x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|
Florida
|
|
65-1129912
|
(State
or other jurisdiction of incorporation or organization)
|
|
(IRS
Employer Identification No.)
|
426
Xuefu Street, Taiyuan, Shanxi Province, The People’s Republic of
China
|
030006
|
(Address
of principal executive offices)
|
(Zip
Code)
|
011
86 351 228 1302
|
(Registrant’s
telephone number, including area code)
|
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer x
(Do not check if a smaller reporting company) Smaller reporting company
¨
|
|
Page
|
PART
I. FINANCIAL INFORMATION
|
|
|
|
Item
1. Financial Statements
|
|
|
|
Consolidated
Balance Sheets as of September 30, 2008 (unaudited)
and
December 31, 2007
|
5-6
|
|
|
Unaudited
Consolidated Statements of Operations for the three
and
nine months ended September 30, 2008 and 2007
|
7
|
|
|
Unaudited
Consolidated Statements of Cash Flows for the nine
months
ended September 30, 2008 and 2007
|
8
|
|
|
Notes
to Unaudited Consolidated Financial Statements
|
9–32
|
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
33–35
|
|
|
Item
3. Quantitative and Qualitative Disclosures about Market Risk
|
40
|
|
|
Item
4T. Controls and Procedures
|
41
|
|
|
PART
II. OTHER INFORMATION
|
|
|
|
Item
1. Legal Proceedings
|
43
|
|
|
Item
1A. Risk Factors
|
43–44
|
|
|
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
|
45
|
|
|
Item
6. Exhibits
|
47
|
|
|
Signatures
|
48
|
|
|
Certifications
|
49-53
|
Consolidated
Balance Sheets as of September 30, 2008 (unaudited) and December
31,
2007
|
5-6
|
Unaudited
Consolidated Statements of Operations for the three and nine months
ended
September 30, 2008 and 2007
|
7
|
Unaudited
Consolidated Statements of Cash Flows for the nine months ended September
30, 2008 and 2007
|
8
|
Notes
to Unaudited Consolidated Financial Statements
|
9-32
|
Note(s)
|
September 30,
2008
|
December 31,
2007
|
||||||||
(Unaudited)
|
||||||||||
ASSETS
|
||||||||||
CURRENT
ASSETS
|
||||||||||
Cash
and cash equivalents
|
21
|
$
|
39,429
|
$
|
16,381
|
|||||
Restricted
cash
|
3,
21
|
233
|
233
|
|||||||
Accounts
receivable, net
|
4
|
10,677
|
8,137
|
|||||||
Other
receivables
|
||||||||||
-
Related parties
|
5
|
2
|
4
|
|||||||
- Third
parties
|
-
|
6
|
||||||||
Advances
to suppliers
|
||||||||||
-
Related parties
|
5
|
795
|
685
|
|||||||
-
Third parties
|
7,597
|
1,363
|
||||||||
Inventories
|
6
|
25,357
|
35,953
|
|||||||
Total
current assets
|
84,090
|
62,762
|
||||||||
PROPERTY,
PLANT AND EQUIPMENT, NET
|
7
|
13,776
|
15,018
|
|||||||
INTANGIBLE
ASSETS, NET
|
8
|
3,419
|
3,484
|
|||||||
TOTAL
ASSETS
|
$
|
101,285
|
$
|
81,264
|
||||||
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
|
|||||||
-
Third parties
|
4,642
|
2,140
|
||||||||
Other
payables
|
||||||||||
-
Related parties
|
5
|
1,032
|
1,851
|
|||||||
