Armco Metals Holdings Announces Second Quarter 2013 Financial Results

Armco Metals Holdings Announces Second Quarter 2013 Financial Results 
SAN MATEO, CA -- (Marketwired) -- 08/14/13 --  Armco Metals Holdings,
Inc. (NYSE MKT: AMCO) ("Armco Metals" or the "Company"), a
distributor of imported metal ore and metal recycler with a new
state-of-the-art scrap metal recycling facility in China, today
announced its financial results for the second quarter 2013 and first
half year 2013. 
SUMMARY FINANCIALS 


 
-----------------------------------------------------------------
-----------
Three months ended June 30, 2013                                            
----------------------------------------------------------------------------
                                      Q2 2013           Q2 2012      CHANGE 
----------------------------------------------------------------------------
Sales                              $27.7 million     $4.3 million     545%  
----------------------------------------------------------------------------
Gross Profit                       $2.4 million      $0.7 million     224%  
----------------------------------------------------------------------------
Income (Loss) from Operations      $1.1 million      -$1.2 million    191%  
----------------------------------------------------------------------------
Net Income                         0.95 million     -$1.71 million    156%  
----------------------------------------------------------------------------
EPS (Fully Diluted) (Loss)             $0.04            ($0.09)        N/A  
----------------------------------------------------------------------------

 
Second Quarter of 2013 Financial Results 
For the quarter ended June 30, 2013, net revenue increased 545% to
$27.7 million, of which the metal recycling sales increased 548% to
$18.8 million from $2.9 million and the metal ores trading sales
increased by 539% to $8.9 million from $1.4 million, respectively,
compared to the same period of 2012. The Company sold 42,592 metric
tons ("MT") of recycled scrap metal compared to 6,719MT sold in the
second quarter of 2012, and the production of recycled scrap metal
increased by 383% to 52,749 MT from 10,915 MT in the second quarter
of 2012. The increase in the trading business sales mainly consisted
of a $3.8 million increase in s
ales of chromium ore, and a $1.9
million increase in sales of manganese ore. Recycling business sales
continued to be the major source of our revenue, accounting for
approximately 70% of total net revenue for the quarter ended June 30,
2013. 
"While overall profits of China steel industry has improved over the
first quarter of 2013, the momentum was losing in the second quarter
due to oversupply and economy slowdown," explained Mr. Kexuan Yao,
Chairman and CEO of Armco Metals. "However, although the market was
sluggish, our revenue and gross margin in our recycling business
continued to grow steady; the output and sales from our recycling
facility in the second quarter increased significantly compared to
the same period of 2012. We believe the continued growth in our
recycling business was primarily a result of the overall improvement
of our operation in recycling business. In the second quarter, we
continued to optimize our products structure by processing
high-value-added product such as recycled nonferrous metal scraps
which further improved our profit margin. Through the past two and
half years' operation, we have achieved many major goals such as
optimizing production process, improving cost control and management,
developing and streamlining supply chain, establishing 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 of the Company and has
contributed and will continue to contribute to our development and
growth."  
Gross profit for the second quarter of 2013 was $2.4 million compared
to $0.7 million in the second quarter of 2012. Gross margin was 8.5%
compared to 17% for same period of last year. A $0.5 million
inventory lower of cost or market adjustment was included in cost of
goods sold for the quarter which decreased gross profit for the
quarter by $0.5 million. The profit margin decrease was primarily due
to an abnormally high margin for trading business in the same period
of last year that was led by an adjustment for invoicing changes. 
Operating expenses decreased to $1.2 million from $1.9 million a year
ago. The decrease in operating expenses was primarily due to
decreases in general and administrative expenses and operating cost
of idle manufacturing facility as a result of significantly increase
in output in recycling production.  
Operating income for the second quarter of 2013 totaled $1.1 million
compared to $1.2 million loss in the second quarter of 2012.  
Net income for the second quarter of 2013 was $0.95 million, or $0.04
per diluted share, compared to a net loss of $1.7 million, or $0.09
per share in loss, in the same period of last year. The weighted
average diluted shares outstanding increased from 18.5 million in the
second quarter of 2012 to 24.0 million in the second quarter of 2013. 
Financial Condition 
The Company ended the second quarter of 2013 with $1.2 million in
cash, compared to $1.4 million at the end of 2012. Working capital
was 3.0 million and a current ratio of 1.07:1 at June 30, 2013
compared to $0.3 million and 1.01:1 at December 31, 2012. The
increase in working capital from end of 2012 was mainly a result of
capital raised by sales of our common stock in January of 2013 and
operating income generated since year end 2012. Total accounts
receivable decreased $6.3 million to $9.4 million at the end of the
second quarter of 2013 compared to $15.7 million at the year end of
2012 primarily due to the payment we received after the year-end of
2012 for our scrap metal sales made during 2012. Inventories
increased $8.0 million at June 30, 2013 from December 31, 2012,
primarily due to the increase of scrap metal inventories from
increased production with expanded customer base. As of June 30,
2013, shareholders' equity increased to $43.7 million from $41.8
million at December 31, 2012, primarily due to capital raised by
sales of our common stock and net income generated from operation
after the year-end of 2012. 
The Company had $2.08 million net cash outflow from operations during
the first half of 2013 and spent $0.17 million on capital
expenditures. Net cash inflow from financing activities was $8.26
million. Armco Metals had approximately $40 million of credit
available from seven bank lines with an aggregate capacity of $61
million at June 30, 2013.  
First Half 2013 Financial Results 


