China Shuangji Cement, Ltd. Announces First Quarter 2010 Results

-- Increases in Revenues and Profit Margin Driven by Higher Sales of Cement --

ZHAOYUAN CITY, China--(BUSINESS WIRE)--China Shuangji Cement, Ltd. (OTCBB:CSGJ) ("China Shuangji" or the "Company"), a leading producer of high-quality Portland cement in Shandong and Hainan Provinces in the People’s Republic of China (PRC), today announced its financial results for the first quarter ended March 31, 2010.

“We are very confident about our prospects in 2010 based on strong demand from China’s construction industry and significant growth in infrastructure projects that we are observing”

First Quarter 2010 Highlights

• Total revenue increased 4.1% to approximately $12.0 million from approximately $11.5 million a year ago.
• Gross profit increased 13.0% to approximately $1.8 million from approximately $1.6 million a year ago.
• Gross margin increased to 15.5% from 14.2% in the same period last year.
• Operating expenses were $643,095, up from $409,892 in the same period last year.
• Operating income declined slightly to approximately $1.21 million from approximately $1.23 million a year ago.
• Working capital increased 9.3% to approximately $11.7 million at March 31, 2010, from approximately $10.7 million at December 31, 2009.
• Shareholder equity increased to approximately $27.1 million at March 31, 2010, from $26.1 million at December 31, 2009.
• Net income was $790,993 compared to approximately $1.2 million a year ago, a decrease of $415,356 primarily due to an increase in General and Administrative Expenses and a gain from sale of property occurring in 2009 and not in 2010.

Mr. Wenji Song, Chairman and President of China Shuangji Cement, Ltd., commented, “We experienced a rise in sales in the first quarter of 2010 primarily due to increased production from our new facility in Longkou and continued strong demand for our high-grade bulk cement. This drove a 13% increase in gross profit as China’s economy expanded rapidly in the first quarter, resulting in strong demand for new buildings and infrastructure that we see continuing for the remainder of 2010 and beyond. During the quarter, we continued to move forward with our strategic plans. To reinforce our stature as a U.S.-listed public company, we strengthened our compliance and corporate governance by hiring Sichenzia Ross Friedman Ference LLP as our legal counsel, and engaging Bernstein & Pinchuk LLP as our independent registered public accountant. Both firms have strong reputations and extensive experience working with Chinese domiciled, U.S.-listed companies, and will assist us in making our planned transition to a senior exchange.”

First Quarter 2010 Results

Net revenue for the three months ended March 31, 2010, rose 4.1% to approximately $12.0 million from approximately $11.5 million a year ago. In the first quarter, cement sales increased by 9,955 metric tons, or 3.3%, to 314,231 metric tons from 304,276 metric tons in the same period last year. The increase in revenue was primarily due to production from the new Longkou Cement plant that was acquired in April 2009, which has an upgraded capacity of 500,000 metric tons.

Cost of sales for the three months ended March 31, 2010, increased $257,121, or 2.6%, to approximately $10.1 million from approximately $9.8 million for the same period a year ago. The increase was primarily due to the increase in sales. Cost of sales as a percentage of total net revenue decreased by 1.21% from 85.75% in the three months ended March 31, 2009, to 84.54% for the three months ended March 31, 2010.

Gross profit for the three months ended March 31, 2010, increased by $212,445, or 13.0%, to approximately $1.8 million from approximately $1.6 million for the same period a year ago. The increase was primarily due to the increase in sales. Gross margin increased to 15.5% from 14.2% in the same period last year.

Operating expenses increased for the three months ended March 31, 2010, by $233,203 to $643,095 from $409,892 for the same period a year ago. The increase was primarily due to issuances of stock and warrants as consideration for certain consulting and professional services.

Operating income for the three months ended March 31, 2010, decreased by $20,758, or 1.7%, to approximately $1.21 million from approximately $1.23 million for the same period a year ago. The decrease was primarily due to an increase in General and Administrative Expenses which was not offset by the increase in sales.

During the fiscal 2010 first quarter, the Company reported other expense of $30,745, compared to other income of $384,754 for the same period of 2009. The decrease was primarily due to a gain from sale of property occurring in 2009 and not in 2010.

