion as of November 30, 2010 $277,018 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011
 $306,554 
2012  153,277 
2013  136,247 
Total $596,078 

In December 2009, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $249,466 with an annual interest rate of 5.94%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for three years, with total payments of approximately $272,920. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $3,118 was paid by the Company related to this lease. The minimum payments for the remaining lease term of 28 months from December 2010 to March 2013 are as follows:

F-22

Total lease payment
 $256,889 
Less imputed interest  20,424 
Total capital lease obligation as of November 30, 2010  236,465 
Less current maturity  117,003 
Capital lease obligation – long-term portion as of November 30, 2010 $119,462 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011
 $132,337 
2012  93,414 
2013  31,138 
Total $256,889 
In January 2010, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $56,979 with an annual interest rate of 6.70%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for one year, with total payments of approximately $59,067. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $814 was paid by the Company related to this lease. The minimum payments for the remaining lease term of 2 months from December 2010 to January 2011 are as follows:

Total lease payment
 $12,592 
Less imputed interest  584 
Total capital lease obligation as of November 30, 2010  12,008 
Less current maturity  12,008 
Capital lease obligation – long-term portion as of November 30, 2010 $0 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011
 $12,592 
2012  - 
2013  - 
Total $12,592 
F-23
In February 2010, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $14,640 with an annual interest rate of 9.98%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for three years, with total payments of approximately $17,034. The title of the equipment will be transferred back to the Company upon the last payment. The minimum payments for the remaining lease term of 27 months from December 2010 to February 2013 are as follows:

Total lease payment
 $13,090 
Less imputed interest  1,409 
Total capital lease obligation as of November 30, 2010  11,681 
Less current maturity  6,390 
Capital lease obligation – long-term portion as of November 30, 2010 $5,291 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011
 $7,757 
2012  4,363 
2013  970 
Total $13,090 

In March 2010, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $203,789 with an annual interest rate of 5.94%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for three years, with total payments of approximately $222,991. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $2,547 was paid by the Company related to this lease. The minimum payments for the remaining lease term of 28 months from December 2010 to March 2013 are as follows:

Total lease payment $203,493 
Less imputed interest  15,729 
Total capital lease obligation as of November 30, 2010  187,764 
Less current maturity  90,177 
Capital lease obligation – long-term portion as of November 30, 2010 $97,587 


F-24

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011
 $101,747 
2012  76,310 
2013  25,436 
Total $203,493 

In March 2010, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $28,489 with an annual interest rate of 6.70%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for one year, with total payments of approximately $29,534. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $407 was paid by the Company related to this lease. The minimum payments for the remaining lease term of 5 months from December 2010 to April 2011 are as follows:

Total lease payment
 $12,633 
Less imputed interest  210 
Total capital lease obligation as of November 30, 2010  12,423 
Less current maturity  12,102 
Capital lease obligation – long-term portion as of November 30, 2010 $321 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011
 $12,633 
2012  - 
2013  - 
Total $12,633 

In March 2010, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $339,642 with an annual interest rate of 11.13%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for two years, with total payments of approximately $380,403. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $293 will be paid by the Company related to this lease. The minimum payments for the remaining lease term of 17 months from December 2010 to April 2012 are as follows:

F-25


Total lease payment
 $325,450 
Less imputed interest  29,644 
Total capital lease obligation as of November 30, 2010  295,806 
Less current maturity  216,659 
Capital lease obligation – long-term portion as of November 30, 2010 $79,147 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011 $244,087 
2012  81,363 
2013  - 
Total $325,450 

In March 2010, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $1,161,830 with an annual interest rate of 11.13%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for two years, with total payments of approximately $1,301,262. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $2,928 will be paid by the Company related to this lease. The minimum payments for the remaining lease term of 17 months from December 2010 to April 2012 are as follows:

Total lease payment
 $1,113,274 
Less imputed interest  101,401 
Total capital lease obligation as of November 30, 2010  1,011,873 
Less current maturity  741,132 
Capital lease obligation – long-term portion as of November 30, 2010 $270,741 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011
 $834,955 
2012  278,319 
2013  - 
Total $1,113,274 
F-26
In May 2010, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $28,505 with an annual interest rate of 6.70%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for one year, with total payments of approximately $29,549. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $407 was paid by the Company related to this lease. The minimum payments for the remaining lease term of 5 months from December 2010 to May 2011 are as follows:

Total lease payment
 $12,641 
Less imputed interest  209 
Total capital lease obligation as of November 30, 2010  12,432 
Less current maturity  12,432 
Capital lease obligation – long-term portion as of November 30, 2010 $0 

The future lease commitments for the next three years after November 30, 2010 are as follows:

