x
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
14-1623047
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
Class of
Securities
|
Shares
Outstanding
|
|
Common Stock, $0.001 par
value
|
46,562,955
|
Item
1.
|
Financial
Statements
|
1
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
27
|
Item
4.
|
Controls
and Procedures
|
27
|
Item
1.
|
Legal
Proceedings
|
28
|
Item
1A.
|
Risk
Factors
|
28
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
28
|
Item
3.
|
Defaults
Upon Senior Securities
|
28
|
Item
4.
|
(Removed
and Reserved)
|
28
|
Item
5.
|
Other
Information
|
28
|
Item
6.
|
Exhibits
|
28
|
ITEM
1.
|
FINANCIAL
STATEMENTS.
|
Page(s)
|
|
Consolidated
Balance Sheets (unaudited) 2
|
1
|
Consolidated
Statements of Operations and Comprehensive Income
(unaudited) 3
|
2
|
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) 4 |
3
|
Consolidated Statements of Cash Flows (unaudited) 5 |
4
|
Notes to Consolidated Financial Statements (unaudited) 6-18 |
5
|
China
Precision Steel, Inc. and Subsidiaries
|
Consolidated
Balance Sheets
|
September
30,
|
June
30,
|
|||||||||||
Notes
|
2010
|
2010
|
||||||||||
Assets
|
(Unaudited)
|
|||||||||||
Current
assets
|
||||||||||||
Cash
and cash equivalents
|
$ | 12,653,057 | $ | 29,036,706 | ||||||||
Accounts
receivable
|
||||||||||||
Trade,
net of allowances of $1,027,410 and $1,013,744
|
||||||||||||
at
September 30, 2010 and June 30, 2010, respectively
|
5
|
33,814,865 | 39,598,845 | |||||||||
Bills
receivable
|
4,789,873 | 4,760,816 | ||||||||||
Other
|
1,146,468 | 1,369,219 | ||||||||||
Inventories
|
6
|
31,392,194 | 28,522,198 | |||||||||
Prepaid
expenses
|
570,650 | 534,882 | ||||||||||
Advances
to suppliers, net of allowance of $1,665,573 and
|
||||||||||||
$1,643,419
at September 30, 2010 and June 30, 2010, respectively
|
7
|
26,762,160 | 13,959,206 | |||||||||
Total
current assets
|
111,129,267 | 117,781,872 | ||||||||||
Property,
plant and equipment
|
||||||||||||
Property,
plant and equipment, net
|
8
|
75,802,793 | 69,907,194 | |||||||||
Construction-in-progress
|
9
|
3,772,151 | 3,983,450 | |||||||||
79,574,944 | 73,890,644 | |||||||||||
Intangible
assets, net
|
10
|
1,859,332 | 1,844,995 | |||||||||
Goodwill
|
99,999 | 99,999 | ||||||||||
Total
assets
|
$ | 192,663,542 | $ | 193,617,510 | ||||||||
Liabilities
and Stockholders' Equity
|
||||||||||||
Current
liabilities
|
||||||||||||
Short-term
loans
|
11
|
$ | 26,263,965 | $ | 25,965,421 | |||||||
Accounts
payable and accrued liabilities
|
6,197,537 | 9,952,109 | ||||||||||
Advances
from customers
|
2,811,901 | 3,266,377 | ||||||||||
Other
taxes payables
|
3,974,265 | 3,868,220 | ||||||||||
Current
income taxes payable
|
5,657,572 | 5,393,000 | ||||||||||
Total
current liabilities
|
44,905,240 | 48,445,127 | ||||||||||
Long-term
loans
|
12
|
18,319,584 | 18,075,914 | |||||||||
Stockholders'
equity:
|
||||||||||||
Preferred
stock: $0.001 per value, 8,000,000 shares
|
||||||||||||
authorized,
no shares issued and outstanding
|
||||||||||||
at
September 30, 2010 and June 30, 2010, respectively
|
||||||||||||
Common
stock: $0.001 par value, 62,000,000 shares
|
||||||||||||
authorized,
46,562,955 and 46,562,955 issued and outstanding
|
||||||||||||
at
September 30, 2010 and June 30, 2010, respectively
|
46,563 | 46,563 | ||||||||||
Additional
paid-in capital
|
75,642,383 | 75,642,383 | ||||||||||
Accumulated
other comprehensive income
|
12,328,713 | 10,630,975 | ||||||||||
Retained
earnings
|
41,421,059 | 40,776,548 | ||||||||||
Total
stockholders' equity
|
129,438,718 | 127,096,469 | ||||||||||
Total
liabilities and stockholders' equity
|
$ | 192,663,542 | $ | 193,617,510 |
The
accompanying notes are an integral part of these consolidated financial
statements.
