PROSPECTUS
SUMMARY
|
1
|
|||
RISK
FACTORS
|
6
|
|||
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
16
|
|||
USE
OF PROCEEDS
|
18
|
|||
MARKET
PRICE OF COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|
18
|
|||
DIVIDEND
POLICY
|
19
|
|||
DILUTION
|
19
|
|||
SELECTED
CONSOLIDATED FINANCIAL DATA
|
20
|
|||
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
21
|
|||
BUSINESS
|
34
|
|||
MANAGEMENT
|
48
|
|||
EXECUTIVE
COMPENSATION
|
49
|
|||
TRANSACTIONS
WITH RELATED PERSONS AND CERTAIN CONTROL PERSONS
|
54
|
|||
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
58
|
|||
SELLING
SECURITY HOLDERS
|
58
|
|||
DESCRIPTION
OF CAPITAL STOCK
|
65
|
|||
IMPORTANT
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR NON-UNITED STATES
HOLDERS
|
65
|
|||
PLAN
OF DISTRIBUTION
|
69
|
|||
LEGAL
MATTERS
|
70
|
|||
EXPERTS
|
71
|
|||
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
|
71
|
|||
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-1
|
|||
|
·
|
Shanxi
Province
|
|
·
|
Inner
Mongolia Autonomous Region
|
|
·
|
Hebei
Province
|
|
·
|
Beijing
|
|
·
|
Tianjin
|
|
·
|
We
are a Large Volume Supplier of Coking Coal in China’s Top Coal
Province.
We currently have an annual coal washing capacity of 3.5 million
MT. All
three of our new coal cleaning facilities have become operational.
As such
a large volume supplier, we expect to continue to enjoy certain advantages
as we believe our primary customer base of coke and steel makers
will
continue to focus on suppliers that can deliver large volume, consistently
high quality coking coal.
|
|
·
|
Access
to High Quality Raw Coking Coal.
We have access to the high quality raw coking coal in Liulin County
- an
area famed as China’s “King of Coal”, which has high processing yield and
low processing cost. Jucai Coal is giving us priority over its other
customers and has agreed to supply us with our entire high quality
raw
coking coal requirements.
|
|
·
|
Low
Cost Producer.
We believe we have a competitive advantage over our competitors because
of
our processing know-how and experience, modern facilities, operating
efficiencies, and our strategic location in Shanxi Province’s Liulin
County. Our new cleaning facilities are projected to increase the
amount
of cleaned coking coal produced per MT of raw coking coal input,
although
there can be no assurance that we will be able to achieve such production
capacity in the future.
|
|
·
|
Rapid
Market Growth.
Demand for consistent quality cleaned coking coal is tied to the
demand
for steel. China’s steel production has continued to grow significantly
(up 28% in 2005 over 2004, 19.7% in 2006 over 2005 and 15% in 2007
over
2006. Steel is a key component of the rail systems, bridges, ports,
airports, construction projects and car production that are spearheading
China’s economic growth. Shanxi Province alone includes independent coke
producers that supply 50% of China’s coke and 80% of China’s exported
coke. With rail line access to Shanxi Province, Inner Mongolia Autonomous
Region, Hebei Province, Beijing and Tianjin, we can readily serve
China’s
growing appetite for steel production among our long-standing customers
-
mostly, coking companies that supply the steel mills and steel mills
with
their own coking facilities.
|
· |
the
plans and objectives of management for the future growth of Puda
and its
subsidiaries;
|
· |
our
plans and objectives related to the consummation of acquisitions
and
future private and public issuances of Puda’s equity and debt securities;
|
· |
our
expected access to sufficient quantities of high-quality coking coal
to
meet our future needs;
|
· |
our
ability to produce the optimum raw coking coal mix and at a lower
effective cost per MT, with increased yields;
|
· |
our
good positioning for participation in China’s modernization of the coal,
coking and steel making industries;
|
· |
our
expectation of achieving continued growth and executing our growth
strategy;
|
· |
increasing
production of cleaned coking coal;
|
· |
continued
rapid market growth in China’s steel industry and the demand for quality
cleansed coking coal;
|
· |
advantages
we expect to enjoy as a large volume supplier of high-quality coking
coal;
|
· |
our
good positioning to serve the demand for steel production in China;
|
· |
our
business strategy that should make us a leader of Shanxi Province’s future
coal sector;
|
· |
our
expectations of obtaining increased supplies of high-quality coking
coal
and achieving continued growth;
|
· |
our
ability to provide cleaned coking coal that meets industry specifications;
|
· |
competitive
advantage provided by our proprietary technology;
|
· |
the
continuation of China’s growing appetite for steel production;
|
· |
our
continued compliance with emission standards and other regulatory
developments;
|
· |
possible
increase in market share;
|
· |
increasing
yield realized in our new facilities;
|
· |
developing
coal export sales; and
|
· |
the
expectation that we will not experience significant credit risk.
|
|
High
|
Low
|
|||||
2006
- Quarter Ended:
|
|
|
|||||
March
31, 2006
|
$
|
4.70
|
$
|
1.95
|
|||
June
30, 2006
|
6.35
|
3.00
|
|||||
September
30, 2006
|
3.80
|
2.54
|
|||||
December
31, 2006
|
4.95
|
1.30
|
|||||
|
|||||||
2007
- Quarter Ended:
|
|||||||
March
31, 2007
|
$
|
1.34
|
$
|
0.77
|
|||
June
30, 2007
|
0.83
|
2.59
|
|||||
September
30, 2007
|
1.24
|
2.36
|
|||||
December
31, 2007
|
2.11
|
0.78
|
|||||
|
|||||||
2008
- Quarter Ended:
|
|||||||
March
31, 2008
|
$
|
0.29
|
$
|
0.27
|
Source:
Yahoo! Finance
|
|
|
Year
ended December 31,
|
|
|||||||||||||
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
|||||
|
|
$’000
|
|
$’000
|
|
$’000
|
|
$’000
|
|
$’000
|
|
|||||
OPERATIONS
DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
165,267
|
|
$
|
137,771
|
|
$
|
51,710
|
|
$
|
19,735
|
|
$
|
13,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
10,874
|
|
|
1,354
|
|
|
965
|
|
|
3,693
|
|
|
2,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
holder preference dividend
|
|
|
—
|
|
|
(2,717
|
)
|
|
(2,717
|
)
|
|
—
|
|
|
—
|
|
(Loss)/income
applicable to common Shares
|
|
$
|
10,874
|
|
$
|
(1,363
|
)
|
$
|
(1,752
|
)
|
$
|
3,693
|
|
|
2,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss)
per common share (basic and diluted)
|
|
$
|
0.11
|
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
$
|
0.05
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends declared per common Share
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.02
|
|
$
|
0.03
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
SHEET DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
81,264
|
|
$
|
62,984
|
|
$
|
46,701
|
|
$
|
11,344
|
|
$
|
11,707
|
|
Convertible
notes and warrants
|
|
$
|
7,421
|
|
$
|
13,894
|
|
$
|
18,925
|
|
$
|
—
|
|
$
|
—
|
|
Other
Long-term debt
|
|
$
|
9,100
|
|
$
|
10,400
|
|
$
|
11,700
|
|
$
|
—
|
|
$
|
—
|
|
Shareholders'
equity
|
|
$
|
48,581
|
|
$
|
23,037
|
|
$
|
6,082
|
|
$
|
7,149
|
|
$
|
5,849
|
|
|
First
|
Second
|
Third
|
Fourth
|
|
|||||||||||
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Year
|
|||||||||||
Year
Ended December 31, 2007
|
|
|
|
|
|
|||||||||||
Revenues
|
$
|
37,415
|
38,097
|
40,536
|
$
|
49,219
|
$
|
165,267
|
||||||||
Gross
profit
|
$
|
7,505
|
6,628
|
6.655
|
$
|
7,827
|
$
|
28,615
|
||||||||
Net
income/(loss)
|
$
|
3,847
|
(670
|
)
|
3,365
|
$
|
4,332
|
$
|
10,874
|
|||||||
Option
holder preference dividend
|
$
|
—
|
—
|
—
|
$
|
—
|
$
|
—
|
||||||||
Income/(loss)
applicable to common shares
|
$
|
3,847
|
(670
|
)
|
3,365
|
$
|
4,332
|
$
|
10,874
|
|||||||
Income/(loss)
per common share - basic and diluted
|
$
|
0.04
|
(0.00
|
)
|
0.03
|
$
|
0.04
|
$
|
0.11
|
|||||||
|
||||||||||||||||
Year
Ended December 31, 2006
|
||||||||||||||||
Revenues
|
$
|
20,771
|
$
|
30,943
|
$
|
42,650
|
$
|
43,407
|
$
|
137,771
|
||||||
Gross
profit
|
$
|
4,513
|
$
|
6,027
|
$
|
8,925
|
$
|
8,925
|
$
|
28,390
|
||||||
Net
(loss)/income
|
$
|
(6,445
|
)
|
$
|
(363
|
)
|
$
|
2,166
|
$
|
5,996
|
$
|
1,354
|
||||
Option
holder preference dividend
|
$
|
(2,717
|
)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
(2,717
|
)
|
||||
(Loss)/income
applicable to common shares
|
$
|
(9,162
|
)
|
$
|
(363
|
)
|
$
|
2,166
|
$
|
5,996
|
$
|
(1,363
|
)
|
|||
(Loss)/income
per common share -basic
|
$
|
(0.13
|
)
|
$
|
(0.00
|
)
|
$
|
0.03
|
$
|
0.08
|
$
|
(0.02
|
)
|
|||
(Loss)/income
per common share -diluted
|
$
|
(0.13
|
)
|
$
|
(0.00
|
)
|
$
|
0.02
|
$
|
0.09
|
$
|
(0.02
|
)
|
Obligations
|
Total
|
Less Than
One Year
|
1-3 Years
|
3-5 Years
|
More than 5
Years
|
|||||||||||
Long
Term Debt Obligations
|
$
|
10,400
|
$
|
1,300
|
$
|
2,600
|
$
|
2,600
|
$
|
3,900
|
||||||
Capital
Lease Obligations
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Operating
Lease Obligations
|
$
|
6
|
$
|
6
|
-
|
-
|
-
|
|||||||||
Purchase
Obligations
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Repayment
Obligations under Line of Credit
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
10,406
|
$
|
1,306
|
$
|
2,600
|
$
|
2,600
|
$
|
3,900
|
|
·
|
Shanxi
Province
|
|
·
|
Inner
Mongolia Autonomous Region
|
|
·
|
Hebei
Province
|
|
·
|
Beijing
|
|
·
|
Tianjin
|
|
·
|
Puda
Coal, Inc.: Mr. Ming Zhao (approximately 74%); Mr. Yao Zhao (approximately
18%) held directly.
|
|
·
|
Puda
Investment Holding Limited (“BVI”): Mr. Ming Zhao (approximately 74%); Mr.