-
Third parties
|
3,432
|
2,916
|
||||||||
Accrued
expenses
|
1,645
|
1,350
|
||||||||
Income
taxes payable
|
2,305
|
2,223
|
||||||||
VAT
payable
|
1,808
|
1,379
|
||||||||
Distribution
payable
|
1,297
|
1,096
|
||||||||
Convertible
notes
|
10
|
2,202
|
1,841
|
|||||||
Derivative
conversion feature
|
10,
22
|
1,100
|
1,100
|
|||||||
Penalty
payable
|
10
|
-
|
1,725
|
|||||||
Total
current liabilities
|
20,763
|
19,103
|
||||||||
LONG-TERM
LIABILITIES
|
||||||||||
Long-term
debt
|
||||||||||
-
Related party
|
5,
9
|
8,125
|
9,100
|
|||||||
Derivative
warrants
|
10,
22
|
4,139
|
4,480
|
|||||||
Total
long-term liabilities
|
12,264
|
13,580
|
Note(s)
|
September 30,
2008
|
December 31,
2007
|
||||||||
(Unaudited)
|
||||||||||
COMMITMENTS
AND CONTINGENCIES
|
11
|
|||||||||
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 107,335,759
(2007: 105,252,176)
|
12
|
107
|
105
|
|||||||
Paid-in
capital
|
12
|
30,455
|
28,304
|
|||||||
Statutory
surplus reserve fund
|
1,366
|
1,366
|
||||||||
Retained
earnings
|
28,388
|
14,807
|
||||||||
Accumulated
other comprehensive income
|
7,942
|
3,999
|
||||||||
Total
stockholders’ equity
|
68,258
|
48,581
|
||||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
101,285
|
$
|
81,264
|
Three months
ended
September 30,
2008
|
Three months
ended
September 30,
2007
|
Nine months
ended
September
30, 2008
|
Nine months
ended
September
30, 2007
|
|||||||||||||
Note(s)
|
||||||||||||||||
NET
REVENUE
|
$
|
74,051
|
$
|
40,536
|
$
|
177,837
|
$
|
116,048
|
||||||||
COST
OF REVENUE
|
63,861
|
33,881
|
153,497
|
95,260
|
||||||||||||
GROSS
PROFIT
|
10,190
|
6,655
|
24,340
|
20,788
|
||||||||||||
OPERATING
EXPENSES
|
||||||||||||||||
Selling
expenses
|
783
|
694
|
2,395
|
2,240
|
||||||||||||
General
and administrative expenses
|
422
|
452
|
1,525
|
1,444
|
||||||||||||
TOTAL
OPERATING EXPENSES
|
1,205
|
1,146
|
3,920
|
3,684
|
||||||||||||
INCOME
FROM OPERATIONS
|
8,985
|
5,509
|
20,420
|
17,104
|
||||||||||||
INTEREST
INCOME
|
31
|
18
|
84
|
58
|
||||||||||||
INTEREST
EXPENSE
|
13
|
(191
|
)
|
(345
|
)
|
(588
|
)
|
(1,346
|
)
|
|||||||
DEBT
FINANCING COSTS
|
14
|
(118
|
)
|
(515
|
)
|
(740
|
)
|
(1,921
|
)
|
|||||||
DERIVATIVE
UNREALIZED FAIR VALUE GAIN/(LOSS)
|
15
|
121
|
588
|
341
|
(1,260
|
)
|
||||||||||
OTHER
EXPENSE
|
16
|
-
|
-
|
(719
|
)
|
-
|
||||||||||
INCOME
BEFORE INCOME TAXES
|
8,828
|
5,255
|
18,798
|
12,635
|
||||||||||||
INCOME
TAXES
|
17
|
(2,289
|
)
|
(1,890
|
)
|
(5,101
|
)
|
(6,093
|
)
|
|||||||
NET
INCOME
|
6,539
|
3,365
|
13,697
|
6,542
|
||||||||||||
OTHER
COMPREHENSIVE INCOME
|
||||||||||||||||
Foreign
currency translation adjustment
|
483
|
654
|
3,943
|
1,804
|
||||||||||||
COMPREHENSIVE
INCOME
|
$
|
7,022
|
$
|
4,019
|
$
|
17,640
|
$
|
8,346
|
||||||||
EARNINGS
PER SHARE
|
||||||||||||||||
-
BASIC
|
$
