Breaking News

TransAsia Air Flight Crashed in Taiwan, Official Confirms
Tweet TWEET

China Armco Metals Announces Financial Results for the Fourth Quarter and Full Year of 2012

China Armco Metals Announces Financial Results for the Fourth Quarter and Full 
Year of 2012 
SAN MATEO, CA -- (Marketwire) -- 03/29/13 --  China Armco Metals,
Inc. (NYSE MKT: CNAM) ("China Armco" or "the Company"), a distributor
of imported metal ore and metal recycler, today announced its
financial results for its fourth quarter and for the fiscal year
ended December 31, 2012. 
SUMMARY FINANCIALS 


 
                                                                            
----------------------------------------------------------------------------
Fourth Quarter 2012 Results                                                 
----------------------------------------------------------------------------
                                        Q4 2012         Q4 2011      CHANGE 
----------------------------------------------------------------------------
Sales                                $38.0 million    $9.5 million    298%  
----------------------------------------------------------------------------
Gross Profit                          $4.4 million    $0.5 million    732%  
----------------------------------------------------------------------------
Income (Loss) from Operations        $1.75 million  ($0.67) million   362%  
----------------------------------------------------------------------------
Net Income (Loss)                     $0.6 million   ($1.5) million   141%  
----------------------------------------------------------------------------
EPS (Fully Diluted) (Loss)               $0.03          ($0.10)        N/A  
----------------------------------------------------------------------------
                                                                            
                                                                            
----------------------------------------------------------------------------
Full Year 2012 Results                                                      
----------------------------------------------------------------------------
                                        FY 2012         FY 2011      CHANGE 
----------------------------------------------------------------------------
Sales                                $106.6 million  $106.2 million   0.33% 
----------------------------------------------------------------------------
Gross Profit                          $8.5 million    $5.8 million     45%  
----------------------------------------------------------------------------
Income (Loss) from Operations         $0.9 million   ($0.9) million   194%  
----------------------------------------------------------------------------
Net Income (Loss)                    ($2.6) million  ($3.3) million    22%  
----------------------------------------------------------------------------
EPS (Fully Diluted) (Loss)              ($0.14)         ($0.22)        N/A  
----------------------------------------------------------------------------

