Unassociated Document
As
filed with the Securities and Exchange Commission on January 28,
2010
Registration
No. 333-163474
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
AMENDMENT NO.
1
PUDA
COAL, INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State
of incorporation or other
jurisdiction
of incorporation)
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65-1129912
(I.R.S. Employer
Identification No.)
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426
Xuefu Street, Taiyuan
Shanxi
Province, The People’s Republic of China 030006
011
86 351 228 1302
(Address,
including zip code, and telephone number, including area code, of registrant’s
principal executive offices)
Qiong
Wu
Chief
Financial Officer, Puda Coal, Inc.
426
Xuefu Street, Taiyuan
Shanxi
Province, The People’s Republic of China 030006
011
86 351 228 1302
(Name,
address, including zip code, and telephone number, including area code, of agent
for service)
Copies
to:
Stephen
M. Davis, Esq.
Goodwin
Procter LLP
The
New York Times Building, 620 Eighth Avenue
New
York, NY 10018
212-813-8804
Approximate
date of commencement of proposed sale to the public:
From
time to time after the effective date of this Registration
Statement.
If the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following
box. ¨
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. x
If this Form is
filed to register additional securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. ¨
If this Form is a
post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. ¨
If this Form is a
registration statement pursuant to General Instruction I.D. or a post-effective
amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box. ¨
If this Form is a
post-effective amendment to a registration statement filed pursuant to General
Instruction I.D. filed to register additional securities or additional classes
of securities pursuant to Rule 413(b) under the Securities Act, check the
following box. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer ¨
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Accelerated
filer ¨
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Non-accelerated
filer x (Do
not check if a smaller reporting company)
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Smaller
reporting company ¨
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CALCULATION
OF REGISTRATION FEE
Title of each class of
securities to be registered
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Amount to be
registered(1)
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Proposed
maximum
offering price
per unit(1)(2)
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Proposed
maximum
aggregate
offering
price(1)(2)(3)
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Amount of
registration fee
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Common
Stock, par value $0.001 per share
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— |
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— |
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— |
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— |
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Preferred
Stock, par value $0.001 per share
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— |
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— |
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— |
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|
— |
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Warrants
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— |
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— |
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— |
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— |
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Total
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$ |
13,000,000 |
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$ |
926.9 |
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(1)
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An
indeterminate number of or aggregate principal amount of the securities is
being registered as may at various times be issued at indeterminate
prices, with an aggregate public offering price not to exceed $13,000,000
or the equivalent thereof in one or more currencies, less the aggregate
dollar amount of all securities previously issued
hereunder. Any securities registered hereunder may be sold
separately or as units with other securities registered
hereunder. The proposed maximum initial offering price per
security will be determined, from time to time, by the registrant in
connection with the issuance by the registrant of the securities
registered hereunder. The securities registered also include
such indeterminate number of shares of common stock and preferred stock as
may be issued upon conversion of or exchange for preferred stock that
provide for conversion or exchange, upon exercise of warrants or pursuant
to the anti-dilution provisions of any such securities. In
addition, pursuant to Rule 416 under the Securities Act, the securities
being registered hereunder include indeterminate number of shares of
common stock and preferred stock as may be issuable with respect to the
shares being registered hereunder as a result of stock splits, stock
dividends or similar
transactions.
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(2)
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Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(o).
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(3)
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Includes
consideration to be received by us for registered securities that are
issuable upon exercise, conversion or exchange of other registered
securities.
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The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
The
information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission becomes
effective. This preliminary prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED JANUARY 28, 2010
PROSPECTUS
$13,000,000
PUDA
COAL, INC.
Common
Stock
Preferred
Stock
Warrants
This
prospectus relates to common stock, preferred stock, and warrants for equity
securities which we may sell from time to time in one or more
offerings. We will provide specific terms of these sales in
supplements to this prospectus. You should read this prospectus and
each supplement carefully before you invest. The aggregate public
offering price of the securities offered by this prospectus will not exceed
$13,000,000.
This
prospectus may not be used to offer and sell securities unless accompanied by a
prospectus supplement.
See
“Risk Factors” beginning on page II-3 for a discussion of material risks that
you should consider before you invest in our securities being sold under this
prospectus.
Our
common stock is traded on the NYSE Amex under the trading symbol
“PUDA.” On January 25, 2010, the last reported sale price of our
common stock on the NYSE Amex was $6.25 per share.
The
aggregate market value of our outstanding common stock held by non-affiliates is
$39,533,406, based on 15,838,863 shares of outstanding common
stock, of which 6,325,345 shares are held by non-affiliates, and a per
share price of $6.25 based on the closing sale price of our common stock on
January 25, 2010. As of the date of this prospectus, we have not
offered any securities during the past twelve months pursuant to General
Instruction I.B.6 of Form S-3.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of the securities or passed on the adequacy or accuracy
of the disclosures in this prospectus or any accompanying prospectus
supplement. Any representation to the contrary is a criminal
offense.
The
date of this prospectus
is ,
2010
TABLE
OF CONTENTS
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Page
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ABOUT
THIS PROSPECTUS
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1
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THE
COMPANY
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1
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FORWARD-LOOKING
STATEMENTS |
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2 |
RISK
FACTORS
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3
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USE
OF PROCEEDS
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13
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DESCRIPTION
OF THE COMMON STOCK AND PREFERRED STOCK WE MAY OFFER
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13
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DESCRIPTION
OF THE WARRANTS WE MAY OFFER
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15
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PLAN
OF DISTRIBUTION
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16
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LEGAL
MATTERS
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17
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EXPERTS
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17
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WHERE
YOU CAN FIND MORE INFORMATION
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17
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We have
not authorized any dealer, salesperson or other person to give any information
or represent anything not contained in this prospectus. You should
not rely on any unauthorized information. This prospectus does not
offer to sell or buy any securities in any jurisdiction in which it is
unlawful. The information in this prospectus is current as of the
date on the cover.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a Registration Statement on Form S-3 that we filed with
the Securities and Exchange Commission utilizing a “shelf” registration
process. Under this shelf process, we may sell common stock,
preferred stock, and warrants for equity securities from time to time in one or
more offerings, either separately or in units, at indeterminate prices, up to an
aggregate maximum offering price for all such securities of
$13,000,000. This prospectus provides you with a general description
of the securities we may offer. Each time we sell any securities
under this prospectus, we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described below under the
heading “Where You Can Find More Information.”
Under the
regulations of the SEC governing the use of the Form S-3 registration statement,
so long as the market value of “public float,” as determined on the date on
which we sell any of our securities, is less than $75 million, then we may not
sell securities for proceeds of more than one-third of our public float as it
may be from time to time during the period the registration statement of which
the prospectus is a part remains effective. Our “public float” is
comprised of the number of our issued and outstanding shares of common stock
that are held by non-affiliates multiplied by the closing price of our common
stock on NYSE Amex on any day within 60 days of the date on which we sell any
securities hereunder. To the extent that the restrictions described
above limit our ability to sell the maximum number of securities registered
hereunder, we may sell less securities in order to be in compliance with the
restrictions or we may sell such securities pursuant to a separate registration
statement on Form S-1 or other applicable form, which such registration
statement we would file at some future time.
THE
COMPANY
Puda
Coal, Inc. (“Puda” or the “Company”) is a supplier of high-grade metallurgical
coking coal to the industrial sector in the People’s Republic of
China. Its processed coking coal is primarily purchased by coke and
steel producers for the purpose of making the coke required for the steel
manufacturing process. Its operations are conducted exclusively by an
entity in China, Shanxi Puda Coal Group Co., Ltd. (“Shanxi Coal”), which it
controls through 90% indirect equity ownership.
Puda
cleans raw coking coal sourced from third party coal mines primarily located in
Liulin County, Shanxi Province, and markets the cleaned, high quality coking
coal to coke and steel makers in its geographic market. Its current
primary geographic markets include Shanxi Province, Inner Mongolia Autonomous
Region, Hebei Province, Beijing and Tianjin, China.
The
Company focuses on value-added coal washing processes and specializes in
providing high quality, cleaned coking coal, which is the quality level required
to produce steel. The demand for the form of high quality coking coal
which the Company produces is primarily driven by China’s industrial expansion
and advancement, which depends on the availability of large amounts of steel for
building infrastructure. The Company currently purchases raw coal from a
diversified pool of local coal mines in Shanxi Province. Puda is not a
coal mining operation and does not own any coal mines as of the date of this
registration statement.