Yao Zhao (approximately 18%) held indirectly through
Puda.
|
|
·
|
Taiyuan
Putai Business Consulting Co., Ltd. (now known as Shanxi Putai Resources
Limited): Mr. Ming Zhao (approximately 74%); Mr. Yao Zhao (approximately
18%) held indirectly through Puda and
BVI.
|
|
·
|
Shanxi
Puda Coal Group Co., Ltd.: Mr. Ming Zhao (80%); Mr. Yao Zhao (20%)
held
directly.
|
|
·
|
Coal-fired
power plants
|
|
·
|
Steel
manufacturing
|
|
·
|
Metallurgy
of non-ferrous metals
|
|
·
|
Cement
production
|
|
·
|
High
quality raw coking coal is needed to consistently meet our customer
specifications for cleaned coking coal, with our larger customers
insisting on even greater levels of quality consistency to improve
the
operating efficiency, pollution control and profits of their
operations.
|
|
·
|
If
we are required to use a lower quality of raw coking coal, the yield,
or
the volume of cleaned coking coal produced from a MT of raw coking
coal,
will be reduced and adversely affect our gross
margins.
|
|
·
|
The
further the cleaning facilities are from the mines, the higher the
cost to
transport raw coal from the mines to the cleaning facilities, a cost
typically absorbed by the coal cleaning facility. Our current and
new
cleaning facilities are all located in close proximity to our major
raw
coking coal sources, especially Jucai Coal and the other two related
party
mines.
|
|
·
|
Liujiazhuang
Coal Mine
-
Shanxi Coal purchased about $2,522,655, $6,270,458 and $8,065,596
of raw
coal from this mine in 2005, 2006 and 2007,
respectively.
|
|
·
|
Liulin
Dadongzhuang Coal Mine
-
Shanxi Coal purchased about $4,443,774, $5,995,774 and $7,880,949
of raw
coal from this mine in 2005, 2006 and 2007, respectively.
|
·
|
Shanxi
Liulin Jucai Plant
-
This facility, which we ceased operating on December 31, 2005, has
an
annual clean coal washing capacity of 100,000 MT. It is located in
Liulin
County and was leased to us by Jucai Coal. The leasing agreement
was
entered into on December 2, 2001 for a term of 5 years. The cost
for the
leased capacity was approximately $604,000 annually with four quarterly
payments per year. This plant is located about 5 miles from the cleaned
coal storage facility used by us to store clean coal until customer
pick
up. The lease for this plant expired in December 31, 2005 and was
not
renewed.
|
· |
Shanxi
Liulin Dongqiang Plant
-
This facility has an annual clean coal washing capacity of 400,000 MT.
This facility is owned by Shanxi Coal, has a land area of approximately
1.5 hectares, and is located about 15 miles from Jucai Coal. This
plant is
located about ½ miles from the cleaned coal storage facility used by
Shanxi Coal.
|
|
·
|
New
Shanxi Liulin Jucai Plant
-
This facility, which is adjacent to the formerly leased Shanxi Liulin
Jucai Plant in Liulin County and located in Liulin County about 2
miles
away from Jucai Coal, has an annual cleaning capacity of 1.1 million
MT.
After completing its testing phase, the New Shanxi Liulin Jucai Plant
became fully operational in December 2005. This new facility has
separate
land use rights owned by Shanxi Coal. Shanxi Coal purchased New Shanxi
Liulin Jucai Plant from Resources Group, a related party, at cost
for
approximately $5,800,000 of which $900,000 is for the 50-year land
use
rights, $1,000,000 is for the plant and $3,900,000 is for the equipment.
Resources Group financed the new facility under a
loan.
|
|
·
|
New
Zhongyang Plant
-
This facility, which is located in Zhongyang County approximately
15 miles
from Jucai Coal and about 3 miles from Resources Group’s Zhongyang Coal
Mine, has an annual cleaning capacity of 1.2 million MT. This facility
became fully operational in April 2006. The new facility has a large
storage facility and rail dock. We purchased New Zhongyang Plant
from
Resources Group at cost for approximately $7,200,000 of which $2,000,000
is for the 50-year land use rights, $1,000,000 is for the plant and
$4,200,000 is for the equipment. Resources Group financed the new
facility
under a loan.
|
|
·
|
New
Lingshi Plant
-
This facility, which is located in Lingshi County, has an annual
coal
washing capacity of 1.2 million MT. We purchased this facility through
an
asset exchange with Lingshi Jinliao Coal & Chemical Co. Ltd. (“Lingshi
Coal & Chemical”) on June 22, 2007. Upon the closing of the asset
exchange, Shanxi Coal acquired all the assets of a coal washing plant
of
Lingshi Coal & Chemical, which has an annual coal washing capacity of
1.2 million tons and a book value of RMB 57 million (approximately
$7.4
million). In exchange, Lingshi Coal & Chemical received RMB 45.5
million (approximately $5.9 million) in cash from Shanxi Coal and
all the
assets of a coal washing plant of Shanxi Coal located in Liulin County
of
the same province, which has an annual coal washing capacity of 400,000
tons and a book value of RMB 11.5 million (approximately $1.5
million).
|
|
·
|
Shanxi
Province
|
|
·
|
Inner
Mongolia Autonomous Region
|
|
·
|
Hebei
Province
|
|
·
|
Beijing
|
|
·
|
Tianjin
|
Department
|
|
Job
Title / Responsibility
|
|
Number
of
Employees
|
Corporate
|
|
President,
Vice Presidents, Managers
|
|
9
|
Finance
|
|
Finance
and Accounting
|
|
10
|
Supply;
Marketing and Sales
|
|
Purchase
raw coal and maintain relationship with suppliers; Sell cleaned coal,
maintain relationship with customers, and acquire new
customers
|
|
34
|
Transportation
|
|
Short-range
truck drivers (within plant)
|
|
8
|
Production
|
|
Produce
cleaned coal
|
|
155
|
Quality
Control
|
|
Quality
check on input (raw coal) and output (cleaned coal)
|
|
17
|
Reception
and Security
|
|
Administrative
matters on reception and security
|
|
12
|
Total
|
|
|
|
245
|
Risk
Covered
|
Insured
Amount
(RMB)
|
Insured
Amount
($)
|
Premium
(RMB)
|
Premium
($)
|
|||||||||
Risk
of Loss of New Equipment
|
18,000,000
|
2,374,232
|
64,800
|
8,547
|
|||||||||
Third
Party Liability
|
200,000
|
26,380
|
1,774
|
234
|
|||||||||
Risk
of Theft and Robbery
|
|||||||||||||
Irrespective
of Percentage *
|
110,000,000
|
14,509,194
|
396,000
|
52,233
|
|||||||||
Risk
of Spontaneous Combustion
|
43,000,000
|
5,671,776
|
154,800
|
20,418
|
|||||||||
Risk
of Malicious Damage
|
75,000,000
|
9,892,632
|
270,000
|
35,613
|
|||||||||
Total
|
246,200,000
|
32,474,213
|
887,374
|
117,046
|
NAME
|
|
AGE
|
|
POSITION
|
Ming Zhao
|
|
35
|
|
Chief Executive Officer, President and Chairman of the board of directors
|
Xia Jin
|
|
42
|
|
Chief Financial Officer
|
Wenwei Tian
|
|
37
|
|
Chief Operating Officer and Director of Investor Relations
|
Lawrence S. Wizel
|
|
64
|
|
Director
|
C. Mark Tang
|
|
43
|
|
Director
|
Jianfei Ni
|
|
61
|
|
Director
|
Name
and
Principal
Position
|
|
Year
|
|
Salary ($)
(1)
|
|
Other
Annual
Compensation
(1)(2) ($)
|
|
Total (1)($)
|
|
||||
Ming
Zhao (President and Chief Executive Officer)(3)
|
|
|
2007
2006
2005
|
|
|
102,883
79,747
20,000
|
|
|
12,346
9,570
2,400
|
|
|
115,229
89,317
22,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xia
Jin (Chief Financial Officer)(3)
|
|
|
2007
2006
2005
|
|
|
15,568
14,889
11,920
|
|
|
1,868
1,787
1,430
|
|
|
17,436
16,676
13,350
|
|
|
(1)
|
All
compensations were paid in Renminbi but are reported in U.S. dollars.
The
currency conversion ratio we used to report the compensation in the
table
is 7.5814, which is the average
conversion ratio for fiscal year 2007, consistent with the conversion
ratio we used in our financial statements for the fiscal year ended
December 31, 2007.
|
|
(2)
|
In
accordance with Chinese law, we contributed 12% of the base salary of
each employee (including named executive officers) to such employees’
social pension insurance. These amounts are included in the “Other Annual
Compensation” column of this Summary Compensation
Table.
|
|
(3)
|
Mr.