|
0.06
|
$
|
0.03
|
$
|
0.13
|
$
|
0.07
|
||||||||
-
DILUTED
|
$
|
0.06
|
$
|
0.03
|
$
|
0.13
|
$
|
0.07
|
||||||||
WEIGHTED
AVERAGE NUMBER OF SHARES
OUTSTANDING
|
||||||||||||||||
-
BASIC
|
18
|
107,291,751
|
100,188,544
|
105,936,997
|
97,017,522
|
|||||||||||
-
DILUTED
|
18
|
107,291,751
|
116,548,514
|
105,936,997
|
97,023,280
|
Nine months ended September 30,
|
||||||||||
Notes
|
2008
|
2007
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||
Net
income
|
$
|
13,697
|
$
|
6,542
|
||||||
Adjustments
to reconcile net income to net cash provided by operating
activities
|
||||||||||
Amortization
of land-use rights
|
65
|
59
|
||||||||
Depreciation
|
1,244
|
872
|
||||||||
Allowance
for doubtful debts
|
6
|
1
|
||||||||
Amortization
of debt issue costs
|
-
|
6
|
||||||||
Amortization
of discount on convertible notes and warrants
|
361
|
777
|
||||||||
Derivative
unrealized fair value (gain)/loss
|
(341
|
)
|
1,260
|
|||||||
Discount
on converted shares and exercised warrants
|
-
|
638
|
||||||||
Stock
compensation expense
|
29
|
-
|
||||||||
Changes
in operating assets and liabilities:
|
||||||||||
Increase
in accounts receivable
|
(1,895
|
)
|
(265
|
)
|
||||||
Decrease
in other receivables
|
8
|
38
|
||||||||
Increase
in advances to suppliers
|
(6,081
|
)
|
(602
|
)
|
||||||
Increase
in VAT recoverable
|
-
|
(938
|
)
|
|||||||
Decrease/(increase)
in inventories
|
13,088
|
(26,007
|
)
|
|||||||
Increase
in accounts payable
|
2,107
|
51
|
||||||||
Increase
in accrued expenses
|
221
|
34
|
||||||||
(Decrease)/increase
in other payables
|
(562
|
)
|
877
|
|||||||
Decrease
in income tax payable
|
(85
|
)
|
(673
|
)
|
||||||
Increase/(decrease)
in VAT payable
|
318
|
(1,228
|
)
|
|||||||
Increase
in penalty payable
|
379
|
1,138
|
||||||||
Net
cash provided by/(used in) operating activities
|
22,559
|
(17,420
|
)
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||
Purchase
of property, plant and equipment
|
(2
|
)
|
(5,977
|
)
|
||||||
Net
cash used in investing activities
|
(2
|
)
|
(5,977
|
)
|
||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
Exercise
of warrants
|
-
|
1,110
|
||||||||
Repayment
of long-term debt
|
(975
|
)
|
(975
|
)
|
||||||
Net
cash (used in)/provided by financing activities
|
(975
|
)
|
135
|
|||||||
Effect
of exchange rate changes on cash
|
1,466
|
136
|
||||||||
Net
increase/(decrease) in cash and cash equivalents
|
23,048
|
(23,126
|
)
|
|||||||
Cash
and cash equivalents at beginning of period
|
16,381
|
24,943
|
||||||||
Cash
and cash equivalents at end of period
|
$
|
39,429
|
$
|
1,817
|
||||||
Supplementary
cash flow information:
|
19
|
·
|
Puda
Coal, Inc.: Mr. Ming Zhao (approximately 49%); Mr. Yao Zhao (approximately
12%) held directly.
|
·
|
Puda
Investment Holding Limited: Mr. Ming Zhao (approximately 49%); Mr.
