10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

(Mark One)

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

or

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________________

Commission file number: 001-34631

Armco Metals Holdings, Inc.

(Exact name of registrant as specified in its charter)

Nevada	26-0491904
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Waters Park Drive, Suite 98, San Mateo, CA	94403
(Address of principal executive offices)	(Zip Code)

(650) 212-7620

(Registrant's telephone number, including area code)

not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

☒Yes ☐No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☒Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

☐Yes ☒No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 55,318,745 shares of common stock are issued and outstanding as of August 13, 2014.

1

TABLE OF CONTENTS

		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.	F-1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	5
Item 3.	Quantative and Qualitative Disclosures About Market Risk.	14
Item 4.	Controls and Procedures.	14
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	15
Item 1A.	Risk Factors.	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	15
Item 3.	Defaults Upon Senior Securities.	16
Item 4.	Mine Safety Disclosures.	16
Item 5.	Other Information.	16
Item 6.	Exhibits.	16

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Throughout this report, or in other reports or registration statements filed from time to time with the Securities and Exchange Commission under the Securities Exchange Act of 1934, or under the Securities Act of 1933, as well as in documents we incorporate by reference or in press releases or oral statements made by our officers or representatives, we may make statements that express our opinions, expectations, or projections regarding future events or future results, in contrast with statements that reflect historical facts. These predictive statements, which we generally precede or accompany by such typical conditional words as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project” or “expect,” or by the words “may,” “will,” or “should,” are intended to operate as “forward-looking statements” of the kind permitted by the Private Securities Litigation Reform Act of 1995, incorporated in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. That legislation protects such predictive statements by creating a “safe harbor” from liability in the event that a particular prediction does not turn out as anticipated.

While we always intend to express our best judgment when we make statements about what we believe will occur in the future, and although we base these statements on assumptions that we believe to be reasonable when made, these forward-looking statements are not a guarantee of performance, and you should not place undue reliance on such statements. Forward-looking statements are subject to many uncertainties and other variable circumstances, many of which are outside of our control, that could cause our actual results and experience to differ materially from those we thought would occur.

The following listing represents some, but not necessarily all, of the factors that may cause actual results to differ from those we may have anticipated or predicted:

● We operate in cyclical industries and we experience volatile demand for our products;

● Our ability to operate our scrap metal recycling facility efficiently and profitably;

● Our ability to obtain sufficient capital to fund a potential expansion of our scrap metal recycling facility;

● Our ability to consummate the pending acquisition of Draco Resources, Inc. and the success of its future business and operations;

● Our ability to establish adequate management, legal and financial controls in the United States and China;

3

● The availability to us of supplies of metal ore and scrap metal upon favorable terms;

● The availability of electricity to operate our scrap metal recycling facility;

● Fluctuations in raw material prices may affect our operating results as we may not be able to pass on cost increases to customers;

● The lack of various legal protections, which may be customarily contained in similar contracts among parties in the United States and are material to our operations, in certain agreements to which we are a party;

● Our dependence on our key management personnel;

● Our potential inability to meet the filing requirements imposed by the securities laws in the United States;

● Our ineffective internal control over financial reporting;

● The effect of changes resulting from the political and economic policies of the Chinese government on our assets and operations located in China;

● The limitation on our ability to receive and use our revenues effectively as a result of restrictions on currency exchange in China;

● The impact of future inflation in China on economic activities in China;

● Our ability to enforce our rights due to policies regarding the regulation of foreign investments in China;

● The restrictions imposed under regulations relating to offshore investment activities by Chinese residents, causing us increased administrative burdens and regulatory uncertainties, may limit or adversely affect our ability to complete any business combinations with our subsidiaries based in China;

● Our ability to comply with the United States Foreign Corrupt Practices Act which could subject us to penalties and other adverse consequences;

● The provisions of our articles of incorporation and by-laws that may delay or prevent a takeover may sometimes work against the best interests of our stockholders; and

● Our controlling stockholders may take actions that conflict with the interests of our stockholders.

You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in Part II, Item 1A. Risk Factors appearing later in this report, Part I. Item 1A. Risk Factors appearing in our Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2013 and our other filings with the Securities and Exchange Commission. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless otherwise set forth to the contrary, when used in this report the terms the “Company,” "we," "us," "ours," and similar terms refers to Armco Metals Holdings, Inc., a Nevada corporation, and our subsidiaries, the term “MT” refers to metric tons, and the term “Recycling Facility” refers to our metal recycling facility located in the Banqiao Industrial Zone, part of Lianyungang Economic Development Zone in the Jiangsu province of China.

The information which appears on our web site at www.armcometals.com is not part of this report.

4

Holdings, Inc.

June 30, 2014 and 2013

Index to the Consolidated Financial Statements

Contents	Page(s)
Consolidated Balance Sheets at June 30, 2014 (Unaudited) and December 31, 2013	F-2
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months and Six Months Ended June 30, 2014 and 2013 (Unaudited)	F-3
Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2014 (Unaudited)	F-4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013 (Unaudited)	F-5
Notes to the Consolidated Financial Statements (Unaudited)	F-6

F-1

ARMCO METALS HOLDINGS, INC. 

CONSOLIDATED BALANCE SHEETS 

	June 30, 2014			December 31, 2013
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	702,802		$	596,557
Pledged deposits		505,714			4,652,222
Marketable securities		551,597			519,129
Accounts receivable, net		23,318,809			25,595,516
Inventories		13,248,882			20,456,920
Advance on purchases		1,268,903			733,285
Prepayments and other current assets		774,718			1,181,371
Total Current Assets		40,371,425			53,735,000
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment		44,535,389			44,856,611
Accumulated depreciation		(10,695,728	)		(9,360,933	)
PROPERTY, PLANT AND EQUIPMENT, net		33,839,661			35,495,678
LAND USE RIGHTS
Land use rights		6,633,807			6,681,779
Accumulated amortization		(474,665	)		(416,478	)
LAND USE RIGHTS, net		6,159,142			6,265,301
Total Assets	$	80,370,228		$	95,495,979
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable	$	19,641,087		$	27,415,638
Banker's acceptance notes payable and letters of credit		1,764,803			8,473,217
Current maturities of capital lease obligation		1,060,710			904,990
Accounts payable		2,698,968			10,062,463
Advances received from Chairman and CEO		792,431			668,332
Due to related party		250,146			403,141
Customer deposits		1,879,761			649,488
Corporate income tax payable		819,686			822,207
Derivative warrant liability		19,559			61,429
Value added tax and other taxes payable		2,500,956			2,202,331
Accrued expenses and other current liabilities		1,224,489			1,228,753
Total Current Liabilities		32,652,596			52,891,989
Total Liabilities		32,652,596			52,891,989
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued or outstanding		-			-
Common stock, $0.001 par value, 74,000,000 shares authorized, 54,958,437 and 29,876,327 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively		54,958			29,876
Additional paid-in capital		45,601,982			35,790,906
Deferred compensation		-
Statutory surplus reserve and common welfare fund		-			-
Retained earnings		(1,756,919	)		2,625,287
Accumulated other comprehensive income (loss):		-
Change in unrealized gain on marketable securities		(662,044	)		(694,512	)
Foreign currency translation gain		4,479,655			4,852,433
Total Stockholders' Equity		47,717,632			42,603,990
Total Liabilities and Stockholders' Equity	$	80,370,228		$	95,495,979

 See accompanying notes to the consolidated financial statements.

F-2

ARMCO METALS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

	For the Six Months			For the Three Months			For the Six Months			For the Three Months
	Ended			Ended			Ended			Ended
	June 30, 2014			June 30, 2014			June 30, 2013			June 30, 2013
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
NET REVENUES	$	42,797,893		$	32,879,242		$	42,027,253		$	27,684,176
COST OF GOODS SOLD		40,898,856			29,816,401			39,031,199			25,332,787
GROSS MARGIN		1,899,037			3,062,841			2,996,054			2,351,389
OPERATING EXPENSES:
Selling expenses		202,690			101,835			89,686			60,460
Professional fees		355,782			141,328			316,985			120,488
General and administrative expenses		1,975,580			537,454			1,722,671			675,977
Operating cost of idle manufacturing facility		1,007,214			472,242			815,639			392,418
Total operating expenses		3,541,266			1,252,859			2,944,981			1,249,343
INCOME (LOSS) FROM OPERATIONS		(1,642,229	)		1,809,982			51,073			1,102,046
OTHER EXPENSE:
Interest income		(98,800	)		(532	)		(46,861	)		(44,136	)
Interest expense		2,641,772			1,968,830			1,111,683			382,311
Change in fair value of derivative liability		108,975			586,884			(920,338	)		(304,392	)
Loan guarantee expense		13,002			-			22,833			10,333
Other (income) expense		75,028			16,725			(36,218	)		39,678
Total other expense		2,739,977			2,571,907			131,099			83,794
INCOME (LOSS) BEFORE INCOME TAXES PROVISION		(4,382,206	)		(761,925	)		(80,026	)		1,018,252
INCOME TAX PROVISION		-			-			61,688			70,198
NET INCOME (LOSS)		(4,382,206	)		(761,925	)		(141,714	)		948,054
OTHER COMPREHENSIVE INCOME (LOSS):
Change in unrealized income (loss) of marketable securities		32,468			10,530			(411,606	)		(417,105	)
Foreign currency translation gain (loss)		(372,778	)		35,780			906,893			1,146,411
COMPREHENSIVE LOSS	$	(4,722,516	)	$	(715,615	)	$	353,573		$	1,677,360
NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED:
Net income (loss) per common share - basic and diluted	$	(0.11	)	$	(0.01	)	$	(0.01	)	$	0.04
Weighted Average Common Shares Outstanding - basic and diluted		40,320,346			50,808,455			23,974,603			23,974,603

See accompanying notes to the consolidated financial statements. 

F-3

ARMCO METALS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Six Months Ended June 30, 2014

(Unaudited)

	Common Stock, $0.001 Par Value										Accumulated Other Comprehensive Income (Loss)
	Number of Shares		Amount		Additional Paid-in Capital			Retained Earnings			Change in Unrealized Loss on Marketable Securities			Foreign Currency Translation Gain			Total Stockholders' Equity
Balance, December 31, 2013		29,876,327	$	29,876	$	35,790,906		$	2,625,287		$	(694,512	)	$	4,852,433		$	42,603,990
Loan guarantee services received and quarterly shares vested from common shares issued to Chaoyang Steel on June 11, 2010 for 5 year loan guarantee services expiring June 30, 2016		33,338		34		12,968												13,002
Stock-based compensation		2,361,208		2,361		968,668												971,029
Issuance of common shares for consulting services to CDII for service of one year starting from November 1, 2013		500,000		500		164,500												165,000
Issuance of common shares for consulting services to All Bright for service of 14 months starting from April 1, 2014		125,000		125		33,625												33,750
Issuance of common shares to initial investors		60,000		60		(60	)
Issuance of common stock in conversion of convertible notes		22,002,564		22,002		6,529,710												6,551,712
Reclassification of derivative liabilities due to conversion of convertible notes						2,101,665												2,101,665
Net Loss									(4,382,206	)								(4,382,206	)
Change in unrealized loss on marketable securities												32,468						32,468
Foreign currency translation gain (loss)															(372,778	)		(372,778	)
Balance, June 30, 2014		54,958,437	$	54,958	$	45,601,982		$	(1,756,919	)	$	(662,044	)	$	4,479,655		$	47,717,632

See accompanying notes to the consolidated financial statements.

F-4

ARMCO METALS HOLDINGS, INC. 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

	For the Six Months			For the Six Months
	Ended			Ended
	June 30, 2014			June 30, 2013
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,382,206	)	$	(141,714	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation expense		1,405,506			1,432,247
Amortization expense		61,322			90,552
Change in fair value of derivative liability		108,975			(920,338	)
Gain on disposal of property		(339	)		-
Amortization of debt discount		1,985,325			-
Stock based compensation		1,182,781			501,815
Reversal of inventory reserve		(541,834	)		-
Changes in operating assets and liabilities:
Bank acceptance notes receivable		-			(1,132,558	)
Accounts receivable		2,116,260			6,640,189
Inventories		7,619,601			(7,689,157	)
Advance on purchases		(538,812	)		(40,034	)
Prepayments and other current assets		396,061			(761,181	)
Accounts payable		(7,266,050	)		3,883,794
Customer deposits		1,237,852			(1,323,944	)
Taxes payable		315,184			(1,291,579	)
Advance for stock subscription		-			(80,000	)
Accrued expenses and other current liabilities		29,042			(1,246,756	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		3,728,668			(2,078,664	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from release of pledged deposits		5,932,261			5,517,104
Payment made towards pledged deposits		(1,809,397	)		(11,041,193	)
(Purchase) Disposal of property, plant and equipment		1,628			(165,656	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		4,124,492			(5,689,745	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable		11,535,286			20,909,692
Repayment of loans payable		(12,970,719	)		(24,503,446	)
Banker's acceptance notes payable		(6,663,274	)		7,376,187
Proceeds from capital lease obligation		162,600			-
Repayment of capital lease obligation		-			(315,572	)
Advances from (repayment to) Chairman and CEO		144			2,153,815
Advances from (repayment to) related party		(32,534	)		-
Proceeds from Related Party Loan		-			1,019,302
Proceeds from sales of common stock		-			1,621,356
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(7,968,497	)		8,261,334
EFFECT OF EXCHANGE RATE CHANGES ON CASH		221,582			(703,283	)
NET CHANGE IN CASH		106,245			(210,358	)
Cash at beginning of the period		596,557			1,367,171
Cash at end of the period	$	702,802		$	1,156,813
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid	$	236,240		$	1,211,724
Income tax paid	$	-		$	7,157
NON CASH FINANCING AND INVESTING ACTIVITIES:
Debt discount due to convertible features	$	1,950,820			-
Reclassification from short-term debt to convertible debt	$	5,554,468			-
Reclassification of derivative liability to equity	$	2,101,665			-
Change in fair value of marketable security	$	32,468			-
Common shares issued for conversion of convertible notes and accrued interest	$	6,551,712			-

See accompanying notes to the consolidated financial statements.

F-5

Armco Metals Holdings, Inc.

June 30, 2014 and 2013

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1 – Organization and Operations

Armco Metals Holdings, Inc. (formerly China Armco Metals, Inc. and Cox Distributing, Inc.)

Cox Distributing was founded as an unincorporated business in January 1984 and was incorporated as Cox Distributing, Inc. (“Cox Distributing”), a C corporation under the laws of the State of Nevada on April 6, 2007 at which time 9,100,000 shares of common stock were issued to the founder in exchange for the existing unincorporated business. No value was given to the stock issued by the newly formed corporation.  Therefore, the shares were recorded to reflect the $.001 par value and paid in capital was recorded as a negative amount ($9,100).

On June 27, 2008, Cox Distributing amended its Articles of Incorporation, and changed its name to China Armco Metals, Inc. (“Armco Metals” ) upon the acquisition of Armco Metals International Limited (formerly “Armco & Metawise (H.K) Limited” or “Armco HK”) and Subsidiaries to better identify the Company with the business conducted, through its wholly owned subsidiaries in China, import, export and distribution of ferrous and non-ferrous ores and metals, and processing and distribution of scrap steel.

On July 3, 2013, the Company changed its name from “China Armco Metals, Inc.” to “Armco Metals Holdings, Inc.”(“Armco Metals Holdings” or the “Company”).

Armco Metals International Limited (formerly Armco & Metawise (H.K) Limited) and Subsidiaries

Armco Metals International Limited (formerly Armco & Metawise (H.K) Limited)

Armco & Metawise (H.K) Limited was incorporated on July 13, 2001 under the laws of the Hong Kong Special Administrative Region (“HK SAR”) of the People’s Republic of China (“PRC”). Armco HK engages in the import, export and distribution of ferrous and non-ferrous ore and metals.

On March 22, 2011, Armco & Metawise (H.K) Limited amended its Memorandum and Articles of Association, and changed its name to Armco Metals International Limited (“Armco HK”).

Formation of Henan Armco and Metawise Trading Co., Ltd.

Henan Armco and Metawise Trading Co., Ltd. (“Henan”) was incorporated on June 6, 2002 in the City of Zhengzhou, Henan Province, PRC. Henan engages in the import, export and distribution of ferrous and non-ferrous ores and metals.

Formation of Armco (Lianyungang) Renewable Metals, Inc.

On January 9, 2007, Armco HK formed Armco (Lianyungang) Renewable Metals, Inc. (“Renewable Metals”), a wholly-owned foreign enterprise (“WOFE”) subsidiary in the City of Lianyungang, Jiangsu Province, PRC. Renewable Metals engages in the processing and distribution of scrap metal.

On December 1, 2008, Armco HK transferred its 100% equity interest in Renewable Metals to Armco Metals.

Merger of Henan with Renewable Metals, Companies under Common Control

On December 28, 2007, Armco HK entered into a Share Transfer Agreement with Renewable Metals, whereby Armco HK transferred to Renewable Metals all of its equity interest in Henan, a company under common control of Armco HK.

The acquisition of Henan has been recorded on the purchase method of accounting at historical amounts as Renewable Metals and Henan were under common control since June 2002. The consolidated financial statements have been presented as if the acquisition of Henan had occurred as of the first date of the first period presented.

F-6

Acquisition of Armco Metal International Limited and Subsidiaries (“Armco HK”) Recognized as a Reverse Acquisition

On June 27, 2008, the Company entered into and consummated a share purchase agreement (the “Share Purchase Agreement”) with Armco HK and Feng Gao, who owned 100% of the issued and outstanding shares of Armco HK. In connection with the consummation of the Share Purchase Agreement, (i) Stephen Cox surrendered 7,694,000 common shares, representing his controlling interest in the Company for cancellation and resigned as an officer and director; (ii) the Company purchased from the Armco HK Shareholder 100% of the issued and outstanding shares of Armco HK’s capital stock for $6,890,000 by delivery of the Company’s purchase money promissory note; (iii) issued to Ms. Gao (a) a stock option entitling Ms. Gao to purchase 5,300,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) with an exercise price of $1.30 per share expiring on December 31, 2008 and (b) a stock option entitling Ms. Gao to purchase 2,000,000 shares of the Company’s common stock with an exercise price of $5.00 per share expiring two (2) years from the date of issuance on June 27, 2010 (the “Gao Options”). On August 12, 2008, Ms. Gao exercised her option to purchase and the Company issued 5,300,000 shares of its common stock in exchange for the $6,890,000 note owed to Ms. Gao. The shares issued represented approximately 69.7% of the issued and outstanding common stock immediately after the consummation of the Share Purchase and exercise of the option to purchase 5,300,000 shares of the Company’s common stock at $1.30 per share.