 
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-----------
Six months ended June 30, 2013                                              
----------------------------------------------------------------------------
                                      1H 2013           1H 2012      CHANGE 
----------------------------------------------------------------------------
Sales                              $42.0 million     $53.6 million    -22%  
----------------------------------------------------------------------------
Gross Profit                       $3.0 million      $2.2 million      37%  
----------------------------------------------------------------------------
Income (Loss) from Operations      $0.05 million    -$1.44 million    104%  
----------------------------------------------------------
------------------
Net Income                        -$0.14 million    -$3.37 million     96%  
----------------------------------------------------------------------------
EPS (Fully Diluted) (Loss)            ($0.01)           ($0.19)        N/A  
----------------------------------------------------------------------------

 
Armco Metals' sales decreased in the first half of 2013, from $53.6
million for the same period of last year to $42.0 million, primarily
due to the decrease in trading business sales in first quarter of
2013. Sales in the metal recycling business were $27.8 million, an
increase of $16.1 million from the same period of last year. Metal
ores trading business generated $14.2 million of sales compared to
$41.9 million in the comparable period a year ago. The decline in
trading sales was primarily a result of a decrease in the sales of
iron ore of $35 million, partially offset by the increase in the
sales of manganese ore of $3.2 million, chrome ore of $1.2 million,
and titanium ore of $0.7 million.  
Gross profit increased by $0.8 million to $3.0 million, with a gross
margin of 7%, compared to $2.2 million with a gross margin of 4% for
the first six months of 2012. 
Operating expenses decreased from $3.6 million to $ 2.9 million,
primarily due to a decrease in general and administrative expenses of
$0.46 million mainly resulting from a decrease of non-cash shares
compensation to management and employees of $0.31 million and a
decrease in operating cost of idle manufacturing facility of $0.25
million contributed by increased production. Net loss and per share
loss were $0.14 million and $0.01, respectively, in the first half of
2013. The weighted average diluted shares outstanding were 24.0
million, a 37% increase from 17.6 million in the first six months of
2012.  
Business Updates 
The metal ore trading business decreased approximately 20% in net
revenues during the first half of 2013 compared to the same period in
2012. The trading business sales from new customers for the first six
months of 2013 were approximately $2.6 million. The decline in
trading business sales was primarily due to the adjustment that the
Company proactively made to the operation in response to the change
in metal ore market where the Company slowed down its trading
activities to manage risks. The company also optimized its trading
business sales structure by diversifying its metal ore products and
balancing different products sales to control market risks, which
reduced sales of iron ore significantly and increased sales of
manganese ore, chrome ore and titanium ore. During the difficult time
for whole industry, the Company continued to firm business
relationship with its suppliers and develop customer base while
reducing metal ore purchase and inventory to lower ore market risk.
Meanwhile, we continued to develop our new "Commodity Financing"
model and have obtained support from several large banks. We expect
to make some major progress later this year. 
Our scrap metal recycling business continued to grow steady despite
the slowdown in China's economy. Sales and production increased
substantially by 181% and 168%, respectively, from the comparable
period a year ago. Sales and production increased from approximately
23,471 MT and 35,986 MT in the first six months of 2012 to
approximately 65,593 and 96,543 MT, respectively, in the first six
months of 2013. The Company ended the second quarter with
approximately 15,000 MT of recycled scrap steel yet to be delivered.
As an effort to optimize products structure and maximize profit
margin, in the second quarter of 2013 the company increased the
production of recycled nonferrous metals scraps which has a higher
added-value and profit. The company continued to develop new
customers to expand its customer base for its recycling business. For
the first half of 2013 the recycling business sales generated from
new customers amounted to $7.8 million. The recycling business
contributed 66% and 90% of our net revenue and gross profit,
respectively, for six months ended June 30, 2013, and continued to be
the major sources of our net revenue and gross profit. In the second
quarter of 2013 the company's recycling subsidiary signed a long-term
sales contract with an important customer under the pre-selling model
and the company has started to deliver products to this customer. The
contract is expected to increase recycled scrap metals sales and
improve the Company's profit margin by lowering idle capacity cost
accompanying the increased production. In the second quarter of 2013,
the Company's recycling subsidiary was rated as AAA grade, the
highest level, in credit rating by China Association of Metal Scrap
Utilization. This recognized our development in recycling business in
the past few years. The rating is very important to our brand
building effort in the industry and market which is expected to
improve and strengthen our supply chain, customer base and bank
credit facilities.  