Yao
Zhao (approximately 12%) held indirectly through
Puda.
|
·
|
Shanxi
Putai Resources Limited: Mr. Ming Zhao (approximately 49%); Mr. Yao
Zhao
(approximately 12%) held indirectly through Puda and
BVI.
|
·
|
Shanxi
Puda Coal Group Co., Ltd.: Mr. Ming Zhao (8%); Mr. Yao Zhao (2%)
held
directly, Mr. Ming Zhao (approximately 44%); Mr. Yao Zhao (approximately
11%) held indirectly through Puda, BVI and
Putai.
|
Buildings
and facility
|
20
years
|
Machinery
and equipment
|
10
years
|
Motor
vehicles
|
10
years
|
Office
equipment and others
|
10
years
|
September 30,
2008
|
December 31,
2007
|
||||||
$’000
|
$’000
|
||||||
Balance,
beginning of period
|
$
|
48
|
$
|
44
|
|||
Additions
|
10
|
4
|
|||||
Balance,
end of period
|
$
|
58
|
$
|
48
|
September 30,
2008
|
December 31,
2007
|
||||||
$’000
|
$’000
|
||||||
Other
receivable from Ming Zhao, director and major shareholder
of Puda
|
$
|
2
|
$
|
4
|
|||
Advance
to Shanxi Liulin Jucai Coal Industry Co., Limited (“Jucai
Coal”), a related company with a common owner
|
$
|
795
|
$
|
685
|
|||
|
|||||||
Accounts
payable to Jucai Coal
|
$
|
-
|
$
|
182
|
|||
Other
payable to Shanxi Puda Resources Group Limited (“Resources
Group”), a related company with common owners
|
$
|
800
|
$
|
743
|
|||
Other
payable to Yao Zhao, manager and shareholder of Puda
|
232
|
215
|
|||||
Other
payable to Ming Zhao and Yao Zhao
|
-
|
893
|
|||||
$
|
1,032
|
$
|
1,851
|
||||
Loan
payable to Resources Group
|
|||||||
-current
portion
|
$
|
1,300
|
$
|
1,300
|
|||
-long-term
portion
|
8,125
|
9,100
|
|||||
$
|
9,425
|
$
|
10,400
|
September 30,
2008
|
December 31,
2007
|
||||||
$’000
|
$’000
|
||||||
Raw materials
|
$
|
12,341
|
$
|
24,252
|
|||
Finished
goods
|
13,016
|
11,701
|
|||||
Total
|
$
|
25,357
|
$
|
35,953
|
September
30,
2008
|
December
31,
2007
|
||||||
$’000
|
$’000
|
||||||
Cost:
|
|||||||
Buildings
and facilities
|
$
|
3,344
|
$
|
3,344
|
|||
Machinery
equipment
|
13,611
|
13,611
|
|||||
Motor
vehicles
|
104
|
104
|
|||||
Office
equipment and others
|
32
|
30
|
|||||
17,091
|
17,089
|
||||||
Accumulated
depreciation:
|
|||||||
Buildings
and facilities
|
385
|
255
|
|||||
Machinery
equipment
|
2,918
|
1,814
|
|||||
Motor
vehicles
|
10
|
2
|
|||||
Office
equipment and others
|
2
|
-
|
|||||
3,315
|
2,071
|
||||||
Carrying
value:
|
|||||||
Buildings
and facilities
|
2,959
|
3,089
|
|||||
Machinery
equipment
|
10,693
|
11,797
|
|||||
Motor
vehicles
|
94
|
102
|
|||||
Office
equipment and others
|
30
|
30
|
|||||
$
|
13,776
|
$
|
15,018
|
Land-use rights
|
|||||||
September 30,
2008
|
December 31,
2007
|
||||||
$’000
|
$’000
|
||||||
Cost
|
$
|
3,634
|
$
|
3,634
|
|||
Accumulated amortization
|
215
|
150
|
|||||
Carrying
value
|
$
|
3,419
|
$
|
3,484
|
September 30,
2008
|
December 31,
2007
|
||||||
$’000
|
$’000
|
||||||
Conveyance loan
|
$
|
9,425
|
$
|
10,400
|
|||
Less:
current portion
|
(1,300
|
)
|
(1,300
|
)
|
|||
Long-term
portion
|
$
|
8,125
|
$
|
9,100
|
September
30,
2008
|
||||
Year
|
$’000
|
|||
2008
|
$
|
325
|
||
2009
|
1,300
|
|||
2010
|
1,300
|
|||
2011
|
1,300
|
|||
2012
|
1,300
|
|||
Thereafter
|
3,900
|
|||
$
|
9,425
|
September 30,
2008
|
December 31,
2007
|
||||||
$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
|
)
|
(2,660
|
)
|
|||
Less:
unamortized discount on conversion feature
|
(38
|
)
|
(366
|
)
|
|||
Less:
unamortized discount on note warrants
|
-
|
(33
|
)
|
||||
$
|
2,202
|
$
|
1,841
|
||||
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
|
)
|
(1,306
|
)
|
|||
$
|
1,100
|
$
|
1,100
|
||||
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
|
)
|
(1,527
|
)
|
|||
Less:
amount transferred to equity upon exercise of placement agent
warrants in 2007
|
(2,716
|
)
|
(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
|
343
|
|||||
Less:
change in fair value in 2008
|
(341
|
)
|
-
|
||||
$
|
4,139
|
$
|
4,480
|
Common
Stock
|
|
Paid-in
Capital
|
|
|||||||
|
|
No.