As a result of the controlling financial interest of the former stockholder of Armco HK, for financial statement reporting purposes, the merger between the Company and Armco HK has been treated as a reverse acquisition with Armco HK deemed the accounting acquirer and the Company deemed the accounting acquiree under the acquisition method of accounting in accordance with section 805-10-55 of the FASB Accounting Standards Codification. The reverse acquisition is deemed a capital transaction and the net assets of Armco HK (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the acquisition. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Armco HK which are recorded at their historical cost. The equity of the Company is the historical equity of Armco HK retroactively restated to reflect the number of shares issued by the Company in the transaction.

Formation of Armco (Lianyungang) Holdings, Inc.

On June 4, 2009, the Company formed Armco (Lianyungang) Holdings, Inc. (“Lianyungang Armco”), a WOFE subsidiary in the City of Lianyungang, Jiangsu Province, PRC. Lianyungang Armco intends to engage in marketing and distribution of the recycled scrap steel.

Formation of Armco Metals (Shanghai) Holdings, Ltd.

On July 16, 2010, the Company formed Armco Metals (Shanghai) Holdings. Ltd. (“Armco Shanghai”) as a WOFE subsidiary in Shanghai, China. Armco Shanghai serves as the headquarters for the Company’s China operations and oversees the activities of the Company in financing and international trading.

Acquisition of Draco Resources Inc (“Draco”) Recognized as a Reverse Acquisition

On April 15, 2014, the Company entered into a Share Exchange Agreement with Draco Resources Inc ("Draco") and Metawise Group Inc ("Metawise") Nominees ("Metawise Nominees") pursuant to which the Company agreed to acquire 100% of the outstanding capital stock of Draco in exchange for i) 12,750,000 shares (post 1:10 reverse stock split as part of the contemplated acquisition("post-split")) of its common stock, and ii) a five year common stock purchase warrant to purchase 3,000,000 (post-split) shares of its common stock at an exercise price of $3.40 (post-split) per share.

On May 7, 2014 the Company entered into an amendment to the Share Exchange Agreement with Draco and the Metawise Nominees to add Metawise, the current sole shareholder of Draco, as a party.

At the closing of the Draco Acquisition, the Company will also issue an aggregate of 1,200,000 Shares (post-split) to China Direct Investments, Inc. and Shanghai Heqi Investment Center (Limited Partner) ("Compensation Shares") as finder’s fees due by Draco to those entities.

Following the completion of the Draco Acquisition, as giving effect to the distribution of the Acquisition Consideration by Metawise to the Metawise Nominees, the Metawise Nominees will own, by virtue of the issuance of the Acquisition Shares, approximately 66% of the Company’s then outstanding common stock, giving effect to the issuance of the Compensation Shares, but excluding any additional shares of its common stock issuable upon the exercise of the Acquisition Warrant or any other outstanding options or warrants. As a result of the Draco Acquisition, the Company’s stockholders’ existing share ownership and voting power will be diluted by the issuance of 13,950,000 newly issued shares of its common stock, which represent approximately 255% of its outstanding common stock as of July 11, 2014 (giving pro-forma effect to the reverse stock split described below), and approximately 72% of its outstanding common stock that would be outstanding at the closing of the Draco Acquisition, giving no effect to the shares underlying the Acquisition Warrant.

Immediately prior to the closing of the Draco Acquisition, the Company will effect a 1:10 reverse stock split of its common stock. All share numbers in the Acquisition Consideration and the Compensation Consideration are post-split numbers. At the reporting date, the Draco Acquisition is not closed and the closing date is not clear.

F-7

As of the reporting date, the Company is evaluating a change in the structure of its acquisition of Draco Resources, Inc. in order to satisfy initial listing standards with NYSE MKT. The Company continues to pursue a substantial interest in Draco. and expects that a restructured agreement will be formalized following management discussions.

Note 2 - Significant and Critical Accounting Policies and Practices

Basis of Presentation - Unaudited Interim Financial Information

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Interim results are not necessarily indicative of the results for the full year.  These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2013 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on April 4, 2014.

Principles of Consolidation

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

The Company's consolidated subsidiaries and/or entities as of June 30, 2014 are as follows:

Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition, if applicable)	Attributable interest
Armco Metal International Limited (“Armco HK”)	Hong Kong SAR	July 13, 2001	100%
Henan Armco and Metawise Trading Co., Ltd. (“Henan Armco”)	PRC	June 6, 2002	100%
Armco (Lianyungang) Renewable Metals, Inc. (“Renewable Metals”)	PRC	January 9, 2007	100%
Armco (Lianyungang) Holdings, Inc. (“Lianyungang Armco”)	PRC	June 4, 2009	100%
Armco Metals (Shanghai) Holdings. Ltd. (“Armco Shanghai”)	PRC	July 16, 2010	100%

The consolidated financial statements include all accounts of the Company and the consolidated subsidiaries and/or entities as of reporting period ending date(s) and for the reporting period(s) then ended.

All inter-company balances and transactions have been eliminated.

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period). Management makes its best estimate of the outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.

F-8

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, pledged deposits, accounts receivable, advance on purchases, prepayments and other current assets, accounts payable, customer deposits, corporate income/VAT tax payable, accrued expenses and other current liabilities approximate their fair values because of the short maturity of these instruments.

The Company’s loans payable, banker’s acceptance notes payable, and capital lease obligation approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2014 and December 31, 2013.

The Company’s Level 3 financial liabilities consist of the derivative warrant issued in April 2010 and convertible note with embedded conversion feature issued in September, November, and December 2013, and January through March 2014, for which there are no current market for these securities such that the determination of fair value requires significant judgment or estimation.  The Company valued the automatic conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions using a lattice model, with the assistance of a valuation specialist, for which management understands the methodologies. These models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

It is not, however, practical to determine the fair value of advances from significant stockholder and lease arrangement with the significant stockholder, if any, due to their related party nature.

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

Level 1 Financial Assets – Marketable Securities

The Company uses Level 1 of the fair value hierarchy to measure the fair value of the marketable securities and marks the available for sale marketable securities at fair value in the statement of financial position at each balance sheet date and reports the unrealized holding gains and losses for available-for-sale securities in other comprehensive income (loss) until realized provided the unrealized holding gains and losses is temporary. If the fair value of an investment is less than its cost basis at the balance sheet date of the reporting period for which impairment is assessed, and it is determined that the impairment is other than temporary, then an impairment loss is recognized in earnings equal to the entire difference between the investment’s cost and its fair value at the balance sheet date of the reporting period.

F-9

Level 3 Financial Liabilities – Derivative Liabilities

The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative warrant liability and derivative convertible debt liabilities at every reporting period and recognizes gains or losses in the consolidated statements of operations and comprehensive income (loss) that are attributable to the change in the fair value of the derivative liabilities.

The following table sets forth by level within the fair value hierarchy the Company's financial assets and liabilities that were accounted for at fair value as of June 30, 2014, and December 31, 2013:

Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
June 30, 2014
Derivative liability		-		-	$	19,559	$	19,559
Available-for-sale securities	$	551,597		-		-	$	551,597
December 31, 2013
Derivative liability		-		-	$	61,429	$	61,429
Available-for-sale securities	$	519,129		-		-	$	519,129

Fair Value of Non-Financial Assets or Liabilities Measured on a Recurring Basis

The Company’s non-financial assets include inventories. The Company identifies potentially excess and slow-moving inventories by evaluating turn rates, inventory levels and other factors. Excess quantities are identified through evaluation of inventory aging, review of inventory turns and historical sales experiences. The Company provides lower of cost or market reserves for such identified excess and slow-moving inventories. The Company establishes a reserve for inventory shrinkage, if any, based on the historical results of physical inventory cycle counts.

Foreign Currency Translation

The financial records of the Company's Chinese operating subsidiaries are maintained in their local currency, the Renminbi (“RMB”), which is the functional currency. Assets and liabilities are translated from the local currency into the reporting currency, U.S. dollars, at the exchange rate prevailing at the balance sheet date. Revenues and expenses are translated at weighted average exchange rates for the period to approximate translation at the exchange rates prevailing at the dates those elements are recognized in the consolidated financial statements. Foreign currency translation gain (loss) resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining accumulated other comprehensive income in the consolidated statement of stockholders’ equity.

F-10

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rate adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC. Commencing July 21, 2005, China adopted a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies. The exchange rate of the US dollar against the RMB was adjusted from approximately RMB 8.28 per U.S. dollar to approximately RMB 8.11 per U.S. dollar on July 21, 2005. Since then, the PBOC administers and regulates the exchange rate of the U.S. dollar against the RMB taking into account demand and supply of RMB, as well as domestic and foreign economic and financial conditions.

Unless otherwise noted, the rate presented below per U.S. $1.00 was the midpoint of the interbank rate as quoted by OANDA Corporation (www.oanda.com) contained in its consolidated financial statements. Management believes that the difference between RMB vs. U.S. dollar exchange rate quoted by the PBOC and RMB vs. U.S. dollar exchange rate reported by OANDA Corporation were immaterial. Translations do not imply that the RMB amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars. Translation of amounts from RMB into U.S. dollars has been made at the following exchange rates for the respective periods:

	June 30, 2014		December 31, 2013		June 30, 2013
Balance sheets		6.1564		6.1122		6.1807
Statements of operations and comprehensive income (loss)		6.1419		6.1943		6.2437

Net Income (Loss) per Common Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options, warrants and convertible debt instruments.

For the periods presented, the computation of diluted loss per share equaled basic loss per share as the inclusion of any dilutive instruments would have had an antidilutive effect on the earnings per share calculation in the periods presented.

The following table shows the potentially outstanding dilutive common shares excluded from the diluted net income (loss) per common share calculation as they were anti-dilutive:

	Potentially Outstanding Dilutive Common Shares
	For the Six Months Ended June 30, 2014		For the Six Months Ended June 30, 2013
Conversion Feature Shares
Common shares issuable under the conversion feature of convertible notes payable		416,979		-
Sub-total: Conversion feature shares		416,979		-
Unvested common shares issued to employees
Unvested common shares issued to directors, vest in July, October, December 2014, and January 2015		378,125		-
Sub-total: Unvested common shares issued to employees		378,125		-
Stock Option Shares
Options issued on October 5, 2010 to employees to purchase common shares with an exercise price of $5.00 per share expiring five (5) years from the date of issuance		40,000		40,000
Sub-total: Stock option shares		40,000		40,000
Warrant Shares
12,180,210 Warrants issued on August 1, 2008 to investors to purchase common shares with an exercise price of $0.50 per shares expiring five(5) from the date of issuance		-		12,180,210
1,538,464 and 76,923 Warrants issued on April 20, 2010 to investors to purchase common shares with an exercise price of $7.50 per shares expiring five(5) from the date of issuance		1,615,387		1,615,387
Sub-total: Warrant shares		1,615,387		13,795,597
Total potentially outstanding dilutive common shares		2,450,491		13,835,597

F-11

Recently Issued Accounting Pronouncements

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update change the requirements for reporting discontinued operations in Subtopic 205-20. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” The ASU states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Although “major” is not defined, the standard provides examples of when a disposal qualifies as a discontinued operation. The ASU also requires additional disclosures about discontinued operations that will provide more information about the assets, liabilities, income and expenses of discontinued operations. In addition, the ASU requires disclosure of the pre-tax profit or loss attributable to a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. The ASU is effective for public business entities for annual periods beginning on or after December 15, 2014, and interim periods within those years. The adoption of ASU 2014 -08 is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from contracts with Customers (Topic 606)". This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchanged for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

Note 3 – Pledged Deposits

Pledged deposits consist of cash held in financial institutions for (a) outstanding letters of credit and (b) open banker’s acceptance notes payable maturing between three (3) to nine (9) months from the date of issuance, and (c) capital lease obligation.

Pledged deposits consisted of the following:

	June 30, 2014		December 31, 2013
Armco HK
Letters of credit (i)	$	7,962	$	5,993
Sub-total – Armco HK		7,962		5,993
Renewable Metals
Bank acceptance notes payable		-		1,636,072
Letters of credit (ii)		10,142		2,517,621
Deposit for capital lease obligation (iii)		487,298		490,823
Sub-total – Renewable Metals		497,440		4,644,516
Henan Armco
Letters of credit (iv)		312		2,113
Sub-total – Henan Armco		312		2,113
	$	505,714	$	4,652,222

(i) $7,962 is to be released to the Company for payment towards fulfilled letters of credit when those letters of credit mature on August 15, 2014.

(ii) $10,142 is to be released to the Company for payment towards fulfilled letters of credit when those letters of credit mature on August 15, 2014.

(iii) $487,298 is to be released to the Company as part of the payment towards capital lease installment payment when the capital lease agreement matures on December 15, 2014.

(iv) $312 is to be released to the Company on August 15, 2014

F-12

Note 4 – Marketable Equity Securities, Available for Sale

As of June 30, 2014, the Company’s available for sale marketable securities were marked to market to its fair value of $551,597 and reported a $662,044 change in unrealized loss on marketable securities as other comprehensive income (loss) in its Stockholders’ Equity.

The table below provides a summary of the changes in the fair value of marketable securities, available for sale measured at fair value on a recurring basis using Level 1 of the fair value hierarchy to measure the fair value.

			Fair Value Measurement Using Level 1 Inputs
	Original cost		Impairment – Other Than Temporary			Accumulated Foreign Currency Transaction Gain (Loss)		Other Comprehensive Income (Loss) - Change in Unrealized Loss			Fair Value
Balance, December 31, 2013	$	3,396,658	$	(2,366,941	)	$	183,924	$	(694,512	)	$	519,129
Purchases, issuances and settlements
Total gains or losses (realized/unrealized) included in:
Other comprehensive income (loss): Changes in unrealized loss							-		32,468			32,468
Balance, June 30, 2014	$	3,396,658	$	(2,366,941	)	$	183,924	$	(662,044	)	$	551,597

Note 5 – Accounts Receivable

Accounts receivable consisted of the following:

	June 30, 2014			December 31, 2013
Accounts receivable	$	23,361,959		$	25,638,666
Allowance for doubtful accounts		(43,150	)		(43,150	)
	$	23,318,809		$	25,595,516

F-13

Note 6 – Inventories

Inventories consisted of the following:

	June 30, 2014			December 31, 2013
Raw materials – scrap metal	$	5,206,529		$	4,390,811
Finished goods – processed scrap metal		9,745,128			12,421,088
Purchased merchandise for resale		74,306			5,936,936
Write - down of inventories		(1,777,081	)		(2,291,915	)
	$	13,248,882		$	20,456,920

Renewable Metals raw materials and finished goods are collateralized for loans from the Bank of Communications Limited Lianyungang Branch. Raw materials consisted of scrap metals to be processed and finished goods were comprised of all of the processed scrap metal at Renewable Metals. Due to the short duration time for the processing of its scrap metal, there was no material work-in-process inventory at June 30, 2014 or December 31, 2013.

Slow-Moving or Obsolescence Markdowns

The Company recorded no inventory obsolescence adjustments for the six months ended June 30, 2014 and 2013.

Lower of Cost or Market Adjustments

There were $-541,834 and $486,837 of lower of cost or market adjustments for the six months ended June 30, 2014 and 2013.

Note 7 – Loans and Convertible Note Payable

Loans payable consisted of the following:

	June 30, 2014		December 31, 2013
Armco HK
Loan payable to RZB Austria Finance (Hong Kong) Limited, collateralized by certain of the Company’s inventory, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at the bank’s cost of funds plus 200 basis points per annum, with principal and interest due April 1, 2014 and repaid in full	$	-	$	504,248
Loan payables to DBS, collateralized by certain of the Company’s inventory, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at an average of 2.86% per annum, balance is due September 23, 2014		935,019		2,602,115
Sub-total - Armco HK		935,019		3,106,363
Renewable Metals
Loan payable to Bank of Communications, Lianyungang Branch, under trade credit facilities, collateralized by Renewable Metals inventories and guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 120% of the bank’s benchmark rate per annum (average 7.2%), balance due June 2, 2014 and paid in full		-		1,963,286
Loan payable to Bank of China, Lianyungang Branch, under trade credit facilities, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 6.6% per annum payable monthly, balance due September 25, 2014		8,121,629		8,180,361
Loan payable to Pudong Development Bank, Lianyungang Branch, under trade credit facilities, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 7.92% per annum payable monthly, balance due from March 27, 2015 through April 7, 2015		2,436,489		-
Short-term borrowing, with interest rate at 8% per annum		64,973		229,050
Short-term borrowing with no interest and due upon demand		1,294,588		-
Loan payable, with interest at 6% per annum and due January 21, 2015		3,478,226		3,503,379
Sub-total – Renewable Metals		15,395,905		13,876,076
Henan Armco
Loan Payable to ICBC, with interest at 2.47% per annum, and repaid in full on March 28, 2014		-		2,755,926
Loan Payable to Guanhutun Credit Union, collateralized by Henan’s building and leasehold improvement, with interest at 9.6% per annum, balance due March 16, 2015		162,432		163,607
Loans payable, with interest at 8% per annum, and due in 2014. The creditors agreed to exchange $5,319,351 into convertible notes in January and February, 2014		-		5,999,957
Short-term borrowing, no interest bearing due upon demand		2,117,409		-
Sub-total – Henan Armco		2,339,841		8,919,490
Armco Metals Holdings
Short term borrowing, with 0% interest, due on demand		110,000
Loans payable, with interest at 8% per annum, due from October 21, 2014 through November 8, 2014		790,000		1,050,000
Convertible notes payable, net of discount of $18,286, with interest at 4% per annum, due on March 3, 2015.		70,322		463,709
Sub-total – Armco Metals Holdings		970,322		1,513,709
	$	19,641,087	$	27,415,638

Collateralization of Property, Plant and Equipment

Both Renewable Metals and Lianyungang Armco’s property, plant and equipment representing substantially all of the Company’s property, plant and equipment are collateralized for loans from the Bank of China Lianyungang Branch .