 
Conference Call                                                             
                                                                            
Date:                  Thursday, August 15, 2013                            
                                                                            
Time:                  5:00 p.m. Eastern Time, US                           
                                                                            
Conference Line Dial-  1-877-407-9210                                       
In (U.S.):                                                                  
                                                                            
International Dial-    1- 201-689-8049                                      
In:                                                                         
                                                                            
Conference ID#:        2013 2nd Quarter Financial Results Call              
419405                                                                      
                                                                            
Webcast link:          http://www.investorcalendar.com/IC/CEPage.asp?ID=
                       171466                                               

 
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About Armco Metals Holdings, Inc. 
Armco Metals Holdings, Inc. is engaged in the sale and distribution
of metal ore and non-ferrous metals and the recycling business
throughout China. Armco Metals' customers include some of the fastest
growing steel producing mills and foundries in China. Raw materials
are acquired from a global group of suppliers located in various
countries, including, but not limited to, Brazil, India, Indonesia,
Ukraine and the Uni
ted States. Armco Metals' 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 Armco Metals, please visit
http://www.armcometals.com. 
Safe Harbor Statement 
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
relating to our operations, results of operations and other matters
that are based on our current expectations, estimates, forecasts and
projections. 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" "expect," "anticipate," "estimate," "intend," "plan,"
"believe," "project," "may", "potential," "opportunity" and "should")
are intended to identify forward-looking st
atements and may involve
risks and uncertainties that 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 programs and policies announced by the PRC government on
our operations or any forward looking statement in this press
release.  
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. Such
factors include, but are not limited to: fluctuations in the prices
of metals, ore and scrap metal, the growth rate of the Chinese and
world economy and related economic factors, fluctuations in supply
and demand of metals, ore and scrap metal, our ability to secure
supplies of metals, ore and scrap metal upon favorable terms, our
ability to resell metals and ores at current market prices and on
favorable terms, our ability to finance the purchase price of metals,
ore and scrap metal (and the continued willingness of our Chairman to
personally guarantee such financing), our ability to repay our
indebtedness, our ability to retain current customers and suppliers
and attract new customers and suppliers, our ability to continue to
improve production rates at our recycling facility, our ability to
establish adequate management, legal and financial controls in the
United States and China, the actions of government and regulatory
bodies in China and the United States, the negative market and
governmental reaction to "reverse merger" Chinese companies due to
high profile frauds and other problems noted in the press, and the
cautionary statements and risk factors contained in our Securities
and Exchange Commission filings, including our Annual Report on Form
10-K for the year ended December 31, 2012, and our Quarterly Report
on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013.
Most of these factors are beyond our ability to predict or control.
New factors that could cause actual results to differ materially from
those expressed in the forward-looking statements 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. Each
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 the occurrence of
anticipated or unanticipated events or circumstances. 
-- Financial Tables --  


 
                         ARMCO METALS HOLDINGS, INC                         
                    (FORMERLY CHINA ARMCO METALS, INC.)                     
   CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)    
                                                                            
                                                                            
                                                                            
