China Shuangji Cement (PINK:CSGJ)

On April 12, 2010, as disclosed in the Company’s Form 8-K filed on April 15, 2010, the management of China Shuangji Cement Ltd.  concluded that its financial statements for the year ended December 31, 2008, which are included in its Form 10-K for the years ended December 31, 2008 and 2007, did not properly account for the certain items as of December 31, 2008 and for the year then ended in accordance with United States generally accepted accounting principles, and, as a result, cannot be relied upon. 

As disclosed in the above-mentioned 8-K, the Company will restate its financial statements for the year ended December 31, 2008 to correct the errors noted above and file an amendment to the Company’s 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission.  

In connection with the re-audit of the Company’s 2008 numbers, the Company, in consultation with its independent registered accounting firm, Bernstein & Pinchuk LLP (“B & P”), preliminarily determined on April 26, 2010 that the Company’s financial statements for the period ended March 31, 2009, which are included in its Form 10-Q for the respective period, might contain certain errors.  During B&P’s review field work period from April 26 to May 16, 2010, the Company’s management identified, corrected, and finalized the 2009 numbers, at which point on May 16, 2010, the Company was able to disclose which numbers should no longer be relied upon.

As such, the Company’s management has concluded that its financial statements for the three month period ended March 31, 2009, which are included in the Company’s Forms 10-Q for the period ended March 31, 2009, did not properly account for the following items as of the above-referenced period in accordance with United States generally accepted accounting principles, and, as a result, cannot be relied upon:

1.   Cost of goods sold was overstated

2.   Selling and Administrative expense was understated

3.   Gain from sale of property was not recorded

4.   Income tax expense was understated

China Shuangji Cement, Ltd.  announced today that one of its 4 cement plants, the Dongfang facility on Hainan Island, is on a recently published list of more than 2,000 production lines across China that the Ministry of Industry and Information Technology (MIIT)* wants to phase out due to concerns about outmoded production methods. China Shuangji is working closely with the government to keep the plant open and potentially expand production in this fast growing resort area.

According to the list, published on August 6, 2010, the Company’s Dongfang production line may eventually be phased out as part of the Chinese government’s efforts to upgrade and consolidate the cement industry. However, no time-table has been given and the Company is working with the government to allow it to upgrade and modernize its Dongfang plant instead. In the event of a closure, the Company believes that it may be granted a new production permit for a more modern and bigger production line and other forms of compensation in exchange for the closure. The Company’s Dongfang production line, established in 1994 in Hainan Province, has an annual production capacity of 500,000 metric tons of cement, representing 33% of China Shuangji’s current total production capacity. After the Company’s new Zhaoyuan facility comes online, the Dongfang facility would represent only 20% of its new increased total production capacity.

“We are working very closely with the Chinese government to resolve this issue as quickly as possible,” said Mr. Wenji Song, Chairman and President of China Shuangji Cement, Ltd. “We feel confident we will be successful in this regard and are in a good position to upgrade and modernize our Dongfang facility."

Mr. Song continued, "The Company is also presently nearing completion of a brand new state-of-the-art cement facility that would meet all new government standards. This new facility, in Zhaoyuan City, is expected to increase our production capacity by 1,000,000 metric tons to an estimated 2,500,000 metric tons per year, assuming the Dongfang facility remains at 500,000 MT per year. We believe that this new capacity from Zhaoyuan, once it is open, will solidify our position as a major cement player in Shandong and Hainan Provinces.”

*A link to the Ministry of Industry and Information Technology’s (MIIT) list may be found at http://www.miit.gov.cn/n11293472/n11293832/13333261.html