Collateralization of Land Use Rights

Both Renewable Metals and Lianyungang Armco’s land use rights representing all of the Company’s land use rights are collateralized for loans from the Bank of China Lianyungang Branch .

Convertible notes payable

During 2013, the Company’s subsidiary borrowed an aggregate of approximately $6.2 million from 15 non-U.S. lenders who are not its affiliates under the terms of loan contracts. In January and February 2014, the Company and its subsidiary entered into note exchange agreements with each of these lenders pursuant to which the Company exchanged the loan contracts for 8% convertible notes in the aggregate amount of RMB 33,512,936 (approximately $5.5 million net of discount of $1.3 million), which represented the remaining principal balance due under the loan contracts. The convertible notes bear interest at the rate of 8% per annum, mature nine months from the date of issuance, and are convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion price of $0.317 per share. All the notes were converted on April 7, 2014. See note 11.

The Company analyzed the modification of the term under ASC 470-60 “Trouble Debt Restructurings” and ASC 470-50 “Extinguishment of Debt”. The Company determined the modification is substantial and the transaction should be accounted for as an extinguishment with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. The Company also determined that the fair value of the new debt is the same as the fair value of the old debt. Thus no gain or loss was recognized upon the extinguishment.

F-14

Note 8 – Banker’s Acceptance Notes Payable and Letters of Credit

Banker’s acceptance notes payable consisted of the following:

	June 30, 2014		December 31, 2013
Renewable Metals
Banker’s acceptance notes payable maturing on March 27, 2014	$	-	$	3,272,144
Letters of credit maturing October 6, 2014		1,764,803		5,201,073
	$	1,764,803	$	8,473,217

Note 9 – Related Party Transactions

The related parties consist of the following:

Kexuan Yao (“Mr. Yao”	The Company’s Chairman, Chief Executive Officer and principal stockholder
Keli Yao	Kexuan Yao’s brother
Yi Chu	Kexuan Yao’s wife

Advances from Chairman and CEO

From time to time, the Chairman, CEO and significant stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand. As of June 30, 2014 and December 31, 2013, the advance balance was $792,431 and $668,332, respectively.

Promissory Note from Chairman and CEO

On March 29, 2013, the Company executed a promissory note in the amount of RMB 6,300,000 (approximately $1,000,000) payable to the Chairman, CEO and significant stockholder of the Company.  The note, which is due one year from the date of issuance, accrues interest at 8% per annum.  The proceeds are used for working capital purposes. The note was subsequently converted into shares of common stock of the Company in October 28, 2013. See more details in Note 13.

Operating Lease from Chairman and CEO

On January 1, 2006, Henan entered into a non-cancellable operating lease for its 176.37 square meters commercial office space in the City of Zhengzhou, Henan Province, PRC from Mr. Yao for RMB 10, 000 per month. The lease expired on December 31, 2008 and has been extended through December 31, 2014. Rental expense incurred for the six months ended 30 June, 2014 and 2013 was RMB 60,000 (approximately $9,746) and RMB 60,000 (approximately $9,610), respectively.

Due to Other Related Parties

Due to other related parties consists of the following:

	June 30, 2014		December 31, 2013
Keli Yao		-		116,828
Yi Chu		250,146		286,313
Total		250,146		403,141

The balance of $250,146 due to related party represents the loan owed to the related parties, which is interest free, unsecured and repayable on demand.

F-15

Note 10 – Capital Lease Obligation

Capital lease obligation consisted of the following:

	June 30, 2014			December 31, 2013
Renewable Metals
(i)    Capital lease obligation to a financing company for a term of three (3) years, collateralized by certain of Renewable Metals machinery and equipment, with interest at 14% per annum, with principal and interest due and payable in monthly installments of RMB 497,897 on the 23rd of each month.	$	419,453		$	336,065
Less current maturities		(419,453	)		(336,065	)
Capital lease obligation, net of current maturities		-			-
(ii)   Capital lease obligation to a financing company for a term of three (3) years, collateralized by certain of Renewable Metals machinery and equipment, with interest at 11.0% per annum, with principal and interest due and payable in quarterly installments of RMB3,609,102 on the 15th of each quarter.		641,257			568,925
Less current maturities		(641,257	)		(568,925	)
Capital lease obligation, net of current maturities		-			-
Total capital lease obligation		1,060,710			904,990
Less current maturities		(1,060,710	)		(904,990	)
TOTAL CAPITAL LEASE OBLIGATION, net of current maturities	$	-		$	-

Note 11 – Derivative Instruments and the Fair Value of Financial Instruments

(i)     Warrants Issued in April 2010 (“2010 Warrants)

Description of Warrants

In connection with the sale of 1,538,464 shares of its common stock at $6.50 per share or $10,000,016 in gross proceeds to nine (9) accredited and institutional investors on April 20, 2010, the Company issued warrants to purchase an additional 1,538,464 shares of its common stock with an exercise price of $7.50 per share (“2010 Warrants”) expiring five (5) years from date of grant exercisable commencing 181 days following the date of issuance.  At the closing of the private offering, the Company paid Rodman & Renshaw, LLC, a FINRA member firm that served as placement agent for the Company in the offering, (i) a fee of $500,000 as compensation for their services and (ii) a warrant to purchase 76,923 shares of the Company’s common stock with an exercise price of $7.50 per share expiring five (5) years from date of grant exercisable commencing 181 days following the date of issuance, as well as a $15,000 non-accountable expense allowance to one of the nine (9) investors in the offering.

Derivative Analysis

Since the Asher and Hanover notes bear derivative feature, as discussed below, the warrants were tainted under ASC 815-15 “Derivatives and Hedging”. On June 30, 2014, the derivative liability associated with the warrants was valued at $53.

2010 Warrants Outstanding

As of June 30, 2014, 2010 warrants to purchase 1,615,387 shares of its common stock remain outstanding.

The table below summarizes the Company’s 2010 non-derivative warrant activities through June 30, 2014:

	Number of Warrant Shares			Exercise Price Range Per Share		Weighted Average Exercise Price		Fair Value at Date of Issuance		Aggregate Intrinsic Value
Balance, December 31, 2013		1,615,387		$	7.50	$	7.5	$	-	$	-
Earned and exercisable, December 31, 2013		1,615,387		$	7.50	$	7.5	$	-	$	-
Unvested, December 31, 2013		-		$	-	$	-	$	-	$	-
Granted		-			-		-		-		-
Canceled for cashless exercise		(-	)		-		-		-		-
Exercised (Cashless)		(-	)		-		-		-		-
Exercised		(-	)		-		-		-		-
Expired		-			-		-		-		-
Balance, June 30, 2014		1,615,387		$	7.50	$	7.50	$	-	$	-
Earned and exercisable, June 30, 2014		1,615,387		$	7.50	$	7.50	$	-	$	-
Unvested, June 30, 2014		-		$	-	$	-	$	-	$	-

F-16

The following table summarizes information concerning outstanding and exercisable 2010 warrants as of June 30, 2014:

	Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices	Number Outstanding		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price
$7.50		1,615,387		0.81	$	7.50		1,615,387		0.81	$	7.50
$7.50		1,615,387		0.81	$	7.5		1,615,387		0.81	$	7.5

(ii) Convertible Notes

On November 8, 2013, the Company signed a purchase agreement with Hanover Holdings I, LLC, a New York limited liability company, or Hanover, with an initial principal amount of $450,000, or the Initial Convertible Note (“ Hanover Notes”), for a purchase price of $300,000. The outstanding principal of initial note is subject to filing date reduction and effective date reduction. Filing date reduction will reduce the outstanding principal of initial note by $50,000 if the Company files the S-1registration statement per the purchase agreement within 45 days of the note date. The Company failed to meet this filing date reduction term, and accordingly, the initial principal amount was not reduced by the $50,000. Effective date reduction will reduce the outstanding principal of the initial note by another $100,000 if the S-1 registration statement takes effective within 120 days of the note date. On December 26, 2013, the Company filed a S-1 registration statement pursuant to the purchase agreement which was effective on February 14, 2014. Thus, we successfully met the effective date reduction term. As a result, the principal amount of the note was reduced to $350,000 of which $50,000 was recorded as accrued liabilities as of December 31, 2013. Additionally, the Company has the right to require Hanover to purchase, on the 10th trading day after the effective date of the Registration Statement, or the Additional Closing Date, an additional senior convertible note with an initial principal amount of $500,000, or the Additional Convertible Note, for a purchase price of $500,000.  The Initial Convertible Note matures on November 8, 2014 (subject to extension as provided in the Initial Convertible Note) and accrues interest at the rate of 4.0% per annum. On March 3, 2014, the Additional Convertible Note was issued and it will mature on the date that is the one-year anniversary of the date of issuance of the Additional Convertible Note (subject to extension as provided in the Initial Convertible Note) and will accrue interest at the rate of 4.0% per annum. The Initial Convertible Note is convertible at any time, in whole or in part, at Hanover’s option, into shares of common stock, at a conversion price equal to the Variable Conversion Price. “Variable Conversion Price” means, as of any date of determination, the product of (A) the lowest volume weighted average price of the common stock of any of the five consecutive trading days ending and including the trading day immediately preceding such date of determination (subject to adjustment) , or the Variable Conversion Base Price; and (B) the applicable Variable Percentage. “Variable Percentage” means (i) if the applicable Variable Conversion Base Price is less than or equal to $0.45 (subject to adjustment), 85% or (ii) if the applicable Variable Conversion Base Price is greater than $0.45 (subject to adjustment), 80%. The Additional Convertible Note will be convertible at any time, in whole or in part, at Hanover’s option into shares of common stock at a conversion price that will be equal to the Variable Conversion Price.

On September 23, 2013 and December 10, 2013, the Company issued Notes (“Asher Notes”) to Asher Enterprises, Inc. (the “Holder”) which are convertible in 180 days (at which time they will require derivative treatment), in the amounts of $153,500 (1st tranche included no deferred financing cost or legal fees) and $63,000 (2nd tranche included no deferred financing cost or legal fees) (the “Convertible Note” or the “Note”). The 9/23/13 and 12/10/13 Asher Convertible Notes are convertible at 58% of the average 3 lowest closing bid prices for the last 10 trading days and contains a full ratchet reset. The holders have the right after 180 days following the Date of Issuance (on 3/22/14 the 9/23/13 note became convertible, and on 6/8/14 the 12/10/13 note became convertible), and until any time until the Convertible Note is fully paid, to convert any outstanding and unpaid principal portion of the Convertible Note, and accrued interest, into fully paid and non-assessable shares of Common Stock. The Holder was not issued warrants with the Convertible Note. The Convertible Note: (a) bears interest at 8% per annum; (b) the principal and accrued interest is due and payable on 6/25/13 and 9/12/14; (c) is convertible optionally by the Holder at any time after 180 days; (d) bears 22% interest on default with a 150% payment penalty under specific default provisions; (e) redeemable at 115% through 140% for days 0-180; (f) and is subject to dilutive adjustments for share issuances (full ratchet reset feature). The Company analyzed the conversion option of all the convertible notes for derivative accounting consideration under ASC 815-15 "Derivatives and Hedging" and determined that the embedded conversion feature should be classified as a liability due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The embedded conversion feature was measured at fair value at the date of inception and at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings.  

On January 13, 2014, the Company issued convertible notes for a total of $2,472,127 to four foreign investors. The notes will mature on October 13, 2014. On February 4, 2014, the Company issued convertible notes for a total of $3,082,340 to another eleven foreign investors. The notes will mature on February 4, 2014. All these notes bear interest at 8% per annum, and convertible optionally by the holders at any time at a conversion price of $0.317. The derivative features of the Asher and Hanover Notes taint (due to the indeterminate number of shares) the convertible notes issued on January 13, and February 4, 2014. See more details in Note 7.

F-17

Conversions to Common Stock

On February 27, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 plus interest of $4,628 of the note into 95,997 shares of the Company's common stock, at a conversion price of $0.308635 per share.

On March 5, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $75,000 of the note due November 1, 2014 into 234,295 shares of the Company's common stock, at a conversion price of $0.32011 per share.

On March 14, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $50,000 of the note due November 1, 2014 into 155,085 shares of the Company's common stock, at a conversion price of $0.322405 per share.

On March 24, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $50,000 of the note due November 1, 2014 into 145,351 shares of the Company's common stock, at a conversion price of $0.343995 per share.

On March 26, 2014, the Company received a conversion notice from its convertible note holder, Hanover, to convert $100,000 of the note due November 1, 2014 into 288,493 shares of the Company's common stock, at a conversion price of $0.34663 per share.

On March 28, 2014, $80,000 of principal under the Asher Note issued on September 23, 2013 was converted to 355,082 shares of the Company’s common stock.

On April 7, 2014, $73,500 of principal under Asher Note issued on September 23, 2013 and accrual interest of $6,140 was converted to 363,653 shares of the Company’s common stock and the remaining principal balance under the note is $0.

On April 7, 2014, the Company received conversion notices from its 15 foreign convertible notes holders to convert $5,554,468 of the note into 17,521,980 shares of the Company's common stock, at a conversion price of $ 0.317 per share.

On April 16, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $100,000 of the note and accrual interest of $1,525 into 374,425 shares of the Company's common stock, at a conversion price of $ 0.27115 per share.

On May 7, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $278 into 105,756 shares of the Company's common stock, at a conversion price of $ 0.23902 per share.

On May 14, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $78 into 109,923 shares of the Company's common stock, at a conversion price of $ 0.22814 per share.

On May 22, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $58 into 134,308 shares of the Company's common stock, at a conversion price of $0.186575 per share.

On May 30, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $44 into 135,717 shares of the Company's common stock, at a conversion price of $ 0.184535 per share.

On June 4, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $11 into 150,897 shares of the Company's common stock, at a conversion price of $ 0.16575 per share

On June 12, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $100,000 plus interest of $3,756 of the note into 596,315 shares of the Company's common stock, at a conversion price of $ $ 0.173995 per share.

On June 16, 2014, $63,000 of principal under the Asher Note issued on December 10, 2013 and accrual interest of $2,520 were converted into 577,267 shares of the Company’s common stock, at a conversion price of $0.1135 per share.

On June 18, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $50,000 plus interest of $150 of the note into 244,409 shares of the Company's common stock, at a conversion price of $ $ 0.20519 per share.

On June 25, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $50,000 plus interest of $136 of the note into 239,577 shares of the Company's common stock, at a conversion price of $ $ 0.20927 per share.

On June 27, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $36,392 plus interest of $28 of the note into 174,034 shares of the Company's common stock, at a conversion price of $ $ 0.20927 per share.

F-18

Valuation Methodology

The Company analyzed the conversion feature with the reset provisions within the Convertible Note and has utilized a third party valuation consultant to assist the Company to fair value the compound embedded derivatives using a multinomial lattice models that values the derivative liabilities within the convertible notes based on a probability weighted discount cash flow model.

Valuation Assumptions – Initial valuation, Conversion and Change in Fair Value of Derivative Liability Related to Convertible Notes

The following assumptions were used for the valuation of the derivative liability related to issuance date, conversions, and the quarterly period ending June 30, 2014:

● The underlying stock price was used as the fair value of the common stock;

● An event of default would occur 5% of the time, increasing 1.00% per month to a maximum of 10% – to-date the 1 note is not in default and has not been converted by the holder nor redeemed by the Company;

● Capital raising events of $1,000,000 would occur in each quarter at 75% of market generating dilutive reset events at prices below the current exercise price or stock price;

● The projected annual volatility for each valuation period was based on the historical volatility of the Company which has been actively trading for the last 3 years:

1 Year

2/27/14 101%

3/3/14 101%

3/5/14 101%

3/14/14 102%

3/24/14 102%

3/26/14 102%

3/31/14 102%

4/7/14 82%

4/8/14 82%

4/16/14 83%

5/7/14 83%

5/14/14 83%

5/22/14 85%

5/30/14 84%

6/4/14 84%

6/12/14 84%

6/18/14 98%

6/25/14 102%

6/27/14 102%

6/30/14 102%

● The Holder would redeem through maturity based on availability of alternative financing, 10% of the time increasing 1.0% monthly to a maximum of 20%; and;

● The Holder would automatically convert the note at maturity if the registration was effective and the company was not in default.

As of June 30, 2014, the estimated fair value of derivative liabilities on convertible notes was $19,559.

The following table summarizes the change of fair value of the derivative debt liabilities:

Balance at December 31, 2012	$	-
To record derivative liability as debt discount		60,795
Change in fair value of derivative liability		634
Balance at December 31, 2013	$	61,429
To record derivative liability as debt discount		1,950,820
Change in fair value of derivative liability		108,975
Settlement of derivative liability due to conversion of related notes	$	(2,101,665	)
Balance at June 30, 2014		19,559

F-19

Note 12 – Commitments and Contingencies

Litigation

The Company and its directors are a party to a lawsuit filed on March 29, 2013 by Albert Perron, derivatively on behalf of the Company, in the District Court for Clark County, Nevada (Case No. A- I 3-679151-C), which seeks a declaratory judgment, rescission, unspecified damages, equitable and injunctive relief, and attorney's fees. The Plaintiffs complaint alleges that the directors breached their fiduciary duties to the Company by exceeding their authority under the Company's Amended and Restated 2009 Stock Incentive Plan (the "Plan"), as further amended, by issuing shares to Mr. Kexuan Yao ("Mr. Yao") that exceeded the amount allowed under the Plan. The director defendants William Thomson ("Mr. Thomson") and Mr. Yao have tiled an answer to this lawsuit in which they have denied the claims being made. The Court's previous entry of default against Jinping (K.P.) Chan, Tao Pang and Weiping Shen (collectively, the "Remaining Defendants") has been lifted and their responses to Plaintiff's complaint are due August 20, 2014. Pretrial discovery has been completed, including taking the depositions of Mr. Thomson (Director and Audit Committee Chair) and Christina Xiong (Corporate and Board Secretary). The Company's position is that the shares at issue in this matter were granted to Mr. Yao in accordance with the Plan. The director defendants Mr. Thomson and Mr. Yao moved for summary judgment ("Motion for Summary Judgment") on the Plaintiff's meritless claims on July 18, 2014. The Remaining Defendants intend to join the Motion for Summary Judgment. A briefing schedule was entered by the Court on August 6, 2014, ordering Plaintiff to file a response to the Motion for Summary Judgment on or before August 22, 2014. A hearing on the Motion for Summary Judgment is currently scheduled for September 18, 2014. 