 
Fourth Quarter of 2012 Financial Results 
For the quarter ended December 31, 2012, net revenue increased 298%
to $38 million due to the significant increase in sales in our
recycling business as result of steel market rebound in China in the
period. In response to the market rebound, we quickly and proactively
react to the market changes, speeded up processing of the raw
materials acquired at a low cost during the market downturn, and
sales of the products to our existing customers successfully. During
the fourth quarter of 2012, our net revenue in the scrap metal
recycling business increased significantly by 430% to $36.6 million
from $6.9 million in the fourth quarter of 2011. Our production
increased substantially by 337% to 69,687 metric tons ("MT") from
15,948 MT in the fourth quarter of 2011. Despite the great
uncertainties surrounding global economies, we believe the demand for
iron ore on a global basis and the Chinese scrap steel demand will
grow in 2013. We intend to continue our strategy to secure longer
term ore and scrap metal supply contracts with our customers,
ensuring a more stable supply of inventory. 
Gross profit for the fourth quarter of 2012 increased 732% to $4.4
million, compared to $0.5 million in the fourth quarter of 2011.
Gross margin increased to 11.6%, compared to 5.5% in the same period
in 2011. 
Operating expenses increased by 119% to $2.6 million for the fourth
quarter of 2012 from $1.2 million for the fourth quarter of 2011.  
Operating income for the fourth quarter of 2012 increased 362% to
1.75 million, compared to an operating loss of $0.67 million in the
fourth quarter of 2011.  
Net income for the fourth quarter of 2012 was $0.6 million, or $0.03
per diluted share, compared to a loss of ($1.5) million or ($0.10)
per share for the same period last year. Diluted earnings per share
were a $0.14 loss and $0.22 loss for the year ended December 31, 2012
and December 31, 2011, respectively. 
Results for the Year Ended December 31, 2012 
Net revenues in 2012 remained at approximately $106 million, compared
to 2011. By business section, the net revenues from our metal
recycling business increased by $17.8 million, or by 41%, to $61.6
million, compared to 2011; our net revenues for our metal ore trading
business decreased approximately 28% in 2012 to $45.0 million,
compared to $62.5 million in 2011. Our recycling business accounted
for approximately 60% of our total revenue and has first time
exceeded trading business, becoming the major sources of our net
revenue and gross profit. Gross profit for the full year 2012 was
$8.5 million, an increase of 45% from $5.8 million for the year ended
December 31, 2011. Gross margins increased to 8.0% in 2012 compared
to 5.5% in 2011, which was primarily attributable to higher margins
on sales of scrap metal valued at $61.6 million in 2012 with a gross
margin of 10.2%.  
Operating expenses of $7.6 million in 2012 increased by $0.8 million,
or 12.5%, compared to 2011, primarily due to an increase in general
and administrative expenses of $1.4 million including $0.8 million of
non-cash stock compensation to officers and employees, and an
increase in selling expenses of $0.12 million. Selling expenses
include commissions, salaries and travel for the sales agents and
warehouse fees. These increases were partially offset by a decrease
in professional fees of $0.55 million including legal fees, audit
fees, investor relations, website design and SEC filing services, and
a decrease in operating cost of our idle manufacturing facility of
$0.14 million. Our net loss in 2012 was $2.6 million, compared to net
loss of $3.3 million in 2011, the decrease in loss primarily related
to the increase in gross profit of $2.6 million as a result of
improved gross margin in our recycling business. 
In reviewing the financial performance for the quarter and year ended
2012, Mr. Kexuan Yao, Chairman and CEO of China Armco, was pleased
that the company has made substantial improvement on its recycling
business during this past year. Mr. Yao remarked that, "Although 2012
proved to be a challenging year for China steel industry, financially
we achieved positive operating results from our operations in 2012
and were profitable in both the third and fourth quarter of 2012 with
significant growth in our recycling business. The results are very
important to us because this is the first time we had a profitable
annual operation results and a consecutive profitable quarters since
we officially started our recycling business operation in 2010. More
importantly, the recycling business has replaced the trading business
and has become the major source of our net revenue and gross profit.
We believe the metal recycling business will continue to be the major
growth driver for our company."  
Mr. Yao further stated that "Our recycling production started in the
late of 2010 and the operation has experienced difficulties and ups
and downs due to market volatility and our learning curve for
entering the new business. However, through the past two years'
operation, we have achieved many accomplishments in fundamental
aspects such as optimizing production process, improving cost control
and management, developing and streamlining supply chain,
establishment of long term strategic partnership with key clients,
obtaining various qualifications and licenses, and building our brand
in the industry. All of these are valuable intangible assets to the
Company and has been and will continue to contribute to our
development and growth." 
Financial Condition 