The
central area of Shanxi Province, where Puda’s three coal washing plants are
located, is known for its high quality coking coal reserves. The
Company is strategically located in proximity to some of the highest quality
coking coal reserves suitable for steel making. Puda’s three coal
washing plants are located in Liulin County, Zhongyang County and Lingshi
County, all of which are within approximately 150 miles of the Company’s
executive offices in Taiyuan City. Puda’s accumulated coal washing
capacity is about 3.5 million MT per year. As a large-volume
supplier, the Company expects to continue to enjoy certain advantages as it
believes that its primary customers will continue to focus on suppliers that can
deliver large volume, consistently high-quality coking coal. The
Company also expect to be well positioned to serve the demand for steel
production in China - mostly, coking companies that supply the steel mills and
steel mills with their own coking facilities. These customers are
mostly located in Shanxi Province, Inner Mongolia Autonomous Region, Hebei
Province, Beijing and Tianjin, all of which are accessible by railroad which is
the most cost effective method for coal transport.
Puda has
three coal washing plants: Shanxi Liulin Jucai Plant, located in
Liulin County, about 2 miles away from Jucai Coal, has an annual cleaning
capacity of 1.1 million MT; Shanxi Zhongyang Ruixu Plant, located in
Zhongyang County, has an annual clean coal washing capacity of 1.2 million MT;
Lingshi Dongqiang Plant, located in Lingshi County, has an annual coal washing
capacity of 1.2 million MT. In year 2008, the Company produced about
2.3 million MT cleaned coal, which is 66% of the 3.5 million MT annual
production capacity.
To
diversify its source of revenue and increase its gross margin, the board of
directors of Puda has approved a change in its business strategy to permit Puda
to enter into coal mining business, which can be operated separately from, or
synergistically with, its coal washing business. The Company plans to take
advantage of the policy initiatives of the Chinese government and has begun
working on finding suitable coal mines to acquire. On May 14, 2009, the
Company entered into an agreement to purchase 18% ownership in Shanxi Jianhe
Coal Industry Limited Company for an aggregate purchase price of RMB 100 million
(approximately $14.6 million). Pursuant to the agreement, the Company
has pre-paid 60% of the purchase price. The Company anticipates that
the closing will occur at or around end of 2009 when the share transfer and
governmental registration of the share transfer is completed. On September 28,
2009, the Shanxi provincial government appointed Shanxi Coal as the consolidator
for eight coal mines in Yucheng City, Pinglu County. Shanxi Coal will
consolidate the eight coal mines into five, increasing their total annual
capacity from approximately 1.6 million to 3.6 million metric
tons. Shanxi Coal has commenced the technical geological prospecting
process for the targeted coal reserves. In the near future, it will perform a
comprehensive financial analysis of the project and then determine the most
efficient plan to develop and construct the targeted consolidated coal
mines. As of the date of this prospectus, the Company or Shanxi Coal
has not entered into any definitive agreements for the acquisition of these
eight coal mines or any other definitive coal mine acquisition
agreements.
Puda
Coal, Inc. was incorporated on August 9, 2001 under the laws of Florida, and was
subsequently reincorporated on July 30, 2009 under the laws of
Delaware. Its principal executive office is located at 426 Xuefu
Street, Taiyuan City, Shanxi Province, China. The Company’s telephone number is
+86 (351) 2281302 and our facsimile number is +86 (351) 7034404. As
used in this prospectus, the words “we,” “us,” “our”, “Puda” and the “Company”
refer to Puda Coal, Inc., a Delaware corporation, and its
subsidiaries.
RECENT
DEVELOPMENTS
No material recent development has
occurred since the filing of our last Annual Report on Form 10-K for the year
ended December 31, 2008 that has not been described in a report on Form 10-Q or
Form 8-K.
The
statements contained in this registration statement on Form S-3 that are
not purely historical are “forward-looking statements” within the meaning
of Section 27A of the Securities Act of 1933 (the “Securities Act”) and
Section 21E of the Securities Exchange Act of 1934 (“Exchange Act”),
including without limitation statements about the expectations, beliefs,
intentions or strategies regarding the future of Puda. Words such as
“expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” and
similar expressions are used to identify these forward-looking statements.
These include, among others, statements regarding our future expectations,
performance, plans and prospects as well as assumptions about future
events. All forward-looking statements included in this registration
statement are based on information available to us on the date hereof, and
we assume no obligation to update any such forward-looking statements. The
forward-looking statements contained herein involve risks and
uncertainties discussed under the heading “Risk Factors” on page II-3. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of such factors, including those
set forth in this registration
statement.
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RISK
FACTORS
The
prospectus supplement applicable to each type or series of securities we offer
will contain a discussion of risks applicable to an investment in Puda and to
the particular types of securities that we are offering under that prospectus
supplement. Prior to making a decision about investing in our
securities, you should carefully consider the specific factors discussed under
the caption “Risk Factors” in the applicable prospectus supplement, together
with all of the other information contained in the prospectus supplement or
appearing or incorporated by reference in this prospectus.
Risks
Relating to Our Business
We
are primarily a holding company and depend on distributions from our
subsidiaries to meet our financial obligations.
Our
company has an offshore holding structure commonly used by foreign investors
with operations in China. We are a corporation which owns BVI, and BVI owns
Putai. Our operations are conducted exclusively through Shanxi Coal, in which we
indirectly own 90% of the equity interest. The operations of Shanxi
Coal are our sole source of revenue. We have no operations
independent of those of Putai and its subsidiaries. As a result, we
are dependent upon the performance of Putai and its subsidiaries and will be
subject to the financial, business and other factors affecting such subsidiaries
as well as general economic and financial conditions. As
substantially all of our operations are conducted through our subsidiaries, we
are dependent on the cash flows of our subsidiaries to meet our obligations and
the ability of Shanxi Coal and our other subsidiaries to pay dividends or make
other distributions, which may be limited.
Because
virtually all of our assets are held by our operating subsidiaries, the claims
of our shareholders will be structurally subordinate to all existing and future
liabilities and obligations, and trade payables of such subsidiaries. In the
event of a bankruptcy, liquidation or reorganization of the Company, our assets
and those of our subsidiaries’ will be available to satisfy the claims of our
shareholders only after all of Putai’s and its subsidiaries’ liabilities and
obligations have been paid in full.
If
we do not successfully execute our strategy of growth through coal mine
acquisitions, our future performance, particularly our profit margins, could be
adversely affected.
We plan
to grow through external growth opportunities, including acquisitions of coal
mines. If we are unable to obtain or manage these external growth
opportunities successfully, we will not be able to grow our business in the way
that we currently expect. The availability of high quality coal mines
is limited and we are not certain that we will be able to identify suitable
candidates or complete transactions on terms that are acceptable to
us. In order to pursue such opportunities, we may require significant
additional financing, which may not be available to us on favorable terms, if at
all. In addition, even if we are able to successfully complete
acquisitions, we may not be able to integrate them, operate them profitably, or
take full advantage of them and therefore may not realize the benefits that we
expect. If we are unsuccessful in our external growth strategy, we
may not be able to grow our business significantly and we may incur asset
impairment charges as a result of acquisitions that are not
successful.
The
current credit and financial market conditions have a negative impact on global
business environment and may exacerbate certain risks affecting our
business.
The
financial markets are currently experiencing unprecedented volatility, stress,
illiquidity and disruption around the world. Many of our customers and suppliers
may encounter much uncertainty and risks due to the weakening business
environment and credit availability. As a result, these customers and
suppliers may be unable to satisfy their contract obligations, may delay
payment, or may not repay our credit advance to them, which could
negatively affect our business and financial performance.
Our
operating results have been and may continue to be affected by fluctuations in
raw material prices. We may not be able to pass on cost increases to
customers.
Our
operating profits have been and may continue to be negatively affected by
fluctuations in the price of raw coking coal. We are subject to
short-term coal price volatility and have purchased and may continue to have to
purchase raw coking coal at higher prices. In the past, we were
unable to pass the cost increase of raw coal on to customers and may not be able
to do so in the future either. This has adversely affected and may
continue to adversely affect our gross margins and profitability. Our sales
agreements with customers generally contain provisions that permit the parties
to adjust the contract price of the cleaned coking coal upward or downward at
specified times. For example, we may adjust these contract prices
because of increases or decreases in the price of raw coal from our mining
suppliers, general inflation or deflation, or changes in the cost of producing
raw or cleaned coking coal caused by such things as changes in taxes, fees,
royalties or the laws regulating the mining, production, sale or use of
coal. However, if we fail to agree on a price with our customer under
these provisions, many agreements permit customers to terminate the contract or
refuse to buy all of the quantities contracted for. Market prices for
raw coking coal fluctuate in most regions in China. From the
beginning of 2008 the price of raw coking coal rose significantly and the price
reached highest level before October 2008, and then significantly decreased
afterwards. We were not able to fully pass these cost increases on to
our customers and may not be able to do so with any future increases in the cost
of raw materials. Top quality raw coking coal is critical to our
maintaining operating efficiencies and delivering cleaned coal to our customers
which meets their specifications. Since top quality raw coking coal
is more limited in supply, its price tends to be more volatile. A
general rise in coking coal prices also may adversely affect the price of, and
demand for, coke and products made with coke such as pig iron, steel and
concrete. This may in turn lead to a fall in demand for our
products.