|
China
Precision Steel, Inc. and Subsidiaries
|
|||||
Consolidated
Statements of Operations
|
|||||
For
the Three Months Ended September 30, 2010 and 2009
|
|||||
(Unaudited)
|
|||||
Notes
|
2010
|
2009
|
||||||||||
Sales
revenues
|
$ | 33,896,455 | $ | 17,041,989 | ||||||||
Cost
of goods sold
|
31,512,370 | 16,338,630 | ||||||||||
Gross
profit
|
2,384,085 | 703,359 | ||||||||||
Operating
expenses
|
||||||||||||
Selling
expenses
|
110,205 | 31,809 | ||||||||||
Administrative
expenses
|
871,470 | 578,698 | ||||||||||
Allowance
for bad and doubtful debts
|
- | 117,117 | ||||||||||
Depreciation
and amortization expense
|
44,160 | 43,738 | ||||||||||
Total
operating expenses
|
1,025,835 | 771,362 | ||||||||||
Income/(loss)
from operations
|
1,358,250 | (68,003 | ) | |||||||||
Other
income/(expense)
|
||||||||||||
Other
revenues
|
1,518 | 19,922 | ||||||||||
Interest
and finance costs
|
(465,113 | ) | (228,343 | ) | ||||||||
Total
other expense
|
(463,595 | ) | (208,421 | ) | ||||||||
Income/(loss)
from operations before income tax
|
894,655 | (276,424 | ) | |||||||||
Provision/(benefit)
for income tax
|
14
|
|||||||||||
Current
|
250,144 | (1,233 | ) | |||||||||
Total
income tax expense/(benefit)
|
250,144 | (1,233 | ) | |||||||||
Net
income/(loss)
|
$ | 644,511 | $ | (275,191 | ) | |||||||
Basic
earnings/(loss) per share
|
15
|
$ | 0.01 | $ | (0.01 | ) | ||||||
Basic
weighted average shares outstanding
|
46,562,955 | 46,562,955 | ||||||||||
Diluted
earnings/(loss) per share
|
15
|
$ | 0.01 | $ | (0.01 | ) | ||||||
Diluted
weighted average shares outstanding
|
46,562,955 | 46,562,955 | ||||||||||
Components
of comprehensive income/(loss):
|
||||||||||||
Net
income/(loss)
|
$ | 644,511 | $ | (275,191 | ) | |||||||
Foreign
currency translation adjustment
|
1,697,739 | 75,192 | ||||||||||
Comprehensive
income/(loss)
|
$ | 2,342,249 | $ | (199,999 | ) |
The
accompanying notes are an integral part of these consolidated financial
statements.
|
China
Precision Steel, Inc. and Subsidiaries
|
||||||||||||||||||||||||
Consolidated
Statements of Changes in Stockholders' Equity
|
||||||||||||||||||||||||
For
the Three Months Ended September 30, 2010
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Other
|
Total
|
||||||||||||||||||||||
Ordinary
Shares
|
Paid-in
|
Comprehensive
|
Retained
|
Stockholders'
|
||||||||||||||||||||
Share
|
Amount
|
Capital
|
Income
|
Earnings
|
Equity
|
|||||||||||||||||||
Balance
at June 30, 2010
|
- | 46,563 | 75,642,383 | 10,630,975 | 40,776,548 | 127,096,469 | ||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | 1,697,738 | - | 1,697,738 | ||||||||||||||||||
Net
income
|
- | - | - | - | 644,511 | 644,511 | ||||||||||||||||||
Balance
at September 30, 2010 (Unaudited)
|
- | $ | 46,563 | $ | 75,642,383 | $ | 12,328,713 | $ | 41,421,059 | $ | 129,438,718 |
The
accompanying notes are an integral part of these consolidated financial
statements.