Uncommitted Trade Credit Facilities

The Company entered into uncommitted trade credit facilities with certain financial institutions. Substantially all of the uncommitted trade credit facilities were guaranteed by Mr. Yao.

The uncommitted trade credit facilities at June 30, 2014 were as follows:

Date of Expiration		Total Facilities			Facilities Used		Facilities Available
Armco HK
DBS (Hong Kong) Limited (i)	October 21, 2014		20,000,000			1,053,500		18,946,500
RZB (Beijing) Branch (ii)	March 24, 2015		15,000,000			-		15,000,000
Sub-total - Armco HK			35,000,000			1,053,500		33,946,500
Henan Armco
Bank of China (iii)	May 23, 2015		4,872,978			-		4,872,978
ICBC (iv)	September 09, 2014		3,248,652			-		3,248,652
Guangdong Development Bank Zhengzhou Branch (v)	May 6, 2015		15,593,529			-		15,593,529
Sub-total – Henan Armco			23,715,159			-		23,715,159
Renewable Metals
Bank of China Lianyungang Branch (vi)	December 27, 2015		8,121,630			8,121,630		-
Shanghai Pudong Development Bank (vii)	August 25, 2014		2,436,489			2,436,489		-
Bank of Communications Lianyungang Branch (viii)	October 6, 2014		11,695,147			-		11,695,147
Sub-total – Renewable Metals			22,253,266			10,558,119		11,695,148
		$	80,968,425		$	11,611,619	$	69,356,807
				%

F-20

(i) On December 21, 2011, Armco HK entered into a Banking Facilities Agreement with DBS Bank (Hong Kong) Limited of $20,000,000 for issuance of commercial letters of credit in connection with the Company’s purchase of metal ore.  The Company pays interest at LIBOR or DBS Bank’s cost of funds plus 2.50% per annum on issued letters of credit in addition to an export bill collection commission equal to 12.5% of the first $50,000 and 6.25% of the balance and an opening commission of 25% on the first $50,000 and 6.25% of the balance for each issuance.  Amounts advanced under this facility are repaid from the proceeds of the sale of metal ore.  The lender may terminate the facility at anytime at its sole discretion. The facility is secured by the charge on cash deposit of the borrower, the borrower’s restricted pledged deposit in the minimum amount of 3% of the letter of credit amount, the Company’s letter of comfort and the guarantee of Mr. Yao.

(ii) On March 25, 2014, Armco HK entered into Amendment No. 5 to the March 25, 2009 uncommitted Trade Finance Facility with RZB Austria Finance (Hong Kong) Limited. The amendment provides for the issuance of $15,000,000 of commercial letters of credit in connection with the purchase of metal ore, an increase of $5,000,000 over the amounts provided for in the March 25, 2010 facility. The Company pays interest at 200 basis points per annum plus the lender’s cost of funds per annum on issued letters of credit in addition to fees upon issuance of the letter of credit of 6.25% for issuance commissions, negotiation commissions, commission-in-lieu and collection commissions.  Amounts advanced under this facility are repaid from the proceeds of the sale of metal ore.  The lender may, however, terminate the facility at any time or at its sole discretion upon the occurrence of any event which causes a material market disruption in respect of unusual movement in the level of funding costs to the lender or the unusual loss of liquidity in the funding market. The lender has the sole discretion to decide whether or not such event has occurred.  The facility is secured by restricted cash deposits held by the lender, the personal guarantee of Mr. Yao, the Company’s guarantee, and a security interest in the contract for the purchase of the ore for which the letter of credit has been issued and the contract for the sale of the ore.

(iii) On June 8, 2013, Henan Armco obtained a RMB 30,000,000 (approximately $4.8 million) line of credit from Bank of China for issuance of letters of credit to finance the purchase of metal ore and scrap metal expiring May 23, 2014. The facility is secured by the guarantee provided by Renewable Metals and the pledge of movable assets provided by the borrower. Amounts advanced under this line of credit are repaid from the proceeds of the sale of metal ore.

(iv) On September 10, 2013, Henan Armco obtained a RMB 20,000,000 (approximately $3.2 million) line of credit from ICBC, for issuance of letters of credit to finance the purchase of metal ore and scrap metal expiring one (1) year from the date of issuance. The facility is guaranteed by Renewable Metals and Mr. Yao, the Company’s Chairman and Chief Executive Officer.

(v) On May 16, 2014, Henan Armco obtained a RMB 96,000,000 (approximately $15.6 million) line of credit from Guangdong Development Bank Zhengzhou Branch for issuance of letters of credit to finance the purchase of metal ore.  The Company pays interest at 120% of the applicable base rate for lending published by the People’s Bank of China (“PBC”) at the time the loan is made on issued letters of credit.  The facility is secured by the guarantee provided by Mr. Yao and Renewable Metals jointly and the pledge of movable assets provided by the borrower. Amounts advanced under this line of credit are repaid from the proceeds of the sale of metal ore.

(vi) On March 15, 2013, Renewable Metals entered into a line of credit facility in the amount of RMB50,000,000 (approximately $8.1 million) from Bank of China, Lianyungang Branch for the purchase of raw materials. The facility is expiring December 27, 2015 with interest at 7.872% per annum. The facility is secured by Renewable metals properties, machinery and equipment and land use rights, and guaranteed by Mr. Yao, Ms. Yi Chu, and Henan Armco, respectively.

(vii) On July 24, 2012, Renewable Metals entered into a line of credit facility in the amount of RMB 15,000,000 (approximately $2.4 million) from Shanghai Pudong Development Bank for the purchase of raw materials. The term of the facility is 12 months with interest at 120% of the applicable base rate for lending published by the People’s Bank of China (“PBOC”) at the time the loan is drawn down per annum. The facility is secured by Armco machinery’s land use right and guarantees provided Mr. Yao, Ms. Yi Chu.

(viii) On July 1, 2011, Renewable Metals obtained a RMB 72,000,000 (approximately $11.7 million) line of credit from Bank of Communications, Lianyungang Branch expiring two (2) years from the date of issuance, for issuance of letters of credit in connection with the purchase of scrap metal. The letters of credit require Renewable Metals to pledge cash deposit equal to 20% of the letter of credit for letters of credit at sight, or 30% for other domestic letters of credit and for extended domestic letters of credit, the collateral of inventory equal to 166% of the letter of credit. The facility is secured by Renewable Metals inventories and guarantee provided by Mr. Yao, the Company’s Chairman and Chief Executive Officer.

F-21

Employment with the Chairman and CEO

On February 8, 2012, the Company and Mr. Yao, entered into an Employment Agreement (the “Employment Agreement”), to employ Mr. Yao as the Company’s Chairman of the Board of Directors, President, and Chief Executive Officer. The initial term of employment under the agreement is from January 1, 2012 (the “Effective Date”) until December 31, 2014, unless sooner terminated in accordance with the terms of the Employment Agreement. Pursuant to the Employment Agreement, Mr. Yao is entitled to, among others, the following compensation and benefits:

a. Base Salary.  The Company shall pay the Executive a salary at a minimum rate of (i) $250,000 per annum for the period beginning on the Effective Date through December 31, 2012; (ii) $275,000 per annum for the period beginning on January 1, 2013 through December 31, 2013; and (iii) $300,000 per annum for the period beginning on January 1, 2014 through December 31, 2014 (the “Base Salary”).  Base Salary shall be payable in accordance with the customary payroll practices of the Company applicable to senior executives.

b. Bonus.  Each year during the Term, in addition to Base Salary, the Executive shall be entitled to an annual cash bonus in an amount equal to 50% of the Executive’s Base Salary for such year. Any such bonus shall be payable no later 2 and half months following the year with respect to which the Base Salary is payable.

c. Restricted Shares.  On the Effective Date, Executive shall receive 1,500,000 shares of the Company’s common stock (“Restricted Shares”) subject to the terms and conditions of the Amended and Restated China Armco Metals, Inc. 2009 Stock Incentive Plan (the "Incentive Plan"). The Restricted Shares shall vest according to Vesting Schedule attached the Employment Agreement as Exhibit A; provided, however, if the Executive is terminated pursuant to Section 5 of this Agreement, the Executive shall forfeit all the unvested Restricted Shares as of such termination.

d. Equity Incentive Compensation.  The Executive shall be entitled to participate in any equity compensation plan of the Company in which he is eligible to participate, and may, without limitation, be granted in accordance with any such plan options to purchase shares of Company’s common stock, shares of restricted stock and other equity awards in the discretion of the Board or the Committee. Any equity incentive compensation shall be payable no later than 2 and halfmonths of the following tax year in which such compensation is granted

e. Eligibility to participate in the Company’s benefit plans that are generally provided for executive employees.

Operating Leases

(i)     Operating Lease - Office Space

On July 16, 2012, Armco Shanghai entered into a non-cancelable operating lease for office space that will expire on July 31, 2014. The lease agreement has been renewed on July 1, 2014 and will expire on July 31, 2016. The annual lease payment is RMB 674,933 (approximately $109,631).

On December 17, 2010, Armco Metals Holdings entered into a non-cancelable operating lease for office space that expired on December 31, 2013. The monthly rental payment is $4,004 in 2013. After the contract expired, the Company continued the lease with the same landlord on a month by month basis.

F-22

(ii)     Operating Lease of Property, Plant and Equipment and Facilities

Initial Lease Signed on June 24, 2010

On June 24, 2011, Renewable Metals entered into a non-cancelable operating lease agreement with an independent third party for property, plant, equipment and facilities expiring one (1) year from date of signing. Renewable Metals is required to pay RMB 30 per metric ton of scrap metal processed at this facility over the term of the lease, which were accrued and included in the inventory of finished goods – processed scrap metal and transferred to cost of goods sold upon shipment of processed scrap metal.

First Renewal on April 13, 2012

On April 13, 2012, Renewable Metals renewed the aforementioned non-cancelable operating lease agreement for property, plant, equipment and facilities for an additional two-year term commencing on June 25, 2012, in consideration for (i) the issuance of one (1) million shares of the Company’s common stock and (ii) the payment of RMB1,000,000 (approximately $159,000) in cash. Pursuant to the lease agreement, the Company issued one million shares to the third party on April 13, 2012.  The cash amount is to be paid during the second year of the lease term.

On March 31, 2013, Renewable Metals terminated this operating lease agreement. Under the terms and conditions of the Termination Agreement, Hebang agreed to forgive the cash amount to be paid under the amended Leasing Agreement and Renewable Metals agreed to let Hebang keep the 1 million shares. Also see Note 13.

Note 13 – Stockholders’ Equity

Issuance of Common Stock to Parties Other Than Employees for Acquiring Goods or Services

Loan Guarantee - Henan Chaoyang Steel Co., Ltd.

On June 11, 2010 the Company entered into a Guaranty Cooperation Agreement with Henan Chaoyang Steel Co., Ltd. (“Henan Chaoyang”) to provide additional liquidity to meet anticipated working capital requirements of Renewable Metals’ scrap metal recycling facility. Under the terms of the guaranty, Henan Chaoyang agreed to provide loan guarantees to Renewable Metals’ existing and pending bank lines of credit of up to 300 million RMB in the aggregate (approximately $45,400,000) for five (5) years expiring June 30, 2015. As consideration for the guaranty, the Company issued a designee of Henan Chaoyang 500,000 shares of its common stock. These shares are earned ratably over the term of the agreement and the unearned shares are forfeitable in the event of nonperformance by the guarantor.

Shares Earned during the Year Ending December 31, 2014

33,338 common shares earned for the quarter ended March 31, 2014 were valued at $0.39 per share, which was the market price on quarter end date, or $13,002, which was recorded as loan guarantee expense.

Consulting Services Agreement – CD International Enterprise Inc

On November 8, 2013, the Company entered into a Consulting Services Agreement (“Consulting Agreement”) with CD International Enterprise Inc (“CDI”), a US company. Pursuant to the Consulting Agreement, CDI agreed to provide consulting services from November 1, 2013 to October 31, 2014 in exchange for 1,000,000 shares of common stock of the Company. These shares are earned ratably over the term of the agreement and the unearned shares are forfeitable in the event of nonperformance by the CDI.

Shares Earned during the Year Ending December 31, 2014

250,000 common shares earned for the quarter ended March 31, 2014 were valued at $0.39 per share, which was the market price on quarter end date, or $97,500, which was recorded as consulting expenses.

250,000 common shares earned for the quarter ended June 30, 2014 were valued at $0.27 per share, which was the market price on quarter end date, or $67,500, which was recorded as consulting expenses.

Legal Services Agreement – All Bright Law Offices

On April 7, 2014, the Company entered into a Legal Services Agreement (“Legal Agreement”) with All Bright Law Office Pursuant to the Legal Agreement, All Bright agreed to provide Chinese-law related legal counsel services from April 1, 2013 to March 31, 2015 in exchange for 500,000 shares of common stock of the Company. These shares are earned ratably over the term of the agreement and the unearned shares are forfeitable in the event of nonperformance by the All Bright.

F-23

Shares Earned during the Year Ending December 31, 2014

125,000 common shares earned for the quarter ended June 30, 2014 were valued at $0.27 per share, which was the market price on quarter end date, or $33,750, which was recorded as legal expenses.

Issuance of Common Stock under the 2009 Stock Incentive Plan as Amended

On February 8, 2012, the Company awarded 1,500,000 shares of its restricted common stock, par value $.001 per share, pursuant to the Amended and Restated 2009 Stock Incentive Plan, to Mr. Kexuan Yao, the Company’s Chief Executive Officer. The term of employment under the agreement is from January 1, 2012 (the “Effective Date”) until December 31, 2014, unless sooner terminated in accordance with the terms of the Employment Agreement. These shares were valued at $0.499 per share or $748,500 on the date of grant and are amortized over the vesting period, or $62,375 per quarter. During the six months ended June 30, 2014, a total of $124,750 stock-base compensation expense was recognized.

On May 3, 2013, the Company agreed to pay Director Mr. Weiping Shen 50,000 shares of the Company’s restricted common stock in conjunction with his re-appointment to the Company's board of directors vesting 50% on September 30, 2013 and 50% on May 3, 2014.  The restricted stock vests only if Mr. Shen is still a director of the Company on the vesting date (with limited exceptions), and the shares are eligible for the payment of dividends, if the Board of Directors was to declare dividends on the Company’s common stock. These shares were valued at $0.389 per share or $19,450 on the date of grant and are being amortized over the vesting period, or $4,863 per quarter. During the six months ended June 30, 2014, a total of $6,484 stock-base compensation expense was recognized.

On January 2, 2014, the Company agreed to pay Director Mr. Kam Ping Chan 6,250 shares of the Company’s restricted common stock in conjunction with his re-appointment to the Company's board of directors vesting 50% on June 30, 2014 and 50% on December 31, 2014, effectively January 1, 2014.  The restricted stock vests only if Mr. Chan is still a director of the Company on the vesting date (with limited exceptions), and the shares are eligible for the payment of dividends, if the Board of Directors was to declare dividends on the Company’s common stock. These shares were valued at $0.323 per share or $2,019 on the date of grant and are being amortized over the vesting period, or $505 per quarter in 2014. During the six months ended June 30, 2014, a total of $1,010 stock-base compensation expense was recognized.

On April 9, 2014, the Company granted 2,329,958 shares of its common stock to certain of its employees for the first quarter of their 2014 service of approximately $838,785, in lieu of cash, which were recorded as compensation expense for the quarter ended March 31, 2014.

Summary of the Company’s Amended and Restated 2009 Stock Incentive Plan Activities

The table below summarizes the Company’s Amended and Restated 2009 Stock Incentive Plan activities:

	Number of Shares or Options			Fair Value at Date of Grant
Balance, December 31, 2012		4,198,881		$	2,614,951
Options – granted		-			-
Options – canceled		-			-
Shares – granted		1,419,532			662,256
Shares – canceled		(-	)		(-	)
Balance, December 31, 2013		5,618,413		$	3,277,207
Vested, December 31, 2013		5,101,746			3,023,732
Unvested, December 31, 2013		516,667		$	253,475
Options – granted		-			-
Options – canceled		-			-
Shares – granted		2,336,208			840,804
Shares – canceled		(-	)		(-	)
Balance, March 31, 2014		7,954,621		$	4,118,011
Vested, June 30, 2014		7,576,496			3,929,876
Unvested, June 30, 2014		378,125		$	188,135

F-24

As of June 30, 2014, there were 245,379 shares of common stock remaining available for issuance under the Amended and Restated 2009 Stock Incentive Plan.

During the six months ended June 30, 2014, the Company issued 60,000 adjustment shares to four investors pursuant to the anti-dilution provision of the Company’s 2008 Offering Subscription Agreement, which was triggered by the Company’s 2013 offering. Per the anti-dilution provision, the investors are entitled to an adjustment to the Purchase Price for such shares that they purchased in the 2008 Offering and have held the purchase from 2008 offering to January 28, 2013(2013 Offering date). The Company debit additional paid in capital and credit to common stock of $60 to reflect this transactions.

Issuance of common stock for debt conversion

During the six months ended June 30, 2014, the Company issued a total of 22,002,564 shares for conversion of debt and accrued interest of $6,551,712. See details in Note 11.

Note 14 – Income Taxes

Armco Metals Holdings is a non-operating holding company. Armco HK, the Company’s Hong Kong Subsidiary is subject to Hong Kong SAR income taxes. Henan Armco, Renewable Metals, Lianyungang Armco and Armco Shanghai, the Company’s PRC subsidiaries are subject to PRC income taxes, file income tax returns under the Income Tax Law of the People’s Republic of China concerning Foreign Investment Enterprises and Foreign Enterprises and local income tax laws (the ‘PRC Income Tax Law”) accordingly. Henan Armco, Renewable Metals, Lianyungang Armco and Armco Shanghai derive substantially all of their income (loss) before income taxed and related tax expenses from PRC sources.

