Nevada
|
98-0550699
|
|
(State or other jurisdiction of
incorporation of organization)
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
Non-accelerated filer
(Do not check if smaller reporting company)
|
o
|
Smaller reporting company
|
x
|
PART I - FINANCIAL INFORMATION
|
Page No.
|
|
Item 1.
|
Financial Statements:
|
1
|
Consolidated Balance Sheets at March 31, 2013 (unaudited) and December 31, 2012
|
1
|
|
Unaudited Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2013 and 2012
|
2
|
|
Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012
|
3
|
|
Notes to Unaudited Consolidated Financial Statements
|
4
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
31
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
48
|
Item 4.
|
Controls and Procedures
|
48
|
PART II - OTHER INFORMATION
|
||
Item 1.
|
Legal Proceedings
|
49
|
Item 1A.
|
Risk Factors
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
49
|
Item 3.
|
Defaults Upon Senior Securities
|
51
|
Item 4.
|
Mine Safety Disclosures
|
51
|
Item 5.
|
Other Information
|
51
|
Item 6.
|
Exhibits
|
51
|
Signatures
|
52
|
March 31,
2013
|
December 31,
2012
|
|||||||
(Unaudited )
|
(Audited)
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
1,680,254
|
$
|
129,746
|
||||
Restricted cash
|
22,379,000
|
22,149,000
|
||||||
Accounts receivable, Net
|
7,142,892
|
11,239,002
|
||||||
Notes receivable
|
7,401,165
|
—
|
||||||
Advance to suppliers
|
12,503,217
|
1,177,462
|
||||||
Inventories
|
48,181,039
|
48,417,875
|
||||||
Prepaid expenses
|
785,438
|
280,779
|
||||||
Other receivables, net of allowance of $221,026 and $220,339, respectively
|
104,639
|
35,655
|
||||||
Total current assets
|
100,177,644
|
83,429,519
|
||||||
Property And Equipment, Net
|
40,481,778
|
40,964,363
|
||||||
Construction In Progress
|
18,943,945
|
7,324,379
|
||||||
Land Use Rights, Net
|
9,643,328
|
9,657,419
|
||||||
Total Assets
|
$
|
169,246,695
|
$
|
141,375,680
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$
|
1,431,323
|
$
|
2,250,745
|
||||
Advance from customers
|
1,740,402
|
1,368,525
|
||||||
Short term bank loans
|
45,241,000
|
38,680,500
|
||||||
Notes payable
|
40,733,000
|
40,606,500
|
||||||
Other payables
|
1,489,655
|
630,179
|
||||||
Loan from unrelated parties
|
11,351,604
|
338,002
|
||||||
Dividends payable
|
51,353
|
46,816
|
||||||
Total current liabilities
|
102,038,337
|
83,921,267
|
||||||
Amounts Due To Related Parties
|
4,637,132
|
4,795,593
|
||||||
Long Term Bank Loans
|
16,067,800
|
4,782,900
|
||||||
Warrant Liabilities
|
179,994
|
224,362
|
||||||
Total Liabilities
|
122,923,263
|
93,724,122
|
||||||
Redeemable convertible series B preferred stock, $0.001 par value; 3,000,000 shares authorized; 300,000 and 300,000 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively.
|
360,000
|
360,000
|
||||||
Stockholders' Equity
|
||||||||
Common stock, $0.001 par value; 100,000,000 shares authorized
|
||||||||
25,137,518 and 25,077,518 shares issued and outstanding at
|
||||||||
March 31, 2013 and December 31, 2012, respectively
|
25,137
|
25,077
|
||||||
Additional paid-in capital
|
18,256,121
|
18,223,781
|
||||||
Accumulated other comprehensive income
|
9,129,202
|
8,982,925
|
||||||
Retained earnings
|
18,552,972
|
20,059,775
|
||||||
Total stockholders' equity
|
45, 963,432
|
47,291,558
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
169,246,695
|
$
|
141,375,680
|
Three months ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Sales
|
$
|
3,060,918
|
$
|
10,061,210
|
||||
Cost of Goods Sold
|
3,320,320
|
7,143,606
|
||||||
Gross Profit (loss)
|
(259,402
|
)
|
2,917,604
|
|||||
Operating Expenses
|
||||||||
Selling expenses
|
17,941
|
46,798
|
||||||
General and administrative
|
384,582
|
851,399
|
||||||
Depreciation and amortization
|
67,888
|
57,004
|
||||||
Total operating expenses
|
470,411
|
955,201
|
||||||
Operating Income (Loss) Before Other Income (Expense)
|
(729,813
|
)
|
1,962,403
|
|||||
Other Income (Expense)
|
||||||||
Interest expense
|
(862,448
|
)
|
(1,229,745
|
)
|
||||
Interest income
|
45,304
|
22
|
||||||
Other income, net
|
321
|
-
|
||||||
Change in fair value of warrants
|
44,368
|
(479,563
|
)
|
|||||
Total other expense
|
(772,455
|
)
|
(1,709,286
|
)
|
||||
Net Income (Loss)
|
|
(1,502,268
|
)
|
|
253,117
|
|||
Preferred Stock Dividends
