Delaware
|
|
14-1623047
|
(State
or other jurisdiction
of
incorporation)
|
|
(IRS
Employer Identification No.)
|
Item
1.
|
Financial
Statements
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets at, March 31, 2008 (unaudited) and
June 30, 2007 (audited)
|
3
|
|
|
|
|
Unaudited
Condensed Consolidated Statements of Operations for the three and
nine months ended March 31, 2008 and 2007
|
4
|
|
|
|
|
Unaudited Condensed
Consolidated Statements of Cash Flows for the nine months ended March
31,
2008 and 2007
|
5
|
|
|
|
|
Condensed
Consolidated Statements of Changes in Stockholders’ Equity for the year
ended June 30, 2007 (audited) and the nine months ended March 31,
2008 (unaudited)
|
6
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
|
7
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
19
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
31
|
|
|
|
Item
4.
|
Controls
and Procedures
|
32
|
|
|
|
Part II
- Other Information
|
||
|
|
|
Item
1.
|
Legal
Proceedings
|
32
|
|
|
|
Item
1A.
|
Risk
Factors
|
32
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
32
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
32
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
32
|
|
|
|
Item
5.
|
Other
Information
|
32
|
|
|
|
Item
6.
|
Exhibits
|
33
|
|
|
|
Signatures
|
|
34
|
(Unaudited)
|
||||||||||
March
31,
|
June
30,
|
|||||||||
Notes
|
2008
|
2007
|
||||||||
Assets
|
||||||||||
Current
assets
|
||||||||||
Cash
and equivalents
|
$
|
14,295,503
|
$
|
5,504,862
|
||||||
Accounts
receivable
|
||||||||||
Trade,
net of allowances of $994,313 and $273,461 at March 31, 2008 and
June 30,
2007, respectively
|
25,406,355
|
8,242,044
|
||||||||
Bank
acceptance notes
|
4,197,091
|
-
|
||||||||
Other
|
4,794,735
|
85,708
|
||||||||
Inventories
|
5
|
19,594,824
|
15,723,704
|
|||||||
Deposits
|
-
|
82,758
|
||||||||
Prepaid
expenses
|
429,556
|
-
|
||||||||
Advances
to suppliers, net of allowance of $2,466,098 and $3,502,184 at March
31,
2008 and June 30, 2007, respectively
|
38,527,179
|
11,699,918
|
||||||||
Total
current assets
|
107,245,243
|
41,338,994
|
||||||||
Property
and equipment
|
||||||||||
Land
use rights
|
1,869,205
|
1,124,583
|
||||||||
Property
and equipment, net
|
6
|
35,657,690
|
29,238,227
|
|||||||
Construction-in-progress
|
7
|
12,344,841
|
10,355,763
|
|||||||
49,871,736
|
40,718,573
|
|||||||||
Goodwill
|
99,999
|
99,999
|
||||||||
Total
assets
|
$
|
157,216,978
|
$
|
82,157,566
|
||||||
Liabilities
and Stockholders' Equity
|
||||||||||
Current
liabilities
|
||||||||||
Accounts
payable and accrued liabilities
|
$
|
11,179,506
|
$
|
4,855,932
|
||||||
Advances
from customers
|
8
|
6,896,092
|
1,720,812
|
|||||||
Other
taxes payables
|
3,431,415
|
816,554
|
||||||||
Current
income taxes payable
|
4,373,885
|
1,892,866
|
||||||||
Deferred
income taxes payable
|
-
|
1,064,028
|
||||||||
Amounts
due to directors
|
9
|
2,807,353
|
-
|
|||||||
Current
portion of long-term debt
|
-
|
6,163,445
|
||||||||
Notes
payable
|
10
|
17,400,194
|
9,842,520
|
|||||||
Total
current liabilities
|
46,088,445
|
26,356,157
|
||||||||
Long-term
debt, net of current portion shown above
|
11
|
-
|
6,878,714
|
|||||||
Stockholders'
equity:
|
||||||||||
Preferred
stock: $0.001 per value, 8,000,000 shares authorized, no shares
outstanding at March 31, 2008 and June 30, 2007;
|
14
|
|||||||||
Common
stock: $0.001 par value, 62,000,000 shares authorized, 45,896,288