United States Income Tax

Armco Metals Holdings is incorporated in the State of Nevada and is subjected to United Sates of America tax law.

Hong Kong SAR Income Tax

Armco HK is registered and operates in the Hong Kong Special Administrative Region (“HK SAR”) of the People’s Republic of

China (“PRC”) and is subject to HK SAR tax law. Armco HK’s statutory income tax rate is 16.5%.

PRC Income Tax

Henan Armco, Renewable Metals, Lianyungang Armco and Armco Shanghai are governed by and file separate income tax returns under the PRC Income Tax Law, which, until January 2008, generally subject to tax at a statutory rate of 33% (30% state income tax plus 3% local income tax) on income reported in the statutory financial statements after appropriate tax adjustments. On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”), effective January 1, 2008. Under the New CIT Law, the corporate income tax rate applicable to all Companies, including both domestic and foreign-invested companies, will be 25%. However, tax concession granted to eligible companies prior to March 16, 2007 will be grand fathered in.

The effective tax rate is 0% and -77% for the six months ended June 30, 2014 and June 30, 2013, respectively.

Note 15 – Concentrations and Credit Risk

Credit Risk Arising from Financial Instruments

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents.

As of June 30, 2014 and December 31, 2013, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in the PRC, none of which are insured. However, the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts.

F-25

Customers and Credit Concentrations

Customer concentrations and credit concentrations are as follows:

	Net Sales for the Six Months Ended						Accounts Receivable at
	June 30, 2014			June 30, 2013			June 30, 2014			December 31, 2013
Customer A		-	%		-	%		-	%		33.8	%
Customer B		15.5	%		35.6	%		-	%		25.1	%
Customer C		-	%		-	%		29.8	%		18.3	%
Customer D		54.0	%		-	%		32.6	%		-	%
Customer E		-	%		-	%		14.0	%		-	%
Customer F	%				13.8	%		-	%		-	%
		69.5	%		49.4	%		76.4	%		77.2	%

A reduction in sales from or loss of such customers would have a material adverse effect on the Company’s results of operations and financial condition.

Vendor Concentrations

Vendor purchase concentrations and accounts payable concentration as follows:

	Net Purchases for the Six Months Ended						Accounts Payable at
	June 30, 2014			June 30, 2013			June 30, 2014			December 31, 2013
Vendor A		79.2	%		75.3	%		-	%		86.0	%
Vendor B		13.0	%		-	%		-	%		-	%
Vendor C		-	%		-	%		60	%		-	%
Vendor D		-	%		-	%		13	%		-	%
		92.2	%		75.3	%		73.0	%		86.0	%

Note 16 – Subsequent Events

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued.  The Management of the Company determined that there were  certain reportable subsequent events to be disclosed as follows.

On July 11, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $23,608 plus interest of $108 of the note into 133,957 shares of the Company's common stock, at a conversion price of $  0.17704 per share.

On July 25, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $10,000 plus interest of $101of the note into 56,321 shares of the Company's common stock, at a conversion price of $  0.17935 per share.

On August 11, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 plus interest of $104 of the note into 170,030 shares of the Company's common stock, at a conversion price of $ 0.147645 per share.

F-26

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our consolidated financial condition and results of operations for the three and six months ended June 30, 2014 and 2013 should be read in conjunction with the consolidated financial statements, including footnotes, and other information presented elsewhere in this report.

OVERVIEW OF OUR PERFORMANCE AND OPERATIONS

Our Business and Recent Developments

              We import, sell and distribute to the metal refinery industry in China a variety of metal ore, including iron, chrome, nickel, titanium, copper and manganese ore, as well as non-ferrous metals and coal. We obtain these raw materials from global suppliers in Brazil, India, Oman, Turkey, Nigeria, Indonesia, and the Philippines and distribute them in the PRC. We also recycle scrap metal used by steel mills in the production of recycled steel.

              China's economy grew at an annual rate of 7.5 percent in the second quarter, up slightly from 7.4 percent in the first three months of the year, responding to a modest stimulus package that included tax cuts for small firms, reserve requirement cuts for some banks and infrastructure spending. According to the China Iron and Steel Association (CISA), new housing construction helped drive an improvement in steel demand and inventory levels declined during the quarter, but prices still remained near 11-year lows as steel production remains at a high level and oversupply problem was not alleviated in the steel market. Iron ore prices was sliding again in the second quarter, hitting a near 2-year low of $89 a tonne. Iron ore has slowly clawed back some of losses, but remains in danger of trading below $100 on a quarterly basis for the first time since 2009. Falls in the prices of iron ore and coal helped Chinese steelmakers to gain better profits for the first half even though the domestic industry still faces a serious overcapacity problem. Meanwhile, on the other side, the weak iron ore has substantially adversely affected the demand and price of scrap steel due to the substitute for each other and micro-thin profit margins for steel makers, which steel mills use more iron ore and less scrap steel to gain cost advantage. Ferrous scrap imports into China during the first half plunged by 49% year-on-year as China steel makers slashed its purchases of the steelmaking raw materials in favor of cheaper iron ore. Under the pressure from the declining price of iron ore, scrap steel demand and price remained sluggish in the second quarter. Other metal ores, such as manganese ore and chrome ore, were also facing weak demand but relative stable in price compared to iron ore. In respond to the market change, we adjusted and improved our product in selection and process. In the trading business, we decreased our sales in metal ores and increased the sales in the billet with higher profit margin. In the recycling business, we improved our recycling process by separating and producing more high value non-ferrous scrap products from scrap materials. Mainly attributable to these efforts, our revenue and gross profit for the first half of 2014 increased 19% and 30%, respectively, compared to same period of last year.

                We have been taking the initiative in the changing market to maintain our operation flexibility in our trading business and to refine our business model in response to unpredictable fluctuations in market prices.  We seek to secure longer term supply contracts in response to known opportunities rather than sell goods purchased in the spot market.  Where possible, we structure transaction-specific terms with our customers in order to better manage risk and ensure an acceptable profit margin.  While this process may limit certain trading opportunities, we believe that it will enhance our competitive position in the long run. We have developed pre-selling model to supplement our cash flow. We continued to develop our “Commodity Financing” model, first introduced in the third quarter of 2012, that enables us to provide financing service for our clients and liquidate the ore inventories stockpiled at the ports. We are also evaluating other potential methods such as hedging that can help us to manage market risks.

              We formally commenced the operation of our scrap metal recycling facility in the Banqiao Industrial Zone of Lianyungang Economic Development Zone in the Jiangsu province of China (the “Recycling Facility”) late in the third quarter of 2010. The Recycling Facility recycles automobiles, machinery, building materials, dismantled ships and various other scrap metals.  We sell and distribute the recycled scrap metal to the metal refinery industry in China utilizing our existing network of metal ore customers while continuing to seek new customers. During the second quarter of 2014, our net revenue in the scrap metal recycling business increased significantly by 39% to $26.1million from $18.8 million in the second quarter of 2013.  Our production decreased to 33,458 metric tons (“MT”) from 52,749 MT in the second quarter of 2013.   For the second quarter of 2014, our scrap metal business sold approximately 46,452 MT of scrap metals, generating approximately $ 26.2 million of revenue and $2.4 million of gross profit; for the first half of 2014, our scrap metal business sold approximately 54,501 MT of scrap metals, generating approximately $28.8 million of revenue and $1.0 million of gross profit.

We continue to believe that our recycling business will become a strong driver in our Company’s growth as natural resources continue to be depleted and larger amounts of unprocessed scrap metal become available as a result of increases in consumer demand. We also believe that the profit margin of our recycling business will gradually stabilize as we gain more experience in operating our recycling facility , marketing our products, and establishing our reputation and presence in the recycled scrap metal industry. We have conducted a series of tests and analysis to improve our cost control and eventually implement precise management at our recycling facility. We have also developed strategies to expand our sources for raw materials and establish a local supply chain to increase and stabilize the availability of raw materials near our recycling operation. In addition, as an effort to improve our operation and profitability of the recycling business, we strived to obtain a series of qualifications from Chinese government. We expect to continue to expand our overseas supply channels through potential business cooperation with suppliers in Japan and the United States. We also continue to expand our customer base with our sales increase in recycling business. In addition, in 2013 we developed a new business model, “platform model”, in our recycling operation which our business partners and customers involved in the entire recycling process from participating in acquisition and preparation of raw materials to delivering of processed scrap products. Our profits, by nature, mainly generate from the process fees by taking advantage of our facility and equipment as a platform for recycling scrap metals. By this unique sales and operation model, we work with our customers more closely, lower our market risks by sharing them with our customers, increase our sales with less or without additional working capital, and improve the efficiency and utilization of our facility and equipment by reducing the operating cost of idle facility. We have signed long-term contract with Mitsui & Co. (Shanghai) Ltd. under this business model and we are working with several other customers and expect to get more similar contracts in 2014.

5

We utilize bank facilities and sales of our debt securities to finance our operations and expansions. We maintain nine bank facilities, which provide for the issuance of commercial lines of credit for letters of credit in the aggregate amount of $81 million, of which approximately $69 million is available to us at June 30, 2014. 

Pending Acquisition of Draco Resources, Inc.

We disclosed the pending transaction in our last quarterly report. As of the current reporting date,the company is evaluating a change in the structure of its acquisition of Draco Resources, Inc. in order to satisfy initial listing standards with NYSE MKT. The company continues to pursue a substantial interest in Draco. and expects that a restructured agreement will be formalized following management discussions. 

Our Performance

For the three months ended June 30, 2014, our net revenues increased approximately 19%, and for six months ended June 30, 2014, our net revenues increased approximately 2%, respectively, over the comparable periods in 2013. Our gross profit margin for the three and six months ended June 30, 2014 were 9.3% and 4.4%, respectively compared to 8.5% and 7.1% during the comparable prior year periods. The revenue increase for the second quarter of 2014 was mainly due to the significant increase in our metal recycling business sales. The margin increase for the second quarter of 2014 was primarily due to improved profit margin in our trading business. By business segment, our trading business gross profit margin increased for the six months ended June 30, 2014 to 6.5 % compared to 2% during the comparable prior year period; our recycling business gross profit margin decreased for the three and six months ended June 30, 2014 to 9.2% and 3.4%, respectively, compared to 10.1% and 9.7% during the same period of 2013. Our recycling business contributed 67% and 52% of net our revenue and gross profit, respectively, for six months ended June 30, 2014, and continued to be the major sources of our net revenue and gross profit.

6

As noted above, our recycling business saw a gross profit margin of 9.2% and 3.4% for the second quarter and first half of 2014, respectively, which represents a decrease from 10.1% and 9.7% of gross profit margin in this business for the same periods in 2013. We believe that the decrease in gross profit margin were primarily due to the adverse market change described above. While our trading business gross margin increased significantly to 6.5% for the first half of 2014 from 2% for the same period of last year mainly due to our improvement in product selection and development of new product in trading business.

We had a net loss of $0.76 million and net loss of $4.38 million for the three and six months ended June 30, 2014, respectively, compared to our net income of $0.95 million and net loss of $0.14 million over the comparable periods in 2013.  The net income and loss were further discussed under our “Results of Operations” section.

RESULTS OF OPERATIONS

The table below summarizes the consolidated operating results for the three and six months ended June 30, 2014 and 2013.

	For the Six Months Ended June 30,									For the Three Months Ended June 30,
	2014					2013				2014				2013
Net revenues	$	42,797,893				$	42,027,253			$	32,879,242			$	27,684,176
Cost of goods sold		40,898,856		95.56	%		38,549,274	91.72	%		29,816,401	90.68	%		24,850,862	89.77	%
Inventory Lower market or cost adjustment		0					481,925	1.1	%		0				481,925	1.7	%
Gross profit		1,899,037		4.4	%		2,996,054	7.1	%		3,062,841	9.3	%		2,351,389	8.5	%
Total operating expenses		3,541,267		8.3	%		2,944,981	7.0	%		1,252,860	3.8	%		1,249,343	4.5	%
Operating income (loss)		(1,642,230	)	-3.8	%		51,073	0.1	%		1,809,981	5.5	%		1,102,046	4.0	%

Net Revenues

                Net revenues for the three and six months ended June 30, 2014, were $32.9 million  and $42.8 million, respectively, representing an increase of $5.2 million and an increase of $0.8 million over the comparable periods in 2013.  The increase in net revenues for the second quarter is mainly due to a $8.3 million increase in sales of scrap metals and a $2.9 million increase in sales of billet, partially offset by a $2.4 million decrease in sales of manganese ore, a $1.3 million decrease in sales of chrome ore, and a $0.7 million decrease in sales of titanium . The increase in net revenues for the six month period ended June 30, 2014 is primarily due to a $4.1 million increase in sales of billet and a $1.0 million increase in sales of scrap metals, partially offset by a $2.2 million decrease in sales of manganese ore, a $1.4 million increase in sales of chromium ore, and a $0.7 million decrease in sales of titanium.  The type of products we buy and sell are subject to change and are dependent upon availability and the demands of our customers.

7

Cost of Goods Sold

                 Cost of goods sold for the three months ended June 30, 2014 was $29.8 million, representing an increase of $4.5 million and a gross profit margin of 9.3%, compared to $25.3 million and a gross profit margin of 8.5%, in the same period in 2013.  The profit margin increase in the quarter was primarily due to an increase in gross margin of our trading business compared to in the same period of last year as a result of improvement in product selection. Cost of goods sold for the six months ended June 30, 2014 was $40.9 million, representing an increase of $1.87 million, a gross profit margin of 4.4%, compared to $39 million and a gross profit margin of 7%, in the same period in 2013.  This profit margin decrease was primarily due to decrease in profit margin in sales of scrap metal compared to prior period as a result of adverse market change described above . The gross margin for our scrap metal recycling business decreased for the six month period to 3.4% compared to 9.7% for the same period of 2013.

Total Operating Expenses

                 Operating expenses for the three and six months ended June 30, 2014 were $1.3 million and $3.5 million, representing an increase of $0.004 million and an increase of $0.60 million, compared to the three and six months ended June 30, 2013, respectively.

                  For the three months ended June 30, 2014, the operating expenses remained approximately flat compared to the same period of last year.

                   For the six months ended June 30, 2014, the increase in operating expenses was primarily due to an increase in general and administrative expenses of $0.25 million, an increase in operating cost of idle manufacturing facility of $0.19 million resulting from decreased production, and an increase in selling expenses of $0.11 million.

Other (Income) expense

                  Total other expense for the three and six months ended June 30, 2014 were $2.6 million and $2.7 million, respectively. During the three and six months ended June 30, 2013, we had other expense of $0.08 million and $0.13 million, respectively.

                  For the three months ended June 30, 2014, interest expenses increased significantly to $2.0 million from $0.38 million compared to the comparative period in 2013 mainly due to the discounts associated with the conversion of convertible notes. During the second quarter, the change in fair value of derivative liability increased $0. 9 million compared to the same period of 2013. 

                  For the six months ended June 30, 2014, total other expenses increased $2.6 million, compared to the same period in 2013, mainly due to an increase in interest expense of $1.5 million as result of discount associated with conversion of convertible notes and an increase in change in fair value of derivative liability of $1.03 million.

Income tax expense

                  Income tax expenses for the three and six months ended June 30, 2014 was $0 for each period. In the comparative periods in 2013, income tax expense was $0.07 million and $0.06 million, respectively.  Our income tax expense was derived mainly from operational results at our Hong Kong subsidiary applying an effective tax rate of 16.5%.

Net Income (loss)

                  For the three and six months ended June 30, 2014, we had a net loss of $0.76 million and a net loss of $4.4 million, respectively, comparable to a net income totaling $0.95 million and a net loss of $0.14 million, respectively for the comparable 2013 periods. The increase in net loss were due to significant increase in interest expenses described above and decreased gross margin in our recycling business which our recycling business gross margin decreased to 9.2% and 3.4% from 10.1% and 9.7%, respectively, for three and six months comparable periods of 2013. For the six months ended June 30, 2014, the total other expense increased $2.6 million compared to same period of 2013, which also accounts for the increase in net loss.   

Comprehensive Income (Loss)

                 During the three and six months ended June 30, 2014, our comprehensive loss amounted to $0.72 million and $4.72 million, respectively, compared to comprehensive income of $1.68 million and $0.35 million in the comparative periods in 2013. Comprehensive income (loss) consists of our net income and other comprehensive income, including change in unrealized loss of marketable securities and foreign currency translation gain (loss).  The functional currency of four of our subsidiaries operating in the PRC is the Chinese Yuan or RMB. The financial statements of our subsidiaries are translated to U.S. dollars using the exchange rate prevailing as of the date of the balance sheet for assets and liabilities, and average exchange rates (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations.  As a result of these translations, we reported a foreign currency translation loss of $0.37 million for the first six months of 2014, comparable to a gain of $0.91 million for the same period in 2013. The non-cash loss had the effect of decreasing our reported comprehensive income in period of first half of 2014 while the non-cash gain had the effect of increasing our reported comprehensive income in same period of 2013. We had an unrealized income of marketable securities of $0.03 million for the first six months of 2014, comparable to an unrealized loss of marketable securities of $0.41 for the same period in 2013.

8

LIQUIDITY AND CAPITAL RESOURCES 

                  Liquidity is the ability of a company to generate adequate amounts of cash to meet its needs for cash.

                  Our cash balance at June 30, 2014 totaled $0.7 million, an increase of $0.1 million as compared to $0.6 million at December 31, 2013.  At June 30, 2014 our working capital was $7.7 million, as compared to $0.8 million at December 31, 2013. This increase in working capital is mainly as result of conversion of convertible notes to our stock during the first half of 2014.

                 Our current assets at June 30, 2014 were $40.4 million, a decrease of $13.4 million, or 25%, from December 31, 2013. This overall decrease reflects a decrease of $7.2 million in inventories, a decrease of $4.1 million in pledged deposits, a decrease of $2.3 million in accounts receivable, and a decrease of $0.4 million in prepayment and other current assets, partially offset by an increase of $0.5 million in advance on purchases, an increase of $0.11 million in cash, and an increase of $0.03 million in marketable securities.  

                 Inventories decreased $7.2 million at June 30, 2014 compared to December 31, 2013, primarily due to our sales of inventories and the decreased scrap metal production during the first half of 2014.