|
(4,537
|
)
|
(5,018
|
)
|
||||
Net Income (Loss) Available To Common Shareholders
|
|
(1,506,805
|
)
|
248,099
|
||||
Other Comprehensive Income
|
||||||||
Foreign currency translation gain
|
146,277
|
423,897
|
||||||
Total Comprehensive Income
|
$
|
(1,355,991
|
)
|
$
|
677,014
|
|||
Share Data
|
||||||||
Basic earnings (loss) per share
|
$
|
(0.06
|
)
|
$
|
0.01
|
|||
Diluted earnings (loss) per share
|
$
|
(0.06
|
)
|
$
|
0.01
|
|||
Weighted average common shares outstanding,
|
||||||||
Basic
|
25,103,518
|
23,315,645
|
||||||
Weighted average common shares outstanding,
|
||||||||
Diluted
|
25,103,518
|
23,647,455
|
Three months ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net income (loss)
|
$
|
(1,502,268
|
)
|
$
|
253,117
|
|||
Adjustments to reconcile net cash provided by
|
||||||||
operating activities
|
||||||||
Depreciation and Amortization
|
655,449
|
567,584
|
||||||
Stock compensation
|
60,345
|
-
|
||||||
Change in fair value of warrants
|
(44,368
|
)
|
479,563
|
|||||
Recovery of bad debt expenses
|
(166,601)
|
-
|
||||||
Changes in operating assets and liabilities
|
||||||||
Accounts receivable
|
4,290,026
|
(1,310,189
|
)
|
|||||
Notes receivable
|
(7,387,374
|
)
|
(142,124
|
)
|
||||
Other receivables
|
(68,745
|
)
|
(44,531
|
)
|
||||
Advance to suppliers
|
(11,300,990
|
)
|
(5,197,009
|
)
|
||||
Inventory
|
386,948
|
(4,075,391
|
)
|
|||||
Prepaid expenses
|
(530,927
|
)
|
169,188
|
|||||
Accounts payable and accrued liabilities
|
(824,186
|
)
|
594,274
|
|||||
Advance from customers
|
366,928
|
592,123
|
||||||
Taxes payable
|
99,446
|
(110,310
|
)
|
|||||
Other payables
|
755,723
|
133,762
|
||||||
Net cash used in operating activities
|
(15,210,594
|
)
|
(8,089,943
|
)
|
||||
Cash flows from investing activities
|
||||||||
Acquisition of property, plant and equipment
|
(2,292
|
)
|
(15,831
|
)
|
||||
Proceeds from land bureau against cost of land use rights
|
237,749
|
|||||||
Addition of construction in progress
|
(11,575,140
|
)
|
(651,528
|
)
|
||||
Net cash used in investing activities
|
(11,577,432
|
)
|
(429,610
|
)
|
||||
Cash flows from financing activities
|
||||||||
Proceeds from issuing common stock
|
-
|
50,000
|
||||||
Proceeds from short term loans
|
11,249,000
|
4,755,000
|
||||||
Repayments for short term loans
|
(4,821,000
|
)
|
(4,755,000
|
)
|
||||
Proceeds from long term loans
|
11,249,000
|
-
|
||||||
Proceeds from loan from unrelated parties
|
10,992,029
|
9,313,808
|
||||||
Proceeds from loan from related parties
|
448,994
|
79,727
|
||||||
Repayments to related parties
|
(622,072
|
)
|
-
|
|||||
Proceeds from stock not yet issued
|
-
|
77,500
|
||||||
Restricted cash
|
(160,700
|
)
|
4,945,200
|
|||||
Proceeds from notes payable
|
17,677,000
|
10,778,000
|
||||||
Repayments to notes payable
|
(17,677,000
|
)
|
(16,880,250
|
)
|
||||
Net cash provided by financing activities
|
28,335,251
|
8,363,985
|
||||||
Effect of exchange rate fluctuation
|
3,283
|
3,819
|
||||||
Net increase (decrease) in cash
|
1,550,508
|
(151,749
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
129,746
|
521,450
|
||||||
Cash and cash equivalents at end of period
|
$
|
1,680,254
|
$
|
369,701
|
||||
Supplemental disclosure of cash flow information
|
||||||||
Interest paid
|
$
|
1,040,625
|
$
|
984,830
|
||||
Income taxes paid
|
$
|
-
|
$
|
-
|
||||
Non-cash activities:
|
||||||||
Preferred stock conversion to common stock
|
$
|
-
|
$
|
94
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
|
1.
|
10% of after tax income to be allocated to a statutory surplus reserve until the reserve amounts to 50% of the company’s registered capital.
|
2.
|
If the cumulative balance of statutory surplus reserve is not enough to make up the Company’s cumulative prior years’ losses, the current year’s after tax income should be first used to make up the losses before the statutory surplus reverse is drawn.
|
3.
|
Allocation can be made to the discretionary surplus reserve, if such a reserve is approved at the meeting of the equity owners.
|
Buildings
|
25 - 40 years
|
Machinery and equipment
|
10 - 20 years
|
Motor vehicles
|
5 years
|
●
|
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
●
|
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
|
●
|
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.