As of December 31, 2012, the Company had $1.4 million in cash and
cash equivalents, compared to $1.0 million at year-end 2011. The
Company had working capital of $0.3 million and a current ratio of
1.01:1 on December 31, 2012 compared to $1.6 million and 1.03:1 on
December 31, 2011. The decrease in working capital was mainly due to
increases in value added tax and other taxes payable of $2.5 million
as result of increased sales which we could get 50% refund in the
future, $0.4 million income tax due to the increased net income in
our subsidiaries, and $0.3 million derivative warrant liability which
will be expiring in August 2013. As of December 31, 2012,
shareholders' equity was $41.8 million, slightly down from $42.3
million at the end of 2011.  
The Company had $9 million net cash used in operations in 2012
compared to a net inflow of $14.3 million in 2011. The change
primarily reflects a decrease in accounts payable of $17.4 million,
an increase in accounts receivable of $14.9 million and a decrease in
inventories of $20 million in the year ended 2012 compared to year
ended 2011. The Company invested a total of approximately $50 million
in the aggregate to acquire land use rights and to construct and
purchase equipment for scrap metal facilities we operated. We
maintain seven bank facilities with lines of credit totaling
approximately $57 million in the aggregate. Approximately $33 million
remained available at December 31, 2012. An additional $20 million
bank facility's renewal is currently in process.  
Business Outlook 
China Armco continues to make steady progress in its metal recycling
business and to refine and develop its metal trading business model.
In 2012 our sales increased significantly with improved gross margin
in compared to 2011 in our recycling business while trading business
sales decreased in 2012 due to economy slow down and market condition
in the PRC. By March 25, 2012, the Company's trading business has
delivered metal ores to its customers approximately 21,000 tons and
17,000 tons to be delivered. We continued to work with our global
metal ore suppliers to seize market opportunities with manageable
market risks. In third quarter we signed a financing mandate letter
with Deutsche Bank. The new financing facility is custom-tailored for
our new "Commodity Financing" model which enables us to provide
financing service for our clients and liquidate the ore inventories
stockpiled at the ports. We continue to work on and expect to make
some major progresses on the new "Commodity Financing" model in 2013
which could significantly increase the growth potential of the
Company.  
In the metal recycling business, in 2012, the Company made
substantial improvement both financially and fundamentally. As of
result of our efforts and achievements, we have seen the first
consecutive profitable quarters in the last two quarters of 2012
since we officially started our recycling business operation in 2010.
More importantly, our recycling business has exceeded the trading
business and has become the major source of our net revenue and gross
profit. This is a milestone for our recycling business development
which reflects the successful transition of our main business from
high-volatility metal ore trading business to scrap metal recycling
with stable margin and lower risk. We expect to continue to expend
our overseas supply channels and recent development included
negotiations on business cooperation with Japan and U.S. suppliers.
During the third quarter our recycling business obtained new
qualifications for scrap recycling operation. The updated
qualification certificate allows our facility to recycle scrap metals
imported from abroad without the requirement to use agents, who
charge the company a fee. This is expected to substantially lower the
company's cost by removing the agent fee in its operation and thus
improve operating profit margin. The removal of the previous
qualification limitation also enhances the company's capability on
raw materials sourcing and purchasing and improves the company's
operating capacity. Moreover, in the fourth quarter our recycling
business further obtained the qualification from Chinese regulators
to import and process various scrap metals, including waste metal
appliances, scrap wires/cables and waste electric motors, from
overseas to China directly. This is a milestone for the Company's
supply chain development. With the license, China Armco can import
and process scrap metals from overseas directly, which will
significantly improve its global sourcing capability and cost control
by removing import agents and directly working with global suppliers.
More importantly, this license is the key to the Company's business
strategy which it aims to generate excess profits in processing
imported scrap metals by capitalizing on China labor cost advantages
and its state-of-the-art scrap metal recycling facility. By year end
of 2012, China Armco also expanded its purchases from overseas
markets, acquiring approximately 12,000 MT of unprocessed scrap
metals. By March 25, 2013, the Company has received orders in
aggregate approximately 360,000 MTs for 2013 and beyond and has
delivered approximately $26,500 and additional $10,000 in the
shipping process.  
Recently our recycling facility has been certified as a Demonstration
Base for Steel Scrap Processing and Distribution by the China Steel
Scrap Industrial Associations, and therefore could benefit from a 50%
value added tax (VAT) refund in 2013 according to the upcoming policy
of the Chinese government. The Company will benefit from the