The demand for our product is
cyclical and is affected by industrial economic conditions. Downturns
in the economy may reduce demand for our product and our revenues could
decline.
Because
we do not export our product out of China, our business and operating results
are primarily dependent upon China’s domestic demand for cleaned coking
coal. However, because the domestic demand for coal in China is
impacted by the international demand for coal, we are also susceptible to
fluctuations in the international markets. The domestic and
international coking coal markets are cyclical and exhibit fluctuation in supply
and demand from year to year and are subject to numerous factors beyond our
control, including, but not limited to, the economic conditions in China, the
global economic conditions and fluctuations in industries with high demand for
coal, such as the steel and power industries. A significant decline
in demand or excess supply for cleaned coking coal may have a material adverse
effect on our business and results of operations.
In
addition, nearly all of our sales are concentrated in the central and northern
area of China. Accordingly, we are susceptible to fluctuations in
business caused by adverse economic conditions in those
regions. Difficult economic conditions in other geographic areas into
which we may expand may also adversely affect our business, operations and
finances.
If
any of Shanxi Coal’s coal sales agreements terminates or expires, our revenues
and operating profits could suffer.
A
substantial portion of our sales are made under coal sales agreements, which are
important to the stability and profitability of our operations. It is
common business practice in China that coal purchase and sale agreements are
signed for one year terms, with annual renewals. This practice makes
it difficult for us to forecast long-term purchase and sale quantities and
can negatively affect our ability to manage inventory. These
agreements may expire or be terminated. Coal sales agreements also typically
contain force majeure provisions allowing temporary suspension of performance by
us or the customer during the duration of specified events beyond the control of
the affected party. Moreover, even if sales agreements are in force,
buyers are generally not obligated to take the quantities specified in the
contracts.
Increases
in transportation costs could make our operations less competitive and result in
the loss of customers.
Coal
producers and processors depend upon rail, barge, trucking, overland conveyor
and other systems to deliver coal to markets. While our customers
typically arrange and pay for transportation of cleaned coking coal from our
facilities to the point of use, any disruption of these transportation services
because of weather-related problems, strikes, lock-outs or other
events could temporarily impair our ability to supply coal to customers and
thus could adversely affect our results of operations. For example,
the high volume of raw coal shipped from all Shanxi Province mines could create
temporary congestion on the rail systems servicing that region. If
transportation for our cleaned coking coal becomes unavailable or uneconomic for
our customers, our ability to sell cleaned coking coal could
suffer. Transportation costs can represent a significant portion of
the total cost of cleaned coal. Since our customers typically
pay that cost, it is a critical factor in a distant customer’s purchasing
decision. If transportation costs from our facilities to the
customer’s are not competitive, the customer may elect to purchase
from another company. Moreover, certain coal sales agreements
permit the customer to terminate the contract if the cost of transportation
increases by specified amounts in any given 12-month period.
We
may not be able to manage our expanding operations effectively, which could harm
our business.
We have
expanded rapidly by acquiring coal washing facilities in Liulin County,
Zhongyang County and Lingshi County, which have become operational and have a
total annual coal washing capacity of approximately 3.5 million
MT. We anticipate continuous expansion in our business, both through
further acquisitions and internal growth. The new facility
acquisitions and the overall internal growth require significant management
resources that our smaller-size competitors do not need to devote to their
operations. In order to manage the expected growth of our operations
and personnel, we will be required to improve and implement operational and
financial systems, procedures and controls, and expand, train and manage our
growing employee base. Further, our management will be required to
maintain and expand our relationship with more suppliers and
customers. Our current and planned personnel, systems, procedures and
controls may not be adequate to support our further operations. If we
were not successful in establishing, maintaining and managing our personnel,
systems, procedures and controls, our business will be materially and adversely
affected.
We
may not be able to meet quality specifications required by our customers and as
a result could incur economic penalties or cancelled agreements which would
reduce our sales and profitability.
Most of
our coal sales agreements contain provisions requiring us to deliver coking coal
meeting quality thresholds for certain characteristics such as BTUs, sulfur
content, ash content, grindability and ash fusion temperature. If we
are not able to meet these specifications, because, for example, we are not able
to source coal of the proper quality, we may incur economic penalties, including
price adjustments, the rejection of deliveries or termination of the
contracts.
Our business is highly competitive
and increased competition could reduce our sales, earnings and
profitability.
The coal
crushing, washing and processing business is highly competitive in China and we
face substantial competition in connection with the marketing and sale of our
products. Most of our competitors are well established, have greater
financial, marketing, personnel and other resources, have been in business for
longer periods of time than we have, and have products that have gained wide
customer acceptance in the marketplace. The greater financial
resources of our competitors will permit them to implement extensive marketing
and promotional programs. We could fail to expand our market share,
and could fail to maintain our current share.
Increased
competition could also result in overcapacity in the Chinese coal industry in
general. The coal industry in China has experienced overcapacity in
the past. During the mid-1970s and early 1980s, a growing coal market
and increased demand for coal in China attracted new investors to the coal
industry, spurred the development of new mines and resulted in added production
capacity throughout the industry, all of which led to increased competition and
lower processed coal prices. Similarly, an increase in future
processed coal prices could encourage the development of expanded capacity by
new or existing coal processors. Any overcapacity could reduce
processed coal prices in the future and our profitability would be
impaired.
We
depend on key persons and the loss of any key person could adversely affect
our operations.
We and
our operating company, Shanxi Coal, are highly dependent on the marketing
ability and credit of Ming Zhao, our Chairman, and the loss of his service and
support would have a material and adverse impact on our
operations. We are also dependent upon our relationship with Ming
Zhao and his brother, Yao Zhao’s other controlled businesses. None of
our companies have applied for key-man life insurance on the lives of our
executives. If we were to lose the services of Ming Zhao, our ability to operate
would be impaired.
We
do not have any registered patents or other intellectual property and we may not
be able to maintain the confidentiality of our processes.
We have
no patents covering our cleaning processes and we rely on the confidentiality of
our cleaning processes in producing a competitive product. The
confidentiality of our know-how may not be maintained and we may lose any
meaningful competitive advantage which might arise through our proprietary
processes. As a result, our market position may be materially
adversely affected.
Significant
assets are subject to a lien held by a company controlled by the Zhaos and their
family. If we default on the payment of the obligations secured by
the lien we could lose title to assets which are necessary for the operation of
our business.
We
financed the acquisition of the New Shanxi Liulin Jucai Plant and the New
Zhongyang Plant through Resources Group, an entity owned 80% by Ming Zhao, 10%
by Yao Zhao, 5% by Xue Ning, Ming Zhao’s wife, and 5% by Xue Yue, a
second-generation cousin of Xue Ning, for an aggregate cost of $13 million paid
through a 6% secured Facilities Loan amortized over 10 years. The
note is secured by the assets purchased. If we default on the loan,
the security could be enforced and title to the assets could be lost, having a
significant negative impact on our ability to produce our products.
Since the
Zhaos are equity owners of Resources Group they may have a conflict of interest
with the Company. If the lien is enforced after a default, the
secured assets would be transferred to an entity which is owned by
them. Ming Zhao and Yao Zhao may have, or may develop in the future,
conflicts of interest with us. As the equity owners of 10% of the
registered capital of Shanxi Coal, they might personally profit if Shanxi Coal’s
benefits of operation are not directed to us. In addition, the loan
used to finance our recent facility expansions are held by Resources Group, a
company which is owned by the Zhaos and their family. It could be in
their economic interest to cause us to default on the payment of the loan with
Resources Group since Resources Group could acquire the assets which are subject
to the lien as a result of enforcement of the lien after a
default. With their combined ownership of us (as of November 10,
2009, approximately 48.56% and 12.22% of our outstanding common stock), they can
control the actions which we take. Ming Zhao is our Chairman of the
board of directors. In addition, the Zhao brothers also control the
Jucai coal mine, one of our suppliers of raw coal. By limiting or
eliminating our supply, they could materially adversely impact our production
and revenue, which in turn could cause us to default on our loan to Resources
Group. See also the risk below, “Our principal stockholders have significant
control over the company and may have conflicts of interest with the
company.”
Because
we are expanding, we may have to make sales to customers with inadequate or
unknown creditworthiness. We may not be able to collect receivables
which are incurred by these customers.
Our
ability to receive payment for cleaned coal depends on the continued
creditworthiness of our customers. In order to pay our expansion
costs, we may have to make sales to customers who are less creditworthy than our
historical customers. Our customer base may change if our sales
increase because of our added cleaning capacity. If we are not able
to collect our receivables, our profitability will be negatively
affected.
Terrorist
attacks or military conflict could result in disruption of our
business.