|
Consolidated
Statements of Cash Flows
|
||||||||
For
the Three Months Ended September 30, 2010 and 2009
|
||||||||
(Unaudited)
|
||||||||
2010
|
2009
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income/(loss)
|
$ | 644,511 | $ | (275,191 | ) | |||
Adjustments
to reconcile net income to net cash provided by operating
activities
|
||||||||
Depreciation
and amortization
|
1,918,682 | 1,210,759 | ||||||
Allowance
for bad and doubtful debts
|
- | 117,117 | ||||||
Inventory
provision
|
- | 42,534 | ||||||
Net
changes in assets and liabilities:
|
||||||||
Accounts
receivable, net
|
6,594,117 | 661,741 | ||||||
Inventories
|
(2,485,506 | ) | (3,229,520 | ) | ||||
Prepaid
expenses
|
(33,514 | ) | 16,231 | |||||
Advances
to suppliers
|
(12,614,539 | ) | 723,173 | |||||
Accounts
payable and accrued expenses
|
(3,886,917 | ) | 2,149,699 | |||||
Advances
from customers
|
(498,508 | ) | 432,425 | |||||
Other
taxes payable
|
53,900 | (2,151,427 | ) | |||||
Income
taxes payable
|
191,872 | - | ||||||
Net
cash (used in) operating activities
|
(10,115,902 | ) | (302,459 | ) | ||||
Cash
flows from investing activities
|
||||||||
Deposit
for plant and machinery
|
- | (2,197,384 | ) | |||||
Purchase
of property, plant and equipment, including construction
in progress
|
(6,542,428 | ) | (749,049 | ) | ||||
Net
cash (used in) investing activities
|
(6,542,428 | ) | (2,946,433 | ) | ||||
Cash
flows from financing activities
|
||||||||
Loan
proceeds
|
- | 3,735,552 | ||||||
Repayments
of short-term loans
|
(51,479 | ) | (439,477 | ) | ||||
Net
cash (used in)/provided by financing activities
|
(51,479 | ) | 3,296,075 | |||||
Effect
of exchange rate
|
326,160 | 6,641 | ||||||
Net
(decrease)/increase in cash
|
(16,383,649 | ) | 53,824 | |||||
Cash
and cash equivalents, beginning of period
|
29,036,706 | 13,649,587 | ||||||
Cash
and cash equivalents, end of period
|
$ | 12,653,057 | $ | 13,703,411 |
The
accompanying notes are an integral part of these consolidated financial
statements.
|
Plant
and machinery
|
10 years
|
Buildings
|
10 years
|
Motor
vehicles
|
5 years
|
Office
equipment
|
5 years
|
a. Customers
|
2010
|
% to
sales
|
2009
|
% to
sales
|
||||||||||||
Shanghai
Shengdejia Metal Co. Ltd
|
9,097,037
|
27
|
-*
|
-*
|
||||||||||||
Shanghai
Changshuo Steel Company, Ltd
|
5,825,690
|
17
|
3,848,354
|
23
|
||||||||||||
Zhangjiagang
Gangxing Innovative Construction Material Co., Ltd.
|
-*
|
-*
|
1,735,287
|
10
|
||||||||||||
Shaoxing
Wancheng Metal Plate Co., Ltd
|
-*
|
-*
|
1,768,383
|
10
|
b. Suppliers
|
2010
|
% to
consumption
|
2009
|
% to
consumption
|
||||||||||||
Dachang
Huizu Baosheng Steel Products Co., Ltd.
|
8,767,582
|
24
|
-*
|
-*
|
||||||||||||
Zhejinag
Wuchan Metal Group Co., Ltd.
|
8,209,383
|
22
|
-*
|
-*
|
||||||||||||
Hangzhou
Steel Materials Co., Ltd.
|
7,576,264
|
21
|
-*
|
-*
|
||||||||||||
Guangzhou
Zhujiang Steel Co., Ltd.
|
-*
|
-*
|
4,679,267
|
31
|
||||||||||||
Wuxi
Hangda Trading Co., Ltd.