2011 $12,641 
2012  - 
2013  - 
Total $12,641 

In May 2010, the Company entered into a capital leaseback arrangement with an unrelated third party for approximately $36,673 with an annual interest rate of 11.13%. The lease has been accounted for as a capital lease with the same third party to lease the equipment for two years, with total payments of approximately $41,331. The title of the equipment will be transferred back to the Company upon the last payment. A one time processing fee of $1,710 was paid by the Company related to this lease. The minimum payments for the remaining lease term of 17 months from December 2010 to April 2012 are as follows:

Total lease payment $34,227 
Less imputed interest  3,117 
Total capital lease obligation as of November 30, 2010  31,110 
Less current maturity  22,787 
Capital lease obligation – long-term portion as of November 30, 2010 $8,323 

The future lease commitments for the next three years after November 30, 2010 are as follows:
F-27
2011 $25,671 
2012  8,556 
2013  - 
Total $34,227 
The summary of all lease commitments is as follows:

Total lease payment
 $4,022,700 
Less imputed interest  317,925 
Total capital lease obligation as of November 30, 2010  3,704,775 
Less current maturity  2,230,000 
Capital lease obligation – long term portion as of November 30, 2010 $1,474,775 

The summary of future lease commitments for the next three years after November 30, 2010 is as follows:

2011
 $2,495,607 
2012  1,321,607 
2013  205,486 
Total $4,022,700 

11.Noncontrolling Interest

Noncontrolling interest consists of other stockholders’ ownership interest in majority-owned subsidiaries of the Company, which is about 5.48% of the total ownership before the change of the noncontrolling interest and 5.32% of the total ownership after the change of the noncontrolling interest (Note 1). As of November 30, 2010 and May 31, 2010, the balance of noncontrolling interest was $2,644,080 and $2,046,212, respectively.

F-28

12.Shareholder’s Equity

Stock Issuance for Compensation

On June 1, 2010, the Company hired a consulting company. As compensation, the Company paid $45,000 and issued 115,000 shares of restricted common stock, and another 100,000 shares of restricted common stock will be issued upon certain terms. The shares are valued at market price of a total of $316,250 at $2.75 per share. The cash paid was first recorded as prepaid expenses. The shares issued are recorded as deferred consulting fee. Both the prepaid expenses and deferred consulting fee will amortize to expense over the agreement term of the six-month period. As of November 30, 2010, prepaid expenses for this service has a balance of $0 and deferred consulting fee has a balance of $0.

On November 18, 2010, the Company hired an investor relationship company. As compensation, the Company agreed to issue 30,000 shares of restricted common stock. The shares are valued at market price of a total of $77,700 at $2.59 per share. As of November 30, 2010, the shares have not been issued and are recorded as shares to be issued in liabilities.

Options

On December 17, 2009, we granted to the previous CFO options to purchase 300,000 shares of common stock, with an exercise price of $3.90 per share, which was the closest stock issuance price at the date of grant. The options will vest over 2 years and expire 3 years after the vesting date or after a termination date whichever is earlier. All the options were forfeited immediately when the CFO resigned the position on October 25, 2010.

On February 12, 2010, we granted to our CEO options to purchase 400,000 shares of common stock, with an exercise price of $3.90 per share. The options will vest over 2 years and no option can be exercised after 5 years from the vesting date.

The assumptions used in calculating the fair value of the above options granted using the Black-Scholes option- pricing model are as follows:

Risk-free interest rate0.86%
Expected life of the options1- 2 years
Expected volatility45%
Expected dividend yield0

On February 12, 2010, we granted three independent directors each, options to purchase 10,000 shares of common stock, with an exercise price of $3.90 per share. The options will vest over 1 year and no option can be exercised after 3 years from the vesting date.
F-29
On March 22, 2010, we granted one independent director options to purchase 10,000 shares of common stock, with an exercise price of $3.90 per share. The options will vest over 1 year and no option can be exercised after 3 years from the vesting date.

The assumptions used in calculating the fair value of the above options granted using the Black-Scholes option- pricing model are as follows:

Risk-free interest rate
0.35%
Expected life of the options1- 2 years
Expected volatility45%
Expected dividend yield0

On October 25, 2010, we granted to our newly appointed CFO options to purchase 150,000 shares of common stock, with an exercise price of $3.90 per share. The options will vest over 1 year and expire 3 years after the vesting date or after a termination date whichever is earlier.