Terrorist
attacks and threats, escalation of military activity in response to such attacks
or acts of war may negatively affect our business, financial condition and
results of operations. Our business is affected by general economic
conditions, fluctuations in consumer confidence and spending, and market
liquidity, which can decline as a result of numerous factors outside of our
control, such as terrorist attacks and acts of war. Future terrorist
attacks, rumors or threats of war, actual conflicts involving China or its
allies, or military or trade disruptions affecting our customers may materially
adversely affect our operations. As a result, there could be delays
or losses in transportation and deliveries of processed coal to our customers,
decreased sales of coal and extensions of time for payment of accounts
receivable from customers. Strategic targets such as energy-related
assets may be at greater risk of terrorist attacks than other targets. In
addition, disruption or significant increases in energy prices could result in
government-imposed price controls. Any, or a combination, of these
occurrences could have a material adverse effect on Shanxi Coal’s business,
financial condition and results of operations.
Risks
Relating to Doing Business in China
Our
Chinese operations pose certain risks because of the evolving state of the
Chinese economy, political, and legislative and regulatory
systems. Changes in the interpretations of existing laws and the
enactment of new laws may negatively impact our business and results of
operation.
Substantially
all of our business operations are conducted in China. Accordingly,
our results of operations, financial condition and prospects are subject to
economic, political and legal developments in China. China’s economy
differs from the economies of most developed countries in many respects,
including its levels of government involvement, level of development, growth
rate, control of foreign exchange and allocation of resources. Doing
business in China involves various risks including internal and international
political risks, evolving national economic policies as well as financial
accounting standards, expropriation and the potential for a reversal in economic
conditions. Since the late 1970s, the Chinese government has been
reforming its economic system. These policies and measures may from
time to time be modified or revised. While the Chinese economy has
experienced significant growth in the past 20 years, growth has been uneven
across different regions and among various economic sectors of
China. Furthermore, while the Chinese government has implemented
various measures to encourage economic development and guide the allocation of
resources, some of these measures may also have a negative effect on
us. For example, our financial condition and results of operations
may be adversely affected by government control over capital investments or
changes in tax regulations that are applicable to us. Also, since
early 2004, the Chinese government has implemented certain measures to control
the pace of economic growth including certain levels of price controls on raw
coking coal. Such controls could cause our margins to be
decreased. In addition, such measures may cause a decrease in the
level of economic activity in China, which in turn could adversely affect our
results of operations and financial condition. Adverse changes in
economic policies of the Chinese government or in the laws and regulations, if
any, could have a material and adverse effect on the overall economic growth of
China, and could adversely affect our business operations.
There are
substantial uncertainties regarding the application of Chinese laws, especially
with respect to existing and future foreign investments in China. The
interpretation and application of existing Chinese laws, regulations and
policies, and the stated positions of the Chinese authorities may change and
possible new laws, regulations or policies will impact our business and
operations. For example, due to the uncertainties surrounding the
interpretation of the transfer pricing rules relating to related party
transactions in China, it is possible that tax authorities in China may
challenge the transfer prices that we have used for related party transactions
among our entities in China in the future. Because of the evolving nature of the
law, it will be difficult for us to manage and plan for changes that may
arise. Our business is and will continue to be subject central,
provincial, local and municipal regulation and licensing in
China. Compliance with such regulations and licensing can be expected
to be a time-consuming, expensive process. Compliance with foreign country laws
and regulations affecting foreign investment, business operations, currency
exchange, repatriation of profits, and taxation, will increase the risk of
investing in our stock.
We
may have to incur unanticipated costs because of the unpredictability of the
Chinese legal system.
The
Chinese legal system has many uncertainties. The Chinese legal system
is based on written statutes. Prior court decisions may be cited for
reference but have limited precedential value. Since 1979, Chinese
legislation and regulations have enhanced the protections afforded to various
forms of foreign investments in China. However, China has not
developed a fully integrated legal system and recently-enacted laws and
regulations may not sufficiently cover all aspects of economic activities in
China. In particular, because these laws and regulations are relatively
new, and because of the limited volume of published decisions and their
nonbinding nature, the interpretation and enforcement of these laws and
regulations involve uncertainties. In addition, the Chinese legal
system is based in part on government policies and internal rules (some of which
are not published on a timely basis or at all) that may have a retroactive
effect. As a result, we may not be aware of our violation of these
policies and rules until some time after the violation. In addition,
any litigation in China may be protracted and result in substantial costs and
diversion of resources and management attention.
Our industry is heavily regulated and
we may not be able to remain in compliance with all such regulations and we may
be required to incur substantial costs in complying with such
regulation.
We are
subject to extensive regulation by China’s Mining Ministry, and by other
provincial, county and local authorities in jurisdictions in which our products
are processed or sold, regarding the processing, storage, and distribution of
our product. Our processing facilities are subject to periodic
inspection by national, province, county and local authorities. We
may not be able to comply with current laws and regulations, or any future laws
and regulations. To the extent that new regulations are adopted, we
will be required to adjust our activities in order to comply with such
regulations. We may be required to incur substantial costs in
order to comply. Our failure to comply with applicable laws and
regulations could subject us to civil remedies, including fines, injunctions,
recalls or seizures, as well as potential criminal sanctions, which could have a
material and adverse effect on our business, operations and
finances. Changes in applicable laws and regulations may also have a
negative impact on our sales. Certain of our contracts with customers
permit the customers to terminate the contract in the event of changes in
regulations affecting the industry that increase the price of coal beyond
specified limits.
The
government regulation of our coal processing operations imposes additional costs
on us, and future regulations could increase those costs or limit our ability to
crush, clean and process coking coal. China’s central, provincial and
local authorities regulate the coal mining industry with respect to matters such
as employee health and safety, permitting and licensing requirements, air
quality standards, water pollution, plant and wildlife protection, reclamation
and restoration of mining properties after mining is completed, the discharge of
materials into the environment, surface subsidence from underground mining and
the effects that mining has on groundwater quality and
availability. We are required to prepare and present to China’s
central, provincial and local authorities data pertaining to the effect or
impact that any proposed processing of coal may have upon the
environment. The costs, liabilities and requirements associated with
these regulations may be costly and time-consuming and may delay commencement,
expansion or continuation of our coal processing operations. The possibility
exists that new legislation and/or regulations and orders may be adopted that
may materially and adversely affect our operations, our cost structure and/or
our customers’ ability to use coal. New legislation or administrative
regulations (or judicial interpretations of existing laws and regulations),
including proposals related to the protection of the environment that would
further regulate and tax the coal industry, may also require us and our
customers to change operations significantly or incur increased
costs. Certain sales agreements contain provisions that allow a
purchaser to terminate its contract if legislation is passed that either
restricts the use or type of coal permissible at the purchaser’s plant or
results in specified increases in the cost of coal or its use. These
factors and legislation, if enacted, could have a material adverse effect
on our financial condition and results of operations.
It
will be difficult for any shareholder of our company to commence a legal action
against our executives. Other than the stock of our subsidiaries, we
have no assets in the United States.
We
conduct substantially all of our operations through our control of Shanxi Coal.
Shanxi Coal and substantially all of Shanxi Coal’s assets are located in Shanxi
Province, China. Other than our stock in our direct subsidiary, Puda
Investments Holding Limited, an International Business Company incorporated in
the British Virgin Islands, we have no assets in the United
States. In addition, all of our executive officers and some of our
directors reside within China. As a result, it may not be possible to
effect service of process within the United States or elsewhere outside of China
upon our senior executive officers or some directors, including with respect to
matters arising under U.S. federal securities laws or applicable state
securities laws. Moreover, our Chinese counsel has advised us that
China does not have treaties with the United States or many other countries
providing for the reciprocal recognition and enforcement of judgments of
courts.
Restrictions
on Chinese currency may limit our ability to obtain operating capital and could
restrict our ability to move funds out of China and to pay
dividends.
The
Chinese currency, “Renminbi”, or “RMB”, is not a freely convertible currency,
which could limit our ability to obtain sufficient foreign currency to support
Shanxi Coal’s business operations in the future and could impair the ability of
Shanxi Coal to pay dividends or other distributions to Puda. We rely
on the Chinese government’s foreign currency conversion policies, which may
change at any time, in regard to our currency exchange needs. Shanxi
Coal receives all of its revenues in Renminbi, which is not freely convertible
into other foreign currencies. Under our current structure, our
income is derived from payments from Shanxi Coal through Putai and
BVI. In China, the government has control over Renminbi reserves
through, among other things, direct regulation of the conversion of Renminbi
into other foreign currencies and restrictions on foreign
imports. Although foreign currencies which are required for “current
account” transactions can be bought freely at authorized Chinese banks, the
proper procedural requirements prescribed by Chinese law must be
met. Current account items, including profit distributions, interest
payments and expenditures from trade-related transactions, can be made in
foreign currencies without prior approval from the Chinese State Administration
of Foreign Exchange by complying with certain procedural
requirements. However, approval from appropriate government
authorities is required where RMB is to be converted into foreign currency and
remitted out of China to pay capital expenses such as the repayment of bank
loans denominated in foreign currencies. At the same time, Chinese companies are
also required to sell their foreign exchange earnings to authorized Chinese
banks and the purchase of foreign currencies for capital account
transactions still requires prior approval of the Chinese
government. This type of heavy regulation by the Chinese government
of foreign currency exchange restricts certain of our business operations
and a change in any of these government policies, or any other, could
further negatively impact our operations.