certification as well as the possible tax refund. The tax refund when
effective could lower our costs and increase our profits by a large
margin. Also, with the certification we are allowed to act as
procurement agency for other uncertified companies, which could boost
our domestic purchases and total sales as well. 
In addressing the issues faced by the Company's recycling operations
for 2012, Chairman Yao noted that "Our Facility is fully capable of
ramping up to satisfy an expected increase in production volumes.
With the benefit of the greater efficiency of recycling operations
and its strategic port location advantages, we are cautiously
optimistic that we can operate profitably with potentially higher
gro
ss margins. Perhaps, most importantly, while enduring these
tumultuous times, we wish to express our sincere appreciation to our
customers, suppliers, vendors, as well as all of our long-term
stockholders and banking institutions, for their unwavering support.
All our credit facilities have been renewed on favorable terms,
reflecting their continual confidence in our management team, our
strategies and its future business prospects for success. As a
result, we continue to remain optimistic for our business prospects
for 2013, despite the existence of the world's economies mercurial
nature." 
Conference Call    
Date: Monday, April 1, 2013 
Time: 5:00 p.m. Eastern Time, US  
Conference Line Dial-In (U.S.): 1-877-407-9210  
International Dial-In: 1-201-689-8049  
Conference ID# 411414: 2012 Fourth Quarter & Year End Financial
Results Call  
Webcast link: http://www.investorcalendar.com/IC/CEPage.asp?ID=170704 
The playback of the webcast can be accessed until 07/01/2013. To
access the webcast, you will need to have the Windows Media Player on
your desktop. For the free download of the Media Player, please
visit:
http://www.microsoft.com/windows/windowsmedia/en/download/default.asp 
Teleconference Replay:
 Replay Number (Toll Free): 1-877-660-6853 
Replay Number (International): 1-201-612-7415
 Replay Passcode needs
Conference ID#: 411414
 Teleconference will be available for replay
until 11:59 PM 04/15/2013 
About China Armco Metals, Inc. 
China Armco Metals, Inc. is engaged in the sale and distribution of
metal ore and non-ferrous metals throughout the PRC and is in the
recycling business in the PRC. China Armco's customers throughout
China include some of the fastest growing steel producing mills and
foundries in the PRC. Raw materials are acquired from a global group
of suppliers located in diverse countries, including, but not limited
to, Brazil, India, Indonesia, Ukraine and the United States. China
Armco's product lines include ferrous and non-ferrous ore, iron ore,
chrome ore, nickel ore, magnesium, copper ore, manganese ore, steel
billet and recycled scrap metals. For more information about China
Armco, please visit http://www.armcometals.com. 
Safe Harbor Statement 
In connection with the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, China Armco Metals, Inc.,
is hereby providing cautionary statements identifying important
factors that could cause our actual results to differ materially from
those projected in forward-looking statements (as defined in such
act). Any statements that are not historical facts and that express,
or involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but
not always, indicated through the use of words or phrases such as
"will likely result," "are expected to," "will continue," "is
anticipated," "estimated," "intends," "plans," "believes" and
"projects") may be forward-looking and may involve estimates and
uncertainties which could cause actual results to differ materially
from those expressed in the forward-looking statements. These
statements include, but are not limited to, our expectations
regarding our revenues and production related to our scrap metal
recycling operations and the extent that any of China's energy
restrictions that have and could be imposed upon us from time to time
in the future with resulting blackouts having and adverse impact on
our recycling operations. 
In addition, any such statements are qualified in their entirety by
reference to, and are accompanied by, the following key factors that
have a direct bearing on our results of operations: 
We caution that the factors described herein could cause actual
results to differ materially from those expressed in any
forward-looking statements we make and that investors should not
place undue reliance on any such forward-looking statements. Further,
any forward-looking statement speaks only as of the date on which
such statement is made, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence
of anticipated or unanticipated events or circumstances. New factors
emerge from time to time, and it is not possible for us to predict
all of such factors. Further, we cannot assess the impact of each
such factor on our results of operations or the extent to which any
factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
This press release is qualified in its entirety by the following,
including, but not limited to, any expectations with respect to the
Company's revenues and results of operations, the institution of
China and US governmental regulations relating to our businesses and
the general economic climate of volatility around the world, and the
cautionary statements and risk factor disclosure contained in our
Securities and Exchange Commission filings, including our Annual
Report on Form 10-K for the year ended December 31, 2012. 