The assumptions used in calculating the fair value of the above option granted using the Black-Scholes option- pricing model are as follows:

Risk-free interest rate0.22%
Expected life of the options1- 2 years
Expected volatility81%
Expected dividend yield0

Following is a summary of the stock option activity for the three months ended November 30, 2010:

   
  
Options 
outstanding
    
Weighted 
Average 
Exercise 
Price
    
Aggregate 
Intrinsic 
Value
  
Outstanding, May 31, 2010  740,000  $3.90  $0.00 
Granted  150,000   -   - 
Forfeited  300,000   -   - 
Exercised  -   -   - 
Outstanding November 30, 2010  590,000  $3.90  $0.00 
Following is a summary of the status of options outstanding at November 30, 2010:

F-30

Outstanding Options
 Exercisable Options   
Exercise Price  Number  
Average 
Remaining 
Contractual 
Life 
   
Average 
Exercise 
Price
   Number    
Average 
Exercise Price
   
$3.90 590,000 1.06 $3.90 - $3.90 

Warrants

On October 16, 2009, in connection with the Share Purchase Agreement in October 2009, the Company issued 153,846 warrants to Hunter Wise Financial Group, LLC, the Placement Agent. The warrants carry an exercise price of $3.90 and a 5-year term. The Warrants contain standard adjustment provisions upon stock dividend, stock split, stock combination, recapitalization, and a change of control transaction.

On March 22, 2010, in connection with the Share Purchase Agreement in March 2010, the Company issued 69,231 warrants to various parties as part of placement cost. The warrants carry an exercise price of $3.90 and a 5-year term. The Warrants contain standard adjustment provisions upon stock dividend, stock split, stock combination, recapitalization, and a change of control transaction.

On March 22, 2010, in connection with the Share Purchase Agreement in March 2010, the Company issued 1,281,083 warrants to October 2009 investors. The warrants carry an exercise price of $6.00 and a 3-year term. The Warrants contain standard adjustment provisions upon stock dividend, stock split, stock combination, recapitalization, and a change of control transaction.

Placement Agent Warrants meet the conditions for equity classification pursuant to FASB ASC 815 “Derivatives and Hedging” and EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock.” Therefore, these warrants were classified as equity and accounted for as common stock issuance cost.

F-31

       
Warrants 
Outstanding
        
Warrants 
Exercisable
        
Weighted 
Average 
Exercise 
Price
        
Average 
Remaining 
Contractual 
Life
    
Outstanding, May 31, 2010  1,504,160   1,504,160  $5.69   3.05 
Granted  -   -   -   - 
Forfeited  -   -   -   - 
Exercised  -   -   -   - 
Outstanding, November 30, 2010  1,504,160   1,504,160  $5.69   2.55 

13.Employee Welfare Plan

The Company has established its own employee welfare plan in accordance with Chinese law and regulations. The Company makes contributions to an employee welfare plan. The total expense for the above plan was $33,417 and $43,488 for the three months ended November 30, 2010 and 2009, respectively. The total expense for the above plan was $35,558 and $48,161 for the six months ended November 30, 2010 and 2009, respectively.

14.Income Tax

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the six months ended November 30, 2010 and 2009:

  2010  2009 
       
U.S. Statutory rates  34.0%  34.0%
         
Foreign income not recognized in USA  (34.0)  (34.0)
         
China income taxes  25.0   0 
         
China income tax exemption  19.1   0 
         
Total provision for income taxes  5.9%  0%

USA

The Company and its subsidiaries are subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. As the Group has no income generated in the United States, there was no tax expense or tax liability due to the Internal Revenue Service of the United States as of November 30, 2010 and May 31, 2010.
F-32

Hong Kong

As the Group has no income generated in Hong Kong, there was no tax expense or tax liability due to the tax rule of Hong Kong as of November 30, 2010 and May 31, 2010.

People’s Republic of China (PRC)

Under the Income Tax Laws of the PRC, the Company’s subsidiaries are generally subject to an Enterprise Income Tax (EIT) at a standard rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.

Beijing Concrete is subject to a special tax exemption approved by the PRC tax department. 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 a standard rate of 25%.

BFCM has an accumulated operating loss, thus there is no income tax expense for BFCM. The Company has not recorded deferred taxes, as valuation allowances were provided because all significant differences in tax basis and financial statement amounts are permanent differences.

  For the six months ended November 30, 
  2010  2009 
Income tax expenses      
Current tax $-  $- 
Change in deferred tax assets  128,645   3,196 
Change in valuation allowance  (128,645)  (3,196)
Total $-  $- 

Hongruida is subject to a 25% income tax rate. According to Chinese tax law, the income tax will be calculated at the year end. As of November 30, 2010, the Company has accrued tax payable of $1,032,164 for income tax expenses for Hongruida.