|
March 31,
2013
|
December 31,
2012
|
|||||||
2007 Warrants
|
||||||||
Annual dividend yield
|
-
|
-
|
||||||
Expected life (years)
|
0.00
|
0.04
|
||||||
Risk-free interest rate
|
0.18
|
%
|
0.18
|
%
|
||||
Expected volatility
|
143
|
%
|
146
|
%
|
March 31,
2013
|
December 31,
2012
|
|||||||
2009 Warrants
|
||||||||
Annual dividend yield
|
-
|
-
|
||||||
Expected life (years)
|
1.46
|
1.71
|
||||||
Risk-free interest rate
|
0.18
|
%
|
0.18
|
%
|
||||
Expected volatility
|
143
|
%
|
146
|
%
|
March 31,
2013
|
December 31,
2012
|
|||||||
2009 Series B Warrants
|
||||||||
Annual dividend yield
|
-
|
-
|
||||||
Expected life (years)
|
1.73
|
1.98
|
||||||
Risk-free interest rate
|
0.18
|
%
|
0.18
|
%
|
||||
Expected volatility
|
143
|
%
|
146
|
%
|
March 31,
2013
|
December 31,
2012
|
|||||||
2010 Series B Warrants
|
||||||||
Annual dividend yield
|
-
|
-
|
||||||
Expected life (years)
|
1.78
|
2.03
|
||||||
Risk-free interest rate
|
0.18
|
%
|
0.18
|
%
|
||||
Expected volatility
|
143
|
%
|
146
|
%
|
Carrying Value
at March 31,
|
Fair Value Measurement at
March 31, 2013
|
|||||||||||||||
2013
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Warrant liability
|
$
|
179,994
|
|
$
|
-
|
$
|
179,994
|
|||||||||
Notes receivables
|
$ |
7,401,165
|
$ |
7,401,165
|
-
|
|||||||||||
Notes payable
|
$
|
40,733,000
|
|
$ |
-
|
$ |
40,733,000
|
|
-
|
Warrants
|
Weighted Average
Exercise Price
|
|||||||
Outstanding as of December 31, 2012
|
1,229,200
|
$
|
1.51
|
|||||
Granted
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Cancelled
|
-
|
-
|
||||||
Outstanding as of March 31, 2013
|
1,229,200
|
$
|
1.51
|
March 31,
2013
|
March 31,
2012
|
|||||||
Weighted average shares of common stock outstanding (basic)
|
25,103,518
|
23,315,645
|
||||||
Shares issuable upon conversion of Series B Preferred Stock
|
-
|
331,810
|
||||||
Weighted average shares of common stock outstanding (diluted)
|
25,103,518
|
23,647,455
|
||||||
Net income (loss) available to common shareholders
|
$
|
(1,506,805
|
)
|
$
|
248,099
|
|||
Net income (loss) per shares of common stock (basic)
|
$
|
(0.06
|
)
|
$
|
0.01
|
|||
Net income (loss) per shares of common stock (diluted)
|
$
|
(0.06
|
)
|
$
|
0.01
|
Three Months Ended March 31, | ||||||||
2013 |
2012
|
|||||||
Computed tax at the PRC statutory rate of 15%
|
$ |
-
|
$
|
165,203
|
||||
Benefit of tax holiday
|
-
|
(165,203
|
)
|
|||||
Income tax expenses per books
|
$ |
-
|
$
|
-
|
March 31,
2013
|
December 31,
2012
|
|||||||
Amount outstanding
|
$
|
10,860,124
|
$
|
15,111,084
|
||||
Less: Allowance for doubtful accounts, net
|
(3,717,232
|
)
|
( 3,872,082
|
)
|
||||
Net amount
|
$
|
7,142,892
|
$
|
11,239,002
|
March 31,
2013
|
December 31,
2012
|
|||||||
Beginning balance
|
$
|
3,872,082
|
$
|
2,790,662
|
||||
Provision for (recovery of) doubtful accounts
|
(154,850
|
)
|
1,081,420
|
|||||
Ending balance
|
$
|
3,717,232
|
$
|
3,872,082
|
March 31,
2013
|
December 31,
2012
|
|||||||
Advances to suppliers
|
$ |
12,503,217
|
$ |
1,177,462
|
March 31,
2013
|
December 31, 2012
|
|||||||
Raw materials
|
$
|
6,912,618
|
$
|
5,863,406
|
||||
Work in process
|
39,314,341
|
40,387,355
|
||||||
Finished goods
|
1,954,080
|
2,167,114
|
||||||
$
|
48,181,039
|
$
|
48,417,875
|
March 31,
2013
|
December 31, 2012
|
|||||||
Building
|
$
|
26,860,029
|
$
|
26,776,613
|
||||
Machinery and equipment
|
28,783,960
|
28,692,280
|
||||||
Motor vehicles
|
33,810
|
33,705
|
||||||
55,677,799
|
55,502,598
|
|||||||
Less: accumulated depreciation