                Pledged deposits at June 30, 2014 of $0.51 million represent deposits with financial institutions as collateral to letters of credit and bank acceptable notes payable we provide to suppliers for the purchase of inventories.  The amounts will be released to pay vendors upon acceptance of goods.

                 Our accounts receivable decreased $2.3 million at June 30, 2014 from December 31, 2013 mainly due to the timing difference between the sales and collections of sales and our collections of scrap metals sales during the quarters.

                Our prepayments and other current assets decreased $0.4 million at June 30, 2014 compared to December 31, 2013 primarily due to the decreases in deposits related to our scrap metal recycling operations and prepayments and deposits for our metal ore trading business.

               Advance on purchases increased $0.5 million at June 30, 2014 compared to December 31, 2013, and consisted of prepayments to vendors for merchandise and deposits on pending purchases.  These advances on purchases are customary in our business and help us secure inventory below prevailing market prices, thereby providing us with a better opportunity to increase our gross profit margins.

                Marketable securities increased $0.03 million at June 30, 2014 compared to December 31, 2013 due to the temporary increase in the market value of our securities.

Cash increased $0.1 million at June 30, 2014 compared to December 31, 2013 reflecting more cash received from operation and financing activities.

                At June 30, 2014, our total current liabilities decreased $20 million, or 38%, from December 31, 2013, which reflected  mainly a decrease in loan payable of $7.77 million, a decrease in accounts payable of $7.36 million, a decrease in banker's acceptance notes payable and letter of credit of $6.71 million, and a decrease in due to related party of $0.15 million, partially offset by an increase in customer deposits of $1.23 million, an increase in value added tax and other taxes payable of $0.3 million, an increase in current maturities of capital lease obligation of $0.16 million, and an increase in advances received from Chairman and CEO of $0.12 million.

               Loans payable decreased $7.88 million at June 30, 2014, compared to December 31, 2013, primarily due to our repayment of short-term borrowing under our letter of credit facilities in the first two quarters of 2014. The short-term borrowing usually is used to finance the payment of our purchase and is paid when we collected the payment from our customer. We used collections of accounts receivable to repay these short-term borrowings.

9

                Accounts payable decreased $7.36 million at June 30, 2014 compared to December 31, 2013 mainly due to our payment made to previous purchases during the first half of 2014.

                Banker's acceptance notes payable and letters of credit decreased $6.7 million at June 30, 2014 compared to December 31, 2013 primarily due to a decrease in short-term borrowings used in raw material acquisitions.

               Customer deposits increased $1.23 million at June 30, 2014, compared to December 31, 2013.  This increase is due to timing of customer orders and amounts that we require for deposits and the orders we delivered against the customer deposits.  We recognize customer deposits as revenue when the goods have been delivered and the risk of loss has transferred to the customer either at the port of origin or port of destination based on the shipping terms we agree to with our customer.

               Value added tax and other taxes payable increased $0.3 million at June 30, 2014 from December 31, 2013 mainly due to the increased sales in the first half of 2014.

                Current maturities of capital lease obligation increased $0.16 million at June 30, 2014 compared to December 31, 2013 reflecting the increase of capital lease obligation due within one year.

               At June 30, 2014, we owed our Chairman and CEO, Mr. Kexuan Yao, $0.8 million for funds he advanced to us for working capital purposes, a net increase of $0.12 million from December 31, 2013 as result of new advances used for our operation during the second quarter.

              We do not have any commitments for capital expenditures at June 30, 2014. 

              As of June 30, 2014, we had invested a total of approximately $51.2 million for the acquisition of land use rights, construction and equipment purchases for the facilities we operate. We expect to expand the production capacity at the facilities in the future and to build or acquire additional facilities in the future, depending on market conditions.   We have not set a timeframe for this expansion.

              Moreover, we have not yet determined how we plan to finance this future expansion if we determine to proceed with it. Unless we can obtain additional financing on terms we deem favorable to us, we will be unable to complete any such expansion or construct additional facilities in the future, and there can be no assurance that we will be successful in obtaining any such additional financing, or that such financing would be on terms deemed to be desirable or favorable to our management.  Furthermore, in the event we do obtain such financing, there can be no assurance that such investment will result in enhanced operating performance or produce significant revenues and related profits in the future.

                In addition, we need to continue to fund future capital expenditures for our existing operations, to service our debt and to purchase the raw materials required in our recycling operations.  We have historically financed our cash needs primarily through the sales of our common stock and warrants, internally generated funds and debt financing.  We collect cash from our customers based on our sales to them and their respective payment terms.

We have bank facilities which provide for cash borrowings or the issuance of commercial letters of credit that we require in our metal ore trading business in the aggregate amount of $81 million.   Approximately $69 million was available under these facilities at June 30, 2014. We have approximately $24 million of debt which become due within the next 12 months. We expect to satisfy these obligations through our operation.

Substantially all of our cash reserves are held in the form of RMB in bank accounts at financial institutions located in the PRC.  Cash held in banks in the PRC is not insured.  The Chinese regulatory authorities impose a number of restrictions regarding RMB conversions and restrictions on foreign investments.  Accordingly, our cash on deposit in banks in the PRC is not readily deployable by us for purposes outside of China.

We have entered into a number of bank financing and debt arrangements which provide working capital, including:

10

On November 8, 2013, we consummated the transactions contemplated by the Purchase Agreement dated November 4, 2013 with Hanover Holdings I, LLC and issued a senior convertible note pursuant to the Purchase Agreement. The full disclosure is included in the Form 8K filed with SEC on November 13, 2013. On November 13, 2013, we issued 47,022 commitment shares to the investor as per the Purchase Agreement. On December 26, 2013, we filed a S-1 registration statement pursuant to the Purchase Agreement which was effective on February 14, 2014. We received total proceeds of $800,000 under the note in two tranches, $300,000 on November 8, 2013 and $500,000 on March 3, 2014. As of August 7, 2014, 3,421,879 shares were issued for conversion of $795,000 principal and $10,901interest under the convertible notes and the remaining principal balance of the note was $55,000 including $50,000 penalty due to delay on filing of registration statement.

Between May 2013 and September 2013 our subsidiary Henan Armco & Metawise Trading Co. Ltd. (“Henan Armco”) borrowed an aggregate of RMB 19,700,000 (approximately $3.26 million) from four lenders who are not our affiliates under the terms of loan contracts. These loans matured between May 2013 and December 2013. Our subsidiary used the funds for working capital. In January 2014 we and our subsidiary entered into note exchange agreements with each of these lenders pursuant to which we exchanged the loan contracts for 8% convertible notes in the aggregate amount of RMB 15,100,000 (approximately $2.5 million) which represented the remaining principal balance due under the loan contracts. We refer to these notes as the January 2014 Convertible Notes. The lenders waived any accrued but unpaid interest due prior to this exchange. The January 2014 Convertible Notes, which bear interest at the rate of 8% per annum, mature nine months from the date of issuance and, approved at the special shareholder meeting held on March 27, 2014, these notes are convertible at any time prior to maturity at the option of the holder into shares of our common stock at a conversion price of $0.317 per share. Interest is payable at maturity or conversion, and we have the right to prepay the notes at any time without penalty to us.

              In unrelated transactions, between November 2013 and December 2013 Henan Armco & Metawise Trading Co. Ltd. also borrowed an additional RMB18,827,240 (approximately US $3.1 million) from 11 non-U.S. lenders who are not our affiliates under the terms of loan contracts. These loans initially matured between August 2014 and September 2014. Our subsidiary used the funds for working capital. In February 2014 we and our subsidiary entered into note exchange agreements with each of these lenders pursuant to which we exchanged the loan contracts for 8% convertible notes in the aggregate amount of RMB18,827,240 (approximately US$3.1 million) which represented the remaining principal balance due under the loan contracts. We refer to these notes as the February 2014 Convertible Notes. The lenders waived any accrued but unpaid interest due prior to this exchange. The convertible notes, which bear interest at the rate of 8% per annum, mature nine months from the date of issuance and, approved at the special shareholder meeting held on March 27, 2014, these notes are also convertible at any time prior to maturity at the option of the holder into shares of our common stock at a conversion price of $0.317 per share. Interest is payable at maturity or conversion, and we have the right to prepay the notes at any time without penalty to us.

            On April 8, 2014 the holders of an aggregate of $5,554,467 principal amount of our convertible notes issued in January 2014 and February 2014 converted the principal and accrued unpaid interest due under those notes into an aggregate of 17,521,978 shares of our common stock.

            On October 22, 2013, our subsidiary Armco Metals International Limited (“Armco HK”) extended the Banking Facilities Agreement with DBS Bank (Hong Kong) Limited (originally entered on December 21, 2011) of $20,000,000 for issuance of commercial letters of credit in connection with the Company’s purchase of metal ore.  The Company pays interest at LIBOR or DBS Bank’s cost of funds plus 2.50% per annum on issued letters of credit in addition to an export bill collection commission equal to 12.5% of the first $50,000 and 6.25% of the balance and an opening commission of 25% on the first $50,000 and 6.25% of the balance for each issuance.  Amounts advanced under this facility are repaid from the proceeds of the sale of metal ore.  The lender may terminate the facility at anytime at its sole discretion. The facility is secured by the charge on cash deposit of the borrower, the borrower’s restricted pledged deposit in the minimum amount of 3% of the letter of credit amount, the Company’s letter of comfort and the guarantee of Mr. Kexuan Yao.  At June 30, 2014, the balance outstanding under this facility was $1,053,500. 

              On March 25, 2014, Armco HK extended the uncommitted Trade Finance Facility with RZB Austria Finance (Hong Kong) Limited (originally entered on March 25, 2009 and Amendment No. 3 was entered on November 13, 2013). The facility provides for the issuance of $15,000,000 of commercial letters of credit in connection with the purchase of metal ore. The Company pays interest at 200 basis points per annum plus the lender’s cost of funds per annum on issued letters of credit in addition to fees upon issuance of the letter of credit of 1/16% for issuance commissions, negotiation commissions, commission-in-lieu and collection commissions. Amounts advanced under this facility are repaid from the proceeds of the sale of metal ore. The lender may, however, terminate the facility at any time or at its sole discretion upon the occurrence of any event which causes a material market disruption in respect of unusual movement in the level of funding costs to the lender or the unusual loss of liquidity in the funding market. The lender has the sole discretion to decide whether or not such event has occurred. The facility is secured by restricted cash deposits held by the lender, the personal guarantee of Mr. Kexuan Yao, the Company’s guarantee, and a security interest in the contract for the purchase of the ore for which the letter of credit has been issued and the contract for the sale of the ore. At June 30, 2014, no balance was outstanding under this facility.  

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                On June 8, 2013, Henan Armco obtained a RMB 30,000,000 (approximately $4.8 million) line of credit from Bank of China for issuance of letters of credit to finance the purchase of metal ore and scrap metal expiring May 23, 2014. The facility is secured by the guarantee provided by our subsidiary, Armco HK formed Armco (Lianyungang) Renewable Metals, Inc. (“Renewable Metals”) and the pledge of movable assets provided by the borrower. Amounts advanced under this line of credit are repaid from the proceeds of the sale of metal ore. At June 30, 2014, no balance was outstanding under this facility. 

              On September 10, 2013, Henan Armco obtained a RMB 20,000,000 (approximately $3.2 million) line of credit from ICBC, for issuance of letters of credit to finance the purchase of metal ore and scrap metal expiring one (1) year from the date of issuance. The facility is guaranteed by Renewable Metals and Mr. Kexuan Yao, the Company’s Chairman and Chief Executive Officer. At June 30, 2014, no balance was outstanding under this facility. 

              On September 19, 2012, Henan Armco obtained a RMB 78,000,000 (approximately $12.7 million) line of credit from Guangdong Development Bank Zhengzhou Branch for issuance of letters of credit to finance the purchase of metal ore.  The Company pays interest at 120% of the applicable base rate for lending published by the PBC at the time the loan is made on issued letters of credit.  The facility is secured by the guarantee provided by Mr. Kexuan Yao and Renewable Metals jointly and the pledge of movable assets provided by the borrower. Amounts advanced under this line of credit are repaid from the proceeds of the sale of metal ore. The facility was renewed on May 7, 2014 with same term. At June 30, 2014, no balance was outstanding under this facility.

              On March 15, 2013, Renewable Metals entered into a line of credit facility in the amount of RMB50, 000,000 (approximately $8.1 million) from Bank of China, Lianyungang Branch for the purchase of raw materials. The facility is expiring December 27, 2015 with interest at 7.872% per annum. The facility is secured by Renewable Metals properties, machinery and equipment and land use rights, and guaranteed by Mr. Kexuan Yao, Ms. Yi Chu, and Henan Armco, respectively. At June 30, 2014, the balance outstanding under this facility was $8,121,630.

              On September 10, 2013, Renewable Metals extended (originally entered into on July 24, 2012) a line of credit facility in the amount of RMB 15,000,000 (approximately $2.4 million) from Shanghai Pudong Development Bank for the purchase of raw materials. The term of the facility is 12 months with interest at 120% of the applicable base rate for lending published by the PBOC at the time the loan is drawn down per annum. The facility is secured by Armco machinery’s land use right and guarantees provided Mr. Kexuan Yao, Ms. Yi Chu. At June 30, 2014, the balance outstanding under this facility was $2,436,489.  

              On July 1, 2011, Renewable Metals obtained a RMB 72,000,000 (approximately $11.7 million) line of credit from Bank of Communications, Lianyungang Branch expiring two (2) years from the date of issuance, for issuance of letters of credit in connection with the purchase of scrap metal. The letters of credit require Renewable Metals to pledge cash deposit equal to 20% of the letter of credit for letters of credit at sight, or 30% for other domestic letters of credit and for extended domestic letters of credit, the collateral of inventory equal to 166% of the letter of credit. The facility is secured by Renewable Metals inventories and guarantee provided by Mr. Kexuan Yao, the Company’s Chairman and Chief Executive Officer. At June 30, 2014, no balance was outstanding under this facility.  

Statement of Cash Flows

                  For the first six months of 2014, our net increase in cash totaled $0.11 million, and was comprised of $3.73 million provided by operating activities and $4.12 million provided by investing activities, offset by $7.97 million used in financing activities.

                  For the first six months of 2013, our net decrease in cash totaled $0.21 million, and was comprised of $2.08 million used in operating activities and $5.69 million used in investing activities, offset by $8.26 million provided by financing activities.

Cash flows from Operating Activities

                 For the first six months of 2014 cash provided by operations of $3.73 million was mainly comprised of an decrease in inventory of $7.62 million, a decrease in accounts receivable of $2.11 million, an increase in customer deposits of $1.24 million, a decrease in prepayments and other current assets of $0.40 million, and an increase in taxes payable of $0.315 million. These cash inflows were partially offset by a decrease in accounts payable of $7.27million and an increase in advance on purchases of $0.539 million.

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                For the first six months of 2013 cash used in operations of $2.08 million was mainly comprised of an increase in inventory of $7.69 million, a decrease in customer deposits of $1.32 million, a decrease in accrued expenses and other current liabilities of $1.25 million, a decrease in taxes payable of $1.29 million, an increase in bank acceptance notes receivable of 1.13 million, and an increase of prepayments and other current assets of $0.76 million. These cash outflows were partially offset by a decrease in accounts receivable of $6.64 million and an increase in accounts payable of $3.88 million.

Cash flows from Investing Activities

                  For the six months ended June 30, 2014 cash provided by investing activities of $4.12 million was due to proceeds received from the release of pledge deposits of $5.93 million, partially offset by payment made toward pledged deposits of $1.81 million.

                 For the six months ended June 30, 2013 cash used in investing activities of $5.69 million was due to payment made toward pledged deposits of $11.04 million and purchases of property and equipments of $0.17 million, partially offset by proceeds received from the release of pledge deposits of $5.52 million.

Cash used in Financing Activities

                 For the six months ended June 30, 2014 cash used in financing activities of $7.97 million was mainly due to repayment of loans payable of $12.97 million, payment to banker's acceptance notes payable of $6.66 million, and payment to advance from related party of $0.03 million, partially offset by the proceeds from loans payable of $11.53 million and proceeds from capital lease obligation of $0.162 million.

                 For the six months ended June 30, 2013 cash provided by financing activities of $8.26 million was mainly due to proceeds from loans payable of $20.91 million, banker's acceptance notes payable of $7.38 million, advances from chairman and CEO of $2.15 million, proceeds from sales of common stock of $1.62 million, and proceeds from related party loan of $1.02 million, partially offset by the repayment of loans payable of $24.50 million and repayment of mortgage payable of $0.32 million.

Off Balance Sheet Arrangements

                Under SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have:

- Any obligation under certain guarantee contracts;

- Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets;

- Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in stockholder’s equity in our statement of financial position; and

- Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us.

                We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with the generally accepted accounting principles in the United States.

13

Contractual Obligations and Commitments.

 At June 30, 2014, our long-term debt and financial obligations and commitments by due dates were as follows:

	PAYMENTS DUE BY PERIOD
Contractual obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Banker's acceptance notes payable and letters of credit	$	1,764,803	$	1,764,803	$	-	$	-	$	-
Short-Term Loans Payable		19,641,087		19,641,087		-		-		-
Capital Lease Obligations		1,060,710		1,060,710		-		-		-
Operating Lease Obligations		219,262		45,680		173,582		-		-
Purchase Obligations		-		-		-		-		-
Other Long-Term Liabilities Reflected on the Registrant's Balance Sheet under GAAP		-		-		-		-		-
Total	$	22,685,862	$	22,512,280	$	173,582	$	-	$	-

 Critical Accounting Policies

                   The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We believe the critical accounting policies in Note 1 to the consolidated financial statements appearing elsewhere in this report affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. Actual results may differ from these estimates under different assumptions and conditions.

Item 3.          Quantitative and Qualitative Disclosures About Market Risk.

Not applicable for a smaller reporting company.

Item 4.          Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluation as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of continuing weaknesses in our internal control over financial reporting.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013, based on management’s assessment of the effectiveness of our internal controls over financial reporting, management concluded that our internal controls over financial reporting were not effective as of December 31, 2013, due to insufficiently qualified accounting and other finance personnel with an appropriate level of U.S. GAAP knowledge and experience. Management believes that our lack of experience with U.S. GAAP constitutes a material weakness in our internal control over financial reporting. Until such time, if ever, that we remediate the material weakness in our internal control over financial reporting we expect that the material weaknesses in our disclosure controls and procedures will continue.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

14

PART II - OTHER INFORMATION

Item 1.          Legal Proceedings.