                      For the Six     For the     For the Six     For the   
                        Months     Three Months     Months     Three Months 
                         Ended         Ended         Ended         Ended    
                       June 30,      June 30,      June 30,      June 30,   
                         2013          2013          2012          2012     
                     ------------  ------------  ------------  ------------ 
                      (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
                                                                            
NET REVENUES         $ 42,027,253  $ 27,684,176  $ 53,578,925  $  4,294,734 
                                                                            
COST OF GOODS SOLD                                                          
  Cost of goods sold   38,549,274    24,850,862    51,393,910     3,569,816 
  Lower of cost or                                                          
   market adjustment      481,925       481,925             -             - 
                     ------------  ------------  ------------  ------------ 
                                                                            
    Total cost of                                                           
     goods sold        39,031,199    25,332,787    51,393,910     3,569,816 
                     ------------  ------------  ------------  ------------ 
                                                                            
GROSS PROFIT            2,996,054     2,351,389     2,185,015       724,918 
                                                                            
OPERATING EXPENSES:                                                         
  Selling expenses         89,686        60,460       269,352       138,829 
  Professional fees       316,985       120,488       105,934        89,222 
  General and                                                               
   administrative                                                           
   expenses             1,722,671       675,977     2,184,456     1,140,990 
  Operating cost of                                                         
   idle                                                                     
   manufacturing                                                            
   facility               815,639       392,418     1,061,821       564,597 
                     ------------  ------------  ------------  ------------ 
                                                                            
    Total operating                                                     
    
     expenses           2,944,981     1,249,343     3,621,563     1,933,638 
                     ------------  ------------  ------------  ------------ 
                                                                            
  INCOME (LOSS) FROM                                                        
   OPERATIONS              51,073     1,102,046    (1,436,548)   (1,208,720)
                     ------------  ------------  ------------  ------------ 
                                                                            
OTHER (INCOME)                                                              
 EXPENSE:                                                                   
  Interest income         (46,861)      (44,136)      (44,173)      (43,121)
  Interest expense      1,111,683       382,311     1,211,302       424,790 
  Foreign currency                                                          
   transaction                                                              
   (gain) loss -                                                            
   marketable                                                               
   securities                   -             -        61,995        26,442 
  Impairment other                                                          
   than temporary -                                                         
   marketable                                                               
   securities                   -             -       386,941             - 
  Change in fair                                                            
   value of                                                                 
   derivative                                                               
   liability             (920,338)     (304,392)          129          (420)
  Loan guarantee                                                            
   expense                 22,833        10,333        30,964        14,297 
  Other (income)                                                            
   expense                (36,218)       39,678       130,848        11,041 
                     ------------  ------------  ------------  ------------ 
                                                                            
    Total other                                                             
     (income)                                                               
     expense              131,099        83,794     1,778,006       433,029 
                     ------------  ------------  ------------  ------------ 
                                                                            
INCOME (LOSS) BEFORE                                                        
 INCOME TAXES                                                               
 PROVISION                (80,026)    1,018,252    (3,214,554)   (1,641,749)
                                                                            
INCOME TAX PROVISION       61,688        70,198       151,042        63,639 
                     ------------  ------------  ------------  ------------ 
                                                                            
INCOME (LOSS) FROM                                                          
 CONTINUING                                                                 
 OPERATIONS              (141,714)      948,054    (3,365,596)   (1,705,388)
                                                                            
NET INCOME ( LOSS)       (141,714)      948,054    (3,365,596)   (1,705,388)
                                                                            
OTHER COMPREHENSIVE                                                         
 INCOME (LOSS):                                                             
  Change in                                                                 
   unrealized income                                                        
   (loss) of                                                                
   marketable                                                               
   securities            (411,606)     (417,105)          797             - 
  Foreign currency                                                          
   translation gain                                                         
   (loss)                 906,893     1,146,411       254,736        17,270 
                     ------------  ------------  ------------  ------------ 
                                                                            
COMPREHENSIVE INCOME                                                        
 ( LOSS)             $    353,573  $  1,677,360  $ (3,110,063) $ (1,688,118)
                     ============  ============  ============  ============ 
                                                                            
NET INCOME ( LOSS)                                                          
 PER COMMON SHARE -                                                         
 BASIC AND DILUTED:                                                         
                                                                            