of shares
|
|
$000
|
|
$000
|
||||
Balance,
January 1, 2008
|
105,252,176
|
$
|
105
|
$
|
28,304
|
|||||
Issue
of penalty shares
|
2,058,062
|
2
|
2,102
|
|||||||
Issue
of directors shares
|
25,521
|
-
|
49
|
|||||||
Balance,
September 30, 2008
|
107,335,759
|
$
|
107
|
$
|
30,455
|
Three months
ended
September 30,
2008
|
Three months
ended
September 30,
2007
|
Nine months
ended
September 30,
2008
|
Nine months
ended
September 30,
2007
|
||||||||||
$’000
|
$’000
|
$’000
|
$’000
|
||||||||||
Current
period provision
|
$
|
2,289
|
$
|
1,890
|
$
|
5,101
|
$
|
6,093
|
Three months
ended
September 30,
2008
|
Three months
ended
September 30,
2007
|
Nine months
ended
September 30,
2008
|
Nine months
ended
September 30,
2007
|
||||||||||
$’000
|
$’000
|
$’000
|
$’000
|
||||||||||
Income
before income taxes
|
$
|
8,828
|
$
|
5,255
|
$
|
18,798
|
$
|
12,635
|
|||||
Income
tax on pretax income at statutory rate
|
3,001
|
1,787
|
6,391
|
4,296
|
|||||||||
Tax
effect of expenses that are not deductible in
determining taxable profits
|
(8
|
)
|
82
|
226
|
1,681
|
||||||||
Effect
of different tax rates of subsidiary operating in other
jurisdictions
|
(827
|
)
|
(56
|
)
|
(1,808
|
)
|
(173
|
)
|
|||||
Valuation
allowance
|
123
|
77
|
292
|
289
|
|||||||||
Income
tax at effective rate
|
$
|
2,289
|
$
|
1,890
|
$
|
5,101
|
$
|
6,093
|
September 30, 2008
|
December 31, 2007
|
||||||
$’000
|
$’000
|
||||||
Net
operating loss carryforwards
|
$
|
1,872
|
$
|
1,580
|
|||
Less:
Valuation allowance
|
(1,872
|
)
|
(1,580
|
)
|
|||
Net
|
$
|
-
|
$
|
-
|
Three
months
ended
September
30,
2008
|
Three
months
ended
September
30,
2007
|
Nine
months
ended
September
30,
2008
|
Nine
months
ended
September
30,
2007
|
||||||||||
Basic
weighted average number of shares
|
107,291,751
|
100,188,544
|
105,936,997
|
97,017,522
|
|||||||||
Options
outstanding, after adjusting for 10 to 1reverse
split
|
-
|
5,758
|
-
|
5,758
|
|||||||||
Assumed
conversion of notes
|
-
|
3,238,294
|
-
|
-
|
|||||||||
Assumed
exercise of warrants
|
-
|
13,115,918
|
-
|
-
|
|||||||||
Diluted
weighted average number of shares
|
107,291,751
|
116,548,514
|
105,936,997
|
97,023,280
|
Nine months ended September 30,
|
|||||||
2008
|
2007
|
||||||
$’000
|
$’000
|
||||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
588
|
$
|
708
|
|||
Income
taxes
|
$
|
5,228
|
$
|
6,769
|
|||
Major
non-cash transactions:
|
|||||||
Issue
of penalty shares
|
$
|
2,104
|
$
|
-
|
|||
Issue
of directors’ shares
|
$
|
49
|
$
|
-
|
|||
Dividend
declared
|
$
|
116
|
$
|
-
|
|||
Notes
converted into common shares
|
$
|
-
|
$
|
2,560
|
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, 2007 (after adjusting
for the 10 to 1 reverse stock split)
|
15,000
|
$
|
1
|
||||
Granted
|
-
|
-
|
|||||
Exercised
|
-
|
-
|
|||||
Forfeited
|
-
|
-
|
|||||
Expired
|
-
|
-
|
|||||
Options
outstanding at September 30, 2008
|
15,000
|
$
|
1
|
Three
months
ended
September
30,
2008
|
Three
months
ended
September
30,
2007
|
Nine
months
ended
September
30,
2008
|
Nine
months
ended
September
30,
2007
|