and
37,378,143 issued and outstanding March 31, 2008 and June 30,
2007
|
14
|
45,896
|
37,378
|
|||||||
Additional
paid-in capital
|
14
|
73,643,064
|
31,867,063
|
|||||||
Accumulated
other comprehensive income
|
7,745,138
|
2,192,160
|
||||||||
Retained
earnings
|
29,694,435
|
17,008,238
|
||||||||
Total
stockholders' equity
|
111,128,533
|
51,104,839
|
||||||||
Amounts
due from directors
|
9
|
-
|
(2,182,144
|
)
|
||||||
Total
liabilities and stockholders' equity
|
$
|
157,216,978
|
$
|
82,157,566
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
March 31,
|
March 31,
|
March 31,
|
March 31,
|
|||||||||||||
Notes
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Revenues
|
||||||||||||||||
Sales
revenues
|
$
|
18,723,842
|
$
|
11,610,673
|
$
|
59,189,060
|
$
|
37,121,603
|
||||||||
Cost
of goods sold
|
13,399,010
|
8,240,743
|
42,172,998
|
26,635,693
|
||||||||||||
Gross
profit
|
5,324,832
|
3,369,930
|
17,016,062
|
10,485,910
|
||||||||||||
Operating
expenses
|
||||||||||||||||
Selling
expenses
|
203,477
|
92,315
|
484,926
|
196,705
|
||||||||||||
Administrative
expenses
|
699,221
|
1,411,106
|
2,031,816
|
2,096,031
|
||||||||||||
Provision
for bad debts
|
10,150
|
-
|
661,930
|
-
|
||||||||||||
Depreciation
and amortization expense
|
17,155
|
11,062
|
46,585
|
32,324
|
||||||||||||
Total
operating expenses
|
930,003
|
1,514,483
|
3,225,257
|
2,325,060
|
||||||||||||
Income
from continuing operations
|
4,394,829
|
1,855,447
|
13,790,805
|
8,160,850
|
||||||||||||
Other
income (expense)
|
||||||||||||||||
Other
revenues
|
152,894
|
53,436
|
945,304
|
53,436
|
||||||||||||
Interest
and finance costs
|
(415,863
|
)
|
(196,787
|
)
|
(1,174,864
|
)
|
(514,869
|
)
|
||||||||
Total
other income (expense)
|
(262,969
|
)
|
(143,351
|
)
|
(229,560
|
)
|
(461,433
|
)
|
||||||||
Net
income from continuing operations before income
tax
|
4,131,860
|
1,712,096
|
13,561,245
|
7,699,417
|
||||||||||||
Provision
for (benefit from) income tax
|
12
|
|||||||||||||||
Current
|
1,598,777
|
1,196,573
|
2,047,911
|
2,091,886
|
||||||||||||
Deferred
|
(2,089,956
|
)
|
(880,694
|
)
|
(1,172,863
|
)
|
(966,099
|
)
|
||||||||
Total
income tax expense
|
(491,179
|
)
|
315,879
|
875,048
|
1,125,787
|
|||||||||||
Net
income before discontinued operations
|
4,623,039
|
1,396,217
|
12,686,197
|
6,573,630
|
||||||||||||
Net
income from discontinued operations
|
16
|
-
|
-
|
-
|
831,448
|
|||||||||||
Net
income
|
$
|
4,623,039
|
$
|
1,396,217
|
$
|
12,686,197
|
$
|
7,405,078
|
||||||||
Basic
earnings per share
|
15
|
|||||||||||||||
From
continuing operations
|
$
|
0.10
|
$
|
0.05
|
$
|
0.30
|
$
|
0.26
|
||||||||
From
discontinued operations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
0.03
|
||||||||
Total
|
$
|
0.10
|
$
|
0.05
|
$
|
0.30
|
$
|
0.29
|
||||||||
Basic
weighted average shares outstanding
|
45,896,288
|
28,946,086
|
42,088,128
|
25,815,157
|
||||||||||||
Diluted
earnings per share
|
15
|
|||||||||||||||
From
continuing operations
|
$
|
0.10
|
|
$
|
0.05
|
$
|
0.30
|
$
|
0.26
|
|||||||
From
discontinued operations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
0.03
|
||||||||
Total
|
$
|
0.10
|
|
$
|
0.05
|
$
|
0.30
|
$
|
0.29
|
|||||||
Diluted
weighted average shares outstanding
|
46,365,778
|
29,387,360
|
42,555,912
|
25,960,101
|
||||||||||||
The
Components of comprehensive income:
|
||||||||||||||||
Net
income
|
$
|
4,623,039
|
$
|
1,396,217