In order
to pay dividends to Puda, a conversion of Renminbi into U.S. dollars is
required. Under current Chinese law, the conversion of Renminbi into
foreign currency generally requires government consent. Government
authorities may impose restrictions that could have a negative impact in the
future on the conversion process and upon the ability of Shanxi Coal to meet its
cash needs, and to pay dividends to Puda. However, Putai is presently
classified as a wholly foreign-owned enterprise, or WFOE, in China that has
verifiable foreign investment in China, funding having been made through an
official Chinese banking channel. Because Putai qualifies for
treatment as a WFOE, it can convert Renminbi, declare dividends and its funds
can be repatriated to Puda in the United States under current laws and
regulations in China, subject to limitations and restrictions imposed by Chinese
laws, such as the SAFE notices issued by the State Administration of Foreign
Exchange. However, the Chinese laws governing foreign currency
exchange are evolving, and changes in such laws or their interpretation or
application may adversely affect the ability to convert Renminbi, declare
dividends and repatriate funds to the United States. Because our cash
flow is dependent on dividend distributions from our subsidiaries in China, we
may be restricted from distributing dividends to stockholders if we do not
receive distributions of dividends from our subsidiaries.
Our
ownership structure is subject to regulatory controls which could cause our
subsidiaries to be subject to penalties or which may restrict our ability to
repatriate and distribute profits.
The State
Administration of Foreign Exchange (“SAFE”) in China issued public Circular No.
75 on October 21, 2005 concerning foreign exchange regulations on financings and
returns on investments made by PRC residents through off-shore investment
vehicles. The circular went into effect November 1, 2005 and replaces
Circular No. 11 issued January 24, 2005 and Circular No. 29 issued April 8, 2005
concerning foreign investment regulations on mergers and acquisitions in China.
Circular No. 75 eliminates the requirement under the prior two circulars for the
China Ministry of Commerce (“MOFCOM”) to approve offshore investments made by
PRC individual residents. This change effectively enables PRC
individual residents to set up, control or otherwise invest into China through
an offshore vehicle for the purposes of attracting overseas financing and
facilitating an offshore public listing or offshore merger and acquisition exit,
so long as such individuals comply with the SAFE registration procedures
contained in Circular No. 75.
Although
Circular No. 75 has removed the requirement for MOFCOM approval, and Puda’s
Chinese shareholders have complied with Circular No. 75 requirements, the
burdens that may arise under the SAFE registration process in the future may
still restrict our ability to control and manage Shanxi Coal and could adversely
affect our business and prospects.
We
are subject to currency fluctuations from our Chinese operations and
fluctuations in the exchange rate may negatively affect our expenses and results
of operations, as well as the value of our assets and liabilities.
Effective
July 21, 2005, The People’s Bank of China announced that the Renminbi exchange
rate regime is reformed by moving from a fixed rate of exchange based upon the
U.S. dollar to a managed floating exchange rate regime based upon market supply
and demand of a basket of currencies. As of July 26, 2005, the
exchange rate against the Renminbi was adjusted to 8.11 Renminbi per U.S. dollar
from 8.28 Renminbi per U.S. dollar, which represents an adjustment of
approximately two percent. As of December 31, 2008, the last trading
day in 2008, Renminbi appreciated to approximately 6.8225 Renminbi per U.S.
Dollar. It is expected that the revaluation of the Renminbi and the
exchange rate of the Renminbi may continue to change in the
future. Fluctuations in the exchange rate between the Chinese RMB and
the United States dollar could adversely affect our operating
results. Results of Shanxi Coal’s operations are translated at
average exchange rates into United States Dollars for purposes of reporting
results. As a result, fluctuations in exchange rates may adversely
affect our expenses and results of operations as well as the value of our assets
and liabilities. Fluctuations may adversely affect the comparability
of period-to-period results. We do not use hedging techniques to
eliminate the effects of currency fluctuations. Thus, exchange rate
fluctuations could have a material adverse impact on our operating results and
stock prices.
Because
our operations are located in China, information about our operations are not
readily available from independent third-party sources.
Because
our sole operating company, Shanxi Coal, is based in China, shareholders may
have greater difficulty in obtaining information about Shanxi Coal on a timely
basis than would shareholders of an entirely U.S.-based
company. Shanxi Coal’s operations will continue to be conducted in
China and shareholders may have difficulty in obtaining information about Shanxi
Coal from sources other than Shanxi Coal itself. Information
available from newspapers, trade journals, or local, regional or national
regulatory agencies such as issuance of construction permits and contract awards
for development projects will not be readily available to
shareholders. Shareholders will be dependent upon Shanxi Coal’s
management for reports of Shanxi Coal’s progress, development, activities and
expenditure of proceeds.
Risks Associated with this Offering
and Puda’s Common Stock
Our
stock was historically very thinly traded and stockholders may not be able to
liquidate their investment at all, or may only be able to liquidate the
investment at a price less than the company’s value.
Our
common stock was historically very thinly traded, and the price if traded may
not reflect the value of our company. Consequently, investors may not
be able to liquidate their investment at all, or if they are able to liquidate
it may only be at a price that does not reflect the value of the
business. Even if a more active market should develop, the price may
be highly volatile. Furthermore, if the price for our stock becomes
lower, many brokerage firms may not be willing to effect transactions in the
securities. Even if an investor finds a broker willing to effect a
transaction in our stock, the combination of brokerage commissions, transfer
fees, taxes, if any, and any other selling costs may exceed the selling
price. In additional, many lending institutions will not permit the
use of common stock like ours as collateral for any loans.
We
were historically subject to the Penny Stock Rules; there is no certainty
whether we will be subject to such rules again in the future, and if we will,
sale of our stock by investors may be difficult.
We were
historically subject to the SEC’s “penny stock” rules. Penny stocks
generally are equity securities with a price of less than $5.00. If
our stock prices decrease in the future to below $5.00, we may be subject to
penny stock rules again. The penny stock rules require broker-dealers
to deliver a standardized risk disclosure document prepared by the SEC which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer must also provide the customer
with current bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson, and monthly account statements showing
the market value of each penny stock held in the customer’s
account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information must be given to the customer orally or in
writing prior to completing the transaction and must be given to the customer in
writing before or with the customer’s confirmation.
In
addition, the penny stock rules require that prior to a transaction, the broker
and/or dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. The penny stock rules are burdensome and may
reduce purchases of any offerings and reduce the trading activity for our common
stock. If our common stock becomes subject to the penny stock rules
again in the future, the holders of such common stock may find it more difficult
to sell their securities.
Our
stock price has been extremely volatile and may continue to fluctuate
significantly, which may make it more difficult for you to resell shares when
you want at prices you find attractive.
The
trading price of our common stock has been and may continue to be subject to
significant daily fluctuations. During the three months ended
September 30, 2009, the closing sale prices of our ordinary shares on the
Over-the-Counter Bulletin Board and then NYSE Amex ranged from $3.15 to $6.65
per share (taking into account the 7-to-1 share conversion). Our
stock price may fluctuate in response to a number of events and factors, such as
quarterly variations in operating results, announcements of material customer
agreements or acquisition, the operating and stock price performance of other
companies that investors may deem comparable, new government restrictions or
regulations and news reports relating to trends in our markets. In
addition, the stock market in general, and the market prices for China-related
companies recently have experienced extreme volatility that often has been
unrelated to the operating performance of such companies. These broad
market and industry fluctuations may adversely affect the price of our common
stock, regardless of our operating performance.
Our
stock prices could decrease if a substantial number of shares are sold under
Rule 144.
A
substantial majority of Puda’s outstanding shares of common stock are
“restricted securities” within the meaning of Rule 144 under the Securities
Act. As restricted shares, these shares may be resold only pursuant
to an effective registration statement or under the requirements of Rule 144 or
other applicable exemption from registration under the Act and as required under
applicable state securities laws. Rule 144 provides in essence that a person who
has held restricted securities for a period of at least one year may, under
certain conditions, sell every three months, in brokerage transactions, a number
of shares that does not exceed 1.0% of a our outstanding common
stock. There is no limit on the amount of restricted securities that
may be sold by a non-affiliate after the restricted securities have been held by
the owner for a period of two years or more. The SEC amended Rule 144
and, effective February 15, 2008, non-affiliates may sell restricted securities
without volume limitations or other requirements after having held the
securities for six months. If a substantial number of shares of our
stock are sold under the amended Rule 144 or other exemption, it could cause the
price our stock to go down.