  Net Income (loss)                                                         
   per common share                                                         
   - basic and                                                              
   diluted           $      (0.01) $       0.04  $      (0.19) $      (0.09)
                     ============  ============  ============  ============ 
                                                                            
  Weighted Average                                                          
   Common Shares                                                            
   Outstanding -                                                            
   basic and diluted   23,974,603    23,974,603    17,561,985    18,455,833 
                     ============  ============  ============  ============ 
                                                                            
      See accompanying notes to the consolidated financial statements.      
                                                                            
                                                                            
                                                                            
                         ARMCO METALS HOLDINGS, INC                         
                    (FORMERLY CHINA ARMCO METALS, INC.)                     
                        CONSOLIDATED BALANCE SHEETS                         
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                              December 31,  
                                              June 30, 2013       2012      
                                             --------------  -------------- 
                                               (Unaudited)                  
                                                                            
ASSETS                                                                      
CURRENT ASSETS:                                                             
  Cash                                       $    1,156,813  $    1,367,171 
  Pledged deposits                               10,209,744       4,590,829 
  Marketable securities                             802,035       1,213,641 
  Bank acceptance notes receivable                1,140,647           7,926 
  Accounts receivable, net                        9,375,065      15,699,390 
  Inventories                                    21,359,682      13,378,445 
  Advance on purchases                            2,325,010       2,238,652 
  Prepayments and other current assets            1,155,975         453,299 
                                             --------------  -------------- 
                                                                            
    Total Current Assets                         47,524,971      38,949,353 
                                             --------------  -------------- 
                                                                            
PROPERTY, PLANT AND EQUIPMENT                                               
  Property, plant and equipment                  44,365,365      43,319,218 
  Accumulated depreciation                       (7,840,159)     (6,284,162)
                                             --------------  -------------- 
                                                                            
    PROPERTY, PLANT AND EQUIPMENT, net           36,525,206      37,035,056 
      
                                       --------------  -------------- 
                                                                            
LAND USE RIGHTS                                                             
  Land use rights                                 6,607,726       6,473,761 
  Accumulated amortization                         (356,848)       (260,897)
                                             --------------  -------------- 
                                                                            
    LAND USE RIGHTS, net                          6,250,878       6,212,864 
                                             --------------  -------------- 
                                                                            
      Total Assets                           $   90,301,055  $   82,197,273 
                                             ==============  ============== 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES:                                                        
  Loans payable                              $   15,783,650  $   19,109,930 
  Banker's acceptance notes payable and                                     
   letters of credit                             16,179,397       8,624,734 
  Current maturities of capital lease                                       
   obligation                                     3,018,616       2,615,296 
  Accounts payable                                5,066,255       1,141,583 
  Advances received from Chairman and CEO         1,440,677               - 
  Customer deposits                                 285,886       1,577,194 
  Corporate income tax payable                      374,459         407,621 
  Derivative warrant liability                       10,179         306,708 
  Value added tax and other taxes payable         1,298,091       2,504,677 
  Accrued expenses and oth
er current                                        
   liabilities                                    1,046,541       2,355,903 
                                             --------------  -------------- 
                                                                            
    Total Current Liabilities                    44,503,751      38,643,646 
                                                                            
LONG-TERM LIABILITIES                                                       
  Capital lease obligation, net of current                                  
   maturities                                     1,121,395       1,749,955 
  Long-term debt - CEO                            1,019,302               - 
                                             --------------  -------------- 
                                                                            
    Total Long-Term Liabilities                   2,140,697       1,749,955 
                                             --------------  -------------- 
                                                                            
      Total Liabilities                          46,644,448      40,393,601 
                                             --------------  -------------- 
                                                                            
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,                                                       
  24,593,659 and 20,319,698 shares issued                                   
   and outstanding, respectively                     24,594          20,320 
  Additional paid-in capital                     33,037,171      31,542,083 
  Retained earnings                               6,614,985       6,756,699 
  Accumulated other comprehensive income                                    
   (loss):                                                                  
    Change in unrealized gain on marketable                                 
     securities                                    (411,606)              - 
    Foreign currency translation gain             4,391,463       3,484,570 
                                             --------------  -------------- 
                                                                            
    Total Stockholders' Equity                   43,656,607      41,803,672 
                                             --------------  -------------- 
                                                                            
    Total Liabilities and Stockholders'                                     
     Equity                                  $   90,301,055  $   82,197,273 
                                             ==============  ============== 
                                                                            