|
-*
|
-*
|
2,876,549
|
19
|
||||||||||||
BaoSteel
Steel Products Trading Co. Ltd
|
-*
|
-*
|
2,654,920
|
17
|
At cost:
|
September 30,
2010
|
June 30,
2010
|
||||||
Raw materials
|
$ | 7,097,739 | $ | 5,551,003 | ||||
Work
in progress
|
12,092,822 | 15,443,410 | ||||||
Finished
goods
|
9,238,055 | 4,291,384 | ||||||
Consumable
items
|
2,963,578 | 3,279,217 | ||||||
31,392,194 | 28,565,014 | |||||||
Less:
provision
|
- | (42,816 | ) | |||||
|
$ | 31,392,194 | $ | 28,522,198 |
September 30,
2010
|
June 30,
2010
|
|||||||
Plant
and machinery
|
$ | 70,078,172 | $ | 62,486,750 | ||||
Buildings
|
22,260,841 | 21,964,748 | ||||||
Motor
vehicles
|
675,425 | 554,368 | ||||||
Office
equipment
|
500,002 | 472,537 | ||||||
93,514,440 | 85,478,403 | |||||||
Less:
Accumulated depreciation
|
(17,711,647 | ) | (15,571,209 | ) | ||||
|
$ | 75,802,793 | $ | 69,607,194 |
|
|
September 30,
2010
|
|
|
June 30,
2010
|
|
||
Construction
costs
|
$
|
3,772,151
|
$
|
3,983,450
|
|
September 30,
2010
|
June 30,
2010
|
||||||
Bank
loan dated June 18, 2010, due July 31, 2011 with an interest rate at 115%
of the standard market rate set by the People’s Bank of China for Renminbi
loans (6.11% at September 30, 2010) (Notes 8 and 10)
|
7,881,612
|
5,300,000
|
||||||
Bank
loan dated July 23, 2009, due July 31, 2010 with an interest rate at 115%
of the standard market rate set by the People’s Bank of China for Renminbi
loans (6.11% at September 30, 2010) (Notes 8 and 10)
|
-
|
2,527,573
|
||||||
Bank
loan dated June 18, 2010, due July 31, 2011 with an interest rate at 115%
of the standard market rate set by the People’s Bank of China for Renminbi
loans (6.11% at September 30, 2010) (Notes 6, 8 and 10)
|
18,382,353
|
18,137,848
|
||||||
$
|
26,263,965
|
$
|
25,965,421
|
|
September 30,
2010
|
June 30,
2010
|
||||||
Bank
loan dated June 23, 2010, due June 22, 2017 with an interest rate of the
London Interbank Offered Rate (“LIBOR”) plus 4.5% (5.27775% at September
30, 2010) (Note 8)
|
$ |
18,319,584
|
$
|
18,075,914
|
2011
|
$
|
-
|
||
2012
|
$
|
3,663,917
|
||
2013
|
$
|
3,663,917
|
||
2014
|
$
|
3,663,917
|
||
2015
|
$
|
3,663,917
|
||
2016
|
$
|
3,663,916
|
||
Total
|
$
|
18,319,584
|
Exercise
Price
|
Outstanding
June 30, 2010
|
Granted
|
Expired or
Exercised
|
Outstanding
September 30,
2010
|
Expiration Date
|
||||||||||||||
$
|
7.38
|
225,600
|
-0-
|
-0-
|
225,600
|
November 5, 2010
|
|||||||||||||
$
|
3.00
|
358,392
|
-0-
|
-0-
|
358,392
|
February 22, 2011
|
|||||||||||||
$
|
8.45
|
1,420,000
|
-0-
|
-0-
|
1,420,000
|
May 5, 2013
|
Three
months ended September 30,
|
||||||||
2010
|
2009
|
|||||||
Tax
savings
|
$
|
50,295
|
$
|
197,198
|
||||
Benefit
per share
|
||||||||
Basic
|
$
|
0.00
|
$
|
0.00
|
||||
Diluted
|
$
|
0.00
|
$
|
0.00
|
Deferred tax assets and liabilities:
|
September 30,
2010
|
June 30,
2010
|
||||||
Net
operating loss carried forward
|
$ | 2,031,538 | $ | 1,938,915 | ||||
Temporary
differences resulting from allowances
|
1,945,180 | 1,906,348 | ||||||
Net
deferred income tax asset
|
3,976,718 | 3,845,263 | ||||||
Valuation
allowance
|
(3,976,718 | ) | (3,845,263 | ) | ||||
|
$ | - | $ | - |
Three
months ended September 30,
|
||||||||
2010
|
2009
|
|||||||
Computed tax at
the PRC statutory rate of 25%
|
$ | 197,611 | $ | (93,565 | ) | |||