|
(15,196,021)
|
(14,538,235)
|
||||||
$
|
40,481,778
|
$
|
40,964,363
|
March 31,
2013
|
December 31, 2012
|
Estimated completion time
|
Expected capital needed to complete
|
||||||||||
Production facility
|
$
|
17,759,845
|
$
|
-
|
2014
|
$
|
6,299,225
|
||||||
Land improvements
|
1,184,100
|
7,324,379
|
2013
|
1,368,500
|
|||||||||
$
|
18,943,945
|
$
|
7,324,379
|
$
|
7,667,725
|
March 31,
2013
|
December 31, 2012
|
|||||||
Land Use Rights
|
$
|
11,643,273
|
$
|
11,610,103
|
||||
Less: Accumulated amortization
|
(1,999,945)
|
(1,852,684)
|
||||||
$
|
9,643,328
|
$
|
9,657,419
|
Twelve-month period ended March 31,
|
||||
2014
|
$
|
234,391
|
||
2015
|
234,391
|
|||
2016
|
234,391
|
|||
2017
|
234,391
|
|||
2018
|
234,391
|
|||
2019 and thereafter
|
8,471,373
|
|||
Total
|
$
|
9,643,328
|
March 31,
2013
|
December 31,
2012
|
|||||||
Bank loan from China Construction Bank, dated August 23, 2012, due August 22, 2013 with an annual interest rate of 6.941% payable monthly, secured by property, equipment, building and land use rights
|
$ |
6,440,000
|
$ |
6,420,000
|
||||
Bank loan from China Construction Bank, dated August 3, 2012, due August 2, 2013 with an annual interest rate of 6.941% payable monthly, secured by property, equipment, building and land use rights
|
6,440,000
|
6,420,000
|
||||||
Bank loan from China Construction Bank, dated June 6, 2012, due June 5, 2013 with an annual interest rate of 8.834% payable monthly, secured by property, equipment, building and land use rights
|
6,440,000
|
6,420,000
|
||||||
Bank loan from China Construction Bank, dated March 20, 2013, due March 19, 2014 with an annual interest rate of 6% payable monthly, secured by property, equipment, building and land use rights
|
6,440,000
|
- | ||||||
Bank loan from Huaxia Bank, dated November 16, 2012, due on November 15, 2013, with an annual interest rate of 7.80% payable quarterly, secured by building and land use rights
|
5,635,000
|
5,617,500
|
||||||
Bank loan from China Construction Bank, dated September 7, 2012, due September 6, 2013 with an annual interest rate of 6.941% payable monthly, secured by property, equipment, building and land use rights
|
4,830,000
|
4,815,000
|
||||||
Bank loan from China Construction Bank, dated January 11, 2013, due January 10, 2014 with an annual interest rate of 6% payable monthly, secured by property, equipment, building and land use rights
|
4,830,000
|
- | ||||||
Bank loan from China Construction Bank, dated September 17, 2012, due September 16, 2013, with an annual interest rate of 6.941% payable monthly, secured by property, equipment, building and land use rights
|
4,186,000
|
4,173,000
|
||||||
Bank loan from China Construction Bank, dated January 13, 2012, due January 12, 2013 and repaid, with an annual interest rate of 6.56% payable monthly, secured by property, equipment, building and land use rights
|
-
|
4,815,000
|
||||||
$
|
45,241,000
|
$
|
38,680,500
|
March 31,
2013
|
December 31,
2012
|
|||||||
Bank loan from China Construction Bank, dated January 22, 2013, originally due in January 21, 2016, with an annual interest rate of 6.15%, payable monthly, secured by machinery.
|
$
|
11,270,000
|
$
|
-
|
||||
Bank loan from Credit Union, dated April, 2012, originally due in April 2015, with an annual interest rate of 15.295% payable monthly, secured by machinery.
|
4,797,800
|
4,782,900
|
||||||
$
|
16,067,800
|
$
|
4,782,900
|
o
|
graphite electrodes;
|
o
|
fine grain graphite; and
|
o
|
high purity graphite.