Our principal stockholders have the
ability to exert significant control in matters requiring stockholder vote and
could delay, deter or prevent a change in control of our
company.
As of
November 10, 2009, Ming Zhao and Yao Zhao own in total approximately 60.78% of
the Company’s outstanding shares, and upon the conversion of all of the
outstanding convertible notes and the exercise of all of the outstanding
warrants the underlying stock of which is being registered in this offering,
they will own in total approximately 53.39% of our outstanding stock and, acting
together, will be able to exert a significant degree of influence over our
management and affairs and all actions requiring stockholder approval, such as
the election of directors and approval of significant corporate
transactions. In addition, Delaware corporate law provides that
certain actions may be taken by consent action of stockholders holding a
majority of the outstanding shares. In the event that the requisite
approval of stockholders is obtained by consent action, without any meeting of
stockholders, dissenting or non-participating stockholders generally would be
bound by such vote. Through their concentration of voting power, the
Zhao brothers could delay, deter or prevent a change in control of our company
or other business combinations that might otherwise be beneficial to our other
stockholders. Accordingly, this concentration of ownership may harm
the market price of our common stock. In addition, the interest of
the Zhao brothers may not always coincide with the interest of the Company’s
other stockholders. In deciding how to vote on such matters, the Zhao
brothers may be influenced by interests that conflict with yours. You
should not buy our common stock unless you are willing to entrust all aspects of
operational control to Puda’s current management team.
Our
principal stockholders have significant control over the company and may have
conflicts of interest with the company.
Ming Zhao
and Yao Zhao may have, or may develop in the future, conflicts of interest with
us. First, the loan used to finance our recent facility expansions
is held by Resources Group, a company which is owned by the
Zhaos. It could be in their economic interest to cause us to default
on the payment of the loan with Resources Group since Resources Group could
acquire the assets which are subject to the lien as a result of enforcement of
the lien after a default. With their combined ownership of us
(60.78%, and 53.39% after the Conversion), they can control the actions which we
take. Ming Zhao is our Chairman of the board of
directors. Second, the Zhao brothers control the mine which is one of
our raw coal suppliers. We currently secure raw coal from local
Liulin County coal mines, including Jucai Coal, a coal mine that is 75% owned by
Yao Zhao, Mr. Ming Zhao’s brother and a manager of the coal washing plants of
Shanxi Coal. By limiting or eliminating our supply, the Zhao
brothers, who control our coal mine supplies, could adversely impact our
production and revenue, which in turn could cause us to default on our loan to
Resources Group. In addition, the Zhao Brothers may declare dividends
out of Shanxi Coal, in which they own 10% of the direct equity interest even
though it would be in the interests of Puda for Shanxi Coal, to reinvest its
profits into the business.
The
conversion of outstanding derivative securities could cause your ownership in
the company to be diluted and may decrease the value of your
investment.
Outstanding
derivative securities and current and future obligations to issue Puda’s
securities to various parties may dilute the value of your
investment. In November 2005, we issued warrants with 5 years term to
certain investors. For as long as the warrants are outstanding, the
holders thereof will have an opportunity to profit from a rise in the market
price of our common stock without assuming the risks of
ownership. This may have an adverse effect on the terms upon which we
can obtain additional capital. It should be expected that the holders
of such derivative securities would exercise or convert them at a time when we
would be able to obtain equity capital on terms more favorable than the exercise
or conversion prices provided by the warrants or options. There are
no preemptive rights in connection with Puda’s common stock.
We
do not intend to pay dividends in the foreseeable future.
In 2005,
Shanxi Coal, our 90% subsidiary, declared dividends of $1,756,470, payable to
Ming Zhao (80%) and Yao Zhao (20%), of which $543,470 was paid in 2005 and
$1,172,000 was paid in October 17, 2008. In September 2008, Shanxi
Coal declared RMB 8 million ($1,170,754) dividend to its shareholders, which has
not been paid as of the date of December 31, 2008. No dividend was
declared in 2006, 2007 and 2008 by Puda Coal, the OTC listed
company. Puda Coal does not intend to pay any dividends in the
foreseeable future. We do not plan on making any cash distributions
in the manner of a dividend or otherwise. Our board of directors presently
intends to follow a policy of retaining earnings, if any.
The
Company has the right to issue additional common stock and preferred stock
without the consent of shareholders. This would have the effect of diluting your
ownership in the company and could decrease the value of your
stock.
There are
additional authorized but unissued shares of our common stock that may be later
issued by our board of directors for any purpose without the consent or vote of
the stockholders that would dilute a stockholder’s percentage ownership of the
company.
In
addition, our certificate of incorporation authorizes the issuance of shares of
preferred stock, the rights, preferences, designations and limitations of which
may be set by the board of directors. While no preferred stock is
currently outstanding or subject to be issued, the certificate of incorporation
has authorized issuance of up to 5,000,000 shares of preferred stock in the
discretion of the board of directors. Such preferred stock may be
issued upon filing of amended certificate of incorporation and the payment of
required fees; no further shareholder action is required. If issued,
the rights, preferences, designations and limitations of such preferred stock
would be set by the board of directors and could operate to the disadvantage of
the outstanding common stock. Such terms could include, among others,
preferences as to dividends and distributions on liquidation.
We may be subject to regulatory
scrutiny and sustain a loss of public confidence if we are unable to satisfy
regulatory requirements relating to our internal controls over financial
reporting and/or we have material internal control weaknesses which may result
in material financial reporting errors.
Section
404 of the Sarbanes-Oxley Act of 2002 requires us to perform an evaluation of
our internal controls over financial reporting beginning with our Annual Report
filed for a fiscal year ending on or after December 15, 2007 and have our
independent registered public accounting firm attest to such evaluation for
fiscal years ending on or after December 15, 2009. Compliance with
these requirements can be expensive and time-consuming. While we
believe that we met and will continue to be able to meet the applicable
deadlines, no assurance can be given that we will meet the required deadlines in
future years. If we fail to timely complete this evaluation, or if
our auditors cannot timely attest to our evaluation when we are required to have
such attestation, we may be subject to regulatory scrutiny and a loss of public
confidence in our internal controls.
We
had not maintained an effective system of internal control over financial
reporting until we recently corrected the material weaknesses in our internal
control. If we fail to maintain an effective internal control again
in the future, there may be inaccuracies in our financial statements and current
and potential shareholders could lose confidence in our financial reporting,
which would harm our business and the trading price of our stock.
As
reported in Item 9A(T) – “Control and Procedures” of our annual report on Form
10-K for the fiscal year ended December 31, 2008 and Item 4 – “Controls and
Procedures” of this report, we had not maintained an effective system of
internal control over financial reporting until we recently corrected the
material weaknesses in internal control by the end of the third quarter of 2009.
For a detailed description of these material weaknesses and our remediation
efforts, see Item 9A(T) – “Controls and Procedures” of our annual report on Form
10-K for the fiscal year ended December 31, 2008 and Item 4 – “Controls and
Procedures” of the subsequent quarterly reports on Forms 10-Q. If a
material weakness is identified in our internal control over financial reporting
in the future, our management will be unable to report favorably as to the
effectiveness of our internal control over financial reporting and/or our
disclosure controls and procedures, and we could be required to further
implement expensive and time-consuming remedial measures and potentially lose
investor confidence in the accuracy and completeness of our financial reports,
which could have an adverse effect on our stock price and potentially subject us
to litigation.
USE
OF PROCEEDS
Unless
otherwise indicated in the applicable prospectus supplement, we anticipate that
any net proceeds from the sale of the securities that we may offer under this
prospectus and any accompanying prospectus supplement will be used for general
corporate purposes. General corporate purposes may include operating
expenses, acquisitions, investments, repayment of debt, capital expenditures,
repurchase of our capital stock and any other purposes that we may specify in
any prospectus supplement. We may invest the net proceeds temporarily
until we use them for their stated purposes.
DESCRIPTION
OF THE COMMON STOCK AND PREFERRED STOCK WE MAY OFFER
The
following description of our common stock and preferred stock, together with the
additional information included in any applicable prospectus supplements,
summarizes the material terms and provisions of these types of securities but is
not complete. For the complete terms of our common stock and
preferred stock, please refer to our certificate of incorporation and bylaws
that are incorporated by reference into the registration statement which
includes this prospectus and, with respect to preferred stock, the certificate
of designation which will be filed with the Securities and Exchange Commission
for each series of preferred stock we may designate, if any. We also
refer you to the description of our common stock and preferred stock set forth
in our Registration Statement on Form 8-A filed with the SEC on September 16,
2009.