Ming Zhao and Ms. Xia Jin became our CEO and CFO on July 15, 2005
upon the
closing of the Exchange Agreement with Putai, Shanxi Coal, BVI, Ming
Zhao,
Yao Zhao and Worldwide Gateway Co.,
Ltd.
|
Name
(1)
|
|
Fees Earned or
Paid
in
Cash
($)
|
|
Stock
Awards ($)(2)
|
|
Option
Awards ($)(2)
|
|
Total
($)
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Lawrence
Wizel
|
|
|
20,000
|
(3)
|
|
11,875
|
(4)
|
|
-
|
|
|
31,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C
Mark Tang
|
|
|
20,000
|
(5)
|
|
13,021
|
(6)
|
|
-
|
|
|
33,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jianfei
Ni
|
|
|
-
|
|
|
-
|
|
|
20,700
|
(7)
|
|
20,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
director candidates
|
|
|
None
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1)
|
Mr.
Ming Zhao, Chairman of our board of directors, is also our CEO. He
received no compensation for his services as a
director.
|
|
(2)
|
Represent
the dollar amount recognized for financial statement reporting purposes
with respect to the fiscal year 2007 in accordance with FSAS
123R.
|
|
(3)
|
Fifty
percent of the $40,000 cash retainer to Mr. Lawrence S. Wizel was
earned
in fiscal year 2007 and paid on each of August 15, 2007 and November
22,
2007.
|
|
(4)
|
Fifty
percent of the 12,500 shares granted to Mr. Lawrence S. Wizel were
vested
in fiscal year 2007, even though none of these shares were issued
as of
December 31, 2007. The grant date fair value of the shares computed
in
accordance with FSAS 123(R) is $23,750.
|
|
(5)
|
Fifty
percent of the $40,000 cash retainer to Dr. C. Mark Tang was earned
in
fiscal year 2007 and paid on November 22,
2007.
|
|
(6)
|
Fifty
percent of the 13,021 shares granted to Dr. C. Mark Tang were vested
in
fiscal year 2007, even though none of these shares were issued as
of
December 31, 2007. The grant date fair value of the shares computed
in
accordance with FSAS 123(R) is
$26,042.
|
|
(7)
|
All
the 10,000 warrants granted to Mr. Jianfei Ni were vested in fiscal
year
ended 2007, even though none of the warrants were issued as of December
31, 2007. The grant date fair value of the warrants computed in accordance
with FSAS 123(R) is $20,700.
|
|
|
December
31,
2007
(1)
|
|
December 31,
2006
(1)
|
|
||
|
|
$’000
|
|
$’000
|
|
||
|
|
|
|
|
|
||
Other
receivable from Ming Zhao, CEO, director and major shareholder of
Puda
|
|
$
|
4
|
|
$
|
9
|
|
Advance
to Shanxi Liulin Jucai Coal Industry Co., Limited (“Jucai Coal”), a
related company with a common owner
|
|
$
|
685
|
|
$
|
602
|
|
|
|
|
|
|
|
|
|
Accounts
payable to Jucai Coal
|
|
$
|
182
|
|
$
|
221
|
|
Other
payable to Shanxi Puda Resources Group Limited (“Resources Group”), a
related company with common owners
|
|
$
|
743
|
(2)
|
$
|
696
|
|
|
|
|
|
|
|
|
|
Other
payable to Yao Zhao, manager and shareholder of
Puda (3)
|
|
|
215
|
|
|
205
|
|
Other
payable to Ming Zhao and Yao Zhao
|
|
|
893
|
(4)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,851
|
|
$
|
901
|
|
Loan
payable to Resources Group
|
|
|
|
|
|
|
|
-current
portion
|
|
$
|
1,300
|
|
$
|
1,300
|
|
-long-term
portion
|
|
|
9,100
|
|
|
10,400
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,400
|
|
$
|
11,700
|
|
Name of Beneficial Owner
|
Amount of
Beneficial Ownership
|
Percent of
Beneficial Ownership
|
Amount of
Beneficial
Ownership
After
Offering
|
Percent of
Beneficial
Ownership
After
Offering(2)
|
|||||||||
Ming
Zhao, CEO (1)
|
53,100,000
|
50.45
|
%
|
53,100,000
|
42.12
|
%
|
|||||||
Yao
Zhao (1)
|
13,275,000
|
12.61
|
%
|
13,275,000
|
12.61
|
%
|
|||||||
Xia
Jin, CFO (1)
|
0
|
0
|
0
|
0
|
|||||||||
Lawrence
S. Wizel, director (1)
|
0
|
(3)
|
0
|
0
|
(3)
|
0
|
|||||||
C.
Mark Tang, director (1)
|
0
|
(3)
|
0
|
0
|
(3)
|
0
|
|||||||
Jianfei
Ni, director (1)
|
0
|
(3)
|
0
|
0
|
(3)
|
0
|
|||||||
All
executive officers and directors as a group
|
66,375,000
|
63.06
|
%
|
66,375,000
|
42.12
|
%
|
(1)
|
Address
is c/o Shanxi Puda Coal Group Co., Ltd. 426 Xuefu Street, Taiyuan,
Shanxi
Province, China.
|
(2)
|
Assumes
that all of the notes are converted and all of the warrants are
exercised.
|
|
|
(3)
|
As
of March 13, 2007, none of the shares or warrants granted to the
directors
was issued or outstanding.
|
Number of Shares of Common Stock Beneficially Owned
Prior To Offering
|
Number
of
Shares
of
Common
Stock
Being
Offered
|
Shares of
Common Stock Owned After
the Offering (1)
|
||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
||||||||||||||||
Name
of Selling Security Holder
|
Common
Stock
Issuable
upon
Note
Conversion
|
Common
Stock
Issuable
upon
Warrant
Exercise
|
Common
Stock (excluding penalty shares)
|
Penalty
Shares
|
Total
|
|||||||||||||||||
Alpha
Capital AG
(Konrad
Acherman (2))
|
0
|
700,000
|
0
|
0
|
700,000
|
700,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Anasazi
Partners III
Offshore,
Ltd.**(11)
(Christopher
P. Baker (2))
|
100,000
|
400,000
|
0
|
0
|
500,000
|
500,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Anasazi
Partners III, LLC ** (11)
(Christopher
P. Baker (2))
|
300,000
|
600,000
|
0
|
0
|
900,000
|
900,000
|
0
|
EMERGING
MARKETS
(Alberto
Foa, Giovanni Brambilla (2))
|
0
|
0
|
400,000
|
9,258
|
409,258
|
400,000
|
9,258
|
Anima
S.G.R.p.A. RUBRICA ANIMA
(Alberto
Foa, Giovanni Brambilla (2))
|
0
|
0
|
1,100,000
|
25,460
|
1,125,460
|
1,100,000
|
25,460
|
|||||||||||||||
|
||||||||||||||||||||||
Baker,
Adrienne ** (11)
|
0
|
50,000
|
0
|
0
|
50,000
|
50,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Baker,
Christopher ** (11)
|
200,000
|
400,000
|
0
|
0
|
600,000
|
600,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Banca
Gesfid (Graziano Deli (2))
|
0
|
0
|
800,000
|
18,516
|
818,516
|
800,000
|
18,516
|
|||||||||||||||
|
||||||||||||||||||||||
Barish,
Michael
|
200,000
|
200,000
|
0
|
4,629
|
404,629
|
400,000
|
4,629
|
|||||||||||||||
|
||||||||||||||||||||||
Barletta,
Joseph & Karen
|
50,000
|
50,000
|
0
|
1,157
|
101,157
|
100,000
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
Baum,
David M.
|
0
|
400,000
|
0
|
0
|
400,000
|
400,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Beeman
Insurance Agency Inc.
(Dean
S. Kachudis (2))
|
0
|
50,000
|
25,000
|
1,157
|
76,157
|
75000
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
CCM
Master Qualified Fund, Ltd. (Clint D. Coghill
(2))
|
0
|
200,000
|
0
|
0
|
200,000
|
200,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
CIM
Dividend Income Fund Limited (3)(12)
(R.
James P. Morton (2))
|
0
|
0
|
712,400
|
14,103
|
726,503
|
712,400
|
14,103
|
|||||||||||||||
|
||||||||||||||||||||||
Chilcott,
John
|
0
|
100,000
|
0
|
0
|
100,000
|
100,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
CIM
Special Situations Limited (3)(12)
(R.
James P. Morton (2))
|
0
|
0
|
50,000
|
0
|
50,000
|
50,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Cimarolo
Partners, LLC ** (11)
(Christopher
P. Baker (2))
|
0
|
200,000
|
0
|
0
|
200,000
|
200,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Conn,
Michael
|
0
|
50,000
|
0
|
1,157
|
51,157
|
50,000
|
1,157
|
Crestview
Capital Master, LLC * (11)
(Stewart
Flink, Robert Hoyt, Daniel Warsh
(2)(4))
|
0
|
1,950,375
|
0
|
0
|
1,950,375
|
1,950,375
|
0
|
Datsopoulos,
Milton
|
200,000
|
0
|
0
|
4,629
|
204,629
|
200,000
|
4,629
|
|||||||||||||||
|
||||||||||||||||||||||
DiPietro,
Robert
|
0
|
50,000
|
50,000
|
1,157
|
101,157
|
100,000
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
F.
Berdon Co. L.P. ** (11)
(Fredierick
Berdon (2))
|
0
|
500,000
|
0
|
5,786
|
505,786
|
500,000
|
5,786
|
|||||||||||||||
|
||||||||||||||||||||||
Flynn,
Jason
|
0
|
50,000
|
50,000
|
1,157
|
101,157
|
100,000
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
Fuller,
James H.
|
0
|
50,000
|
39,843
|
1,157
|
91,000
|
89,843
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
Gerdz
Investments Limited Partnership, RLLLP
(Robert
Zappa (2))
|
0
|
50,000
|
50,000
|
1,157
|
101,157
|
100,000
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
Grose,
D. Austin
|
0
|
100,000
|
50,000
|
2,315
|
152,315
|
150,000
|
2,315
|
|||||||||||||||
|
||||||||||||||||||||||
H.L.
Severance Inc., Pension Plan & Trust
(H.