      See accompanying notes to the consolidated financial statements.      
                                                                            
                                                                            
                                                                            
                         ARMCO METALS HOLDINGS, INC                         
                    (FORMERLY CHINA ARMCO METALS, INC.)                     
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                                                                            
                                                               For the Six  
                                               For the Six       Months     
                                              Months Ended    Months Ended  
                                              June 30, 2013   June 30, 2012 
                                             --------------  -------------- 
                                               (Unaudited)     (Unaudited)  
                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES:                                       
Net loss                                     $     (141,714) $   (3,365,596)
                                                                            
Adjustments to reconcile net loss to net                                    
 cash provided by (used in) operating                                       
 activities                                                                 
  Depreciation expense                            1,432,247       1,417,754 
  Amortization expense                               90,552          24,861 
  Change in fair value of derivative                                        
   liability                                       (920,338)            129 
  (Gain) loss from foreign currency exchange                                
   rate change on marketable securities                   -          61,995 
  Impairment other than temporary -                                         
   marketable securities                                  -         386,941 
  Stock based compensation                          501,815         506,926 
  Changes in operating assets and                                           
   liabilities:                                           -                 
    Bank acceptance notes receivable             (1,132,558)              - 
    Accounts receivable                           6,640,189         (29,284)
    Inventories                                  (7,689,157)     19,814,593 
    Adva
nce on purchases                            (40,034)       (814,011)
    Prepayments and other current assets           (761,181)              - 
    Bank acceptance notes payable                         -         580,859 
    Accounts payable                              3,883,794     (17,569,656)
    Customer deposits                            (1,323,944)     (5,152,574)
    Taxes payable                                (1,291,579)        297,140 
    Advance for Stock Subscription                  (80,000)              - 
    Accrued expenses and other current                                      
     liabilities                                 (1,246,756)     (1,112,164)
                                             --------------  -------------- 
                                                                            
NET CASH (USED IN) OPERATING ACTIVITIES          (2,078,664)     (4,952,087)
                                                                            
CASH FLOWS FROM INVESTING ACTIVITIES:                                       
  Proceeds from release of pledged deposits       5,517,104      12,163,902 
  Payment made towards pledged deposits         (11,041,193)    (13,665,517)
  (Purchase) disposal of property, plant and                                
   equipment                                       (165,656)     (1,343,721)
                                             --------------  -------------- 
                                                                            
NET CASH USED IN INVESTING ACTIVITIES            (5,689,745)     (2,845,336)
                                                                            
CASH FLOWS FROM FINANCING ACTIVITIES:                                       
  Proceeds from loans payable                    20,909,692      51,324,318 
  Repayment of loans payable                    (24,503,446)    (45,456,352)
  Banker's acceptance notes payable               7,376,187       3,167,414 
  Repayment of capital lease obligation            (315,572)     (1,073,817)
  Advances from (repayment to) Chairman and                                 
   CEO                                            2,153,815        (306,762)
  Proceeds from Related Party Loan                1,019,302               - 
  Proceeds from sales of common stock             1,621,356               - 
                                             --------------  -------------- 
                                                                            
NET CASH PROVIDED BY FINANCING ACTIVITIES         8,261,334       7,654,801 
                                                                            
EFFECT OF EXCHANGE RATE CHANGES ON CASH            (703,283)        (20,794)
                                             --------------  -------------- 
                                                                            
NET CHANGE IN CASH                                 (210,358)       (163,417)
                                                                            
Cash at beginning of the period                   1,367,171       1,042,591 
                                             --------------  -------------- 
                                                                            
Cash at end of the period                    $    1,156,813  $      879,174 
                                             ==============  ============== 
                                                          -                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS                                       
 INFORMATION:                                                               
    Interest paid                            $    1,244,142  $    1,256,282 
                                             ==============  ============== 
    Income tax paid                          $        7,157  $            - 
                                             ==============  ============== 
                                                                            
      See accompanying notes to the consolidated financial statements.      

  
US Contact:
Christina Xiong
Office: 650.212.7620 
Email: ir@armcometals.com
Website: www.armcometals.com 
China Contact: 
Ripple Zhang
Investor Relations
Office: 86-021-62375286
Email: ripple.zhang@armcometals.com
Website: www.armcometals.com 
 
 
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