||||||||||||||||||||||
Customers
|
|||||||||||||||||||||||||
$
|
’000
|
|
% |
$
|
’000
|
|
% |
$
|
’000
|
|
% |
$
|
’000
|
|
% | ||||||||||
Customer
A
|
$
|
-
|
-
|
$
|
4,752
|
12
|
$
|
-
|
-
|
$
|
16,652
|
14
|
Customers
|
September
30,
2008
|
December
31,
2007
|
|||||||||||
$’000
|
% |
$’000
|
% | ||||||||||
Customer
A
|
$
|
1,236
|
12
|
$
|
961
|
12
|
|||||||
Customer
B
|
$
|
1,104
|
10
|
$
|
-
|
-
|
|||||||
Customer
C
|
$
|
-
|
-
|
$
|
878
|
11
|
|||||||
Customer
D
|
$
|
-
|
-
|
$
|
865
|
11
|
|||||||
Customer
E
|
$
|
-
|
-
|
$
|
849
|
10
|
Fair Value Measurement as of September 30, 2008
|
|||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
$’000
|
$’000
|
$’000
|
$’000
|
||||||||||
Derivative conversion feature
|
$
|
1,100
|
$
|
-
|
$
|
1,100
|
$
|
-
|
|||||
Derivative
warrants
|
4,139
|
-
|
4,
139
|
-
|
|||||||||
Total
|
$
|
5,239
|
$
|
-
|
$
|
5,239
|
$
|
-
|
|||||
September 30, 2008
|
||||
ASSETS
|
||||
CURRENT
ASSETS
|
||||
Restricted
cash
|
$
|
233
|
||
Total
current assets
|
233
|
|||
INVESTMENTS
IN SUBSIDIARIES
|
66,433
|
|||
TOTAL
ASSETS
|
$
|
66,666
|
||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||
CURRENT
LIABILITIES
|
||||
Bank
overdrafts
|
$
|
48
|
||
Other
payables
|
1,773
|
|||
Accrued
expenses
|
25
|
|||
Convertible
notes
|
2,202
|
|||
Derivative
conversion feature
|
1,100
|
|||
Total
current liabilities
|
5,148
|
|||
LONG-TERM
LIABILITIES
|
||||
Derivative
warrants
|
4,139
|
|||
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 107,335,759 shares
|
107
|
|||
Paid-in
capital
|
83,688
|
|||
Accumulated
deficit
|
(26,416
|
)
|
||
Total
stockholders’ equity
|
57,379
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
66,666
|
Nine months ended
September 30, 2008
|
||||
Revenue:
|
||||
Share
of earnings from investment in subsidiaries
|
$
|
18,811
|
||
Total
revenue
|
18,811
|
|||
General
and administrative expenses
|
(755
|
)
|
||
Income
from operations
|
18,056
|
|||
Interest
expense
|
(135
|
)
|
||
Debt
financing costs
|
(740
|
)
|
||
Derivative
unrealized fair value gain
|
341
|
|||
Net
income
|
$
|
17,522
|
Nine months ended
September 30, 2008
|
||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||
Net
income
|
$
|
17,522
|
||
Adjustments
to reconcile net loss to net cash used in operating
activities
|
||||
Share
of earnings from investment in subsidiaries
|
(18,811
|
)
|
||
Amortization
of discount on convertible notes and warrants
|
361
|
|||
Derivative
unrealized fair value gain
|
(341
|
)
|
||
Stock
compensation expense
|
29
|
|||
Changes
in operating assets and liabilities:
|
||||
Advance
from subsidiary
|
130
|
|||
Increase
in other payable
|
780
|
|||
Decrease
in accrued expenses
|
(151
|
)
|
||
Increase
in penalty payable
|
379
|
|||
Net
cash used in operating activities
|
(102
|
)
|
||
Net
decrease in cash and cash equivalents
|
(102
|
)
|
||
Cash
and cash equivalents at beginning of period
|
54
|
|||
Cash
and cash equivalents/(bank overdrafts) at end of period
|
$
|
(48
|
)
|
Name
of Shareholder
|
# of Penalty Shares
|
|||
Silver
Rock I, Ltd.