Leigh Severance (2)(5))
|
0
|
100,000
|
90,000
|
2,315
|
192,315
|
190,000
|
2,315
|
|||||||||||||||
|
||||||||||||||||||||||
H.L.
Severance Inc., Profit Sharing Plan & Trust
(H.
Leigh Severance (2)(6))
|
0
|
150,000
|
122,900
|
3,472
|
276,372
|
272,900
|
3,472
|
|||||||||||||||
|
||||||||||||||||||||||
Hodel,
Ann
|
0
|
50,000
|
0
|
1,157
|
51,157
|
50,000
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
Hollman,
Mark & Stacia (7)
|
30,000
|
50,000
|
0
|
0
|
80,000
|
80,000
|
0
|
|||||||||||||||
Jayhawk
China Fund (Cayman) Ltd.
(Kent
C. McCarthy (2))
|
0
|
0
|
381,030
|
0
|
381,030
|
381,030
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Hollman,
Scott
|
100,000
|
100,000
|
0
|
2,315
|
202,315
|
200,000
|
2,315
|
|||||||||||||||
|
||||||||||||||||||||||
Johnson,
Bruce ** (11)
|
150,000
|
150,000
|
0
|
3,472
|
303,472
|
300,000
|
3,472
|
|||||||||||||||
|
||||||||||||||||||||||
Kahn,
Sheldon & Liron, Sarah (8)
|
0
|
400,000
|
0
|
0
|
400,000
|
400,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Lapidus,
Robert & Donna (8)
|
0
|
0
|
20,000
|
1,157
|
21,157
|
20,000
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
Lemak,
John S. ** (11)
|
0
|
200,000
|
0
|
4,629
|
204,629
|
200,000
|
4,629
|
|
||||||||||||||||||||||
Levy,
Peter
|
0
|
0
|
100,000
|
2,315
|
102,315
|
100,000
|
2,315
|
Masters,
Paul IRA ** (11)
|
0
|
150,000
|
0
|
2,315
|
152,315
|
150,000
|
2,315
|
|||||||||||||||
|
||||||||||||||||||||||
Micek
II, John Revocable Trust Dated 03/27/03
(John
Micek (2))
|
0
|
150,000
|
0
|
150,000
|
150,000
|
0
|
||||||||||||||||
|
||||||||||||||||||||||
Micek
III, John
|
0
|
200,000
|
127,500
|
4,629
|
332,129
|
327,500
|
4,629
|
|||||||||||||||
|
||||||||||||||||||||||
Micek,
Maurice & Jennifer (8)
|
0
|
150,000
|
0
|
0
|
150,000
|
150,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Micek,
Maurice Custodian for Andrew Micek
(Maurice
Micek (2))
|
0
|
50,000
|
0
|
0
|
50,000
|
50,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Micek,
Maurice Custodian for Benjamin Micek
(Maurice
Micek (2))
|
0
|
50,000
|
0
|
0
|
50,000
|
50,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Midsouth
Investor Fund LP ** (11)
(Lyman
O. Heidtke (2))
|
0
|
200,000
|
0
|
0
|
200,000
|
200,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Murphy,
Brian
|
0
|
0
|
50,000
|
1,157
|
51,157
|
50,000
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
Parsley,
Rod
|
50,000
|
50,000
|
0
|
1,157
|
101,157
|
100,000
|
1,157
|
|||||||||||||||
|
||||||||||||||||||||||
Teawood
Nominees Limited (12)
(R.
James P. Morton (2))
|
0
|
100,000
|
0
|
6,944
|
106,944
|
100,000
|
6,944
|
|||||||||||||||
|
||||||||||||||||||||||
Platinum
Global Dividend Fund (3)(12)
(R.
James P. Morton (2))
|
0
|
0
|
174,397
|
0
|
174,397
|
174,397
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Professional
Offshore Opportunity Fund Ltd
(Howard
Boyer and Marc Swickle (2))
|
2,000,000
|
2,100,000
|
0
|
0
|
4,100,000
|
4,100,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Professional
Traders Fund, LLC
(Howard
Boyer and Marc Swickle(2))
|
0
|
200,000
|
0
|
4,629
|
204,629
|
200,000
|
4,629
|
|||||||||||||||
|
||||||||||||||||||||||
Purvis,
Steve
|
100,000
|
100,000
|
0
|
2,315
|
202,315
|
200,000
|
2,315
|
Samuels,
Leonard & Kaplan-Samuels, Leah (8)
|
0
|
0
|
200,000
|
3,472
|
203,472
|
200,000
|
3,472
|
|||||||||||||||
|
||||||||||||||||||||||
Sandor
Capital Master Fund, L. P.**
(John
Lemak (2))
|
0
|
1,000,000
|
0
|
23,145
|
1,023,145
|
1,000,000
|
23,145
|
|||||||||||||||
Severance,
H. Leigh
|
0
|
250,000
|
0
|
0
|
250,000
|
250,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Silicon
Prairie Partners, L. P.
(John
Micek (2))
|
0
|
300,000
|
250,000
|
6,944
|
556,944
|
550,000
|
6,944
|
|||||||||||||||
|
||||||||||||||||||||||
Silver
Rock I Limited (Rima Salam (2))
|
0
|
500,000
|
0
|
11,573
|
511,573
|
500,000
|
11,573
|
|||||||||||||||
|
||||||||||||||||||||||
Stowell,
Kurt
|
0
|
50,000
|
0
|
0
|
50,000
|
50,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Thompson,
Jack
|
0
|
150,000
|
133,500
|
3,472
|
286,972
|
283,500
|
3,472
|
|||||||||||||||
|
||||||||||||||||||||||
Ungar,
Jonathan
|
0
|
200,000
|
0
|
4,629
|
204,629
|
200,000
|
4,629
|
|||||||||||||||
|
||||||||||||||||||||||
Vicis
Capital Master Fund
(John
Succo, Sky Lucas and Shad Stastny (2))
|
1,000,000
|
1,000,000
|
0
|
23,145
|
2,023,145
|
2,000,000
|
23,145
|
|||||||||||||||
|
||||||||||||||||||||||
Vision
Opportunity (Adam Benowitz (2))
|
0
|
0
|
3,500,000
|
0
|
3,500,000
|
3,500,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Whalehaven
Capital Fund Limited (9)
(Arthur
Jones, Trevor Williams, Macro
Weisfeld,
Michael Fwkelskin (2))
|
0
|
1,200,000
|
0
|
0
|
1,200,000
|
1,200,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
White
Sand Investor Group, LP (10)
(Elliott
Donnelley, Owen Donnelley and
Marshall
Donnelley (2))
|
0
|
0
|
100,000
|
2,315
|
102,315
|
100,000
|
2,315
|
|||||||||||||||
|
||||||||||||||||||||||
Wrolstad,
Christopher * (11)
|
0
|
164,167
|
0
|
2,315
|
166,482
|
164,167
|
2,315
|
|||||||||||||||
|
||||||||||||||||||||||
Zelinger,
Steven & Gordon, Lisa (8)
|
0
|
50,000
|
50,000
|
1,157
|
101,157
|
100,000
|
1,157
|
Andrews,
Jeff ** (3)
|
0
|
147,500
|
0
|
0
|
147,500
|
147,500
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Henricks,
Steve** (3)
|
0
|
337,500
|
0
|
0
|
337,500
|
337,500
|
0
|
Haag,
Randy ** (3)
|
0
|
0
|
100,000
|
0
|
100,000
|
100,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Rogers,
Kyle ** (3)
|
0
|
60,000
|
0
|
0
|
60,000
|
60,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Calicchia,
Vincent ** (3)
|
0
|
1,443
|
0
|
0
|
1,443
|
1,443
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Serna,
Pablo
|
0
|
0
|
4,630
|
0
|
4,630
|
4,630
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Troccoli,
Carmelo ** (3)
|
0
|
2,350
|
0
|
0
|
2,350
|
2,350
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Legend
Merchant Group, Inc. * (3) (John
H.
Shaw III (2))
|
0
|
27,125
|
0
|
0
|
27,125
|
27,125
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
Garisch
Financial Inc. (Frederic M. Schweiger (2))
|
0
|
50,000
|
0
|
0
|
50,000
|
50,000
|
0
|
|||||||||||||||
|
||||||||||||||||||||||
TOTAL
|
4,480,000
|
16,340,460
|
8,731,200
|
265,230
|
29,816,890
|
29,551,660
|
265,230
|
*
|
Denotes
a broker-dealer.
|
|
|
**
|
Denotes
an affiliate of a broker-dealer.
|
(1)
|
Assumes
that all of the shares offered hereby are sold and that shares owned
before the offering but not offered hereby are not
sold.
|
|
|
(2)
|
Individual(s)
who has sole or shared power to vote, sell, transfer or otherwise
dispose
of the common stock.
|
|
|
(3)
|
Selling
Security Holder is an underwriter of this offering. The Company has
no
material relationship with such Selling Security Holder. The underwriter
has no arrangement under which the underwriter may purchase additional
shares in connection with this offering. At the time of acquisition
of the
securities, the Selling Security Holder had no understanding, directly
or
indirectly, with any person to distribute the securities being offered
hereunder.
|
|
|
(4)
|
Managing
Partners of Crestview Capital Partners, LLC.
|
|
|
(5)
|
Trustee
of the H.L. Severance Inc., Pension Plan & Trust.
|
|
|
(6)
|
Trustee
of the H.L. Severance Inc., Profit Sharing Plan &
Trust.
|
|
|
(7)
|
Tenants
by the Entirety.
|
|
|
(8)
|
Community
Property.
|
(9)
|
Arthur
Jones, Trevor Williams, Macro Weisfeld, and Michael Fwkelskin are
the
persons who have the power to vote, sell, transfer or otherwise dispose
of
the common stock upon Conversion, but disclaim beneficial ownership
thereof.
|
(10)
|
Elliott
Donnelley, Owen Donnelley and Marshall Donnelley, officers of the
White
Sand Investment Corporation, General Partner of White Sand Investor
Group,
LP have the power to vote, sell, transfer or otherwise dispose of
the
common stock upon Conversion.
|
(11)
|
Selling
Security Holder represented and warranted that the securities were
purchased in the ordinary course of business, and at the time of
purchase,
had no agreements or understandings, directly or indirectly, with
any
party to distribute the securities.
|
(12)
|
Selling
Security Holder acquired securities when it was affiliated with a
broker-dealer and, at the time of acquisition, represented and warranted
that it had no plans to dispose of the securities. Selling Security
Holder
is no longer a broker-dealer as of the date of this
prospectus.
|
·
|
a
citizen or resident of the United
States;
|
·
|
a
corporation (or other entity treated as a corporation for United
States
federal income tax purposes) created or organized in or under the
laws of
the United States, any state thereof or the District of
Columbia;
|
·
|
an
estate the income of which is subject to United States federal income
taxation regardless of its source;
or
|
·
|
a
trust (i) which is subject to primary supervision by a court situated
within the United States and as to which one or more United States
persons
have the authority to control all substantial decisions of the trust,
or
(ii) that has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a United States person.
|
·
|
the
gain is effectively connected with a trade or business of the Non-U.S.