The estimated tax savings due to the tax exemption for the three months ended November 30, 2010 and 2009 amounted to approximately $1,492,075 and $791,525, respectively. The estimated tax savings due to the tax exemption for the six months ended November 30, 2010 and 2009 amounted to approximately $2,800,486 and $1,298,041, respectively. The net effect on earnings per share if the income tax had been applied would decrease the basic and diluted earnings per share for the three months ended November 30, 2010 by $0.12. The net effect on earnings per share if the income tax had been applied would decrease the basic and diluted earnings per share for the six months ended November 30, 2010 by $0.22. The net effect on earnings per share if the income tax had been applied would decrease the basic and diluted earnings per share for the three months ended November 30, 2009 by $0.12. The net effect on earnings per share if the income tax had been applied would decrease the basic and diluted earnings per share for the six months ended November 30, 2009 by $0.32.

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15.Other Income (Expenses)

Other income was $8,482 and $18,666 for the three and six months ended November 30, 2010, respectively. It consists of income from selling recycled paper and vehicle accident compensation. Other expenses were $8,877 and $8,877 for the three and six months ended November 30, 2010, respectively. Other expenses are net losses from property, plant and equipment disposal.

Other income was $4,996 and $4,996 for the three and six months ended November 30, 2009, respectively. It mainly consists of fines from employees. Other expenses were $0 and $0 for the three and six months ended November 30, 2009, respectively.

16.Concentration of Credit Risks and Uncertainties

Concentration of credit risk exists when changes in economic, industry or geographic factors similarly affect groups of counter parties whose aggregate credit exposure is material in relation to the Company’s total credit exposure.

Three major customers, China Railway Construction Group, China Construction Group, and Jiangxi Jinggangshan Road and Bridge construction Company accounted for 16%, 14% and 11% of the Company’s total sales for the three months ended November 30, 2010, respectively. Three major customers, China Railway Construction Group, Jiangxi Jinggangshan Road and Bridge construction Company, and China Construction Group accounted for 17%, 16% and 10% of the Company’s total sales for the six months ended November 30, 2010, respectively.
Four major customers, Mingsheng Group, China Construction Group, Guangzhou Tianli Construction Group, and Beijing Sanyuan Construction Inc. accounted for 14%, 14%, 11% and 11% of the Company’s total sales for the three months ended November 30, 2009, respectively. Three major customers, Mingsheng Group, China Construction Group, and Beijing Sanyuan Construction Group accounted for 11%, 11% and 11% of the Company’s total sales for the six months ended November 30, 2009, respectively.
F-34
Three customers, China Construction Group, China Railway Construction Group, and Guangzhou Tianli Construction Group accounted for 11%, 11%, and 10% of the Company’s accounts receivable balance at November 30, 2010. Two customers, China Railway Construction Group, and Guangzhou Tianli Construction Group, accounted for 26% and 10% of the Company’s accounts receivable balance at May 31, 2010.

Two major vendors, Tangshan Jidong Cement Company, and Hekai Stone and Sand Company accounted for 19% and 13% of the Company’s total inventory purchases for the three months ended November 30, 2010. Two major vendors, Tangshan Jidong Cement Company and Hekai Stone and Sand Company accounted for accounted for 12% and 12% of the Company’s total inventory purchases for the six months ended November 30, 2010.

The top five major vendors accounted for 34% of the Company’s total purchases for the three months ended November 30, 2009, with no one major vendor accounting for more than 10% of the total purchases. One major vendor accounted for 11% of the Company’s accounts payable at May 31, 2010.

No major vendor accounted for over 10% of the Company’s accounts payable at November 30, 2010. No vendor accounted for more than 10% of the Company’s accounts payable at November 30, 2009.

The Company’s exposure to foreign currency exchange rate risk primarily relates to cash and cash equivalents and short-term investments, denominated in the U.S. dollar. Any significant revaluation of RMB may materially and adversely affect the cash flows, revenues, earnings and financial position of the Company.

Contingencies

The Company has not, historically, carried any property or casualty insurance. No amounts have been accrued for any liability that could arise from the lack of insurance. Management feels the chances of such an obligation arising are remote.

Deposits in banks in the PRC are not insured by any government entity or agency, and are consequently exposed to risk of loss. Management believes the probability of a bank failure, causing loss to the Company, is remote.
F-35

Operating Lease Commitment

As of November 30, 2010, the Company was committed to minimum rentals for the leased land under long-term non-cancellable operating leases as follows:

Twelve Months Ended November 30,   
2011 $267,890 
2012  144,774 
2013  109,719 
2014  109,719 
2015  109,719 
Thereafter  652,678 
Total: $1,394,499 

We currently have a ten-year lease with an annual payment of approximately $48,000, from March 1, 2008 to February 28, 2018, for our Beijing production base. We have built our offices and manufacturing facilities on this site. We also lease land for our Xi’an production facility. The annual payment is approximately $59,000. We also leased two offices in Beijing as our headquarter office. One office lease is from July 11, 2010 to July 10, 2012, with an annual payment of approximately $48,000. One office lease is from December 15, 2009 to December 14, 2011, with an annual payment of approximately $106,000.