|
$
|
12,686,197
|
$
|
7,405,078
|
||||||||
Foreign
currency translation adjustment
|
3,548,639
|
335,929
|
5,552,978
|
990,914
|
||||||||||||
Comprehensive
income
|
$
|
8,171,678
|
$
|
1,732,146
|
$
|
18,239,175
|
$
|
8,395,992
|
2008
|
2007
|
||||||
Cash
flows from operating activities
|
|||||||
Net
Income
|
$
|
12,686,197
|
$
|
7,405,078
|
|||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities
|
|||||||
Depreciation
|
1,841,947
|
1,095,981
|
|||||
Less
income from discontinued operations - Oralabs, Inc
|
-
|
(831,448
|
)
|
||||
Allowance
for bad and doubtful debts
|
661,930
|
519,614
|
|||||
Warrants
issued for consulting
|
-
|
447,993
|
|||||
Net
changes in assets and liabilities:
|
|||||||
Accounts
receivable, net
|
(26,067,887
|
)
|
8,200,648
|
||||
Inventories
|
(2,616,526
|
)
|
(11,548,066
|
)
|
|||
Deposits
|
89,361
|
(225,887
|
)
|
||||
Prepayments
|
(429,556
|
)
|
-
|
||||
Advances
to suppliers
|
(25,893,725
|
)
|
(6,197,997
|
)
|
|||
Accounts
payable and accrued expenses
|
5,702,234
|
1,439,529
|
|||||
Advances
from customers
|
5,037,976
|
984,523
|
|||||
Other
taxes payable
|
2,657,687
|
108,450
|
|||||
Current
income taxes
|
2,329,987
|
2,513,992
|
|||||
Deferred
income taxes
|
(1,148,927
|
)
|
(960,262
|
)
|
|||
Net
cash (used in) provided by operating activities
|
(25,149,302
|
)
|
2,952,148
|
||||
Cash
flows from investing activities
|
|||||||
Purchases
of property and equipment including construction in
progress
|
(7,512,290
|
)
|
(10,329,164
|
)
|
|||
Net
cash (used in) investing activities
|
(7,512,290
|
)
|
(10,329,164
|
)
|
|||
Cash
flows from financing activities
|
|||||||
Sale
of common stock
|
44,375,282
|
19,416,533
|
|||||
Advances
from directors, net
|
2,464,868
|
(3,708,722
|
)
|
||||
Notes
payable proceeds
|
16,446,667
|
12,280,943
|
|||||
Repayments
of notes payable
|
(23,757,121
|
)
|
(10,204,006
|
)
|
|||
Net
cash provided by financing activities
|
39,529,696
|
17,784,748
|
|||||
Effect
of exchange rate
|
1,922,537
|
990,914
|
|||||
Net
increase in cash
|
8,790,641
|
11,398,646
|
|||||
Cash
and cash equivalents, beginning of period
|
5,504,862
|
186,955
|
|||||
Cash
and cash equivalents, end of period
|
$
|
14,295,503
|
$
|
11,585,601
|
|||
Supplemental
disclosure of cash flow information
|
|||||||
Interest
paid
|
$
|
1,174,864
|
$
|
572,089
|
|||
Taxes
paid
|
$
|
-
|
$
|
-
|
|||
Issuance
of 2,798,191 shares of stock for syndication fees
|
$
|
-
|
$
|
8,394,573
|
|||
Issuance
of 100,000 warrants for services
|
$
|
-
|
$
|
562,731
|
|||
Issuance
of 1,300,059 warrants for syndication fees
|
$
|
-
|
$
|
2,770,349
|
|||
Fixed
asset purchases in accounts payable
|
$ |
233,885
|
$ | - |
Accumulated
|
|||||||||||||||||||
Additional
|
Other
|
Total
|
|||||||||||||||||
Ordinary Shares
|
Paid-in
|
Comprehensive
|
Retained
|
Stockholders'
|
|||||||||||||||
Share
|
Amount
|
Capital
|
Income
|
Earnings
|
Equity
|
||||||||||||||
Balance
at June 30, 2006
|
24,283,725
|
24,284
|
1,375,716
|
745,583
|
9,535,577
|
11,681,160
|
|||||||||||||
Sale
of common stock
|
7,451,665
|
7,451
|
22,347,543
|
-
|
-
|
22,354,994
|
|||||||||||||
Syndication
fees
|
-
|
-
|
(3,028,116
|
)
|
-
|
-
|
(3,028,116
|
)
|
|||||||||||
Stock
issued for syndication fees
|
2,798,191
|
2,798
|
(2,798
|
)
|
-
|
-
|
-
|
||||||||||||
Anti-dilution
rights stock
|
827,962
|
828
|
(828
|
)
|
-
|
-
|
-
|
||||||||||||
Conversion
of debt to stock
|
2,016,600
|
2,017