Holder in the United States or, where a tax treaty applies, is
attributable to a United States permanent establishment or fixed
base of
the Non-U.S. Holder;
|
·
|
the
Non-U.S. Holder is an individual who is present in the United States
for
183 or more days during the taxable year of disposition, meets certain
other requirements and is not eligible for relief under an income
tax
treaty; or
|
·
|
we
are or have been a “U.S. real property holding corporation” within the
meaning of Section 897(c)(2) of the Code, also referred to as a USRPHC
(as
described below), for United States federal income tax purposes at
any
time within the five-year period preceding the disposition (or, if
shorter, the Non-U.S. Holder’s holding period for the common stock).
|
·
|
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
·
|
in
the over-the-counter market;
|
·
|
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
·
|
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
·
|
in
ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
|
·
|
through
block trades in which the broker-dealer will attempt to sell the
securities as agent but may position and resell a portion of the
block as
principal to facilitate the
transaction;
|
·
|
through
purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
|
·
|
in
an exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
in
privately negotiated transactions;
|
|
·
|
pursuant
to Rule 144 under the Securities Act;
|
|
·
|
involving
broker-dealers that may agree with the Selling Security Holders to
sell a
specified number of such securities at a stipulated price per
security;
|
|
·
|
through
a combination of any such methods of sale; and
|
|
·
|
through
any other method permitted pursuant to applicable
law.
|
F-2
|
||||
|
||||
Consolidated
Balance Sheets
|
F-3
- F-4
|
|||
|
||||
Consolidated
Statements of Operations
|
F5
- F-6
|
|||
|
||||
Consolidated
Statements of Changes in Stockholders’ Equity
|
F
7 - F-8
|
|||
|
||||
Consolidated
Statements of Cash Flows
|
F9
- F-10
|
|||
|
||||
Notes
to Consolidated Financial Statements
|
F-11
- F-36
|
|
Note(s)
|
|
December 31,
2007
|
|
December 31,
2006
|
|||||
ASSETS
|
|
|
|
|||||||
CURRENT
ASSETS
|
|
|
|
|||||||
Cash
and cash equivalents
|
22
|
$
|
16,381
|
$
|
24,943
|
|||||
Restricted
cash
|
3,
22
|
233
|
233
|
|||||||
Accounts
receivable, net
|
4
|
8,137
|
7,186
|
|||||||
Other
receivables
|
||||||||||
-
Related parties
|
5
|
4
|
9
|
|||||||
- Third
parties
|
6
|
40
|
||||||||
Advances
to suppliers
|
||||||||||
-
Related parties
|
5
|
685
|
602
|
|||||||
-
Third parties
|
1,363
|
538
|
||||||||
Deferred
charges
|
-
|
171
|
||||||||
Inventories
|
6
|
35,953
|
15,663
|
|||||||
|
||||||||||
Total
current assets
|
62,762
|
49,385
|
||||||||
|
||||||||||
PROPERTY,
PLANT AND EQUIPMENT, NET
|
7
|
15,018
|
9,870
|
|||||||
|
||||||||||
INTANGIBLE
ASSETS, NET
|
8
|
3,484
|
3,729
|
|||||||
|
||||||||||
TOTAL
ASSETS
|
$
|
81,264
|
$
|
62,984
|
||||||
|
||||||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||
CURRENT
LIABILITIES
|
||||||||||
Current
portion of long-term debt
|
||||||||||
-
Related party
|
5,
9
|
$
|
1,300
|
$
|
1,300
|
|||||
Accounts
payable
|
||||||||||
-
Related parties
|
5
|
182
|
221
|
|||||||
-
Third parties
|
2,140
|
2,531
|
||||||||
Other
payables
|
||||||||||
-
Related parties
|
1,
5
|
1,851
|
901
|
|||||||
-
Third parties
|
2,916
|
2,113
|
||||||||
Accrued
expenses
|
1,350
|
951
|
||||||||
Income
taxes payable
|
2,223
|
2,485
|
||||||||
VAT
payable
|
1,379
|
1,204
|
||||||||
Distribution
payable
|
1,096
|
1,026
|
Convertible
notes
|
10
|
1,841
|
-
|
|||||||
Derivative
conversion feature
|
10
|
1,100
|
-
|
|||||||
Penalty
payable
|
10
|
1,725
|
204
|
|||||||
|
||||||||||
Total
current liabilities
|
19,103
|
12,936
|
||||||||
|
||||||||||
LONG-TERM
LIABILITIES
|
||||||||||
Long-term
debt
|
||||||||||
-
Related party
|
5,
9
|
9,100
|
10,400
|
|||||||
Derivative
warrants
|
10
|
4,480
|
8,380
|
|||||||
Convertible
notes
|
10
|
-
|
3,108
|
|||||||
Derivative
conversion feature
|
10
|
-
|
2,406
|
|||||||
|
||||||||||
Total
long-term liabilities
|
13,580
|
24,294
|
|
Note(s)
|
|
December 31,
2007
|
|
December 31,
2006
|
|||||
|
|
|
|
|||||||
COMMITMENTS
AND CONTINGENCIES
|
11
|
|||||||||
|
||||||||||
TEMPORARY
EQUITY
|
||||||||||
Option
to buy-out Shanxi Coal
|
1
|
-
|
2,717
|
|||||||
|
||||||||||
STOCKHOLDERS’
EQUITY
|
||||||||||
Preferred
stock, authorized 5,000,000 shares, par value $0.01, issued and
outstanding None
|
-
|
-
|
||||||||
Common
stock, authorized 150,000,000 shares, par value $0.001, issued and
outstanding 105,252,176 (2006: 92,881,301)
|
105
|
93
|
||||||||
Paid-in
capital
|
28,304
|
16,506
|
||||||||
Statutory
surplus reserve fund
|
1,366
|
1,366
|
||||||||
Retained
earnings
|
14,807
|
3,933
|
||||||||
Accumulated
other comprehensive income
|
3,999
|
1,139
|
||||||||
|
||||||||||
Total
stockholders’ equity
|
48,581
|
23,037
|
||||||||
|
||||||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
81,264
|
$
|
62,984
|
|
|
Years ended December 31,
|
|||||||||||
|
Note(s)
|
|
2007
|
|
2006
|
|
2005
|
||||||
NET
REVENUE
|
$
|
165,267
|
$
|
137,771
|
$
|
51,710
|
|||||||
|
|||||||||||||
COST
OF REVENUE
|
(136,652
|
)
|
(109,381
|
)
|
(40,047
|
)
|
|||||||
|
|||||||||||||
GROSS
PROFIT
|
28,615
|
28,390
|
11,663
|
||||||||||
|
|||||||||||||
OPERATING
EXPENSES
|
|||||||||||||
Selling
expenses
|
2,975
|
3,231
|
791
|
||||||||||
General
and administrative expenses
|
2,215
|
2,387
|
789
|
||||||||||
|
|||||||||||||
TOTAL
OPERATING EXPENSES
|
5,190
|
5,618
|
1,580
|
||||||||||
|
|||||||||||||
INCOME
FROM OPERATIONS
|
23,425
|
22,772
|
10,083
|
||||||||||
|
|||||||||||||
GAIN
ON SHORT-TERM INVESTMENTS
|
-
|
-
|
6
|
||||||||||
|
|||||||||||||
INTEREST
INCOME
|
83
|
59
|
12
|
||||||||||
|
|||||||||||||
INTEREST
EXPENSE
|
14
|
(1,577
|
)
|
(4,441
|
)
|
(531
|
)
|
||||||
|
|||||||||||||
DEBT
FINANCING COSTS
|
15
|
(2,422
|
)
|
(10,669
|
)
|
(4,964
|
)
|
||||||
|
|||||||||||||
DERIVATIVE
UNREALIZED FAIR VALUE (LOSS)/GAIN
|
10(c),
16
|
(343
|
)
|
1,237
|
700
|
||||||||
|
|||||||||||||
OTHER
FINANCING EXPENSES
|
17
|
-
|
-
|
(902
|
)
|
||||||||
|
|||||||||||||
INCOME
BEFORE INCOME TAXES
|
19,166
|
8,958
|
4,404
|
||||||||||
|
|||||||||||||
INCOME
TAXES
|
18
|
(8,292
|
)
|
(7,604
|
)
|
(3,439
|
)
|
||||||
|
|||||||||||||
NET
INCOME
|
10,874
|
1,354
|
965
|
||||||||||
|
|||||||||||||
OTHER
COMPREHENSIVE INCOME
|
|||||||||||||
Foreign
currency translation adjustment
|
2,860
|
985
|
154
|
||||||||||
|
|||||||||||||
COMPREHENSIVE
INCOME
|
$
|
13,734
|
$
|
2,339
|
$
|
1,119
|
NET
INCOME
|
10,874
|
1,354
|
965
|
||||||||||
|
|||||||||||||
LESS:
DIVIDENDS
|
|||||||||||||
Option
holder preference dividend
|
1,
2(n)
|
-
|
(2,717
|
)
|
(2,717
|
)
|
|||||||
Common
dividend
|
-
|
-
|
-
|
||||||||||
|
|||||||||||||
UNDISTRIBUTED
EARNINGS
|
$
|
10,874
|
$
|
(1,363
|
)
|
$
|
(1,752
|
)
|
|
|
Years ended December 31,
|
|
||||||||||
|
|
Note(s)
|
|
2007
|
|
2006
|
|
2005
|
|||||
|
|
|
|
|
|||||||||
BASIC
EARNINGS/(LOSS) PER SHARE
|
|
|
|
|
|||||||||
-
Option holder preference
|
$
|
-
|
$
|
0.04
|
$
|
0.04
|
|||||||
-
Other common holders
|
0.11
|
(0.02
|
)
|
(0.03
|
)
|
||||||||
|
$
|
0.11
|
$
|
0.02
|
$
|
0.01
|
|||||||
|
|||||||||||||
DILUTED
EARNINGS/(LOSS) PER SHARE
|
|||||||||||||
-
Option holder preference
|
$
|
-
|
$
|
0.04
|
$
|
0.04
|
|||||||
-
Other common holders
|
0.11
|
(0.02
|
)
|
(0.03
|
)
|
||||||||
|
$
|
0.11
|
$
|
0.02
|
$
|
0.01
|
|||||||
|
|||||||||||||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING-BASIC
|
19
|
98,404,914
|
80,167,110
|
73,950,274
|
|||||||||
-DILUTED
|
19
|
100,591,136
|