 
                                                                            
                                                                            
                          CHINA ARMCO METALS, INC.                          
   CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)    
                                                                            
                                                For the Year   For the Year 
                                                   Ended          Ended     
                                                December 31,   December 31, 
                                                   2012           2011      
                                               -------------  ------------- 
                                                                            
                                                                            
NET REVENUES                                   $ 106,569,474  $ 106,216,065 
                                                                            
COST OF GOODS SOLD                                98,102,412    100,363,253 
                                               -------------  ------------- 
                                                                            
GROSS PROFIT                                       8,467,062      5,852,812 
                                                                            
OPERATING EXPENSES:                                                         
  Selling expenses                                   413,352        293,887 
  Professional fees                                  278,502        824,275 
  General and administrative expenses              5,112,131      3,699,401 
  Operating cost of idle manufacturing                                      
   facility                                        1,807,313      1,946,369 
                                               -------------  ------------- 
                                                                            
    Total operating expenses                       7,611,298      6,763,932 
                                               -------------  ------------- 
                                                                            
INCOME (LOSS) FROM OPERATIONS                        855,764       (911,120)
                                               -------------  ------------- 
                                                                            
OTHER (INCOME) EXPENSE:                                                     
  Interest income                                   (190,999)      (102,456)
  Interest expense                                 2,001,535      1,792,885 
  Foreign currency transaction (gain) loss -                                
   marketable securities                              36,957       (220,881)
  Impairment other than temporary - marketable                              
   securities                                        386,941      1,980,000 
  Change in fair value of derivative liability       306,505       (137,940)
  Loan guarantee expense                              59,744        158,066 
  Investment credit - government                           -     (1,547,030)
  Forgiveness of debt                                (16,343)             - 
  Other (income) expense                             148,097        278,578 
                                               -------------  ------------- 
                                                                            
    Total other (income) expense                   2,732,437      2,201,222 
                                               -------------  ------------- 
                                                                            
INCOME (LOSS) BEFORE INCOME TAXES PROVISION       (1,876,673)    (3,112,342)
                                                                            
INCOME TAX PROVISION                                 732,663        232,662 
                                               -------------  ------------- 
                                                                            
NET INCOME (LOSS)                                 (2,609,336)    (3,345,004)
                                                                            
OTHER COMPREHENSIVE INCOME (LOSS):                                          
  Change in unrealized income (loss) of                                     
   marketable securities                                 797        505,481 
  Foreign currency translation gain (loss)           263,532      1,577,471 
                                               -------------  ------------- 
                                                                            
COMPREHENSIVE INCOME (LOSS)                    $  (2,345,007) $  (1,262,052)
                                               =============  ============= 
                                                                            
NET INCOME (LOSS) PER COMMON SHARE - BASIC AND                              
 DILUTED:                                                                   
                                                                            
  Net income (loss) per common share - basic                                
   and diluted                                 $       (0.14) $       (0.22)
                                               =============  ============= 
                                                                            
  Weighted Average Common Shares Outstanding -                              
   basic and diluted                              18,482,234     15,366,743 
                                               =============  ============= 
                                                                            
      See accompanying notes to the consolidated financial statements.      
                                                                            
                                                                            
                                                                            
                          CHINA ARMCO METALS, INC.                          
                        CONSOLIDATED BALANCE SHEETS                         
                                                                            
                                                 December 31,  December 31, 
                                                     2012          2011     
                                                 ------------  ------------ 
                                                                            
                                                                            
ASSETS                                                                      
CURRENT ASSETS:                                                             
  Cash                                           $  1,367,171  $  1,042,591 
  Pledged deposits                                  4,590,829     8,357,670 
  Marketable securities                             1,213,641     1,636,742 
  Bank acceptance notes receivable                      7,926             - 
  Accounts receivable, net                         15,699,390       758,500 
  Inventories                                      13,378,445    33,344,547 
  Advance on purchases                              2,238,652     3,079,684 
  Prepaid corp income taxes - Renewable Metals              -       467,546 
  Prepayments and other current assets                453,299     1,744,047 
                                                 ------------  ------------ 
                                                                            