|
6,773,759
|
6,775,776
|
|||||||||||||||
Warrants
issued for consulting
|
-
|
-
|
447,993
|
-
|
- | 447,993 | |||||||||||||
Capital
contribution from waiver of dividend
|
-
|
-
|
3,953,794
|
3,953,794
|
|||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
1,446,577
|
-
|
1,446,577
|
|||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
8,304,109
|
8,304,109
|
|||||||||||||
Less
discontinued operations sold to former shareholder
|
-
|
-
|
-
|
-
|
(831,448
|
)
|
(831,448
|
)
|
|||||||||||
Balance
at June 30, 2007
|
37,378,143
|
37,378
|
31,867,063
|
2,192,160
|
17,008,238
|
51,104,839
|
|||||||||||||
Sale
of common stock
|
7,100,000
|
7,100
|
44,498,650
|
-
|
-
|
44,505,750
|
|||||||||||||
Syndication
fees
|
-
|
-
|
(130,468
|
)
|
-
|
-
|
(130,468
|
)
|
|||||||||||
Make
good shares
|
2,000,000
|
2,000
|
(2,000
|
)
|
-
|
-
|
-
|
||||||||||||
Exercise
of warrants
|
189,205
|
189
|
(189
|
)
|
-
|
-
|
-
|
||||||||||||
Cancellation
of stock
|
(771,060
|
)
|
(771
|
)
|
(2,589,992
|
)
|
-
|
-
|
(2,590,763
|
)
|
|||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
5,552,978
|
-
|
5,552,978
|
|||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
12,686,197
|
12,686,197
|
|||||||||||||
Balance
at March 31, 2008
|
45,896,288
|
$
|
45,896
|
$
|
73,643,064
|
$
|
7,745,138
|
$
|
29,694,435
|
$
|
111,128,533
|
Buildings
|
10
years
|
Office
equipment
|
5
years
|
Motor
vehicles
|
5
years
|
Machineries
|
10
years
|
Customers
|
March 31,
2008
|
% to
sales
|
March 31,
2007
|
% to
sales
|
|||||||||
Shanghai
Changshuo Stainless Steel Company, Ltd
|
$
|
14,174,957
|
24
|
$
|
—
|
—
|
|||||||
Shanghai
Bayou Trade Co., Ltd.
|
10,854,529
|
18
|
—
|
—
|
|||||||||
Shanghai
Shengdejia Metal Products Limited
|
8,232,801
|
14
|
—
|
—
|
|||||||||
Sinosteel
Company Limited
|
—
|
—
|
4,805,195
|
13
|
March 31,
2008
|
June 30,
2007
|
||||||
Raw
materials
|
$
|
9,668,424
|
$
|
13,026,530
|
|||
Work
in progress
|
3,631,070
|
-
|
|||||
Finished
goods
|
6,295,330
|
2,697,174
|
|||||
$
|
19,594,824
|
$
|
15,723,704
|
March 31,
2008
|
June 30,
2007
|
||||||
Plant
and machinery
|
$
|
19,840,572
|
$
|
21,087,245
|
|||
Buildings
|
21,093,420
|
11,361,207
|
|||||
Motor
vehicles
|
359,482
|
283,534
|
|||||
Office
equipment
|
78,519
|
85,560
|
|||||
41,371,993
|
32,817,546
|
||||||
Less:
Accumulated depreciation
|
(5,714,303
|
)
|
(3,579,319
|
)
|
|||
$
|
35,657,690
|
$
|
29,238,227
|
March 31,
2008
|
June 30,
2007
|
||||||
Construction
costs of plant and machinery
|
$
|
12,344,841
|
$
|
10,355,763
|
Name
|
March
31,
2008
|
|
June 30, 2007
|
|
|||
Wo
Hing Li
|
$
|
2,852,704
|
$
|
(2,590,763
|
)
|
||
Hai
Sheng Chen
|
(45,351
|
)
|
408,619
|
||||
$
|
2,807,353
|
$
|
(2,182,144
|
)
|
March 31,
2008
|
June 30,
2007
|
||||||
Bank
loan dated September 22, 2005, due December 31, 2007 with a interest
rate
of 15% over the standard market rate set by the People’s Bank of China for
Renminbi loans, secured by land, buildings and machinery
|
$
|
—
|
$
|
9,842,520
|
|||
Bank
loan dated August 1, 2007, due in one year with a interest rate of
the
Singapore Interbank Offered Rate (SIBOR) plus 3% (5.72% at March
31,
2008)
|
5,300,000
|
—
|
|||||
Bank
loan dated August 1, 2007, due in one year with a interest rate of
13%
over the standard market rate set by the People’s Bank of China for
Renminbi loans, secured by land, buildings, plant and machinery (8.44%
at
March 31, 2008)
|
3,030,029
|
—
|
|||||
Bank