80,329,032
|
77,576,036
|
COMMON STOCK
|
PAID-IN
CAPITAL
|
STATUTORY
SURPLUS
RESERVE
FUND
|
RETAINED
EARNINGS
|
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME
|
TOTAL
STOCKHOLDERS’
EQUITY
|
|||||||||||||||||
No. of
shares
|
Par
Value
|
|||||||||||||||||||||
Balance,
January 1, 2005, as recapitalized (see Notes 1 and 12)
|
73,750,000
|
$
|
74
|
$
|
2,643
|
$
|
1,243
|
$
|
3,189
|
$
|
-
|
$
|
7,149
|
|||||||||
Shareholder
contribution
|
-
|
-
|
50
|
-
|
-
|
-
|
50
|
|||||||||||||||
Notes
converted to common stock, at $0.50 per share (Note 10(c))
|
1,700,000
|
1
|
849
|
-
|
-
|
-
|
850
|
|||||||||||||||
Conversion
feature transferred to equity upon conversion (Note 10(c))
|
-
|
-
|
417
|
-
|
-
|
-
|
417
|
|||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
965
|
-
|
965
|
|||||||||||||||
Transfer
to statutory surplus reserve fund
|
-
|
-
|
-
|
123
|
(123
|
)
|
-
|
-
|
||||||||||||||
Dividend
distribution
|
-
|
-
|
-
|
-
|
(1,452
|
)
|
-
|
(1,452
|
)
|
|||||||||||||
Difference
between book value of assets of a related party and the purchase
price for
assets being conveyed from the related party
|
-
|
-
|
666
|
-
|
-
|
-
|
666
|
|||||||||||||||
Reclassification
to temporary equity (Note 1)
|
-
|
-
|
(2,717
|
)
|
-
|
-
|
-
|
(2,717
|
)
|
|||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
154
|
154
|
|||||||||||||||
|
||||||||||||||||||||||
Balance,
December 31, 2005
|
75,450,000
|
75
|
1,908
|
1,366
|
2,579
|
154
|
6,082
|
|||||||||||||||
|
||||||||||||||||||||||
Notes
converted to common stock, at $0.50 per share (Note 10(c))
|
13,500,000
|
14
|
6,736
|
-
|
-
|
-
|
6,750
|
|||||||||||||||
Exercise
of warrants, at $0.60 per share (Note 10(a)
|
3,100,000
|
3
|
1,857
|
-
|
-
|
-
|
1,860
|
|||||||||||||||
Cashless
exercise of placement agent warrants (Note 10(b))
|
242,180
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Derivative
conversion feature transferred to equity upon conversion (Note
10(c)
|
-
|
-
|
3,314
|
-
|
-
|
-
|
3,314
|
|||||||||||||||
Derivative
note warrants transferred to equity upon exercise (Note
10(c))
|
-
|
-
|
789
|
-
|
-
|
-
|
789
|
|||||||||||||||
Derivative
placement agent warrants transferred to equity upon exercise (Note
10(c))
|
-
|
-
|
882
|
-
|
-
|
-
|
882
|
|||||||||||||||
Issue
of common stock for services
|
10,000
|
-
|
21
|
-
|
-
|
-
|
21
|
|||||||||||||||
Issue
of common stock for fractional shares and round lot
holders
|
487
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Issue
of penalty shares (Note 10(a))
|
578,634
|
1
|
999
|
-
|
-
|
-
|
1,000
|
|||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
1,354
|
-
|
1,354
|
|||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
985
|
985
|
|||||||||||||||
|
||||||||||||||||||||||
Balance,
December 31, 2006
|
92,881,301
|
$
|
93
|
$
|
16,506
|
$
|
1,366
|
$
|
3,933
|
$
|
1,139
|
$
|
23,037
|
COMMON STOCK
|
PAID-IN
CAPITAL
|
STATUTORY
SURPLUS
RESERVE
FUND
|
RETAINED
EARNINGS
|
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME
|
TOTAL
STOCKHOLDERS’
EQUITY
|
|||||||||||||||||
No. of shares
|
Par
Value
|
|||||||||||||||||||||
Notes
converted to common stock, at $0.50 per share (Note 10(c))
|
5,320,000
|
5
|
2,655
|
-
|
-
|
-
|
2,660
|
|||||||||||||||
Exercise
of warrants, at $0.60 per share (Note 10(a))
|
6,000,000
|
6
|
3,594
|
-
|
-
|
-
|
3,600
|
|||||||||||||||
Cashless
exercise of placement agent warrants (Note 10(b)
|
1,050,875
|
1
|
-
|
-
|
-
|
-
|
1
|
|||||||||||||||
Derivative
conversion feature transferred to equity upon conversion (Note
10(c))
|
-
|
-
|
1,306
|
-
|
-
|
-
|
1,306
|
|||||||||||||||
Derivative
note warrants transferred to equity upon exercise (Note
10(c))
|
-
|
-
|
1,527
|
-
|
-
|
-
|
1,527
|
|||||||||||||||
Derivative
placement agent warrants transferred to equity upon exercise (Note
10(c))
|
-
|
-
|
2,716
|
-
|
-
|
-
|
2,716
|
|||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
10,874
|
-
|
10,874
|
|||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
2,860
|
2,860
|
|||||||||||||||
|
||||||||||||||||||||||
Balance,
December 31, 2007
|
105,252,176
|
$
|
105
|
$
|
28,304
|
$
|
1,366
|
$
|
14,807
|
$
|
3,999
|
$
|
48,581
|
|
|
Years ended December 31,
|
|||||||||||
|
Notes
|
2007
|
2006
|
2005
|
|||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|||||||||
Net
income
|
$
|
10,874
|
$
|
1,354
|
$
|
965
|
|||||||
Adjustments
to reconcile net income to net cash provided by operating
activities
|
|||||||||||||
Amortization
of land-use rights
|
78
|
78
|
9
|
||||||||||
Depreciation
|
1,252
|
953
|
183
|
||||||||||
Provision
for doubtful debts
|
1
|
10
|
5
|
||||||||||
Amortization
of debt issue costs
|
6
|
838
|
739
|
||||||||||
Amortization
of discount on convertible notes and warrants
|
895
|
8,627
|
4,225
|
||||||||||
Derivative
unrealized fair value loss/(gain)
|
343
|
(1,237
|
)
|
(700
|
)
|
||||||||
Discount
on converted shares and exercised warrants
|
663
|
2,898
|
417
|
||||||||||
Stock
compensation expense
|
46
|
-
|
-
|
||||||||||
Issue
of common stock for services
|
-
|
21
|
-
|
||||||||||
Issue
of common stock for penalty
|
-
|
1,000
|
-
|
||||||||||
Changes
in operating assets and liabilities:
|
|||||||||||||
Decrease
in short-term investments
|
117
|
||||||||||||
Increase
in accounts receivable
|
(444
|
)
|
(2,972
|
)
|
(1,507
|
)
|
|||||||
Decrease
in notes receivable
|
-
|
-
|
638
|
||||||||||
Decrease
in other receivables
|
41
|
4
|
2,251
|
||||||||||
(Increase)/decrease
in advances to suppliers
|
(799
|
)
|
1,819
|
(2,430
|
)
|
||||||||
Increase
in inventories
|
(18,518
|
)
|
(8,104
|
)
|
(3,994
|
)
|
|||||||
(Decrease)/increase
in accounts payable
|
(596
|
)
|
1,426
|
610
|
|||||||||
Increase
in accrued expenses
|
289
|
588
|
115
|
||||||||||
Increase
in other payables
|
1,553
|
1,432
|
1,094
|
||||||||||
(Decrease)/increase
in income tax payable
|
(415
|
)
|
1,088
|
(611
|
)
|
||||||||
Increase
in VAT payable
|
90
|
887
|
66
|
||||||||||
Increase
in penalty payable
|
1,521
|
204
|
-
|
||||||||||
Decrease/(increase)
in restricted cash
|
-
|
382
|
(615
|
)
|
|||||||||
|
|||||||||||||
Net
cash (used in)/provided by operating activities
|
(3,120
|
)
|
11,296
|
1,577
|
|||||||||
|
|||||||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||||||||
Purchase
of property, plant and equipment
|
(6,111
|
)
|
-
|
-
|
Payment
for the purchase of equity interest in Shanxi Coal
|
(1,799
|
)
|
-
|
-
|
|||||||||
|
|||||||||||||
Net
cash used in investing activities
|
(7,910
|
)
|
-
|
-
|
|||||||||
|
|||||||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||||||||
Exercise
of warrants
|
3,600
|
1,860
|
-
|
||||||||||
Repayment
of long-term debt
|
(1,300
|
)
|
(1,300
|
)
|
-
|
||||||||
Issue
of convertible notes
|
-
|
-
|
12,500
|
||||||||||
Debt
issue costs
|
-
|
-
|
(1,583
|
)
|
|||||||||
Shareholder
contribution
|
-
|
-
|
50
|
||||||||||
Distribution
paid to owners of a subsidiary
|
-
|
-
|
(947
|
)
|
|||||||||
|
|||||||||||||
Net
cash provided by financing activities
|
2,300
|
560
|
10,020
|
||||||||||
|
|||||||||||||
Effect
of exchange rate changes on cash
|
168
|
1,020
|
157
|
|
|
Years ended December 31,
|
|||||||||||
|
Notes
|
|
2007
|
|
2006
|
|
2005
|
||||||
|
|
|
|
|
|||||||||
Net
(decrease)/increase in cash and cash equivalents
|
(8,562
|
)
|
12,876
|
11,754
|
|||||||||
Cash
and cash equivalents at beginning of year
|
24,943
|
12,067
|
313
|
||||||||||
|
|||||||||||||
Cash
and cash equivalents at end of year
|
$
|
16,381
|
$
|
24,943
|
$
|
12,067
|
|||||||
|
|||||||||||||
Supplementary
cash flow information:
|
20
|
|
l
|
Puda
Coal, Inc.: Mr. Ming Zhao (approximately 50%); Mr. Yao Zhao (approximately
13%) held directly.