Operating lease expenses amounted to $66,654 and $12,100 for the three months ended November 30, 2010 and 2009, respectively. Operating lease expenses amounted to $126,888 and $24,192 for the six months ended November 30, 2010 and 2009, respectively.

17.Subsequent events

There are no material subsequent events. The Company has evaluated subsequent events from the balance sheet date through the date the report is issued.

F-36
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD-LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS", "INTENDS", "WILL", "HOPES", "SEEKS", "ANTICIPATES", "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD-LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD-LOOKING STATEMENT. SUCH FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-K AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

Unless the context otherwise requires, The "Company", "we," "us," and "our," refer to (i) China Infrastructure Construction Corporation; (ii) Beijing Chengzhi Qianmao Concrete Co., Ltd. (“Beijing Concrete”), (iii) Beijing Fortune Capital Management, Ltd. (“BFCM”), (iv) Shaanxi Hongruida Concrete, Ltd. (“Hongruida”), and (v) Northern Construction Holdings, Ltd. (“NCH”).

Overview

China Infrastructure Construction Corporation (the “Company”, “China Infrastructure”, “CHNC”, “We”, “Our”) was organized in Colorado on February 28, 2003. The Company through its subsidiaries in Hong Kong and the People’s Republic of China (“PRC” or “China”), engages in production of ready-mixed concrete for developers and the construction industry in the PRC.

Beijing Concrete currently has four production facilities. One facility is located in the Nanhaizi area, on the west side of the Yizhuang economic development zone in Beijing, one is in Shidu, a suburban area of Beijing, one is in Xi’an West New High-tech Zone, and another one is located at the Tangshan harbor, about two hundred kilometers from Beijing. The plant located in Xi’an was put into operation at the end of March 2010.

3
Results of Operations

Three months ended November 30, 2010 Compared to Three months ended November 30, 2009

Net Revenue

Net Revenue for the three months ended November 30, 2010 was $25,930,120 as compared to $19,155,132 for the same period last year, an increase of $6,774,988, or approximately 35.37%. The increase in net revenue is mainly attributable to our geographic expansion. We had set up new factories in Xi’an and Shidu in 2010. The sales volume of concrete products increased by approximately 31.31% for the three months ended November 30, 2010, as compared to the same period last year. The increase in net revenue is also attributable to technical services we provided to a Tianjin concrete producer since late March 2010, which is a new addition to our main business. These services generated approximately $0.47 million in our net revenue for the three months ended November 30, 2010.

Costs of Goods Sold

Cost of goods sold for the three months ended November 30, 2010 was $18,703,068 as compared to $14,655,122 for the same period last year, an increase of $4,047,946 or approximately 27.62%. The increase in cost of goods sold is mainly because of our increased sales volume.

Gross Profit

Gross profit for the three months ended November 30, 2010 was $7,227,052, an increase of $2,727,042 or approximately 60.60%, as compared to $4,500,010 for the same period last year. The increase in gross profit is attributable to the increase of sales due to geographic development of our business, our business expansion into technical services sector, and vertical integration with one sand and stone vendor.

Gross Profit Margin
Gross profit margin for the three months ended November 30, 2010 was 27.87%, compared to 23.49% for the same period last year. The increase of the gross profit margin is mainly because technical services provided a higher margin and our merger with one sand and stone company lowered the cost of goods sold.

General and administrative Expenses

General and administrative expenses for the three months ended November 30, 2010 were $1,851,878, as compared to $28,794,545 for the same period last year, a decrease of $26,942,667, or approximately 93.57%. The decrease was primarily due to the $27,422,242 one time non-cash compensation expenses included in the general and administrative expenses for the three months ended November 30, 2009.

4
Operating Income (Loss)

Our operating income for the three months ended November 30, 2010 was $5,375,174, an increase of $29,669,709 as compared to operating loss of $24,294,535 for the same period last year. The increased income was due to the increased sales revenue as a result of our business expansion geographically, the increased revenue of the same batch plants as well as our transition towards the business of a higher profit margin. In addition, the Company in the comparable period in 2009 carried a loss because the one-time non-cash compensation expenses of $27,422,242 were included in the general and administrative expenses for the three months ended November 30, 2009.