Valuation
allowance
|
92,637 | 290,897 | ||||||
Income
not subject to tax
|
- | (134 | ) | |||||
Overprovision
|
10,191 | (1,233 | ) | |||||
Benefit
of tax holiday
|
(50,295 | ) | (197,198 | ) | ||||
Income
tax expense per books
|
$ | 250,144 | (1,233 | ) |
Three
months ended September 30,
|
||||||||
2010
|
2009
|
|||||||
Income
tax expense for the year - PRC
|
$ | 250,144 | $ | (1,233 | ) | |||
Deferred
income tax benefit - PRC
|
- | - | ||||||
Income
tax expense/(benefit) per books
|
$ | 250,144 | $ | (1,233 | ) |
Income/(loss)
|
Shares
|
Per Share
|
|||||||
(Numerator)
|
(Denominator)
|
Amount
|
|||||||
For
the three months ended September 30, 2010:
|
|||||||||
Net
income
|
$
|
644,511
|
|||||||
Basic
EPS income available to common shareholders
|
$
|
644,511
|
46,562,955
|
$
|
0.01
|
||||
Effect
of dilutive securities:
|
|||||||||
Warrants
|
-
|
||||||||
Diluted
EPS income available to common shareholders
|
$
|
644,511
|
46,562,955
|
$
|
0.01
|
||||
For
the three months ended September 30, 2009:
|
|||||||||
Net
loss
|
$
|
(275,191
|
)
|
||||||
Basic
EPS loss available to common shareholders
|
$
|
(275,191
|
)
|
46,562,955
|
$
|
(0.01
|
)
|
||
Effect
of dilutive securities:
|
|||||||||
Warrants
|
|
--
|
|||||||
Diluted
EPS loss available to common shareholders
|
$
|
(275,191
|
)
|
46,562,955
|
$
|
(0.01
|
)
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
|
· |
“CPSL,”
“Company,” “Group,” “we,” “us” or “our” are to China Precision Steel,
Inc., a Delaware corporation, and its direct and indirect
subsidiaries;
|
·
|
“PSHL”
are to our subsidiary Partner Success Holdings Limited, a BVI
company;
|
·
|
“Blessford
International” are to our subsidiary Blessford International Limited, a
BVI company;
|
· |
“Shanghai
Blessford” are to our subsidiary Shanghai Blessford Alloy Company Limited,
a PRC company;
|
·
|
“Chengtong”
are to our subsidiary Shanghai Chengtong Precision Strip Company Limited,
a PRC company;
|
·
|
“Tuorong”
are to our subsidiary Shanghai Tuorong Precision Strip Company Limited, a
PRC company;
|
·
|
“SEC”
are to the United States Securities and Exchange
Commission;
|
·
|
“Securities
Act” are to the Securities Act of 1933, as
amended;
|
·
|
“Exchange
Act” are to the Securities Exchange Act of 1934, as
amended;
|
·
|
“RMB”
are to Renminbi, the legal currency of
China;
|
·
|
“U.S.
dollar,” “USD,” “US$” and “$” are to the legal currency of the United
States;
|
·
|
“China,”
“Chinese” and “PRC” are to the People’s Republic of China;
and
|
·
|
“BVI”
are to the British Virgin Islands.
|
●
|
Revenues:
Our revenues were approximately $33.9 million for the first quarter, an
increase of 98.9% from last year.
|
●
|
Gross
Margin: Gross margin was 7.0% for the first quarter, as compared to
4.1% last year.
|
●
|
Income/(loss)
from operations before tax: Income from operations before tax was
approximately $0.9 million for the first quarter, as compared to loss from
operations before tax of $0.3 million last
year.
|
●
|
Net
Income/(loss): Net income was approximately $0.6 million for the
third quarter, as compared to a net loss of approximately $0.3 million
last year.
|
●
|
Fully
diluted Income/(loss) per share: Fully diluted income per share was
$0.01 for the first quarter compared to a fully diluted loss per share of
$0.01 last year.