|
|
l
|
Puda
Investment Holding Limited: Mr. Ming Zhao (approximately 50%); Mr.
Yao
Zhao (approximately 13%) held indirectly through
Puda.
|
|
l
|
Shanxi
Putai Resources Limited: Mr. Ming Zhao (approximately 50%); Mr. Yao
Zhao
(approximately 13%) held indirectly through Puda and
BVI.
|
|
l
|
Shanxi
Puda Coal Group Co., Ltd.: Mr. Ming Zhao (8%); Mr. Yao Zhao (2%)
held
directly, Mr. Ming Zhao (approximately 45%); Mr. Yao Zhao (approximately
11.7%) held indirectly through Puda, BVI and
Putai.
|
Buildings
and facility
|
|
|
20
years
|
|
Machinery
and equipment
|
|
|
10
years
|
|
|
|
10
years
|
|
|
Office
equipment and others
|
|
|
10
years
|
|
|
|
December 31,
2007
|
|
December 31,
2006
|
|
||
|
|
’000
|
|
’000
|
|
||
|
|
|
|
|
|
||
Balance,
beginning of year
|
|
$
|
44
|
|
$
|
34
|
|
Additions
|
|
|
4
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Balance,
end of year
|
|
$
|
48
|
|
$
|
44
|
|
|
December 31,
2007
|
|
December 31,
2006
|
|
|||
|
|
$’000
|
|
$’000
|
|
||
Other
receivable from Ming Zhao, CEO, director and major shareholder of
Puda
|
|
$
|
4
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
Advance
to Shanxi Liulin Jucai Coal Industry Co., Limited (“Jucai Coal”), a
related company with a common owner
|
|
$
|
685
|
|
$
|
602
|
|
|
|
|
|
|
|
|
|
Accounts
payable to Jucai Coal
|
|
$
|
182
|
|
$
|
221
|
|
|
|
|
|
|
|
|
|
Other
payable to Shanxi Puda Resources Group Limited (“Resources Group”), a
related company with common owners
|
|
$
|
743
|
|
$
|
696
|
|
|
|
|
|
|
|
|
|
Other
payable to Yao Zhao, manager and shareholder of Puda
|
|
|
215
|
|
|
205
|
|
|
|
|
|
|
|
|
|
Other
payable to Ming Zhao and Yao Zhao
|
|
|
893
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,851
|
|
$
|
901
|
|
|
|
|
|
|
|
|
|
Loan
payable to Resources Group
|
|
|
|
|
|
|
|
-current
portion
|
|
$
|
1,300
|
|
$
|
1,300
|
|
-long-term
portion
|
|
|
9,100
|
|
|
10,400
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,400
|
|
$
|
11,700
|
|
|
December 31,
2007
|
December 31,
2006
|
|||||
|
$’000
|
$’000
|
|||||
|
|
|
|||||
Raw
materials
|
$
|
24,252
|
$
|
12,342
|
|||
Finished
goods
|
11,701
|
3,321
|
|||||
|
|||||||
Total
|
$
|
35,953
|
$
|
15,663
|
|
December 31,
2007
|
December 31,
2006
|
|||||
|
$’000
|
$’000
|
|||||
Cost:
|
|
|
|||||
Buildings
and facilities
|
$
|
3,344
|
$
|
2,961
|
|||
Machinery
equipment
|
13,611
|
8,131
|
|||||
Motor
vehicles
|
104
|
254
|
|||||
Office
equipment and others
|
30
|
76
|
|||||
|
|||||||
|
17,089
|
11,422
|
|||||
|
|||||||
Accumulated
depreciation:
|
|||||||
Buildings
and facilities
|
255
|
243
|
|||||
Machinery
equipment
|
1,814
|
1,130
|
|||||
Motor
vehicles
|
2
|
143
|
|||||
Office
equipment and others
|
-
|
36
|
|||||
|
|||||||
|
2,071
|
1,552
|
|||||
Carrying
value:
|
|||||||
Buildings
and facilities
|
3,089
|
2,718
|
|||||
Machinery
equipment
|
11,797
|
7,001
|
|||||
Motor
vehicles
|
102
|
111
|
|||||
Office
equipment and others
|
30
|
40
|
|||||
|
|||||||
|
$
|
15,018
|
$
|
9,870
|
|
Land-use rights
|
||||||
|
December 31,
2007
|
December 31,
2006
|
|||||
|
$’000
|
$’000
|
|||||
|
|
|
|||||
Cost
|
$
|
3,634
|
$
|
3,831
|
|||
|
|||||||
Accumulated
amortization
|
150
|
102
|
|||||
|
|||||||
Carrying
value
|
$
|
3,484
|
$
|
3,729
|
|
December 31,
2007
|
December 31,
2006
|
|||||
|
$’000
|
$’000
|
|||||
|
|
|
|||||
Conveyance
loan
|
$
|
10,400
|
$
|
11,700
|
|||
Less:
current portion
|
(1,300
|
)
|
(1,300
|
)
|
|||
Long-term
portion
|
$
|
9,100
|
$
|
10,400
|
Year
|
December 31,
2007
|
|||
|
$’000
|
|||
|
|
|||
2008
|
$
|
1,300
|
||
2009
|
1,300
|
|||
2010
|
1,300
|
|||
2011
|
1,300
|
|||
2012
|
1,300
|
|||
Thereafter
|
3,900
|
|||
|
$
|
10,400
|
|
|
December 31,
2007
|
|
December 31,
2006
|
|
||
|
|
$000
|
|
$000
|
|
||
Convertible
notes:
|
|
|
|
|
|
|
|
Gross
amount issued
|
|
$
|
12,500
|
|
$
|
12,500
|
|
Less:
amount converted in 2005
|
|
|
(850
|
)
|
|
(850
|
)
|
Less:
amount converted in 2006
|
|
|
(6,750
|
)
|
|
(6,750
|
)
|
Less:
amount converted in 2007
|
|
|
(2,660
|
)
|
|
-
|
|
Less:
unamortized discount on conversion feature
|
|
|
(366
|
)
|
|
(1,538
|
)
|
Less:
unamortized discount on note warrants
|
|
|
(33
|
)
|
|
(254
|
)
|
|
|
$
|
1,841
|
|
$
|
3,108
|
|
|
|
|
|
|
|
|
|
Derivative
conversion feature:
|
|
|
|
|
|
|
|
Amount
allocated to conversion feature
|
|
$
|
6,137
|
|
$
|
6,137
|
|
Less:
amount transferred to equity upon conversion in 2005
|
|
|
(417
|
)
|
|
(417
|
)
|
Less:
amount transferred to equity upon conversion in 2006
|
|
|
(3,314
|
)
|
|
(3,314
|
)
|
Less:
amount transferred to equity upon conversion in 2007
|
|
|
(1,306
|
)
|
|
-
|
|
|
|
$
|
1,100
|
|
$
|
2,406
|
|
|
|
|
|
|
|
|
|
Derivative
warrants:
|
|
|
|
|
|
|
|
Amount
allocated to investor warrants
|
|
$
|
6,363
|
|
$
|
6,363
|
|
Placement
agent warrants
|
|
|
5,625
|
|
|
5,625
|
|
Less:
amount transferred to equity upon exercise of note warrants in
2006
|
|
|
(789
|
)
|
|
(789
|
)
|
Less:
amount transferred to equity upon exercise of placement agent warrants
in
2006
|
|
|
(882
|
)
|
|
(882
|
)
|
Less:
amount transferred to equity upon exercise of note warrants in
2007
|
|
|
(1,527
|
)
|
|
-
|
|
Less:
amount transferred to equity upon exercise of placement agent warrants
in
2007
|
|
|
(2,716
|
)
|
|
-
|
|
Less:
change in fair value in 2005
|
|
|
(700
|
)
|
|
(700
|
)
|
Less:
change in fair value in 2006
|
|
|
(1,237
|
)
|
|
(1,237
|
)
|
Add:
change in fair value in 2007
|
|
|
343
|
|
|
-
|
|
|
|
$
|
4,480
|
|
$
|
8,380
|
|
Year
|
December 31,
2007
|
|||
|
$’000
|
|||
|
|
|||
2008
|
$
|
6
|
|
Number of shares
|
|||
|
|
|||
Outstanding
shares as at July 15, 2005 prior to the reorganization
|
59,000,000
|
|||
|
||||
Common
stock converted from preferred stock issued as a result of the
reorganization
|
678,500,000
|
|||
Effect
of the 1-for-10 reverse stock split
|
(663,750,000
|
)
|
||
|
||||
Number
of shares of common stock presented in the consolidated statement
of
changes in stockholders’ equity as of January 1, 2005
|
73,750,000
|
|
Years ended December 31,
|
|||||||||
|
2007
|
2006
|
2005
|
|||||||
|
$’000
|
$’000
|
$’000
|
|||||||
|
|
|
|
|||||||
Current
year provision
|
$
|
8,292
|
$
|
7,604
|
$
|
3,439
|
|
Years ended December 31,
|
|||||||||
|
2007
|
2006
|
2005
|
|||||||
|
$’000
|
$’000
|
$’000
|
|||||||
|
|
|
|
|||||||
Income
before income taxes
|
$
|
19,166
|
$
|
8,958
|
$
|
4,404
|
||||
|
||||||||||
Income
tax on pretax income at statutory rate
|
6,516
|
3,046
|
1,497
|
|||||||
Tax
effect of expenses that are not deductible in determining taxable
profits
|
1,560
|
4,544
|
2,195
|
|||||||
Tax
effect of income that is not taxable in determining taxable
profits
|
-
|
(421
|
)
|
(238
|
)
|
|||||
Effect