|
Three months ended March 31,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
Sales
|
$
|
3,061
|
100.0
|
%
|
$
|
10,061
|
100.0
|
%
|
||||||||
Cost of goods sold
|
3,320
|
108.5
|
%
|
7,144
|
71.0
|
%
|
||||||||||
Gross profit (loss)
|
(259
|
) |
(8.5
|
)%
|
2,917
|
29.0
|
%
|
|||||||||
Operating expenses
|
||||||||||||||||
Selling expenses
|
18
|
0.6
|
%
|
47
|
0.5
|
%
|
||||||||||
General and administrative
|
385
|
12.6
|
%
|
851
|
8.5
|
%
|
||||||||||
Depreciation and amortization
|
68
|
2.2
|
%
|
57
|
0.6
|
%
|
||||||||||
Income (loss) from operations
|
(730
|
)
|
(23.8
|
)%
|
1,962
|
19.5
|
%
|
|||||||||
Other income
|
0.3
|
0.01
|
%
|
-
|
-
|
%
|
||||||||||
Other expense
|
-
|
-
|
%
|
-
|
-
|
%
|
||||||||||
Change in fair value of warrants
|
44
|
1.4
|
%
|
(479
|
)
|
(4.8
|
)%
|
|||||||||
Interest expense, net
|
(817
|
)
|
(26.7
|
)%
|
(1,230
|
)
|
(12.2
|
)%
|
||||||||
Net income (loss)
|
(1,502
|
)
|
(49.1
|
)%
|
253
|
2.5
|
%
|
|||||||||
Preferred Stock Dividend
|
(5
|
)
|
(0.1
|
)%
|
(5
|
)
|
(0.1
|
)%
|
||||||||
Net income (loss) available to common shareholders
|
$
|
(1,507
|
)
|
(49.2
|
)%
|
$
|
248
|
2.5
|
%
|
March 31,
2013
Sales
|
% of Total
Sales
|
March 31,
2012
Sales
|
% of Total
Sales
|
|||||||||||||
Graphite Electrodes
|
$
|
80,960
|
2.6
|
%
|
$
|
456,647
|
4.5
|
%
|
||||||||
Fine Grain Graphite
|
1,394,956
|
45.6
|
%
|
4,467,350
|
44.4
|
%
|
||||||||||
High Purity Graphite
|
1,491,521
|
48.7
|
%
|
5,051,089
|
50.2
|
%
|
||||||||||
Others (1)
|
93,481
|
3.1
|
%
|
86,124
|
0.9
|
%
|
||||||||||
Total
|
$
|
3,060,918
|
100.0
|
%
|
$
|
10,061,210
|
100.0
|
%
|
1.
|
10% of after tax income to be allocated to a statutory surplus reserve until the reserve amounts to 50% of the company’s registered capital.
|
2.
|
If the accumulate balance of statutory surplus reserve is not enough to make up the Company’s cumulative prior years’ losses, the current year’s after tax income should be first used to make up the losses before the statutory surplus reverse is drawn.
|
3.
|
Allocation can be made to the discretionary surplus reserve, if such a reserve is approved at the meeting of the equity owners.
|
March 31,
2013
|
December 31,
2012
|
|||||||
(unaudited) | ||||||||
Bank loan from China Construction Bank, dated August 23, 2012, due August 22, 2013 with an annual interest rate of 6.941% payable monthly, secured by property, equipment, building and land use rights
|
$ |
6,440,000
|
$ |
6,420,000
|
||||
Bank loan from China Construction Bank, dated August 3, 2012, due August 2, 2013 with an annual interest rate of 6.941% payable monthly, secured by property, equipment, building and land use rights
|
6,440,000
|
6,420,000
|
||||||
Bank loan from China Construction Bank, dated June 6, 2012, due June 5, 2013 with an annual interest rate of 8.834% payable monthly, secured by property, equipment, building and land use rights
|
6,440,000
|
6,420,000
|
||||||
Bank loan from China Construction Bank, dated March 20, 2013, due March 19, 2014 with an annual interest rate of 6% payable monthly, secured by property, equipment, building and land use rights
|
6,440,000
|
- | ||||||
Bank loan from Huaxia Bank, dated November 16, 2012, due on November 15, 2013 with an annual interest rate of 7.80% payable quarterly, secured by building and land use rights
|
5,635,000
|
5,617,500
|
||||||
Bank loan from China Construction Bank, dated September 7, 2012, due September 6, 2013 with an annual interest rate of 6.941% payable monthly, secured by property, equipment, building and land use rights
|
4,830,000
|
4,815,000
|
||||||
Bank loan from China Construction Bank, dated January 11, 2013, due January 10, 2014 with an annual interest rate of 6% payable monthly, secured by property, equipment, building and land use rights
|
4,830,000
|
- | ||||||
Bank loan from China Construction Bank, dated September 17, 2012, due September 16, 2013, with an annual interest rate of 6.941% payable monthly, secured by property, equipment, building and land use rights
|
4,186,000
|
4,173,000
|
||||||
Bank loan from China Construction Bank, dated January 13, 2012, due January 12, 2013 and repaid, with an annual interest rate of 6.56% payable monthly, secured by property, equipment, building and land use rights
|
-
|
4,815,000
|
||||||
$
|
45,241,000
|
$
|
38,680,500
|
March 31,
2013
|
December 31, 2012
|
|||||||
(Unaudited)
|
|
|||||||
Bank loan from China Construction Bank, dated January 22, 2013, originally due in January 21, 2016, with an annual interest rate of 6.15%, payable monthly, secured by machinery.
|
$
|
11,270,000
|
$
|
-
|
||||
Bank loan from Credit Union, dated April, 2012, originally due in April 2015, with an annual interest rate of 15.295% payable monthly, secured by machinery.
|
4,797,800
|
4,782,900
|
||||||
$
|
16,067,800
|
$
|
4,782,900
|
o
|
we generate sufficient business so that we are able to generate substantial profits, which cannot be assured;
|
o
|
our banks continue to provide us with the necessary working capital financing; and
|
o
|
we are able to generate savings by improving the efficiency of our operations.
|
For Three Months Ended
March 31
|
||||||||
2013
|
2012
|
|||||||
Net cash flows used in operating activities
|
$
|
(15,210,594
|
)
|
$
|
(8,089,943
|
)
|
||
Net cash flows used in investing activities
|
$
|
(11,577,432
|
)
|
$
|
(429,610
|
)
|
||
Net cash flows provided by financing activities
|
$
|
28,335,251
|
$
|
8,363,985
|
●
|
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
●
|
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the financial instruments.