Net income for the three months ended March 31, 2010, was $790,993, or $0.03 per diluted share, compared to $1.2 million, or $0.04 per diluted share, a year ago, a decrease of $415,356 primarily due to an increase in General and Administrative Expenses and a gain from sale of property occurring in 2009 and not in 2010.

Financial Condition

As of March 31, 2010, China Shuangji Cement had $27,165 in cash and cash equivalents; approximately $11.7 million in working capital, up 9.3% from working capital of approximately $10.7 million at December 31, 2009; and approximately $1.2 million in bank loans. Shareholders’ equity at March 31, 2010, was approximately $27.1 million, a 3.7% increase, compared to approximately $26.1 million recorded at the end of 2009.

The Company generated $236,886 in net cash flow from operating activities in the first quarter of 2010, versus $984,263 in the corresponding period of 2009. The decrease was primarily due to the decrease in net income.

Business Outlook

“We are very confident about our prospects in 2010 based on strong demand from China’s construction industry and significant growth in infrastructure projects that we are observing,” said Mr. Wenji Song, Chairman and President of China Shuangji Cement, Ltd. “This is supported by a surging economy and the government’s $586 billion stimulus program, which calls for substantial investments in cement-intensive projects for years to come.” Added Mr. Song, “We have moved past a challenging economic period and are now on a course for sustained improvement in 2010, supported by the rebound in China’s economy and its prospects for significant future growth. Once our new Zhaoyuan Cement Production Facility becomes fully operational, which we expect to occur this year, we will be able to increase our production capacity by 1,000,000 metric tons to an estimated 2,500,000 metric tons. We believe this, combined with consolidation in our industry and the growth of China’s cement market, will drive significant increases in sales and profits for many years to come.”

About China Shuangji Cement, Ltd.

China Shuangji Cement, Ltd. (OTCBB:CSGJ), through its affiliates and controlled entities, is a leading producer of high-quality Portland cement in Shandong and Hainan Provinces. Its processed cement products are primarily purchased by contractors for the construction of buildings, roads, and other infrastructure projects. The Company currently produces approximately 1,500,000 tons of Portland cement annually from two facilities in Hainan and one facility in Shandong and it expects its output will increase by 1,000,000 tons to a total of 2,500,000 tons once the new Zhaoyuan (Shandong Province) plant and upgrades are completed. http://www.shuangjicement.com.

Safe Harbor Statement

The information contained herein includes forward-looking statements. These statements relate to future events or to our future anticipated financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development and market conditions. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People's Republic of China. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We do not intend to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act. In addition, please refer to the Risk Factor section of our 2009 Form 10-K filed with the Securities and Exchange Commission on April 15, 2010, and detailed in other reports filed with the Securities and Exchange Commission from time to time.

CHINA SHUANGJI CEMENT, LTD. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
		Three months ended March 31,
		2010			2009
		(US$)			(US$)
					Restated
Sales	$	11,951,395		$	11,481,829
Cost of Sales		10,103,152			9,846,031
Gross Margin		1,848,243			1,635,798
Operating Expenses
Selling expenses		66,471			58,573
General and administrative expenses		576,624			351,319
		643,095			409,892
Income From Operations		1,205,148			1,225,906
Other Income ( Expense)
Interest expense		(30,745	)		(51,538	)
Gain from sale of property		-			423,276
Other income		-			13,016
		(30,745	)		384,754
Operating Income Before Income Tax Expense And Noncontrolling Interest		1,174,403			1,610,660
Income Tax Expense		383,410			404,311
Net Income		790,993			1,206,349
Less: Net income attributable to Noncontrolling Interest		(28,861	)		-
Net Income attributable to stockholders		762,132			1,206,349
Foreign Currency Translation Gain		4,199			29,507
Foreign Currency Translation Gain attributable to Noncontrolling Interest		190			-
Comprehensive Income	$	766,521		$	1,235,856
Earning per share
Basic	$	0.03		$	0.18
Diluted	$	0.03		$	0.04
Weighted average number of shares outstanding
Basic		27,995,218			6,733,096
Diluted		28,017,196			26,983,096
Statement of Consolidated Comprehensive Income
Net Income		790,993			1,206,349
Foreign Currency Translation Gain		4,389			29,507
Comprehensive Income		795,382			1,235,856
Less: Comprehensive income attributable to noncontrolling interest		(29,051	)		-
Comprehensive income attributable to stockholders	$	766,331		$	1,235,856