    Total Current Assets                           38,949,353    50,431,327 
                                                                            
                                                                            
PROPERTY, PLANT AND EQUIPMENT                                               
  Property, plant and equipment                    43,319,218    42,165,437 
  Accumulated depreciation                         (6,284,162)   (3,514,893)
                                                 ------------  ------------ 
                                                                            
    PROPERTY, PLANT AND EQUIPMENT, net             37,035,056    38,650,544 
                                                                            
LAND USE RIGHTS                                                             
  Land use rights                                   6,473,761     6,422,956 
  Accumulated amortization                           (260,897)     (209,474)
                                                 ------------  ------------ 
                                                                            
    LAND USE RIGHTS, net                            6,212,864     6,213,482 
                                                 ------------  ------------ 
                                                                            
                                                 ------------  ------------ 
                                                                            
      Total Assets                               $ 82,197,273  $ 95,295,353 
                                                 ============  ============ 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES:                                                        
  Loans payable                                  $ 19,109,930  $  6,711,898 
  Banker's acceptance notes payable and letters                             
   of credit                                        8,624,734     8,178,029 
  Current maturities of capital lease obligation    2,615,296     2,195,177 
  Current maturities of long-term debt                      -     3,931,745 
  Accounts payable                                  1,141,583    18,543,129 
  Advances received from Chairman and CEO                   -       607,009 
  Customer deposits                                 1,577,194     5,851,769 
  Corporate income tax payable                        407,621        99,042 
  Derivative warrant liability - current portion      306,708             - 
  Value added tax and other taxes payable           2,504,677         1,150 
  Accrued expenses and other current liabilities    2,355,903     2,713,532 
                                                 ------------  ------------ 
                                                                            
    Total Current Liabilities                      38,643,646    48,832,480 
                                                                            
CAPITAL LEASE OBLIGATION, net of current                                    
 maturities                                         1,749,955     4,127,354 
                                                                            
LONG-TERM DEBT, net of current maturities                   -             - 
                                                                            
DERIVATIVE LIABILITY, net of current portion                -           203 
                                                 ------------  ------------ 
                                                                            
      Total Liabilities                            40,393,601    52,960,037 
                                                 ------------  ------------ 
                                                                            
COMMITMENTS AND CONTINGENCIES                                               
                                                                            
STOCKHOLDERS' EQUITY:                                                       
  Preferred stock, $0.001 par value; 1,000,000                              
   shares authorized; none issued or outstanding            -             - 
  Common stock, $0.001 par value, 74,000,000                                
   shares authorized, 20,319,698 and 15,421,008                             
   shares issued and outstanding, respectively         20,320        15,421 
  Additional paid-in capital                       31,542,083    29,733,619 
  Retained earnings                                 6,756,699     9,366,035 
  Accumulated other comprehensive income (loss):                            
    Change in unrealized loss on marketable                                 
     securities                                             -          (797)
    Foreign currency translation gain               3,484,570     3,221,038 
                                                 ------------  ------------ 
                                                                            
    Total Stockholders' Equity                     41,803,672    42,335,316 
                                                 ------------  ------------ 
                                                                            
    Total Liabilities and Stockholders' Equity   $ 82,197,273  $ 95,295,353 
                                                 ============  ============ 
                                                                            
      See accompanying notes to the consolidated financial statements.      
                                                                            
                                                                            
                                                                            
                          CHINA ARMCO METALS, INC.                          
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                                                                            
                                                For the Year   For the Year 
                                                   Ended          Ended     
                                                December 31,   December 31, 
                                                    2012           2011     
                                               -------------  ------------- 
                                                                            
                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES:                                       
Net loss                                       $  (2,609,336) $  (3,345,004)
                                                                            