The Company and its directors are a party to a lawsuit filed on March 29, 2013 by Albert Perron, derivatively on behalf of the Company, in the District Court for Clark County, Nevada (Case No. A- I 3-679151-C), which seeks a declaratory judgment, rescission, unspecified damages, equitable and injunctive relief, and attorney's fees. The Plaintiffs complaint alleges that the directors breached their fiduciary duties to the Company by exceeding their authority under the Company's Amended and Restated 2009 Stock Incentive Plan (the "Plan"), as further amended, by issuing shares to Mr. Kexuan Yao ("Mr. Yao") that exceeded the amount allowed under the Plan. The director defendants William Thomson ("Mr. Thomson") and Mr. Yao have tiled an answer to this lawsuit in which they have denied the claims being made. The Court's previous entry of default against Jinping (K.P.) Chan, Tao Pang and Weiping Shen (collectively, the "Remaining Defendants") has been lifted and their responses to Plaintiff's complaint are due August 20, 2014. Pretrial discovery has been completed, including taking the depositions of Mr. Thomson (Director and Audit Committee Chair) and Christina Xiong (Corporate and Board Secretary). The Company's position is that the shares at issue in this matter were granted to Mr. Yao in accordance with the Plan. The director defendants Mr. Thomson and Mr. Yao moved for summary judgment ("Motion for Summary Judgment") on the Plaintiff's meritless claims on July 18, 2014. The Remaining Defendants intend to join the Motion for Summary Judgment. A briefing schedule was entered by the Court on August 6, 2014, ordering Plaintiff to file a response to the Motion for Summary Judgment on or before August 22, 2014. A hearing on the Motion for Summary Judgment is currently scheduled for September 18, 2014. 

Item 1A.       Risk Factors.

In addition to the new risk factor set forth below, the most significant risk factors applicable to the Company are described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2013. There have been no material changes to those risk factors.

There are no assurances we will close the pending acquisition of Draco Resources, which will result in a change of control of our company and require a reverse stock split of our common stock to effect. Even if we close the transaction, there are no assurances the acquisition will ultimately be successful.

There are a number of conditions precedent to the closing of the pending acquisition of Draco Resources, including the approval of our stockholders and the approval of the continued listing of our common stock on the NYSE MKT. There are no assurances our stockholders will approve the issuance of the shares in the acquisition consideration which is required under the NYSE MKT Company Guide. We expect to include a proposal for the approval of the issuance of the securities in the proxy statement for our 2014 annual meeting of stockholders to be held later this year.

In addition, because this transaction will result in a change of control of our company, the approval of NYSE MKT is required for the continued listing of our common stock which is also a condition precedent to closing. Given Draco Resources’ limited assets, lack of operating history and material dependence on a contract between its current parent company and a third party which expires in May 2015, there are no assurances that the exchange will approve the continued listing of our common stock. In that event, and assuming Draco Resources determines to waive the condition precedent to closing, our common stock would be quoted in the over the counter market which would adversely impact it liquidity. Even if the exchange should approve the continued listing, we will need to effective a 1:10 reverse stock split of our common stock prior to the closing which will adversely impact the holdings of our current stockholders.

Finally, even if we ultimately close the Draco Resources acquisition, there are no assurances that company will generate any significant revenues or that this proposed transaction will otherwise benefit our company. Investors are encouraged to carefully read the proxy statement for our 2014 annual meeting, including all of the risks associated with the acquisition and the proposed business and operations of Draco Resources, once the proxy statement has been filed with the Securities and Exchange Commission and mailed to our stockholders. Investors should not place undue reliance on this proposed transaction which making an investment decision concerning our company.

Item 2.          Unregistered Sales of Equity Securities and Use of Proceeds.

                   On September 23, 2013, the Company issued a convertible promissory note to Asher Enterprises, Inc. in the amounts of $153,500 with annual interest rate of 8%.  The note is convertible at 58% of the average 3 lowest closing bid prices for the last 10 trading days after 180 days following the Date of Issuance. On March 28, 2014, $80,000 of principal under the note was converted to 355,082 shares of the Company’s common stock. On April 8, 2014, $73,500 of principal under the note was converted to 363,635 shares of the Company’s common stock and the remaining principal balance under the note is zero. The recipient was an accredited investor and the issuances were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on exemptions under Section 3(a)(9) of that act.

                    On April 7, 2014, the Company entered into a Legal Services Agreement (“Legal Agreement”) with All Bright Law Office (“All Bright”), a PRC law firm located in Shanghai, China. Pursuant to the Legal Agreement, All Bright agreed to provide Chinese-law related legal counsel services from April 1, 2014 to March 31, 2015 in exchange for 500,000 shares of common stock of the Company. These shares are earned ratably over the term of the agreement and the unearned shares are forfeitable in the event of nonperformance by the All Bright. The recipient was an accredited investor and the issuances are exempt from registration under the Securities Act in reliance on an exemption under Section 4(a)(2) of that act.

15

Item 3.          Defaults Upon Senior Securities.

None. 

Item 4.          Mine Safety Disclosures.

Not applicable to our company’s operations.

Item 5.          Other Information.

The company is evaluating a change in the structure of its acquisition of Draco Resources, Inc. in order to satisfy initial listing standards with NYSE MKT. The company continues to pursue a substantial interest in Draco. and expects that a restructured agreement will be formalized following management discussions.

Item 6.          Exhibits.

No.	Description
31.1	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 and Chief Financial Officer*
101.INS	XBRL Instance Document **
101.SCH	XBRL Taxonomy Extension Schema **
101.CAL	XBRL Taxonomy Extension Calculation **
101.DEF	XBRL Taxonomy Extension Definition Linkbase **
101.LAB	XBRL Taxonomy Extension Label Linkbase **
101.PRE	XBRL Taxonomy Extension Presentation **

* filed herewith

** In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this report shall be deemed furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Armco Metals Holdings, Inc.
August 14, 2014	By: /s/ Kexuan Yao
	Kexuan Yao, Chief Executive Officer
	By: /s/ Fengtao Wen
	Fengtao Wen, Chief Financial Officer

16

EX-31

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Kexuan Yao, certify that:

1. I have reviewed this report on Form 10-Q for the period ended June 30, 2014 of Armco Metals Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated:  August 14, 2014			/s/ Kexuan Yao Kexuan Yao, Chief Executive Officer, principal executive officer

EX-31

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Fengtao Wen, certify that:

1. I have reviewed this report on Form 10-Q for the period ended June 30, 2014 of Armco Metals Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: August 14, 2014			/s/ Fengtao Wen Fengtao Wen, Chief Financial Officer, principal financial and accounting officer

EX-32

EXHIBIT 32.1

Section 1350 Certification

In connection with the Quarterly Report of Armco Metals Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2014 as filed with the Securities and Exchange Commission (the “Report”), I, Kexuan Yao, Chief Executive Officer, and Fengtao Wen, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.

Dated: August 14, 2014	/s/ Kexuan Yao Kexuan Yao, Chief Executive Officer, principal executive officer
	/s/ Fengtao Wen Fengtao Wen, Chief Financial Officer, principal financial and accounting officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Consolidation Information	6 Months Ended
	Jun. 30, 2014
Armco HK [Member]
Variable Interest Entity [Line Items]
Jurisdiction	Hong Kong SAR
Date of Incorporation	Jul. 13, 2001
Attributable Interest	100.00%
Henan Armco [Member]
Variable Interest Entity [Line Items]
Jurisdiction	PRC
Date of Incorporation	Jun. 06, 2002
Attributable Interest	100.00%
Renewable Metals [Member]
Variable Interest Entity [Line Items]
Jurisdiction	PRC
Date of Incorporation	Jan. 09, 2007
Attributable Interest	100.00%
Lianyungang Armco [Member]
Variable Interest Entity [Line Items]
Jurisdiction	PRC
Date of Incorporation	Jun. 04, 2009
Attributable Interest	100.00%
Armco Shanghai [Member]
Variable Interest Entity [Line Items]
Jurisdiction	PRC
Date of Incorporation	Jul. 16, 2010
Attributable Interest	100.00%

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Note 8 - Banker's Acceptance Notes Payable and Letters of Credit (Details) - Banker’s Acceptance Notes Payable (USD $)	Jun. 30, 2014	Dec. 31, 2013
Short-term Debt [Line Items]
Short-term debt	$ 1,764,803	$ 8,473,217
Bankers Acceptance [Member] | Renewable Metals [Member]
Short-term Debt [Line Items]
Short-term debt		3,272,144
Letter of Credit [Member]
Short-term Debt [Line Items]
Short-term debt	$ 1,764,803	$ 5,201,073

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Note 5 - Accounts Receivable (Details) - Accounts Receivable (USD $)	Jun. 30, 2014	Dec. 31, 2013
Accounts Receivable [Abstract]
Accounts receivable	$ 23,361,959	$ 25,638,666
Allowance for doubtful accounts	(43,150)	(43,150)
	$ 23,318,809	$ 25,595,516

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Note 16 - Subsequent Events (Details) (USD $)	0 Months Ended			1 Months Ended	0 Months Ended	1 Months Ended		0 Months Ended	1 Months Ended		0 Months Ended		0 Months Ended
	Jun. 04, 2014	Jun. 12, 2014	Jun. 16, 2014	Jun. 18, 2014	May 07, 2014	Jun. 25, 2014	Jun. 27, 2014	May 14, 2014	May 22, 2014	May 30, 2014	Apr. 16, 2014	Feb. 28, 2014	Aug. 11, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Jul. 25, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Jul. 14, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Aug. 11, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Jul. 25, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Jul. 14, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Apr. 16, 2014 Hanover Holdings I, LLC [Member]
Note 16 - Subsequent Events (Details) [Line Items]
Debt Conversion, Original Debt, Amount													$ 25,000	$ 10,000	$ 23,608
Interest Accrued on Convertible Note																$ 104	$ 101	$ 108
Debt Conversion, Converted Instrument, Shares Issued (in Shares)	150,897	596,315	577,267	244,409	105,756	239,577	174,034	109,923	134,308	135,717	374,425		170,030	56,321	133,957
Debt Instrument, Convertible, Conversion Price (in Dollars per share)	$ 0.16575	$ 0.173995	$ 0.1135	$ 0.20519	$ 0.23902	$ 0.20927	$ 0.20927	$ 0.22814	$ 0.186575	$ 0.184535		$ 0.317				$ 0.147645	$ 0.17935	$ 0.17704	$ 0.27115

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Note 9 - Related Party Transactions (Details)						1 Months Ended			0 Months Ended	6 Months Ended
	Jun. 30, 2014 USD ($)	Feb. 28, 2014	Dec. 31, 2013 USD ($)	Jun. 30, 2014 Chairman, CEO and Significant Stockholders [Member] USD ($)	Dec. 31, 2013 Chairman, CEO and Significant Stockholders [Member] USD ($)	Mar. 29, 2013 Chief Executive Officer [Member] Notes Payable, Other Payables [Member]	Mar. 29, 2013 Chief Executive Officer [Member] USD ($)	Mar. 29, 2013 Chief Executive Officer [Member] CNY	Jan. 01, 2006 Monthly Payment [Member] Operating Lease From Related Party [Member] CNY	Jun. 30, 2014 Operating Lease From Related Party [Member] USD ($)	Jun. 30, 2014 Operating Lease From Related Party [Member] CNY	Jun. 30, 2013 Operating Lease From Related Party [Member] USD ($)	Jun. 30, 2013 Operating Lease From Related Party [Member] CNY	Jan. 01, 2006 Operating Lease From Related Party [Member] sqm
Note 9 - Related Party Transactions (Details) [Line Items]
Due to Related Parties	$ 250,146		$ 403,141	$ 792,431	$ 668,332
Notes Payable, Related Parties							1,000,000	6,300,000
Debt Instrument, Term						1 year
Debt Instrument, Interest Rate, Stated Percentage	8.00%	8.00%	8.00%			8.00%
Area of Land (in Square Meters)														176.37
Operating Leases, Rent Expense									10,000	$ 9,746	60,000	$ 9,610	60,000

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Note 4 - Marketable Equity Securities, Available for Sale (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Note 4 - Marketable Equity Securities, Available for Sale (Details) [Line Items]
Available-for-sale Securities	$ 3,396,658	$ 3,396,658
Available-for-sale Securities, Change in Net Unrealized Holding Gain (Loss), Net of Tax	(662,044)
Estimate of Fair Value Measurement [Member]
Note 4 - Marketable Equity Securities, Available for Sale (Details) [Line Items]
Available-for-sale Securities	$ 551,597

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Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Schedule of Share-based Compensation, Activity [Table Text Block]

	Number of Warrant Shares			Exercise Price Range Per Share		Weighted Average Exercise Price		Fair Value at Date of Issuance		Aggregate Intrinsic Value
Balance, December 31, 2013		1,615,387		$	7.50	$	7.5	$	-	$	-
Earned and exercisable, December 31, 2013		1,615,387		$	7.50	$	7.5	$	-	$	-
Unvested, December 31, 2013		-		$	-	$	-	$	-	$	-
Granted		-			-		-		-		-
Canceled for cashless exercise		(-	)		-		-		-		-
Exercised (Cashless)		(-	)		-		-		-		-
Exercised		(-	)		-		-		-		-
Expired		-			-		-		-		-
Balance, June 30, 2014		1,615,387		$	7.50	$	7.50	$	-	$	-
Earned and exercisable, June 30, 2014		1,615,387		$	7.50	$	7.50	$	-	$	-
Unvested, June 30, 2014		-		$	-	$	-	$	-	$	-

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

	Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices	Number Outstanding		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price
$7.50		1,615,387		0.81	$	7.50		1,615,387		0.81	$	7.50
$7.50		1,615,387		0.81	$	7.5		1,615,387		0.81	$	7.5

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

Balance at December 31, 2012	$	-
To record derivative liability as debt discount		60,795
Change in fair value of derivative liability		634
Balance at December 31, 2013	$	61,429
To record derivative liability as debt discount		1,950,820
Change in fair value of derivative liability		108,975
Settlement of derivative liability due to conversion of related notes	$	(2,101,665	)
Balance at June 30, 2014		19,559

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Note 10 - Capital Lease Obligation (Details) - Capital Lease Obligation (USD $)	Jun. 30, 2014	Dec. 31, 2013
Capital Leased Assets [Line Items]
Capital lease obligation	$ 1,060,710	$ 904,990
Less current maturities	(1,060,710)	(904,990)
Machinery and Equipment [Member]
Capital Leased Assets [Line Items]
Capital lease obligation, net of current maturities	419,453	336,065
Less current maturities	(419,453)	(336,065)
Other Machinery and Equipment [Member]
Capital Leased Assets [Line Items]
Capital lease obligation	641,257	568,925
Less current maturities	$ (641,257)	$ (568,925)

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Note 3 - Pledged Deposits (Tables)

6 Months Ended

Jun. 30, 2014

Transfers and Servicing [Abstract]

Schedule of Financial Instruments Owned and Pledged as Collateral [Table Text Block]

	June 30, 2014		December 31, 2013
Armco HK
Letters of credit (i)	$	7,962	$	5,993
Sub-total – Armco HK		7,962		5,993
Renewable Metals
Bank acceptance notes payable		-		1,636,072
Letters of credit (ii)		10,142		2,517,621
Deposit for capital lease obligation (iii)		487,298		490,823
Sub-total – Renewable Metals		497,440		4,644,516
Henan Armco
Letters of credit (iv)		312		2,113
Sub-total – Henan Armco		312		2,113
	$	505,714	$	4,652,222

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Note 6 - Inventories (Details) - Inventories (USD $)	Jun. 30, 2014	Dec. 31, 2013
Inventories [Abstract]
Raw materials – scrap metal	$ 5,206,529	$ 4,390,811
Finished goods – processed scrap metal	9,745,128	12,421,088
Purchased merchandise for resale	74,306	5,936,936
Write - down of inventories	(1,777,081)	(2,291,915)
	$ 13,248,882	$ 20,456,920

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Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Potential Outstanding Dilutive Common Shares	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Conversion Feature Shares
Antidilutive securities	2,450,491	13,835,597
Unvested Common Shares [Member]
Conversion Feature Shares
Antidilutive securities	378,125
Equity Option [Member]
Conversion Feature Shares
Antidilutive securities	40,000	40,000
Warrant [Member] | October 5, 2010 [Member]
Conversion Feature Shares
Antidilutive securities		12,180,210
Warrant [Member] | April 20,2010 [Member]
Conversion Feature Shares
Antidilutive securities	1,615,387	1,615,387
Warrant [Member]
Conversion Feature Shares
Antidilutive securities	1,615,387	13,795,597
Common Stock [Member]
Conversion Feature Shares
Antidilutive securities	416,979

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Note 1 - Organization and Operations (Details) (USD $)	0 Months Ended		6 Months Ended				0 Months Ended			0 Months Ended	6 Months Ended		0 Months Ended
	Jul. 11, 2014	Aug. 12, 2008	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Apr. 06, 2007	Apr. 15, 2014 Convertible Common Stock [Member] Draco Resources [Member]	Jul. 11, 2014 Subsequent Event [Member] Draco Resources [Member]	Dec. 01, 2008 Renewable Metals [Member]	Aug. 12, 2008 Armco HK [Member]	Jun. 27, 2008 Armco HK [Member]	Jun. 27, 2008 Armco HK 2 [Member]	May 07, 2014 Draco Resources [Member] China Direct Investments, Inc. [Member]	Apr. 15, 2014 Draco Resources [Member]	May 07, 2014 Metawise Nominees [Member]
Note 1 - Organization and Operations (Details) [Line Items]
Common Stock, Shares, Issued			54,958,437		29,876,327	9,100,000
Common Stock, Par or Stated Value Per Share (in Dollars per share)	$ 0.001		$ 0.001		$ 0.001
Additional Paid in Capital (in Dollars)			$ 45,601,982		$ 35,790,906	$ (9,100)
Equity Method Investment, Ownership Percentage									100.00%	69.70%	100.00%			100.00%
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares							3,000,000				7,694,000		1,200,000	12,750,000
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned (in Dollars)											6,890,000
Noncash or Part Noncash Acquisition, Noncash Financial or Equity Instrument Consideration, Options Issued											5,300,000	2,000,000
Investment Options, Exercise Price (in Dollars per share)		$ 1.30	$ 5.00	$ 5.00							$ 1.30	$ 5.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period										5,300,000
Stock Issued During Period, Value, Stock Options Exercised (in Dollars)										$ 6,890,000
Stockholders' Equity Note, Stock Split, Conversion Ratio														10
Business Acquisition, Share Price (in Dollars per share)							$ 3.40
Noncontrolling Interest, Ownership Percentage by Parent															66.00%
Incremental Common Shares Attributable to Dilutive Effect of Equity Unit Purchase Agreements								13,950,000
Percentage of Market Generating Dilutive Reset Events			75.00%					255.00%
Percentage of Outstanding Common Stock after Acquisition	72.00%