Income Taxes

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the three months ended November 30, 2010 and 2009:
  2010  2009 
       
U.S. Statutory rates  34.0%  34.0%
         
Foreign income not recognized in USA  (34.0)  (34.0)
         
China income taxes    25.0     0 
         
China income tax exemption    21.5     0 
         
Total provision for income taxes  3.5%  0%

USA

The Company and its subsidiaries are subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. As the Company has no income generated in the United States, there was no tax expense or tax liability due to the Internal Revenue Service of the United States as of November 30, 2010 and May 31, 2010.

Hong Kong

As the Company has no income generated in Hong Kong, there was no tax expense or tax liability due to the tax rule of Hong Kong as of November 30, 2010 and May 31, 2010.

5
People’s Republic of China (PRC)

Under the Income Tax Laws of the PRC, the Company’s subsidiaries are generally subject to an Enterprise Income Tax (EIT) at a standard rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.
Beijing Concrete is subject to a special tax exemption approved by the PRC tax department. The exemption of income tax to the Company will last until December 31, 2010, and starting from year 2011, the Company will be subject to an income tax at a standard rate of 25%.

BFCM has an accumulated operating loss, thus there is no income tax expense for BFCM. The Company has not recorded deferred taxes, as valuation allowances were provided because all significant differences in tax basis and financial statement amounts are permanent differences.

  For the three months ended November 30 
  2010  2009 
Income tax expenses      
Current tax $-  $- 
Change in deferred tax assets    88,696     3,196 
Change in valuation allowance  (88,696)  (3,196)
Total $-  $- 

Hongruida is subject to a 25% income tax rate. According to Chinese tax law, the income tax will be calculated at the year end. As of November 30, 2010, the Company has accrued tax payable of $1,032,164 for income tax expenses for Hongruida.

The estimated tax savings due to the tax exemption for the three months ended November 30, 2010 and 2009 amounted to approximately $1,492,075 and $791,525, respectively. The net effect on earnings per share if the income tax had been applied would decrease the basic and diluted earnings per share for the three months ended November 30, 2010 by $0.12. The net effect on earnings per share if the income tax had been applied would decrease the basic and diluted earnings per share for the three months ended November 30, 2009 by $0.12.

Net Income (Loss) Attributable To China Infrastructure Construction Corporation

Net income was $4,878,251 for the three months ended November 30, 2010, an increase of $29,344,639 as compared to net loss of $24,466,388 for the same period last year. The increase was primarily due to the increased sales as a result of our business expansion geographically and towards the business of a higher profit margin. In addition, the Company carried a loss in the comparable period in 2009 because the one-time non-cash compensation expenses of $27,422,242 were included in the general, and administrative expenses for the three months ended November 30, 2009.

6
Six months ended November 30, 2010 Compared to Six months ended November 30, 2009

Net Revenue
Net Revenue for the six months ended November 30, 2010 was $47,117,650 as compared to $31,410,860 for the same period last year, an increase of $15,706,790, or approximately 50.00%. The increase in net revenue is mainly attributable to our geographic expansion. We had set up new factories in Xi’an and Shidu in 2010. The sales volume of concrete products increased by approximately 51.18% for the six months ended November 30, 2010 as compared to the same period last year. The increase in net revenue is also attributable to technical services we provided to a Tianjin concrete producer since late March 2010, which is a new addition to our main business. These services generated approximately $1.70 million in net revenue for the six months ended November 30, 2010.

Costs of Goods Sold

Cost of goods sold for the six months ended November 30, 2010 was $33,757,085 as compared to $24,504,167 for the same period last year, an increase of $9,252,918, or approximately 37.76%. The increase in cost of goods sold is mainly because of our increased sales volume.

Gross Profit

Gross profit for the six months ended November 30, 2010 was $13,360,565, an increase of $6,453,872 or approximately 93.44% as compared to $6,906,693 for the same period last year. The increase in gross profit is attributable to the increase of sales due to geographic development of our business, our business expansion into technical services sector and our vertical integration with one sand and stone vendor.

Gross Profit Margin
Gross profit margin for the six months ended November 30, 2010 was 28.36%, compared to 21.99% for the same period last year. The increase of the gross profit margin is mainly because technical services provided a higher margin and our merger with one sand and stone supplier lowered the cost of goods sold.

General and administrative Expenses

General and administrative expenses for the six months ended November 30, 2010 were $3,294,188, as compared to $29,183,485 for the same period last year, a decrease of $25,889,297, or approximately 88.71%. The decrease was mainly because the one-time non-cash compensation expenses of $27,422,242 were included in the general and administrative expenses for the six months ended November 30, 2009.