We will
describe in a prospectus supplement the specific terms of any common stock or
preferred stock we may offer pursuant to this prospectus. If
indicated in a prospectus supplement, the terms of such common stock or
preferred stock may differ from the terms described below.
Common
Stock
Under
our certificate of incorporation we may issue up to 150,000,000 shares of common
stock, par value $0.001 per share. As of January 25, 2010, we had
15,838,863 shares of common stock issued and outstanding. The holders
of our common stock are entitled to one vote for each share held of record on
all matters submitted to a vote of the stockholders. Subject to
preferences that may be applicable to any outstanding preferred stock, holders
of common stock are entitled to receive ratably such dividends as may be
declared by our board of directors out of funds legally available for that
purpose. In the event of liquidation, dissolution or winding up of
Puda, the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to the prior distribution rights
of any outstanding preferred stock. The common stock has no
preemptive or conversion rights or other subscription rights. There
are no redemption or sinking fund provisions applicable to the common
stock. The outstanding shares of common stock are fully paid and
non-assessable.
Our
common stock is listed on the NYSE Amex under the symbol “PUDA.” The
transfer agent and registrar for our common stock is Fidelity Transfer
Company.
Preferred
Stock
Under our
certificate of incorporation we may issue up to 5,000,000 shares of preferred
stock, par value $0.01 per share. No shares of preferred stock or
options to purchase preferred stock are currently outstanding. Our
board of directors has the authority, without further action by the
stockholders, to issue up to the maximum authorized number of shares of
preferred stock in one or more series. The board of directors also
has the authority to designate the rights, preferences, privileges and
restrictions of each such series, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any
series. The rights, preferences, privileges and restrictions of each
series will be fixed by the certificate of designation relating to that
series. Any or all of the rights of the preferred stock may be
greater than the rights of the common stock.
The
issuance of preferred stock may have the effect of delaying, deferring or
preventing a change in control of Puda without further action by the
stockholders. The issuance of preferred stock with voting and
conversion rights may also adversely affect the voting power of the holders of
common stock. In certain circumstances, an issuance of preferred
stock could have the effect of decreasing the market price of the common
stock.
Whenever
preferred stock is to be sold pursuant to this prospectus, we will file a
prospectus supplement relating to that sale which will specify:
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the
number of shares in the series of preferred
stock;
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the
designation for the series of preferred stock by number, letter or title
that shall distinguish the series from any other series of preferred
stock;
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the
dividend rate, if any, and whether dividends on that series of preferred
stock will be cumulative, noncumulative or partially
cumulative;
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the
voting rights of that series of preferred stock, if
any;
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any
conversion provisions applicable to that series of preferred
stock;
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any
redemption or sinking fund provisions applicable to that series of
preferred stock;
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the
liquidation preference per share of that series of preferred stock, if
any; and
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the
terms of any other preferences or rights, if any, applicable to that
series of preferred stock.
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Certain
Effects of Authorized but Unissued Stock
We have
shares of common stock and preferred stock available for future issuance without
stockholder approval. These additional shares may be utilized for a
variety of corporate purposes, including future public offerings to raise
additional capital, facilitate corporate acquisitions or payable as a dividend
on the capital stock.
The
existence of unissued and unreserved common stock and preferred stock may enable
our board of directors to issue shares to persons friendly to current management
or to issue preferred stock with terms that could render more difficult or
discourage an attempt to obtain control of us by means of a merger, tender
offer, proxy contest or otherwise, thereby protecting the continuity of our
management. In addition, the issuance of preferred stock could
adversely affect the voting power of holders of common stock and the likelihood
that such holders will receive dividend payments and payments upon
liquidation.
Delaware
Law and Certain Provisions of Our Certificate of Incorporation and
Bylaws
Provisions
of Delaware law and our certificate of incorporation and bylaws could make the
acquisition of Puda and the removal of incumbent officers and directors more
difficult. These provisions are expected to discourage certain types
of coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of Puda to negotiate with us
first. We believe that the benefits of increased protection of our
potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure Puda outweigh the disadvantages
of discouraging such proposals because, among other things, negotiation of such
proposals could result in an improvement of their terms.
We are
subject to the provisions of Section 203 of the Delaware general corporation
law. In general, the statute prohibits a publicly-held Delaware
corporation from engaging in a “business combination” with an “interested
stockholder” for a period of three years after the date that the person became
an interested stockholder unless, subject to certain exceptions, the business
combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a
“business combination” includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the
stockholder. Generally, an “interested stockholder” is a person who,
together with affiliates and associates, owns, or within three years prior, did
own 15% or more of the corporation’s voting stock. These provisions
may have the effect of delaying, deferring or preventing a change in control of
Puda without further action by the stockholders.
Our
certificate of incorporation sets forth an advance notice procedure with regard
to the nomination, other than by or at the direction of the board of directors,
of candidates for election as directors and with regard to business to be
brought before a meeting of stockholders.
DESCRIPTION
OF THE WARRANTS WE MAY OFFER
We may
issue warrants, including warrants to purchase common stock, preferred stock, or
any combination of the foregoing. Warrants may be issued
independently or together with any securities and may be attached to or separate
from the securities. The warrants will be issued under warrant
agreements to be entered into between us and a warrant agent as detailed in the
prospectus supplement relating to warrants being offered.
The
applicable prospectus supplement will describe the following terms, where
applicable, of the warrants in respect of which this prospectus is being
delivered:
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the
title of the warrants;
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the
aggregate number of the warrants;
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the
price or prices at which the warrants will be
issued;
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the
currencies in which the price or prices of the warrants may be
payable;
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the
designation, amount, and terms of the offered securities purchasable upon
exercise of the warrants;
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the
designation and terms of the other offered securities, if any, with which
the warrants are issued and the number of the warrants issued with each
security;
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if
applicable, the date on and after which the warrants and the offered
securities purchasable upon exercise of the warrants will be separately
transferable;
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the
price or prices at which and currency or currencies in which the offered
securities purchasable upon exercise of the warrants may be
purchased;
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the
date on which the right to exercise the warrants shall commence and the
date on which the right shall
expire;
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the
minimum or maximum amount of the warrants which may be exercised at any
one time;
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information
with respect to book-entry procedures, if
any;
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a
discussion of any federal income tax considerations;
and
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any
other material terms of the warrants, including terms, procedures, and
limitations relating to the exchange and exercise of the
warrants.
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PLAN
OF DISTRIBUTION
We may
sell the securities being offered pursuant to this prospectus directly to
purchasers, to or through underwriters, through dealers or agents, or through a
combination of such methods. The prospectus supplement with respect
to the securities being offered will set forth the terms of the offering,
including the names of the underwriters, dealers or agents, if any, the purchase
price, the net proceeds to Puda, any underwriting discounts and other items
constituting underwriters’ compensation, and initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which such securities may be listed.
If
underwriters are used in an offering, we will execute an underwriting agreement
with such underwriters and will specify the name of each underwriter and the
terms of the transaction (including any underwriting discounts and other terms
constituting compensation of the underwriters and any dealers) in a prospectus
supplement. If an underwriting syndicate is used, the managing
underwriter(s) will be specified on the cover of the prospectus
supplement. If underwriters are used in the sale, the offered
securities will be acquired by the underwriters for their own accounts and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Any public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time. Unless otherwise set forth in the prospectus supplement, the
obligations of the underwriters to purchase the offered securities will be
subject to conditions precedent and the underwriters will be obligated to
purchase all of the offered securities if any are purchased.
In the
event any underwriter, broker-dealer or agent that is a member of the Financial
Industry Regulatory Authority, Inc., or FINRA, participates in a public offering
of the securities that are the subject of this prospectus, the maximum
commission or discount to be received by any such FINRA member or independent
broker-dealer will not be greater than 8% of the gross offering proceeds from
securities offered with this prospectus.
If
dealers are used in an offering, we will sell the securities to the dealers as
principals. The dealers then may resell the securities to the public
at varying prices which they determine at the time of resale. The
names of the dealers and the terms of the transaction will be specified in a
prospectus supplement.
The
securities may be sold directly by us or through agents we
designate. If agents are used in an offering, the names of the agents
and the terms of the agency will be specified in a prospectus
supplement. Unless otherwise indicated in a prospectus supplement,
the agents will act on a best-efforts basis for the period of their
appointment.
Dealers
and agents named in a prospectus supplement may be deemed to be underwriters
(within the meaning of the Securities Act) of the securities described
therein. In addition, we may sell the securities directly to
institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resales
thereof.
Underwriters,
dealers and agents, may be entitled to indemnification by us against specific
civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the underwriters or agents may be
required to make in respect thereof, under underwriting or other
agreements. The terms of any indemnification provisions will be set
forth in a prospectus supplement. Certain underwriters, dealers or
agents and their associates may engage in transactions with, and perform
services for us in the ordinary course of business.