loan dated July 26, 2007, due in one year with a interest rate of
15% over
the standard market rate set by the People’s Bank of China for Renminbi
loans, secured by land, buildings, plant and machinery (8.59% at
March 31,
2008)
|
9,070,165
|
—
|
|||||
$
|
17,400,194
|
$
|
9,842,520
|
March
31,
2008
|
June 30,
2007
|
||||||
Long-term
debts:
|
|
|
|||||
Bank
loan dated October 14, 2004, due July 31, 2007, at an interest rate
of 3%
over the 10% of the standard market rate set by the People’s Bank of China
for Renminbi loans, secured by land, buildings and
machinery
|
$
|
—
|
$
|
6,163,445
|
|||
Bank
loan dated September 22, 2005, due August 31, 2009, at an interest
rate of
15% the standard market rate set by the People’s Bank of China for
Renminbi loans, secured by land, buildings and machinery
|
—
|
6,878,714
|
|||||
Total
long-term debt
|
—
|
13,042,159
|
|||||
Less:
Current portion of long-term debts
|
—
|
6,163,445
|
|||||
Long-term
debts
|
$
|
—
|
$
|
6,878,714
|
Three months ended
March 31,
|
Nine months ended
March 31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Tax
savings
|
$
|
1,715,718
|
$
|
315,879
|
$
|
3,158,499
|
$
|
1,023,932
|
|||||
Benefit
per share
|
|||||||||||||
Basic
|
$
|
0.04
|
$
|
0.01
|
$
|
0.10
|
$
|
0.04
|
|||||
Diluted
|
$
|
0.04
|
$
|
0.01
|
$
|
0.10
|
$
|
0.04
|
Deferred tax
assets and liabilities:
|
March 31,
2008
|
June 30,
2007
|
|||||
|
|
||||||
Book
depreciation in excess of tax depreciation
|
$
|
77,143
|
$
|
39,918
|
|||
Timing
differences resulting from reporting for tax
purposes
|
443,561
|
(1,103,946
|
)
|
||||
Net
deferred income tax asset (liability)
|
520,704
|
$
|
(1,064,028
|
)
|
|||
Valuation
allowance
|
(520,704
|
)
|
-
|
||||
|
-
|
$
|
(1,064,028
|
)
|
Three months ended
March 31,
|
Nine months ended
March 31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Computed tax
at the federal statutory rate of 34%
|
$
|
1,404,833
|
$
|
582,113
|
$
|
4,610,823
|
$
|
2,617,802
|
|||||
Less
adjustment to EIT statutory rate of 27%
|
(289,231
|
)
|
(119,847
|
)
|
(949,287
|
)
|
(538,959
|
)
|
|||||
Tax
effect of US losses not deductible in PRC
|
108,937
|
172,733
|
372,011
|
172,733
|
|||||||||
Deferred
taxes
|
-
|
(3,241
|
)
|
-
|
(101,857
|
)
|
|||||||
Benefit
of tax holiday
|
(1,715,718
|
)
|
(315,879
|
) |
(3,158,499
|
)
|
(1,023,932
|
)
|
|||||
Income
tax expense per books
|
$
|
(491,179
|
)
|
$
|
315,879
|
$
|
875,048
|
$
|
1,125,787
|
Three months ended
March 31,
|
Nine months ended
March 31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Income
tax expense (benefit) for the current year PRC
|
$
|
1,598,777
|
$
|
1,196,573
|
$
|
2,047,911
|
$
|
2,091,886
|
|||||
Deferred
income tax expense (benefit) - PRC
|
(2,089,956
|
)
|
(880,694
|
)
|
(1,172,863
|
)
|
(966,099
|
)
|
|||||
Income
tax expense per books
|
$
|
(491,179
|
)
|
$
|
315,879
|
$
|
875,048
|
$
|
1,125,787
|
Exercise
Price
|
Outstanding
June 30, 2007
|
Granted
|
Expired or
Exercised
|
Outstanding
March 31,
2008
|
Expiration Date
|
||||||||||||
$ |
3.00
|
1,300,059
|
-0-
|
(275,000
|
)
|
1,025,059
|
02/22/2011
|
||||||||||
$ |
3.60
|
100,000
|
-0-
|
-0-
|
100,000
|
02/22/2010
|
|||||||||||
$ |
8.45
|
-0-
|
1,420,000
|
-0-
|
1,420,000
|
11/06/2010
|
|||||||||||
$ |
7.38
|
-0-
|
225,600
|
-0-
|
225,600
|
11/06/2010
|
Income
|
Shares
|
Per Share
|
||||||||
(Numerator)
|
(Denominator)
|
Amount
|
||||||||
For
the three months ended March 31, 2008:
|
|
|
|
|||||||
Net
income
|
$
|
4,623,039
|
||||||||
Less
Net income from discontinued operations
|
$
|
—
|
||||||||
Basic
EPS income available to common shareholders
|
$
|
4,623,039
|
45,896,288
|
$
|
0.10
|
|||||
Effect
of dilutive securities:
|
||||||||||
Warrants
|
|
469,490
|
||||||||
Diluted
EPS income available to common shareholders
|
$
|
4,623,039
|
46,365,778
|
$
|
0.10
|
|||||
For
the three months ended March 31, 2007:
|
||||||||||
Net
income
|
$
|
1,396,217
|
||||||||
Less
net income from discontinued operations
|
$
|
-
|
||||||||
Basic
EPS income available to common shareholders
|
$
|
1,396,217
|
28,946,086
|
$
|
0.05
|
|||||
Effect
of dilutive securities:
|
||||||||||
Warrants
|
|
441,274
|
||||||||
Diluted
EPS income available to common shareholders
|
$
|
1,396,217
|
29,387,360
|
$
|
0.05
|
Income
|
Shares
|
Per Share
|
||||||||
(Numerator)
|
(Denominator)
|
Amount
|
||||||||
For
the nine months ended March 31, 2008:
|
|
|
|
|||||||
Net
income
|
$
|
12,686,197
|
||||||||
Less
Net income from discontinued operations
|
$
|
-
|
||||||||
Basic
EPS income available to common shareholders
|
$
|
12,686,197
|
42,088,128
|
$
|
0.30
|
|||||
Effect
of dilutive securities:
|
||||||||||
Warrants
|
|
467,784
|
||||||||
Diluted
EPS income available to common shareholders
|
$
|
12,686,197
|
42,555,912
|
$
|
0.30
|
|||||
For
the nine months ended March 31, 2007:
|
||||||||||
Net
income
|
$
|
7,405,078
|
||||||||
Less
net income from discontinued operations
|
$
|
990,914
|
|
|||||||
Basic
EPS income available to common shareholders
|
$
|
8,395,992
|
25,815,157
|
$
|
0.26
|
|||||
Effect
of dilutive securities:
|
||||||||||
Warrants
|
|
144,944
|
||||||||
Diluted
EPS income available to common shareholders
|
$
|
8,395,992
|
25,960,101
|
$
|
0.29
|
Three months ended:
|
Nine months ended
|
||||||||||||
March 31,
|
March 31,
|
March 31
|
March
31
|
||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
|
|
||||||||||||
Revenues
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
9,404,000
|
|||||
Income
before tax
|
-0-
|
-0-
|
-0-
|
1,023,000
|
|||||||||
Income
taxes
|
-0-
|
-0-
|
-0-
|
192,000
|
|||||||||
Income
from discontinued operations
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
831,000
|
· |
Overview
of the Company’s Business
-
This section provides a general description of the Group’s business, as
well as recent developments that have either occurred during the
nine
months ended March 31, 2008 and are important in understanding the
results
of operations and financial condition or disclose known
trends.
|
· |
Results
of Operations
-
This section provides an analysis of our results of operations for
the
three and nine months ended March 31, 2008 and 2007. This discussion
includes a brief description of significant transactions and events
that
have an impact on the comparability of the results being
analyzed.
|
· |
Liquidity
and Capital Resources
-
This section provides an analysis of the Group’s cash flows for the nine
months ended March 31, 2008 and 2007. Included in this section is a
discussion of the Group’s outstanding debt and the financial capacity
available to fund the Group’s future commitments and
obligations.
|
Three Months Ended March 31,
|
||||||||||||||||||||||
2008
|
2007
|
Period-on-period
|
||||||||||||||||||||
Product category
|
Quantity
(tons)
|
$ Amount
|
% of sales
|
Quantity
(tons)
|
$ Amount
|
% of
sales
|
Qty.