|
●
|
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.
|
Carrying Value
at March 31,
|
Fair Value Measurement at March 31, 2013
|
|||||||||||||||
2013
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Warrant liability
|
$
|
179,994
|
$
|
-
|
$
|
-
|
$
|
179,994
|
Carrying Value
at December 31,
|
Fair Value Measurement at December 31, 2012
|
|||||||||||||||
2012
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Warrant liability
|
$
|
224,362
|
$
|
-
|
$
|
-
|
$
|
224,362
|
Item 1.
|
Legal Proceedings
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
32.1
|
Section 1350 Certification of Chief Executive Officer
|
32.2
|
Section 1350 Certification of Chief Financial Officer
|
CHINA CARBON GRAPHITE GROUP, INC.
|
||
Date: May 15, 2013
|
By:
|
/s/ Donghai Yu
|
Donghai Yu
|
||
Chief Executive Officer
|
Date: May 15, 2013
|
By:
|
/s/ Zhenfang Yang
|
Zhenfang Yang
|
||
Chief Financial Officer
|
/s/ Donghai Yu | ||||
Donghai Yu
|
||||
(Chief Executive Officer)
|
|
/s/ Zhenfang Yang | ||||
Zhenfang Yang
|
|
|||
(Chief Financial Officer)
|
|
Dated: May 15, 2013
|
By:
|
/s/ Donghai Yu
|
Donghai Yu
(Chief Executive Officer)
|
Dated: May 15, 2013
|
By:
|
/s/ Zhenfang Yang
|
Zhenfang Yang
(Chief Financial Officer)
|
Income Taxes (Details) (USD $)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
Schedule of reconciliation of the provision for income taxes | ||
Computed tax at the PRC statutory rate of 15% | $ 165,203 | |
Benefit of tax holiday | (165,203) | |
Income tax expenses per books |
Stockholders' equity (Details Textual 1) (USD $)
|
1 Months Ended | 3 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Jan. 13, 2010
|
Mar. 31, 2013
|
Mar. 31, 2012
|
Dec. 31, 2012
|
|
Stockholders' equity (Textual) | ||||
Aggregate purchase price of common stock | $ 2,976,600 | |||
Amount paid to private placement agent | 298,000 | |||
Term of warrant issued to private placement agent | 5 years | |||
Number of shares of common stock deposited into Escrow | 1,240,250 | |||
Warrant issued to purchase common stock to private placement agent | 124,025 | |||
Exercise price of warrant issued to private placement agent | $ 1.32 | |||
Series B Preferred Stock [Member]
|
||||
Stockholders' equity (Textual) | ||||
Number of shares sold in a private placement | 2,480,500 | |||
Term of warrant | 5 years | |||
Shares purchased of common stock | 992,000 | |||
Exercise price of warrants | $ 1.30 | |||
Preferred stock dividend rate | 6.00% | |||
Preferred stock dividend declared | 51,353 | 46,816 | ||
Preferred stock cash dividend paid |
Property and Equipment, net (Details 1) (USD $)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
|
Summary of construction in progress consists of two projects | ||
Construction In Progress | $ 18,943,945 | $ 7,324,379 |
Expected capital needed to complete | 7,667,725 | |
Production facility [Member]
|
||
Summary of construction in progress consists of two projects | ||
Construction In Progress | 17,759,845 | |
Estimated completion time | 2014 | |
Expected capital needed to complete | 6,299,225 | |
Land improvements [Member]
|
||
Summary of construction in progress consists of two projects | ||
Construction In Progress | 1,184,100 | 7,324,379 |
Estimated completion time | 2013 | |
Expected capital needed to complete | $ 1,368,500 |
Amount Due to Related Parties (Details) (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Amount Due to Related Parties (Textual) | ||
Amount due to a related party | $ 4,637,132 | $ 4,795,593 |
Amount due to Mr. Dengyong Jin | $ 4,380,500 |
Inventories (Details Textual) (USD $)
|
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
|
Inventories (Textual) | ||
Provision for inventory related to slow moving or obsolete items | $ 0 | $ 0 |
Short-term Bank Loans (Details) (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Short-term bank loans | ||
Short term bank loans | $ 45,241,000 | $ 38,680,500 |
August 23, 2012, due August 22, 2013 [Member] | China Construction Bank [Member]
|
||
Short-term bank loans | ||
Short term bank loans | 6,440,000 | 6,420,000 |
August 3, 2012, due August 2, 2013 [Member] | China Construction Bank [Member]
|
||
Short-term bank loans | ||
Short term bank loans | 6,440,000 | 6,420,000 |
June 6, 2012, due June 5, 2013 [Member] | China Construction Bank [Member]
|
||
Short-term bank loans | ||
Short term bank loans | 6,440,000 | 6,420,000 |
March 20, 2013, due March 19, 2014 [Member] | China Construction Bank [Member]
|
||
Short-term bank loans | ||
Short term bank loans | 6,440,000 | |
November 16, 2012, due November 15, 2013 [Member] | Huaxia Bank [Member]
|
||
Short-term bank loans | ||
Short term bank loans | 5,635,000 | 5,617,500 |
September 7, 2012, due September 6, 2013 [Member] | China Construction Bank [Member]