CHINA SHUANGJI CEMENT, LTD. CONSOLIDATED BALANCE SHEETS
		As of
		March 31, 2010			December 31, 2009
		(US$)			(US$)
		(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	27,165		$	47,513
Accounts receivable, net		3,750,653			3,382,114
Other receivable, net		1,080,689			1,186,481
Inventories		9,979,128			9,215,333
Subsidy receivables		5,412,443			5,411,572
Total Current Assets		20,250,078			19,243,013
Plant, property and equipment, Net		16,277,022			16,261,527
Construction In Progress		2,959,046			2,958,570
Land use right, Net		168,532			169,502
Goodwill		205,411			205,378
	$	39,860,089		$	38,837,990
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	833,126		$	735,381
Short-term bank loans		1,227,750			1,227,553
Accrued payroll		181,049			229,687
Other payable		222,721			293,264
Taxes payable		5,060,449			5,025,270
Accrued liability		1,064,190			1,064,019
Total Current Liabilities		8,589,285			8,575,174
Long-term liabilities
Deferred Revenue		877,693			877,552
Long term payable		2,047,951			2,047,622
EQUITY
Stockholders' Equity
Preferred Stock, $.0001 par value, 100,000,000 shares authorized, Zero shares issued and outstanding as of March 31, 2010, and December 31, 2009		-			-
Common stock, $.0001 par value, 100,000,000 shares authorized, 28,157,246 and 27,839,346 shares issued and outstanding as of March 31, 2010, and December 31, 2009		2,816			2,784
Additional paid-in capital		17,829,459			17,617,355
Appropriated retained earnings		9,418,306			9,418,306
Unappropriated retained earnings		(406,828	)		(1,168,960	)
Accumulated other comprehensive income		283,490			279,291
Total Stockholders' Equity		27,127,243			26,148,776
Noncontrolling interest		1,217,917			1,188,866
Total Equity		28,345,160			27,337,642
	$	39,860,089		$	38,837,990

CHINA SHUANGJI CEMENT, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
			Three months ended March 31,
			2010			2009
			(US$)			(US$)
						Restated
CASH FLOWS FROM OPERATING ACTIVITIES
	Net Income	$	790,993		$	1,206,349
Adjustments to reconcile net income to net cash provided by operating activities:
	Warrants issuance for consulting service		33,765			-
	Stock issuance for consulting service		178,371			-
	Gain from sale of property		-			(423,276	)
	Depreciation		244,581			245,612
	Amortization		997			996
Change in operating assets and liabilities
	Accounts receivable		(367,999	)		(283,392	)
	Other receivable		105,984			(4,427	)
	Inventories		(762,320	)		1,419,446
	Accounts payable		97,409			(497,976	)
	Accrued payroll		(48,675	)		(76,671	)
	Other payable		(70,591	)		(380,294	)
.	Tax payable		34,371			38,497
	Accrual expenses		-			(260,601	)
Net cash provided by operating activities			236,886			984,263
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchase of property & equipment		(257,460	)		(292,117	)
Net cash used in investing activities			(257,460	)		(292,117	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Loan payments		-			(730,292	)
Net cash used in financing activities			-			(730,292	)
NET DECREASE IN CASH AND CASH EQUIVALENTS			(20,574	)		(38,146	)
EFFECT OF EXCHANGE RATE FLUCTUATION ON CASH AND CASH EQUIVALENTS			226			53
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR			47,513			60,954
CASH AND CASH EQUIVALENTS, END OF YEAR		$	27,165		$	22,861
SUPPLEMENTAL DISCLOSURES:
	Cash paid during the year for:
	Income tax payments	$	129,465		$	116,622
	Interest payments	$	30,207		$	51,538