Variance
|
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||
Low
carbon cold-rolled
|
7,196
|
5,362,597
|
28.7
|
8,739
|
5,233,213
|
45.0
|
(1,543
|
)
|
||||||||||||||
Low
carbon hard rolled
|
5,178
|
3,562,724
|
19.0
|
378
|
262,340
|
2.3
|
4,800
|
|||||||||||||||
High-carbon
cold-rolled
|
3,270
|
4,011,039
|
21.4
|
2,309
|
3,583,283
|
30.9
|
961
|
|||||||||||||||
High-carbon
hot-rolled
|
1,592
|
1,447,782
|
7.7
|
4,511
|
2,334,225
|
20.1
|
(2,919
|
)
|
||||||||||||||
Sales
of scrap metal
|
—
|
296,863
|
1.6
|
—
|
—
|
—
|
—
|
|||||||||||||||
Subcontracting
income
|
7,037
|
4,042,838
|
21.6
|
—
|
—
|
—
|
7,037
|
|||||||||||||||
High
end cold- rolled
|
—
|
—
|
—
|
173
|
197,612
|
1.7
173
|
(173
|
)
|
||||||||||||||
Total
|
24,273
|
18,723,842
|
100.0
|
16,110
|
11,610,673
|
100
|
Three Months Ended
March 31,
|
|||||||||||||
Average selling prices
|
2008
|
2007
|
Variance
|
||||||||||
|
$
|
$
|
$
|
%
|
|||||||||
Low-carbon
cold-rolled
|
745
|
599
|
146
|
24.4
|
|||||||||
Low-carbon
hard rolled
|
688
|
694
|
(6
|
)
|
(0.9
|
)
|
|||||||
High-carbon
cold-rolled
|
1,227
|
1,552
|
(325
|
)
|
(20.9
|
)
|
|||||||
High-carbon
hot-rolled
|
909
|
517
|
392
|
75.8
|
|||||||||
Subcontracting
income
|
575
|
—
|
575
|
100
|
|||||||||
High-end
cold-rolled
|
—
|
1,142
|
(1,142
|
)
|
(100
|
))
|
|
Three Months Ended March 31
|
||||||||||||
Customers
|
2008 ($ )
|
% to sales
|
2007 ($ )
|
% to sales
|
|||||||||
|
|
|
|
|
|||||||||
Shanghai
Baosteel Stainless Steel Processing and Distribution Co., Ltd.
|
3,906,047
|
21
|
*
|
*
|
|||||||||
Shanghai
Bayou Trading Co., Ltd
|
1,628,451
|
9
|
*
|
*
|
|||||||||
Shanghai
Shengdejia Metal Products Co., Ltd.
|
1,223,316
|
6
|
*
|
*
|
|||||||||
Shanghai
Changshuo Stainless Steel Processing Co. Ltd.
|
706,998
|
4
|
*
|
*
|
|||||||||
Unimax
& Far Corporation
|
526,322
|
3
|
*
|
*
|
|||||||||
Sinosteel
Company Limited
|
*
|
*
|
1,585,399
|
14
|
|||||||||
Hangzhou
Relian Company Limited
|
*
|
*
|
1,373,785
|
12
|
|||||||||
Nuoying
International (HK) Co. Limited
|
*
|
*
|
1,411,803
|
12
|
|||||||||
Hubei
Dafan Vehicle Enterprise Co. Limited
|
*
|
*
|
475,908
|
4
|
|||||||||
Shanghai
Bayou Industrial Limited
|
*
|
*
|
319,957
|
3
|
|||||||||
|
7,991,134
|
43
|
5,166,852
|
45
|
|||||||||
Others
|
10,732,709
|
57
|
6,443,821
|
55
|
|||||||||
Total
|
18,723,842
|
100
|
11,610,673
|
100
|