|
||
Short-term bank loans | ||
Short term bank loans | 4,830,000 | 4,815,000 |
January 11, 2013, due January 10, 2014 [Member] | China Construction Bank [Member]
|
||
Short-term bank loans | ||
Short term bank loans | 4,830,000 | |
September 17, 2012, due September 16, 2013 [Member] | China Construction Bank [Member]
|
||
Short-term bank loans | ||
Short term bank loans | 4,186,000 | 4,173,000 |
January 13, 2012, due January 12, 2013 [Member] | China Construction Bank [Member]
|
||
Short-term bank loans | ||
Short term bank loans | $ 4,815,000 |
Accounts Receivable, net (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
|||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of accounts receivable net, current |
|
||||||||||||||||||||||||||||||||||||
Schedule of allowance for doubtful accounts |
|
Land Use Rights (Details) (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Summary of land use rights | ||
Land Use Rights | $ 11,643,273 | $ 11,610,103 |
Less: Accumulated amortization | (1,999,945) | (1,852,684) |
Total | $ 9,643,328 | $ 9,657,419 |
Accounts Receivable - net (Details 1) (USD $)
|
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
|
Schedule of allowance for doubtful accounts | ||
Beginning balance | $ 3,872,082 | $ 2,790,662 |
Provision for (recovery of) doubtful accounts | (154,850) | 1,081,420 |
Ending balance | $ 3,717,232 | $ 3,872,082 |
Summary of Significant Accounting Policies (Details Textual)
|
3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
USD ($)
sqm
Segment
|
Mar. 31, 2013
CNY
|
Mar. 31, 2012
USD ($)
|
Mar. 31, 2012
CNY
|
Dec. 31, 2012
USD ($)
|
Dec. 31, 2012
CNY
|
Mar. 31, 2013
Convertible Preferred Stock [Member]
|
Mar. 31, 2013
Warrant [Member]
USD ($)
|
Mar. 31, 2013
2007 Warrants [Member]
USD ($)
|
Dec. 31, 2012
2007 Warrants [Member]
USD ($)
|
Mar. 31, 2013
2009 Warrants [Member]
USD ($)
|
Dec. 31, 2012
2009 Warrants [Member]
USD ($)
|
Mar. 31, 2013
2009 Series B Warrants [Member]
USD ($)
|
Dec. 31, 2012
2009 Series B Warrants [Member]
USD ($)
|
Mar. 31, 2013
2010 Series B Warrants [Member]
USD ($)
|
Dec. 31, 2012
2010 Series B Warrants [Member]
USD ($)
|
Mar. 31, 2013
Land in Xinghe County [Member]
sqm
|
Mar. 31, 2013
Expiring in 2052 [Member]
sqkm
|
Mar. 31, 2013
Expiring in 2053 [Member]
sqm
|
Mar. 31, 2013
Expiring in 2060 [Member]
|
|
Summary of Significant Accounting Policies (Additional Textual) | ||||||||||||||||||||
Acquired land use rights | 386,853 | 130,220 | 256,633 | |||||||||||||||||
Land use rights terms | 50 years | 50 years | ||||||||||||||||||
Summary of Significant Accounting Policies (Textual) | ||||||||||||||||||||
Number of common stock issued to purchase warrants | 125,000 | 200,000 | 804,200 | 100,000 | ||||||||||||||||
Fair value of warrants to purchase shares of common stock | $ 0 | $ 0 | $ 23,706 | $ 31,717 | $ 138,585 | $ 170,947 | $ 17,702 | $ 21,698 | ||||||||||||
Change in fair value of warrants | 44,368 | (479,563) | 0 | 8,011 | 32,362 | 3,996 | ||||||||||||||
Outstanding warrant | 1,229,200 | |||||||||||||||||||
Common stock at an exercise price in the range per share, lower range | $ 1.30 | |||||||||||||||||||
Common stock exercise price in the range per share, upper range | $ 2.00 | |||||||||||||||||||
Excluded shares of common stock issuable upon exercise | 300,000 | 1,229,200 | ||||||||||||||||||
Gain from change in fair value of warrants | 0 | |||||||||||||||||||
Restricted cash | 22,379,000 | 22,149,000 | ||||||||||||||||||
Impairment charge | 0 | 0 | ||||||||||||||||||
Area of land located adjacent to the company's facilities (in sq meters) | 387,838 | 387,838 | ||||||||||||||||||
Value of the land which allow for public use | 14,000,000 | |||||||||||||||||||
Land use right expiration period | January 2060. | January 2060. | ||||||||||||||||||
Capitalized interest | 178,177 | 1,108,753 | 0 | |||||||||||||||||
Foreign currency translation | 146,277 | 423,897 | ||||||||||||||||||
Effect of exchange rate for cash | 3,283 | 3,819 | ||||||||||||||||||
Assets and liability translation (RMB to USD) | 1.00 | 6.21 | 1.00 | 6.23 | ||||||||||||||||
Average translation rates applied to income statements (RMB to USD) | 1.00 | 6.22 | 1.00 | 6.31 | ||||||||||||||||
VAT payable rate, minimum | 13.00% | 13.00% | ||||||||||||||||||
VAT payable in the PRC is charged on an aggregated basis at a rate, maximum | 17.00% | 17.00% | ||||||||||||||||||
Shipping and handling costs | 3,877 | 24,587 | ||||||||||||||||||
Number of business segment | 1 | 1 | ||||||||||||||||||
VAT rate on taxable service | 17.00% | 17.00% | ||||||||||||||||||
VAT payable (recoverable), included in other payables | $ (23,055) | $ (79,346) | ||||||||||||||||||