If so
indicated in a prospectus supplement, we will authorize underwriters or other
persons acting as our agents to solicit offers by institutional investors to
purchase securities pursuant to contracts providing for payment and delivery on
a future date. We may enter contracts with commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutional investors. The
obligations of any institutional investor will be subject to the condition that
its purchase of the offered securities will not be illegal, at the time of
delivery. The underwriters and other agents will not be responsible
for the validity or performance of contracts.
Each
series of securities will be a new issue of securities and will have no
established trading market other than the common stock which is listed on NYSE
Amex. Any common stock sold pursuant to a prospectus supplement will
be eligible for quotation and trading on NYSE Amex, subject to official notice
of issuance. Any underwriters to whom securities are sold by Puda for
public offering and sale may make a market in the securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The securities, other than the
common stock, may or may not be listed on a national securities exchange or
eligible for quotation and trading on NYSE Amex.
LEGAL
MATTERS
The
validity of the securities to be issued pursuant to this prospectus will be
passed upon by Goodwin Procter LLP, New York, New York, counsel to
Puda.
EXPERTS
The
consolidated financial statements and supplementary consolidated financial
statements of Puda as of December 31, 2008 and 2007 and for each of the three
years in the period ended December 31, 2008, incorporated in this document by
reference to the Annual Report on Form 10-K of Puda for the year ended December
31, 2008, have been so incorporated in reliance on the reports of Moore
Stephens, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus is part of a registration statement on Form S-3 that we filed with
the Securities and Exchange Commission. Certain information in the registration
statement has been omitted from this prospectus in accordance with the rules of
the SEC. We file the annual, quarterly and special reports, proxy statements and
other information with the SEC. You can inspect and copy the registration
statement as well as the reports, proxy statements and other information we have
filed with the SEC at the public reference room maintained by the SEC at 100 F
Street, N.E., Washington, D.C., 20549. You can call the SEC at 1-800-732-0330
for further information about the Public Reference Room. We are also required to
file electronic versions of these documents with the SEC, which may be accessed
from the SEC’s World Wide Web site at http://www.sec/gov. We maintain a website
at www.pudacoalinc.com. Our website and the information contained therein or
connected thereto are not intended to be incorporated into this registration
statement.
The SEC
allows us to “incorporate by reference” certain of our publicly-filed documents
into this prospectus, which means that information included in those documents
is considered part of this prospectus. Information that we file with
the SEC subsequent to the date of this prospectus will automatically update and
supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act of 1934 for so long as this Registration
Statement remains effective.
The
following documents filed with the SEC are incorporated by reference in this
prospectus:
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1.
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Our
Annual Report on Form 10-K for the fiscal year ended December 31,
2008.
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2.
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Our
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2009, June 30, 2009 and September 30,
2009.
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3.
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Our
current Reports on Form 8-K, filed with the SEC on March 12, March 18, May
15, July 8, August 8, August 5, August 14, September 16, September 22,
November 12 and December 7 and December 17,
2009.
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4.
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The
description of our common stock set forth in our Registration Statement on
Form 8-A filed with the SEC on September 16,
2009.
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We will
furnish without charge to you, on written or oral request, a copy of any or all
of the documents incorporated by reference herein, other than exhibits to such
documents. You should direct any requests for documents to Qiong
(Laby) Wu, Chief Financial Officer, 426 Xuefu Street, Taiyuan, Shanxi Province,
The People’s Republic of China 030006, telephone: 011 86 351 228
1302.
PART
II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution.
The
following table sets forth the costs and expenses payable by the Registrant in
connection with the offerings described in this registration
statement. In addition to the costs and expenses set forth below, we
will pay any selling commissions and brokerage fees and any applicable taxes and
fees and disbursements (“Sales Fees”) with respect to securities registered by
this prospectus which we may sell, but these fees cannot be predicted with any
certainty at this time due to the uncertainty as to the number of such
securities. All amounts shown are estimates except the SEC
registration fee.
SEC
registration fee
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$ |
926.9 |
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Legal
fees and expenses
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$ |
50,000 |
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Accounting
fees and expenses
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$ |
20,000 |
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Financial
printers fees and expenses
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$ |
5,000 |
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Miscellaneous
expenses
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5,000 |
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Total
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$ |
80,926.9 |
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Item
15. Indemnification of Directors and Officers.
Section
145 of the Delaware General Corporation Law (the “DGCL”) allows for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the “Securities Act”). Article
VII of the Registrant’s bylaws authorizes indemnification of the Registrant’s
directors, officers, employees and other agents to the extent and under the
circumstances permitted by the DGCL.
The
Registrant has also entered into agreements with its directors and certain
officers that will require the Registrant, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service
as directors or officers to the fullest extent not prohibited by
law. The Registrant maintains liability insurance for the benefit of
its directors and certain of its officers.
The above
discussion of the DGCL and of the Registrant’s bylaws and indemnification
agreements is not intended to be exhaustive and is qualified in its entirety by
such statutes, certificate of incorporation, bylaws and indemnification
agreements.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Item
16. Exhibits.
Exhibits
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1.1
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Form
of Equity Underwriting Agreement*
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3.1
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Certificate
of Incorporation**
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3.2
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Bylaws**
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4.1
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Form
of Certificate of Designation for the preferred stock (together with
preferred stock certificate)*
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4.2
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Form
of Warrant Agreement (together with form of Warrant
Certificate)*
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5.1
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Opinion
of Goodwin Procter LLP
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12.1
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Computation
of Ratio of Earnings to Fixed Charges*
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23.1
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Consent
of Moore Stephens, Independent Accountants
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23.2
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Consent
of Goodwin Procter LLP (included in Exhibit 5.1)
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24.1
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Power
of Attorney (see signature
page)
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*
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To
be filed by a report on Form 8-K pursuant to Item 601 of Regulation
S-K.
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**
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Incorporated
herein by reference to incorporated
herein by reference to our Current Report on Form 8-K filed with the SEC
on July 8, 2009.
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Item
17. Undertakings.
(a) The
undersigned Registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities
Act,
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the “Calculation of
Registration Fee” table in the effective registration statement,
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
provided,
however, that clauses (a) and (b) do not apply if the information required to be
included in a post-effective amendment by such clauses is contained in periodic
reports filed with or furnished to the Securities and Exchange Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 (the “Exchange Act”) that are incorporated by reference in the
Registration Statement.
(2) That,
for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(b) The
undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant’s annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities, other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding, is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by itself is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(d) The
undersigned Registrant hereby undertakes that:
(1) For
purposes of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time it was
declared effective.
(2) For
the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, Puda certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Taiyuan, Shanxi Province, China, on January 28, 2010.
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PUDA
COAL, INC.
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By:
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/s/ Qiong
Wu
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Qiong
Wu
Chief
Financial Officer
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POWER
OF ATTORNEY
KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby
constitutes and appoints Liping Zhu and Qiong Wu, and each of them, as his true
and lawful attorneys-in-fact, each with full power of substitution, for him in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any related Rule 462(b)
registration statement or amendment thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done or by virtue
hereof.
Pursuant
to the requirements of the Securities Act of 1933, as amended, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature
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Title
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Date
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/s/
Liping Zhu |
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Chief
Executive Officer (Principal |
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January
28, 2010
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Liping
Zhu
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Executive
Officer) and director
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/s/
Qiong Wu |
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Chief
Financial Officer (Principal |
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Qiong
Wu
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Financial
and Accounting Officer)
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/s/ Ming Zhao
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Chairman
of Board
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Ming
Zhao
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/s/ Jianfei Ni
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Director
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Jianfei
Ni
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/s/ C. Mark Tang
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Director
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C.
Mark Tang
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/s/ Lawrence Wizel
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Director
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Lawrence
Wizel
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INDEX
TO EXHIBITS
Exhibits
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1.1
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Form
of Equity Underwriting Agreement*
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3.1
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Certificate
of Incorporation**
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3.2
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Bylaws**
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4.1
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Form
of Certificate of Designation for the preferred stock (together with
preferred stock certificate)*
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4.2
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Form
of Warrant Agreement (together with form of Warrant
Certificate)*
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5.1
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Opinion
of Goodwin Procter LLP
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12.1
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Computation
of Ratio of Earnings to Fixed Charges*
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23.1
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Consent
of Moore Stephens, Independent Accountants
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23.2
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Consent
of Goodwin Procter LLP (included in Exhibit 5.1)
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24.1
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Power
of Attorney (see signature
page)
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*
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To
be filed by a report on Form 8-K pursuant to Item 601 of Regulation
S-K.
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**
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Incorporated
herein by reference to incorporated
herein by reference to our Current Report on Form 8-K filed with the SEC
on July 8, 2009.
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