|
Three
months Ended
September 30, 2010 |
Three
months Ended
September 30, 2009 |
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Revenues
|
33,896,455 | 100.0 | 17,041,989 | 100.0 | ||||||||||||
Cost
of sales (including depreciation and amortization)
|
$ | 31,512,370 | 93.0 | 16,338,630 | 95.9 | |||||||||||
Gross
profit
|
2,384,085 | 7.0 | 703,359 | 4.1 | ||||||||||||
Selling
and marketing
|
110,205 | 0.3 | 31,809 | 0.2 | ||||||||||||
Administrative
expenses
|
871,470 | 2.6 | 578,698 | 3.4 | ||||||||||||
Allowance
for bad and doubtful debts
|
- | - | 117,117 | 0.7 | ||||||||||||
Depreciation
and amortization
|
44,160 | 0.1 | 43,738 | 0.3 | ||||||||||||
Income/(loss)
from operations
|
1,358,249 | 4.0 | (68,003 | ) | (0.4 | ) | ||||||||||
Total
other expense
|
(463,595 | ) | (1.4 | ) | (208,421 | ) | (1.2 | ) | ||||||||
Income/(loss)
from operations before income tax
|
894,654 | 2.6 | (276,424 | ) | (1.6 | ) | ||||||||||
Income
tax expense/(benefit)
|
250,144 | 0.7 | (1,233 | ) |
<0.1
|
|||||||||||
Net
income/(loss)
|
644,511 | 1.9 | (275,191 | ) | (1.6 | ) | ||||||||||
Basic earnings/(loss) per
share
|
$ | 0.01 | (0.01 | ) | ||||||||||||
Diluted
earnings/(loss) per share
|
$ | 0.01 | (0.01 | ) |
2010
|
2009
|
Period-on-Period
Qty.
|
||||||||||||||||||||||||||
Product
Category
|
Quantity
(tons)
|
$
Amount
|
%
of Sales
|
Quantity
(tons)
|
$
Amount
|
%
of Sales
|
Variance
|
|||||||||||||||||||||
Low
carbon hard rolled
|
3,625 | 2,800,212 | 8 | 4,560 | 3,064,585 | 18 | (935 | ) | ||||||||||||||||||||
Low
carbon cold-rolled
|
23,498 | 21,082,008 | 62 | 10,633 | 6,361,255 | 37 | 12,865 | |||||||||||||||||||||
High-carbon
hot-rolled
|
1,652 | 1,402,884 | 4 | 1,981 | 1,556,728 | 9 | (329 | ) | ||||||||||||||||||||
High-carbon
cold-rolled
|
5,472 | 5,136,462 | 15 | 2,497 | 4,321,739 | 25 | 2,975 | |||||||||||||||||||||
Subcontracting
income
|
8,266 | 3,145,202 | 10 | 2,622 | 1,648,876 | 10 | 5,644 | |||||||||||||||||||||
Sales
of scrap metal
|
- | 329,687 | 1 | - | 88,806 | 1 | - | |||||||||||||||||||||
Total
|
42,513 | 33,896,455 | 100 | 22,293 | 17,041,989 | 100 | 20,220 |
Three
Months Ended September 30,
|
||||||||||||||||
2010
|
2009
|
Variance
|
||||||||||||||
Average
Selling Prices
|
($)
|
($)
|
($)
|
(%)
|
||||||||||||
Low-carbon
hard rolled
|
772
|
672
|
100
|
15
|
||||||||||||
Low-carbon
cold-rolled
|
897
|
598
|
299
|
50
|
||||||||||||
High-carbon
hot-rolled
|
849
|
786
|
63
|
8
|
||||||||||||
High-carbon
cold-rolled
|
939
|
1,731
|
(792
|
)
|
(46
|
)
|
||||||||||
Subcontracting
income
|
380
|
629
|
(249
|
)
|
(40
|
)
|
Three
Months Ended September 30,
|
||||||||||||||||
2010
|
2009
|
|||||||||||||||
Customers
|
$
|
%
of Sales
|
$
|
%
of Sales
|
||||||||||||
Shanghai
Shengdejia Metal Products Co., Ltd.
|
9,097,037
|
27
|
*
|
*
|
||||||||||||
Shanghai
Changshuo Steel Co., Ltd.
|
5,825,690
|
17
|
3,848,354
|
23
|
||||||||||||
SUMEC
International Technology Co., Ltd.
|
2,590,163
|
8
|
1,046,660
|
6
|
||||||||||||
Zhangjiagang
Gangxing Innovative Construction Materials
|
2,453,522
|
7
|
1,735,287
|
10
|
||||||||||||
Zhejiang
Zhongwei Materials Co., Ltd.
|
2,298,702
|
7
|
*
|
*
|
||||||||||||
Shaoxing
Wangheng Metal Plate Co., Ltd.