|
28,040
|
|||
Alpha
Capital AG
|
20,826
|
|||
Anasazi
Partners III Offshore, Ltd.
|
33,026
|
|||
Anasazi
Partners III, LLC
|
58,676
|
|||
Anima
S.G.R.p.A. RUBRICA ANIMA EMERGING MARKETS
|
51,300
|
|||
Anima
S.G.R.p.A. RUBRICA ANIMA FONDO TRADING
|
141,074
|
|||
Baker,
Adrienne
|
2,804
|
|||
Baker,
Christopher
|
39,308
|
|||
Banca
Gesfid
|
69,582
|
|||
Banca
Gesfid
|
3,550
|
|||
Barish,
Michael
|
25,650
|
|||
Barletta,
Joseph & Karen JTWROS
|
6,412
|
|||
Baum,
David
|
15,023
|
|||
Beeman
Insurance Agency Inc.
|
5,132
|
|||
Brahmbhatt,
Bimalkumar P.
|
955
|
|||
Carter,
Janet
|
497
|
|||
Chilcott
John
|
5,608
|
|||
Chelverton
Dividend Income Fund Limited
|
70,182
|
|||
CIM
Special Situations Limited
|
9,038
|
|||
Cimarolo
Partners, LLC
|
13,958
|
|||
Conn,
Michael
|
2,574
|
|||
Crestview
Capital
|
233,121
|
|||
Datsopoulos,
Milton
|
25,650
|
|||
Pablo
Felipe Serna Cardenas
|
6,084
|
|||
Pablo
Felipe Serna Cardenas
|
6,084
|
|||
DiPietro,
Robert
|
6,412
|
|||
Double
U Master Fund L.P.
|
25,650
|
|||
Dowling,
Victor & Jody JTWROS
|
2,979
|
|||
Erigero,
Greg
|
2,804
|
|||
F.
Berdon Co. L.P.
|
10,818
|
|||
Flynn,
Jason
|
6,412
|
French,
David
|
993
|
|||
Fuller,
James W.
|
6,412
|
|||
Gerdz
Investments Limited Partnership, RLLLP
|
6,412
|
|||
Gibson
Living Trust
|
2,804
|
|||
Grose,
D. Austin
|
10,932
|
|||
H.L.
Severance Inc., Pension Plan & Trust
|
12,446
|
|||
H.L.