of different tax rates of subsidiary operating in other
jurisdictions
|
(240
|
)
|
(234
|
)
|
(94
|
)
|
||||
Change
in valuation allowance
|
456
|
669
|
79
|
|||||||
|
||||||||||
Income
tax at effective rate
|
$
|
8,292
|
$
|
7,604
|
$
|
3,439
|
|
|
December 31, 2007
|
|
December 31, 2006
|
|
||
|
|
$’000
|
|
$’000
|
|
||
|
|
|
|
|
|
||
Net
operating loss carryforwards
|
|
$
|
1,580
|
|
$
|
1,124
|
|
Less:
Valuation allowance
|
|
|
(1,580
|
)
|
|
(1,124
|
)
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
-
|
|
$
|
-
|
|
|
Years ended December 31,
|
|||||||||
|
2007
|
2006
|
2005
|
|||||||
|
|
|
|
|||||||
Basic
weighted average number of shares
|
98,404,914
|
80,167,110
|
73,950,274
|
|||||||
Options
outstanding, after adjusting for 10 to 1 Reverse split
|
2,678
|
9,683
|
56,218
|
|||||||
Assumed
conversion of notes
|
-
|
-
|
1,742,904
|
|||||||
Assumed
exercise of warrants
|
-
|
-
|
1,826,640
|
|||||||
Issuance
of penalty shares
|
2,183,544
|
152,239
|
-
|
|||||||
|
||||||||||
Diluted
weighted average number of shares
|
100,591,136
|
80,329,032
|
77,576,036
|
|
Years ended December 31,
|
|||||||||
|
2007
|
2006
|
2005
|
|||||||
|
$’000
|
$’000
|
$’000
|
|||||||
|
|
|
|
|||||||
Cash
paid during the period for:
|
|
|
|
|||||||
Interest
|
$
|
914
|
$
|
1,543
|
$
|
114
|
||||
Income
taxes
|
$
|
8,706
|
$
|
6,516
|
$
|
2,039
|
||||
|
||||||||||
Major
non-cash transactions:
|
||||||||||
Notes
converted into common shares
|
$
|
2,660
|
$
|
6,750
|
$
|
850
|
||||
Issue
of common stock for services
|
$
|
-
|
$
|
21
|
$
|
-
|
||||
Issue
of common stock for penalty
|
$
|
-
|
$
|
1,000
|
$
|
-
|
||||
Dividend
declared
|
$
|
-
|
$
|
-
|
$
|
1,452
|
||||
Purchase
of land-use rights, property, plant and equipment from Resources
Group
|
$
|
-
|
$
|
-
|
$
|
13,000
|
||||
Cashless
exercise of 1,468,706 (2006: 273,334) placement agent warrants into
1,050,875 (2006: 242,180) common shares
|
$
|
-
|
$
|
-
|
$
|
-
|
Number of
options granted
|
|
After adjusting for the 10
to 1 reverse stock split
|
|
Exercise price
|
|
Expiry date
|
|
Estimated
Fair value
|
|
||||
|
|
|
|
|
|
|
|
$’000
|
|
||||
150,000
|
|
|
15,000
|
(i)
|
$
|
1
|
|
|
October
20, 2008
|
|
|
0
|
|
|
(i)
|
granted
in 2003 to former directors/officers in consideration of services
rendered.
|
|
|
Number of
options
|
|
Weighted
average
exercise price
|
|
||
Options
outstanding at December 31, 2005 (after adjusting for the 10 to 1
reverse
stock split)
|
|
|
165,000
|
|
$
|
9.2
|
|
Granted
|
|
|
-
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
-
|
|
Expired
|
|
|
(150,000
|
)
|
|
(8.2
|
)
|
|
|
|
|
|
|
|
|
Options
outstanding at December 31, 2006
|
|
|
15,000
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
-
|
|
Expired
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Options
outstanding at December 31, 2007
|
|
|
15,000
|
|
$
|
1
|
|
|
|
Years ended December 31,
|
|
|||||||||||||||||
Customers
|
|
2007
|
|
2006
|
|
2005
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
$’000
|
|
%
|
|
$’000
|
|
%
|
|
$’000
|
|
%
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Customer
A
|
|
$
|
21,626
|
|
|
13
|
|
$
|
27,387
|
|
|
20
|
|
$
|
7,810
|
|
|
15
|
|
|
Customer
E
|
|
$
|
-
|
|
|
-
|
|
$
|
-
|
|
|
-
|
|
$
|
6,588
|
|
|
13
|
|
Customers
|
|
December 31,
2007
|
|
December 31,
2006
|
|
||||||||
|
|
$’000
|
|
%
|
|
$’000
|
|
%
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Customer
A
|
|
$
|
961
|
|
|
12
|
|
$
|
2,135
|
|
|
30
|
|
Customer
B
|
|
$
|
878
|
|
|
11
|
|
$
|
-
|
|
|
-
|
|
Customer
C
|
|
$
|
865
|
|
|
11
|
|
$
|
863
|
|
|
12
|
|
Customer
D
|
|
$
|
849
|
|
|
10
|
|
$
|
729
|
|
|
10
|
|
Customer
E
|
|
$
|
-
|
|
|
-
|
|
$
|
798
|
|
|
11
|
|
Customer
F
|
|
$
|
-
|
|
|
-
|
|
$
|
739
|
|
|
10
|
|
|
|
December 31, 2007
|
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
54
|
|
Restricted
cash
|
|
|
233
|
|
|
|
|
|
|
Total
current assets
|
|
|
287
|
|
|
|
|
|
|
INVESTMENTS
IN SUBSIDIARIES
|
|
|
47,622
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
47,909
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Other
payable
|
|
$
|
1,886
|
|
Accrued
expenses
|
|
|
196
|
|
Convertible
notes
|
|
|
1,841
|
|
Derivative
conversion feature
|
|
|
1,100
|
|
Penalty
payable
|
|
|
1,725
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
6,748
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
Derivative
warrants
|
|
|
4,480
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
|
Preferred
stock, authorized 5,000,000 shares, par value $0.01, issued and
outstanding None
|
|
|
-
|
|
Common
stock, authorized 150,000,000 shares, par value $0.001, issued and
outstanding 105,252,176 shares
|
|
|
105
|
|
Paid-in
capital
|
|
|
61,703
|
|
Accumulated
deficit
|
|
|
(25,127
|
)
|
|
|
|
|
|
Total
stockholders’ equity
|
|
|
36,681
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
47,909
|
|
|
|
Year ended
December 31, 2007
|
|
|
|
|
|
|
|
Revenue:
|
|
$
|
-
|
|
|
|
|
|
|
Share
of earnings from investment in subsidiaries
|
|
|
18,523
|
|
|
|
|
|
|
Total
revenue
|
|
|
18,523
|
|
|
|
|
|
|
General
and administrative expenses
|
|
|
(1,147
|
)
|
|
|
|
|
|
Income
from operations
|
|
|
17,376
|
|
|
|
|
|
|
Interest
expense
|
|
|
(903
|
)
|
|
|
|
|
|
Debt
financing costs
|
|
|
(2,422
|
)
|
|
|
|
|
|
Derivative
unrealized fair value loss
|
|
|
(343
|
)
|
|
|
|
|
|
Net
income
|
|
$
|
13,708
|
|
|
|
Year ended
December 31, 2007
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
Net
income
|
|
$
|
13,708
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
Share
of earnings from investment in subsidiaries
|
|
|
(18,523
|
)
|
Amortization
of debt issue costs
|
|
|
6
|
|
Amortization
of discount on convertible notes and warrants
|
|
|
895
|
|
Derivative
unrealized fair value loss
|
|
|
343
|
|
Discount
on converted shares and exercised warrants
|
|
|
663
|
|
Stock
compensation expense
|
|
|
46
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
Advance
to subsidiary
|
|
|
(771
|
)
|
Increase
in other payable
|
|
|
471
|
|
Decrease
in accrued expenses
|
|
|
(91
|
)
|
Increase
in penalty payable
|
|
|
1,521
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(1,732
|
)
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
Payment
for the purchase of equity interest in Shanxi Coal
|
|
|
(1,799
|
)
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(1,799
|
)
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
Exercise
of warrants
|
|
|
3,600
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
3,600
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
|
69
|
|
Cash
and cash equivalents at beginning of year
|
|
|
(15
|
)
|
|
|
|
|
|
Cash
and cash equivalents at end of year
|
|
$
|
54
|
|