|
*
|
*
|
1,768,383
|
10
|
||||||||||||
Unimax
& Far Corporation
|
*
|
*
|
1,069,184
|
6
|
||||||||||||
22,265,144
|
66
|
9,467,868
|
55
|
|||||||||||||
Others
|
11,631,311
|
34
|
7,574,121
|
45
|
||||||||||||
Total
|
33,896,455
|
100
|
17,041,989
|
100
|
Three
Months Ended September 30,
|
||||||||||||||||
2010
|
2009
|
Variance
|
||||||||||||||
($)
|
($)
|
($)
|
(%)
|
|||||||||||||
Cost
of goods sold
|
||||||||||||||||
-
Raw materials
|
28,570,179 | 14,305,303 | 14,264,876 | 99.7 | ||||||||||||
-
Direct labor
|
129,859 | 97,832 | 32,027 | 32.7 | ||||||||||||
-
Manufacturing overhead
|
2,812,332 | 1,935,495 | 876,837 | 45.3 | ||||||||||||
31,512,370 | 16,338,630 | 15,173,740 | 92.9 | |||||||||||||
Cost
per unit sold
|
||||||||||||||||
Total
units sold (tons)
|
42,513 | 22,293 | 20,220 | 90.7 | ||||||||||||
Average
cost per unit sold ($/ton)
|
741 | 733 | 8 | 1.1 |
·
|
an
increase in cost of raw materials per unit sold of $30, or 4.7%, from $642
for the period ended September 30, 2009 compared to $672 for the
period ended September 30, 2010;
|
·
|
a
decrease in direct labor per unit sold of $1, or 25.0%, from $4 for the
period ended September 30, 2009 compared to $3 for the period ended
September 30, 2010;
|
·
|
a
decrease in factory overhead per unit sold of $21, or 24.1%, from $87 for
the period ended September 30, 2009 compared to $66 for the period ended
September 30, 2010.
|
Three
Months Ended September 30,
|
||||||||
2010
|
2009
|
|||||||
Net
cash used in operating activities
|
$
|
(10,115,902
|
)
|
$
|
(302,459
|
)
|
||
Net
cash used in investing activities
|
(6,542,428
|
)
|
(2,946,433
|
)
|
||||
Net
cash (used in)/provided by financing activities
|
(51,479
|
)
|
3,296,075
|
|||||
Net
cash flow
|
(16,383,649
|
)
|
53,824
|
US$
|
Total
|
Current
|
1 to 30
days
|
31 to
90 days
|
91 to 180
days
|
181 to 360
days
|
over
1 year
|
|||||||||||||||||||||
TOTAL
|
34,842,275
|
14,983,167
|
2,114,872
|
4,631,085
|
12,009,620
|
209,961
|
893,570
|
|||||||||||||||||||||
%
|
100
|
43
|
6
|
13
|
34
|
1
|
3
|
US$
|
Total
|
Current
|
1 to 30
days
|
31 to
90 days
|
91 to 180
days
|
181 to 360
days
|
over
1 year
|
|||||||||||||||||||||
TOTAL
|
40,612,589
|
16,750,361
|
1,521,900
|
5,485,380
|
15,398,743
|
1,177,748
|
278,457
|
|||||||||||||||||||||
%
|
100
|
41
|
4
|
14
|
38
|
3
|
<1
|
Lender
|
Date of Loan
|
Maturity
Date
|
Duration
|
Interest Rate
|
Principal
Amount
|
|||||||
Raiffeisen
Zentralbank
Österreich AG
|
June
18, 2010
|
July
31, 2011
|
1
year
|
1.15
times of
the
PBOC rate
|
$
|
7,881,612
(RMB
52,737,444)
|
||||||
Raiffeisen
Zentralbank
Österreich AG
|
June
18, 2010
|
July
31, 2011
|
1
year
|
1.15
times of
the
PBOC rate
|
$
|
18,382,353
(RMB
123,000,000)
|
||||||
DEG
– Deutsche Investitions – und Entwicklungsgesellschaft mbH
|
June
29, 2010
|
June
15, 2016
|
6
years
|
6
month USD LIBOR + 4.5%
|
$
|
18,319,584
|
||||||
Total
|
$
|
44,583,549
|
|
Payments Due By Year
|
|||||||||||||||||||
Total
|
Fiscal Year
2011
|
Fiscal
Year
2012-2013
|
Fiscal
Year
2014-2015
|
Fiscal Years
2016 and
Beyond
|
||||||||||||||||
Contractual obligations:
|
||||||||||||||||||||
Short-Term
Debt Obligations
|
$ | 29,473,422 | $ | 1,604,729 | $ | 27,868,693 | $ | — | $ | — | ||||||||||
Long-Term
Debt Obligations
|