Adjustments to reconcile net loss to net cash                               
 used in operating activities                                               
  Depreciation expense                             2,742,995      2,726,315 
  Amortization expense                                49,766         49,376 
  Change in fair value of derivative liability       306,505       (137,940)
  (Gain) loss from foreign currency exchange                                
   rate change on marketable securities               36,957       (220,881)
  Impairment other than temporary - marketable                              
   securities                                        386,941      1,980,000 
  Stock based compensation                         1,444,019        580,423 
  Changes in operating assets and liabilities:                              
    Bank acceptance notes receivable                  (7,926)             - 
    Accounts receivable                          (14,935,416)    18,569,271 
    Inventories                                   20,095,232    (22,498,388)
    Advance on purchases                             865,391       (852,982)
    Prepaid value added taxes                        471,244              - 
    Prepayments and other current assets           1,369,997      2,688,460 
    Bank acceptance notes payable                      1,585              - 
    Accounts payable                             (17,410,355)    14,992,427 
    Customer deposits                             (4,320,862)      (491,603)
    Taxes payable                                  2,812,095       (990,833)
    Accrued expenses and other current                                      
     liabilities                                    (310,424)     1,305,792 
                                               -------------  ------------- 
                                                                            
NET CASH PROVIDED BY (USED IN) OPERATING                                    
 ACTIVITIES                                       (9,011,592)    14,354,433 
                                                                            
CASH FLOWS FROM INVESTING ACTIVITIES:                                       
  Proceeds from release of pledged deposits       20,718,637     50,146,115 
  Payment made towards pledged deposits          (16,902,377)   (45,373,468)
  Purchase of property, plant and equipment         (826,350)    (2,967,453)
  Purchase of land use rights                              -     (2,664,162)
                                               -------------  ------------- 
                                                                            
NET CASH PROVIDED BY INVESTING ACTIVITIES          2,989,910       (858,968)
                                                                            
CASH FLOWS FROM FINANCING ACTIVITIES:                                       
  Proceeds from loans payable                     64,716,249     61,308,627 
  Repayment of loans payable                     (52,413,180)   (79,757,796)
  Banker's acceptance notes payable                  380,433      3,837,383 
  Proceeds from mortgage payable                           -      5,897,617 
  Repayment of mortgage payable                   (2,007,291)    (1,934,133)
  Repayment of long-term debt                     (3,962,844)    (4,718,094)
  Advances from (repayment to) Chairman and                                 
   CEO                                              (319,306)      (192,385)
                                               -------------  ------------- 
                                                                            
NET CASH PROVIDED BY (USED IN) FINANCING                                    
 ACTIVITIES                                        6,394,061    (15,558,780)
                                                                            
EFFECT OF EXCHANGE RATE CHANGES ON CASH              (47,799)         7,990 
                                               -------------  ------------- 
                                                                            
NET CHANGE IN CASH                                   324,580     (2,055,325)
                                                                            
Cash at beginning of the year                      1,042,591      3,097,917 
                                               -------------  ------------- 
                                                                            
Cash at end of the year                        $   1,367,171  $   1,042,591 
                                               =============  ============= 
                                                                            
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS                                       
 INFORMATION:                                                               
    Interest paid                              $   2,001,337  $   1,792,885 
                                               =============  ============= 
    Income tax paid                            $           -  $   1,224,230 
                                               =============  ============= 
                                                                            
NON CASH FINANCING AND INVESTING ACTIVITIES:                                
  Accrued director cash compensation paid in                                
   common shares in lieu of cash               $           -  $           - 
                                               =============  ============= 
  Accrued compensation paid in common shares                                
   in lieu of cash                             $           -  $     282,323 
                                               =============  ============= 
  Advance payments used towards construction                                
   in progress and land use rights             $           -  $   4,468,337 
                                               =============  ============= 
  Common shares issued for conversion of                                    
   advances from Chairmand and CEO             $     353,753  $           - 
                                               =============  ============= 
                                                                            
      See accompanying notes to the consolidated financial statements.      

  
For more information, please contact: 
Company:
US Contact:
Christina Xiong
Investor Relations
China Armco Metals, Inc.
Office: 650.212.7620 
Email: christina@armcometals.com
Website: www.armcometals.com 
China Contact:
Ripple Zhang
Office: 021-62375286
Email: ripple.zhang@armcometals.com
Website: www.armcometals.com