Operating Income (Loss)

Our operating income for the six months ended November 30, 2010 was $10,066,377 an increase of $32,343,169, as compared to operating loss of $22,276,792 for the same period last year. The increased income was due to the increased sales revenue as a result of our business expansion geographically and our transition towards the business with higher profit margin. In addition, the one-time non-cash compensation expenses of $27,422,242 were included in the general and administrative expenses for the six months ended November 30, 2009.

7
Income Taxes

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the six months ended November 30, 2010 and 2009:

  2010  2009 
       
U.S. Statutory rates  34.0%  34.0%
         
Foreign income not recognized in USA  (34.0)  (34.0)
         
China income taxes  25.0   0 
         
China income tax exemption  19.1   0 
         
Total provision for income taxes  5.9%  0%

USA

The Company and its subsidiaries are subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. As the Company has no income generated in the United States, there was no tax expense or tax liability due to the Internal Revenue Service of the United States as of November 30, 2010 and May 31, 2010.

Hong Kong

As the Company has no income generated in Hong Kong, there was no tax expense or tax liability due to the tax rule of Hong Kong as of November 30, 2010 and May 31, 2010.

People’s Republic of China (PRC)

Under the Income Tax Laws of the PRC, the Company’s subsidiaries are generally subject to an Enterprise Income Tax (EIT) at a standard rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.
Beijing Concrete is subject to a special tax exemption approved by the PRC tax department. The exemption of income tax to the Company will last until December 31, 2010, and starting from year 2011, the Company will be subject to an income tax at a standard rate of 25%.

8
BFCM has an accumulated operating loss, thus there is no income tax expense for BFCM. The Company has not recorded deferred taxes, as valuation allowances were provided because all significant differences in tax basis and financial statement amounts are permanent differences.

  For the six months ended November 30 
  2010  2009 
Income tax expenses      
Current tax $-  $- 
Change in deferred tax assets  128,645   3,196 
Change in valuation allowance  (128,645)  (3,196)
Total $-  $- 

Hongruida is subject to a 25% income tax rate. According to Chinese tax law, the income tax will be calculated at the year end. As of November 30, 2010, the Company has accrued tax payable of $1,032,164 for income tax expenses for Hongruida.

The estimated tax savings due to the tax exemption for the six months ended November 30, 2010 and 2009 amounted to approximately $2,800,486 and $1,298,041,respectively. The net effect on earnings per share if the income tax had been applied would decrease the basic and diluted earnings per share for the six months ended November 30, 2010 by $0.22. The net effect on earnings per share if the income tax had been applied would decrease the basic and diluted earnings per share for the six months ended November 30, 2009 by $0.32.

Net Income (Loss) Attributable To China Infrastructure Construction Corporation

Net income was $8,854,700 for the six months ended November 30, 2010, an increase of $ 31,414,285 as compared to net loss of $22,559,585 for the same period last year. The increase was primarily due to the increased sales as a result of our business expansion geographically and our transition towards business of a higher profit margin. In addition, the one-time non-cash compensation expenses of $27,422,242 were included in the general and administrative expenses for the six months ended November 30, 2009.

Liquidity and Capital Resources

As of November 30, 2010, we had cash and cash equivalents of $803,470. We have historically funded our working capital needs from operations, advance payments from customers, bank borrowings, capital from shareholders. Due to the competitive environment, our raw materials suppliers are willing to accept our accounts receivable and credit the Company for the payments to the accounts payable. We usually enter into assignment agreements with our suppliers, whereby the suppliers shall be entitled to the amounts due and owed by our customer and the Company shall assist the suppliers on collection. Under these assignment agreements, the Company has the obligation of notifying the customers about the assignment, and in any event that the suppliers are not able to collect such accounts receivable due to a fault other than the suppliers,’ the Company shall still have the obligation to pay off the suppliers. In the concrete industry, the raw material suppliers, with their locality and good relationship with local construction companies who often become our customers, are in a better position to collect the receivable from our customers. All assigned accounts receivable to our suppliers were collected as of the end of our second fiscal quarter of 2011. In the six months ended November 30, 2010, we paid approximately $17,672,576 or 64.99% of the raw materials with our accounts receivable. 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, the timing of accounts receivable collections and the acceptance of our accounts receivable as payment instrument by raw material suppliers.
9

The following table sets forth a summary of our cash flows for the periods indicated:

  
Six months Ended
November 30
 
  2010  2009 
  Unaudited  Unaudited 
Net cash provided by (used in) operating activities $1,293,846  $(3,661,951)
Net cash (used in) investing activities  (360,446)  (918,285)
Net cash provided by (used in) financing activities  (1,253,339)  10,151,014 
Effect of exchange rate change on cash and cash equivalents  20,530   10,510 
(Decrease) Increase in cash and cash equivalents  (299,409)  5,581,288 
Cash and cash equivalents, beginning balance  1,102,879   921,841 
Cash and cash equivalents, ending balance  803,470   6,503,129 

Operating Activities

Net cash provided by operating activities was $1,293,846 for the six months ended November 30, 2010, an increase of $4,955,797 as compared to $3,661,951 net cash used in operating activities for the same period last year. The increase of net cash provided by operating activities was mainly due to the increase of net income and tax payable offset by prepayment. Accounts receivable increased as well as a result of the growing sales. We typically had long-term annual and multi-year contracts with our major customers. We entered into varying payment terms with our customers ranging from payment before delivery, payment on delivery or up to 1 year after the project completion. As of November 30, 2010, trade accounts receivable with aging over twelve months old amounted to $7,294,414, accounting for 10.92% of total trade accounts receivable.

Investing Activities

Net cash used in investing activities was $360,446 for the six months ended November 30, 2010, a decrease of $557,839 as compared to $918,285 used for the same period last year. The decrease was primarily due to the decreased investments of property, plant, and equipment and decreased payment to related party receivable and the proceeds from the collection of related-party receivable and from the sale of property, plant, and equipment.

Financing Activities

Net cash used in financing activities was $1,253,339 for the six months ended November 30, 2010, compared to $10,151,014 net cash provided by financing activities for the same period last year. In addition to the cash from the proceeds of the sale of the Company’s Common Stock in October 2009, the decrease of net cash provided by financing activities was also attributable to the repayment of the Company’s bank loans that matured during the six months ended November 30, 2010 and the increased payment to our capital lease obligations.

10

Critical Accounting Policies and Estimates 

Management's discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. See note 3 to our consolidated financial statements, "Summary of Significant Accounting Policies." Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe that the following reflect the more critical accounting policies that currently affect our financial condition and results of operations.

Revenue recognition

The Company receives revenue from sales of concrete products and from provision of concrete pumping service and consulting service. The Company's revenue recognition policies are in compliance with ASC 605 (previously Staff Accounting Bulletin 104). Sales revenue is recognized at the date of shipment to customers or services have been rendered when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Our sales are non-returnable. Therefore, we do not estimate deductions or allowance for sales returns. Sales are presented net of any discounts, reward, or incentive given to customers.  Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Our products delivered to customers would be checked on site by customers and, once the products are accepted by customers, they will sign the acceptance notice. There is no warranty issue after the delivery.
Reward or incentive given to our customers is an adjustment of the selling prices of our products; therefore, the consideration is characterized as a reduction of revenue when recognized in our income statement.

The Company recognizes its revenues net of value-added taxes (“VAT”).  The Company is subject to VAT which is levied at the rate of 6% on the invoiced value of sales. However, the Company enjoys a free VAT policy according to the national policy, which encourages the development of the cement industry if the manufacturer satisfies the environmental protection requirements. The Company has enjoyed the free VAT policy from January 1, 2006 and has been reviewed every year by the local tax bureau.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the combined financial statements and accompanying notes. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent. Actual results could differ from these estimates.

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Inventories

Inventories are stated at the lower of cost, determined on a weighted average basis, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose.

Off-Balance Sheet Arrangements

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

ITEM 4T.   CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934, is recorded, processed, summarizedas amended, 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 designedotherwise are not subject to ensure that information required to be disclosed by an issuer in the reports that it files or submitsliability under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting

Effective October 25, 2010, Ms. Yiru Shi resigned as the Chief Financial Officer of the Company. Ms. Shi’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

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Effective October 25, 2010, Mr. John Bai was appointed as acting Chief Financial Officer of the Company for a trial period of three months.

Except for the above, there was no other change in the Company's internal control over financial reporting during the period ended November 30, 2010, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II-OTHER INFORMATIONthose sections.

ITEM 6.   EXHIBITS.

(a) The following exhibits are filed herewith:
 
31.131.1*Certifications by the Chief Executive 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.

31.231.2*Certifications by the 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.

32.132.1*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.
101**Interactive data files pursuant to Rule 405 of Regulation S-T.
_____________
* Filed previously
** Filed herewith 
 
 
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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.

CHINA INFRASTRUCTURE CONSTRUCTION CORPORATION
 
By: /s/ Rong Yang
 Rong Yang
 Chief Executive Officer, Director
  (principal(principal executive officer)

By: /s/ John Bai
 John Bai
 Chief Financial Officer
 (principal financial and accounting officer)

Date:  January 14,November 7, 2011

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