Income tax holiday, description by local authority | 100% tax holiday from the enterprise income tax for 10 years from 2008 through 2017. | 100% tax holiday from the enterprise income tax for 10 years from 2008 through 2017. | ||||||||||||||||||
Unified corporate income tax for domestic and foreign company | 25.00% | 25.00% | ||||||||||||||||||
Description of contribution retirement program | At 23.5% of the employees' salaries above a fixed threshold amount and the employees contribute 2% to 8% while the Company contributes the remaining 15.5% to 21.5%. | At 23.5% of the employees' salaries above a fixed threshold amount and the employees contribute 2% to 8% while the Company contributes the remaining 15.5% to 21.5%. | ||||||||||||||||||
Maximum percentage of salary contribute to defined contribution retirement program | 23.50% | 23.50% |
Land Use Rights (Details Textual) (USD $)
|
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Dec. 31, 2012
|
|
Land Use Right, net (Textual) | |||
Amortization expenses | $ 67,888 | $ 57,004 | |
Acquisition of land use right by paying additional fees | 0 | 14,091 | |
Land Use Right [Member]
|
|||
Land Use Right, net (Textual) | |||
Useful life of finite-lived intangible asset | 50 years | ||
Amortization expenses | $ 58,598 | $ 57,004 |
Subsequent events (Details) (Subsequent Event [Member])
|
1 Months Ended |
---|---|
May 31, 2013
|
|
Mr. Dengyong Jin, CEO [Member]
|
|
Subsequent events (Textual) | |
Restricted common stock shares issued as reward for services | 1,000,000 |
Mr. Dong Jin, Director [Member]
|
|
Subsequent events (Textual) | |
Restricted common stock shares issued as reward for services | 25,000 |
Property and Equipment, net (Details) (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Summary of property and equipment, net | ||
Property and equipment, gross | $ 55,677,799 | $ 55,502,598 |
Less: accumulated depreciation | 15,196,021 | 14,538,235 |
Property and equipment, net | 40,481,778 | 40,964,363 |
Buildings [Member]
|
||
Summary of property and equipment, net | ||
Property and equipment, gross | 26,860,029 | 26,776,613 |
Machinery and equipment [Member]
|
||
Summary of property and equipment, net | ||
Property and equipment, gross | 28,783,960 | 28,692,280 |
Motor vehicles [Member]
|
||
Summary of property and equipment, net | ||
Property and equipment, gross | $ 33,810 | $ 33,705 |
Concentration of Business and Credit Risk
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3 Months Ended |
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Mar. 31, 2013
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Concentration Of Business and Credit Risk [Abstract] | |
Concentration of Business and Credit Risk | (4) Concentration of Business and Credit Risk
Most of the Company’s bank accounts are in banks located in the PRC and are not covered by any type of protection similar to that provided by the Federal Deposit Insurance Corporation (“FDIC”) on funds held in U.S. banks. The Company’s bank account in the United States is covered by FDIC insurance.
Because the Company’s operations are located in the PRC, this may give rise to significant foreign currency risks due to fluctuations in and the volatility of foreign exchange rates between U.S. dollars and RMB.
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, trade accounts receivables and inventories, the balances of which are stated on the balance sheet. The Company places its cash in banks located in China. Concentration of credit risk with respect to trade accounts receivables is limited due to the diversity of the Company’s customers who are located in different regions of China. The Company does not require collateral or other security to support financial instruments subject to credit risk.
For the three months ended March 31, 2013, three customers accounted for 10% or more of sales revenues, representing 36%, 23% and 23%, respectively of the total sales. For the three months ended March 31, 2012, three customers accounted for 10% or more of sales revenues, representing 43.2%, 15.0% and 14.3%, respectively of the total sales. As of March 31, 2013, there were two customers that constituted 58% and 25% of the accounts receivable. As of December 31, 2012, there were three customers that constituted 42.2%, 16.5% and 10.3% of the accounts receivable.
For the quarter ended Mar 31, 2013, two suppliers accounted for 10% or more of our total purchases, representing 59.7% and 22.6%, respectively. For the three months ended March 31, 2012, three suppliers accounted for 10% or more of our total purchases, representing 33.2%, 22.4%, and 17.0%, respectively..
For the three months ended March 31, 2013 and 2012, the Company had insurance expense of $0 and $187 respectively. Accrual for losses is not recognized until such time as a loss has occurred. |