Severance Inc., Profit Sharing Plan & Trust
|
18,215
|
|||
Hodel,
Ann
|
2,804
|
|||
Hollman,
Mark & Stacia (Tenants by Entirety)
|
5,655
|
|||
Hollman,
Scott
|
12,825
|
|||
Jayhawk
China Fund (Cayman) Ltd
|
25,552
|
|||
Johnson,
Bruce
|
19,237
|
|||
Kahn,
Sheldon & Liron, Sarah (Community Property)
|
23,384
|
|||
Katz,
Michael
|
7,388
|
|||
Lapidus,
Robert & Donna JTWROS
|
2,565
|
|||
Lemak,
John S.
|
1,986
|
|||
Levy,
Peter
|
12,825
|
|||
Masters,
Paul IRA
|
1,911
|
|||
Micek
II, John Revocable Trust Dated 03/27/03
|
19,237
|
|||
Micek
III, John
|
25,650
|
|||
Micek,
Maurice & Jennifer JTWROS
|
19,237
|
|||
Micek,
Maurice Custodian for Andrew Micek
|
6,412
|
|||
Micek,
Maurice Custodian for Benjamin Micek
|
6,412
|
|||
Murphy,
Brian
|
6,412
|
|||
Nite
Capital LP
|
17,062
|
|||
Ossellos
of Butte Profit Sharing Trust FBO Guy J. Ossello ttee
|
497
|
|||
Parsley,
Rod
|
6,412
|
|||
Wachovia
FBO PerInvest Special Situations
|
9,133
|
|||
Peterson,
Jerry
|
5,608
|
|||
Petrino,
William
|
497
|
|||
Philadelphia
Health & Education Corporation
|
955
|
|||
Professional
Traders Fund, LLC
|
1,986
|
|||
Purvis,
Steve
|
12,825
|
|||
Rock
Associates
|
3,097
|
|||
Sage
Capital Investments Limited
|
6,412
|
|||
Samuels,
Leonard & Kaplan-Samuels, Leah JTWROS
|
19,237
|
|||
Sandor
Capital Master Fund, L. P.
|
26,841
|
|||
Severance,
H. Leigh
|
19,234
|
|||
Silicon
Prairie Partners, L. P.
|
35,104
|
|||
Simgest
(Italy)
|
256,499
|
|||
Southridge
Partners, LP
|
27,551
|
|||
Stowell,
Kurt
|
3,998
|
|||
Thompson,
Jack
|
19,237
|
Ungar,
Jonathan
|
11,216
|
|||
Vicis
Capital Master Fund
|
128,249
|
|||
Vision
Opportunity
|
159,344
|
|||
Weissenberger,
Erich
|
24,685
|
|||
Whalehaven
Capital Fund Limited
|
35,239
|
|||
White
Sand Investors
|
12,825
|
|||
Wrolstad,
Christopher
|
4,573
|
|||
Zelinger,
Steven & Gordon, Lisa (Community Property)
|
6,412
|
|||
Whitehorse
Capital
|
11,071
|
|||
JP
Carey
|
5,328
|
|||
Total
|
2,058,062
|
|
(a)
|
Exhibits
|
|
|
|
|
31.1*
|
Certification
of Mr. Liping Zhu pursuant to Rule 13a-14(a) or 15d-14(a) under the
Securities Exchange Act of 1934, as amended.
|
|
|
|
|
31.2*
|
Certification
of Ms. Qiong Wu pursuant to Rule 13a-14(a) or 15d-14(a) under the
Securities Exchange Act of 1934, as amended.
|
|
|
|
|
32.1*
|
Certification
of Chief Executive Officer and Chief Financial Officer of Puda Coal,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
|
|
PUDA
COAL, INC.
|
|
|
|
|
|
By:
|
/s/
Liping Zhu
|
|
|
Liping
Zhu
|
|
|
President
and Chief Executive Officer
|
|
|
|
Date:
November 13, 2008
|
|
|
Date:
November 13, 2008
|
/s/
Liping Zhu
|
|
Liping
Zhu
President
and Chief Executive Officer
(principal
executive officer of Puda Coal,
Inc.)
|
Date:
November 13, 2008
|
/s/
Qiong Wu
|
|
Qiong
Wu
Chief
Financial Officer
(principal
financial officer of Puda Coal, Inc.)
|
Date:
November 13, 2008
|
/s/
Liping Zhu
|
|
Liping
Zhu
President
and Chief Executive Officer
|
|
|
Date:
November 13, 2008
|
/s/
Qiong Wu
|
|
Qiong
Wu
Chief
Financial Officer
|