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Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable (USD $)	Jun. 30, 2014	Dec. 31, 2013
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	$ 19,641,087	$ 27,415,638
Short Term Borrowings [Member] | Pudong Development Bank [Member] | Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	2,117,409
Convertible Debt [Member] | Temporary Short Term Loan [Member] | Henan Armco [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	2,339,841	8,919,490
Short Term Borrowings [Member] | Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	15,395,905	13,876,076
Short Term Borrowings [Member] | Armco Metals Holdings [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	110,000
Loan Payable [Member] | Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable		2,755,926
Temporary Short Term Loan [Member] | Armco Metals Holdings [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	790,000	1,050,000
RZB Hong Kong [Member] | Armco HK [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable		504,248
DBS Hong Kong [Member] | Armco HK [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	935,019	2,602,115
Bank of Communications Lianyungang [Member] | Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable		1,963,286
Bank of China Lianyungang [Member] | Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	8,121,629	8,180,361
Pudong Development Bank [Member] | Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	2,436,489
Pudong Development Bank [Member] | Pudong Development Bank [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	3,478,226	3,503,379
Guanhutun Credit Union [Member] | Henan Armco [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	1,294,588
ICBC Bank [Member] | Henan Armco [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable		5,999,957
Armco HK [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	935,019	3,106,363
Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	162,432	163,607
Henan Armco [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	64,973	229,050
Armco Metals Holdings [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	970,322	1,513,709
Convertible notes payable, net of discount of $18,286, with interest at 4% per annum, due on March 3, 2015.	$ 70,322	$ 463,709

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Note 14 - Income Taxes (Details)	6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2007
Note 14 - Income Taxes (Details) [Line Items]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	25.00%		33.00%
Effective Income Tax Rate Reconciliation, Percent	0.00%	(77.00%)
State [Member]
Note 14 - Income Taxes (Details) [Line Items]
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent			30.00%
Local [Member]
Note 14 - Income Taxes (Details) [Line Items]
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent			3.00%
Armco HK [Member]
Note 14 - Income Taxes (Details) [Line Items]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	16.50%

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Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Outstanding and Exercisable Warrants (USD $)	6 Months Ended
	Jun. 30, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 7.50
Warrant [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Warrants Outstanding, Number (in Shares)	1,615,387
Warrants Outstanding, Average Remaining Contractual Life	295 days
Warrants Outstanding, Weighted Average Exercise Price	$ 7.50
Warrants Exercisable, Number (in Shares)	1,615,387
Warrants Exercisable, Average Remaining Contractual Life	295 days
Warrants Exercisable, Weighted Average Exercise Price	$ 7.50

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Note 4 - Marketable Equity Securities, Available for Sale (Details) - Fair Value of Marketable Securities, Available for Sale (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Note 4 - Marketable Equity Securities, Available for Sale (Details) - Fair Value of Marketable Securities, Available for Sale [Line Items]
Balance, December 31, 2013			$ 3,396,658
Balance, December 31, 2013			4,852,433
Balance, December 31, 2013			(694,512)
Other comprehensive income (loss): Changes in unrealized loss	10,530	(417,105)	32,468	(411,606)
Balance, June 30, 2014	3,396,658		3,396,658
Balance, June 30, 2014	4,479,655		4,479,655
Balance, June 30, 2014	(662,044)		(662,044)
Fair Value, Inputs, Level 1 [Member]
Note 4 - Marketable Equity Securities, Available for Sale (Details) - Fair Value of Marketable Securities, Available for Sale [Line Items]
Balance, December 31, 2013			519,129
Balance, December 31, 2013			(2,366,941)
Balance, December 31, 2013			183,924
Balance, December 31, 2013			(694,512)
Other comprehensive income (loss): Changes in unrealized loss			32,468
Other comprehensive income (loss): Changes in unrealized loss			32,468
Balance, June 30, 2014	551,597		551,597
Balance, June 30, 2014	(2,366,941)		(2,366,941)
Balance, June 30, 2014	183,924		183,924
Balance, June 30, 2014	$ (662,044)		$ (662,044)

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Note 3 - Pledged Deposits

6 Months Ended

Jun. 30, 2014

Transfers and Servicing [Abstract]

Transfers and Servicing of Financial Assets [Text Block]

Note 3 – Pledged Deposits

Pledged deposits consist of cash held in financial institutions for (a) outstanding letters of credit and (b) open banker’s acceptance notes payable maturing between three (3) to nine (9) months from the date of issuance, and (c) capital lease obligation.

Pledged deposits consisted of the following:

	June 30, 2014		December 31, 2013
Armco HK
Letters of credit (i)	$	7,962	$	5,993
Sub-total – Armco HK		7,962		5,993
Renewable Metals
Bank acceptance notes payable		-		1,636,072
Letters of credit (ii)		10,142		2,517,621
Deposit for capital lease obligation (iii)		487,298		490,823
Sub-total – Renewable Metals		497,440		4,644,516
Henan Armco
Letters of credit (iv)		312		2,113
Sub-total – Henan Armco		312		2,113
	$	505,714	$	4,652,222

(i) $7,962 is to be released to the Company for payment towards fulfilled letters of credit when those letters of credit mature on August 15, 2014.

(ii) $10,142 is to be released to the Company for payment towards fulfilled letters of credit when those letters of credit mature on August 15, 2014.

(iii) $487,298 is to be released to the Company as part of the payment towards capital lease installment payment when the capital lease agreement matures on December 15, 2014.

(iv) $312 is to be released to the Company on August 15, 2014

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Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Change of Fair Value of Derivative Debt Liabilities (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Change of Fair Value of Derivative Debt Liabilities [Line Items]
Balance	$ 19,559	$ 61,429
To record derivative liability as debt discount	1,950,820	60,795
Settlement of derivative liability due to conversion of related notes	(2,101,665)
Derivative [Member]
Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Change of Fair Value of Derivative Debt Liabilities [Line Items]
Change in fair value of derivative liability	$ 108,975	$ 634

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Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Potential Outstanding Dilutive Common Shares (Parentheticals) (USD $)	0 Months Ended	6 Months Ended
	Aug. 12, 2008	Jun. 30, 2014	Jun. 30, 2013
Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Potential Outstanding Dilutive Common Shares (Parentheticals) [Line Items]
Options issued to employees exercise price	$ 1.30	$ 5.00	$ 5.00
October 5, 2010 [Member]
Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Potential Outstanding Dilutive Common Shares (Parentheticals) [Line Items]
Warrants issued (in Shares)			12,180,210
Warrants exercise price			$ 0.50
April 20,2010 [Member]
Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Potential Outstanding Dilutive Common Shares (Parentheticals) [Line Items]
Warrants exercise price		$ 7.50	$ 7.50
Issued to Investors [Member]
Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Potential Outstanding Dilutive Common Shares (Parentheticals) [Line Items]
Warrants issued (in Shares)		1,538,464	76,923

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Note 7 - Loans and Convertible Note Payable (Tables)

6 Months Ended

Jun. 30, 2014

Loans Payable [Abstract]

Loans Payable [Table Text Block]

	June 30, 2014		December 31, 2013
Armco HK
Loan payable to RZB Austria Finance (Hong Kong) Limited, collateralized by certain of the Company’s inventory, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at the bank’s cost of funds plus 200 basis points per annum, with principal and interest due April 1, 2014 and repaid in full	$	-	$	504,248
Loan payables to DBS, collateralized by certain of the Company’s inventory, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at an average of 2.86% per annum, balance is due September 23, 2014		935,019		2,602,115
Sub-total - Armco HK		935,019		3,106,363
Renewable Metals
Loan payable to Bank of Communications, Lianyungang Branch, under trade credit facilities, collateralized by Renewable Metals inventories and guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 120% of the bank’s benchmark rate per annum (average 7.2%), balance due June 2, 2014 and paid in full		-		1,963,286
Loan payable to Bank of China, Lianyungang Branch, under trade credit facilities, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 6.6% per annum payable monthly, balance due September 25, 2014		8,121,629		8,180,361
Loan payable to Pudong Development Bank, Lianyungang Branch, under trade credit facilities, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 7.92% per annum payable monthly, balance due from March 27, 2015 through April 7, 2015		2,436,489		-
Short-term borrowing, with interest rate at 8% per annum		64,973		229,050
Short-term borrowing with no interest and due upon demand		1,294,588		-
Loan payable, with interest at 6% per annum and due January 21, 2015		3,478,226		3,503,379
Sub-total – Renewable Metals		15,395,905		13,876,076
Henan Armco
Loan Payable to ICBC, with interest at 2.47% per annum, and repaid in full on March 28, 2014		-		2,755,926
Loan Payable to Guanhutun Credit Union, collateralized by Henan’s building and leasehold improvement, with interest at 9.6% per annum, balance due March 16, 2015		162,432		163,607
Loans payable, with interest at 8% per annum, and due in 2014. The creditors agreed to exchange $5,319,351 into convertible notes in January and February, 2014		-		5,999,957
Short-term borrowing, no interest bearing due upon demand		2,117,409		-
Sub-total – Henan Armco		2,339,841		8,919,490
Armco Metals Holdings
Short term borrowing, with 0% interest, due on demand		110,000
Loans payable, with interest at 8% per annum, due from October 21, 2014 through November 8, 2014		790,000		1,050,000
Convertible notes payable, net of discount of $18,286, with interest at 4% per annum, due on March 3, 2015.		70,322		463,709
Sub-total – Armco Metals Holdings		970,322		1,513,709
	$	19,641,087	$	27,415,638

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Note 6 - Inventories (Tables)

6 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	June 30, 2014			December 31, 2013
Raw materials – scrap metal	$	5,206,529		$	4,390,811
Finished goods – processed scrap metal		9,745,128			12,421,088
Purchased merchandise for resale		74,306			5,936,936
Write - down of inventories		(1,777,081	)		(2,291,915	)
	$	13,248,882		$	20,456,920

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Note 9 - Related Party Transactions (Details) - Due to Other Related Parties (USD $)	Jun. 30, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Due to related parties	$ 250,146	$ 403,141
Keli Yao [Member]
Related Party Transaction [Line Items]
Due to related parties		116,828
Yi Chu [Member]
Related Party Transaction [Line Items]
Due to related parties	$ 250,146	$ 286,313

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Note 3 - Pledged Deposits (Details) (USD $)	Jun. 30, 2014		Dec. 31, 2013
Armco HK [Member]
Note 3 - Pledged Deposits (Details) [Line Items]
Letters of Credit Outstanding, Amount	$ 7,962
Renewable Metals [Member]
Note 3 - Pledged Deposits (Details) [Line Items]
Letters of Credit Outstanding, Amount	10,142
Pledged Assets, Not Separately Reported, Other	487,298	[1]	490,823	[1]
Henan Armco [Member]
Note 3 - Pledged Deposits (Details) [Line Items]
Letters of Credit Outstanding, Amount	$ 312

[1] $487,298 is to be released to the Company as part of the payment towards capital lease installment payment when the capital lease agreement matures on December 15, 2014.

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Note 8 - Banker's Acceptance Notes Payable and Letters of Credit (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Schedule of Short-term Debt [Table Text Block]

	June 30, 2014		December 31, 2013
Renewable Metals
Banker’s acceptance notes payable maturing on March 27, 2014	$	-	$	3,272,144
Letters of credit maturing October 6, 2014		1,764,803		5,201,073
	$	1,764,803	$	8,473,217

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Note 9 - Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2014

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

	June 30, 2014		December 31, 2013
Keli Yao		-		116,828
Yi Chu		250,146		286,313
Total		250,146		403,141

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Note 2 - Significant and Critical Accounting Policies and Practices

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2 - Significant and Critical Accounting Policies and Practices

Basis of Presentation - Unaudited Interim Financial Information

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Interim results are not necessarily indicative of the results for the full year.  These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2013 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on April 4, 2014.

Principlesof Consolidation

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

The Company's consolidated subsidiaries and/or entities as of June 30, 2014 are as follows:

Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition, if applicable)	Attributable interest
Armco Metal International Limited (“Armco HK”)	Hong Kong SAR	July 13, 2001	100%
Henan Armco and Metawise Trading Co., Ltd. (“Henan Armco”)	PRC	June 6, 2002	100%
Armco (Lianyungang) Renewable Metals, Inc. (“Renewable Metals”)	PRC	January 9, 2007	100%
Armco (Lianyungang) Holdings, Inc. (“Lianyungang Armco”)	PRC	June 4, 2009	100%
Armco Metals (Shanghai) Holdings. Ltd. (“Armco Shanghai”)	PRC	July 16, 2010	100%

The consolidated financial statements include all accounts of the Company and the consolidated subsidiaries and/or entities as of reporting period ending date(s) and for the reporting period(s) then ended.

All inter-company balances and transactions have been eliminated.

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period). Management makes its best estimate of the outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, pledged deposits, accounts receivable, advance on purchases, prepayments and other current assets, accounts payable, customer deposits, corporate income/VAT tax payable, accrued expenses and other current liabilities approximate their fair values because of the short maturity of these instruments.

The Company’s loans payable, banker’s acceptance notes payable, and capital lease obligation approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2014 and December 31, 2013.

The Company’s Level 3 financial liabilities consist of the derivative warrant issued in April 2010 and convertible note with embedded conversion feature issued in September, November, and December 2013, and January through March 2014, for which there are no current market for these securities such that the determination of fair value requires significant judgment or estimation.  The Company valued the automatic conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions using a lattice model, with the assistance of a valuation specialist, for which management understands the methodologies. These models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

It is not, however, practical to determine the fair value of advances from significant stockholder and lease arrangement with the significant stockholder, if any, due to their related party nature.

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

Level 1 Financial Assets – Marketable Securities

The Company uses Level 1 of the fair value hierarchy to measure the fair value of the marketable securities and marks the available for sale marketable securities at fair value in the statement of financial position at each balance sheet date and reports the unrealized holding gains and losses for available-for-sale securities in other comprehensive income (loss) until realized provided the unrealized holding gains and losses is temporary. If the fair value of an investment is less than its cost basis at the balance sheet date of the reporting period for which impairment is assessed, and it is determined that the impairment is other than temporary, then an impairment loss is recognized in earnings equal to the entire difference between the investment’s cost and its fair value at the balance sheet date of the reporting period.

Level 3 Financial Liabilities – Derivative Liabilities

The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative warrant liability and derivative convertible debt liabilities at every reporting period and recognizes gains or losses in the consolidated statements of operations and comprehensive income (loss) that are attributable to the change in the fair value of the derivative liabilities.

The following table sets forth by level within the fair value hierarchy the Company's financial assets and liabilities that were accounted for at fair value as of June 30, 2014, and December 31, 2013:

Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
June 30, 2014
Derivative liability		-		-	$	19,559	$	19,559
Available-for-sale securities	$	551,597		-		-	$	551,597
December 31, 2013
Derivative liability		-		-	$	61,429	$	61,429
Available-for-sale securities	$	519,129		-		-	$	519,129

Fair Value of Non-Financial Assets or Liabilities Measured on a Recurring Basis

The Company’s non-financial assets include inventories. The Company identifies potentially excess and slow-moving inventories by evaluating turn rates, inventory levels and other factors. Excess quantities are identified through evaluation of inventory aging, review of inventory turns and historical sales experiences. The Company provides lower of cost or market reserves for such identified excess and slow-moving inventories. The Company establishes a reserve for inventory shrinkage, if any, based on the historical results of physical inventory cycle counts.

Foreign Currency Translation

The financial records of the Company's Chinese operating subsidiaries are maintained in their local currency, the Renminbi (“RMB”), which is the functional currency. Assets and liabilities are translated from the local currency into the reporting currency, U.S. dollars, at the exchange rate prevailing at the balance sheet date. Revenues and expenses are translated at weighted average exchange rates for the period to approximate translation at the exchange rates prevailing at the dates those elements are recognized in the consolidated financial statements. Foreign currency translation gain (loss) resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining accumulated other comprehensive income in the consolidated statement of stockholders’ equity.

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rate adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC. Commencing July 21, 2005, China adopted a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies. The exchange rate of the US dollar against the RMB was adjusted from approximately RMB 8.28 per U.S. dollar to approximately RMB 8.11 per U.S. dollar on July 21, 2005. Since then, the PBOC administers and regulates the exchange rate of the U.S. dollar against the RMB taking into account demand and supply of RMB, as well as domestic and foreign economic and financial conditions.

Unless otherwise noted, the rate presented below per U.S. $1.00 was the midpoint of the interbank rate as quoted by OANDA Corporation (www.oanda.com) contained in its consolidated financial statements. Management believes that the difference between RMB vs. U.S. dollar exchange rate quoted by the PBOC and RMB vs. U.S. dollar exchange rate reported by OANDA Corporation were immaterial. Translations do not imply that the RMB amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars. Translation of amounts from RMB into U.S. dollars has been made at the following exchange rates for the respective periods:

	June 30, 2014		December 31, 2013		June 30, 2013
Balance sheets		6.1564		6.1122		6.1807
Statements of operations and comprehensive income (loss)		6.1419		6.1943		6.2437

Net Income (Loss) per Common Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options, warrants and convertible debt instruments.

For the periods presented, the computation of diluted loss per share equaled basic loss per share as the inclusion of any dilutive instruments would have had an antidilutive effect on the earnings per share calculation in the periods presented.

The following table shows the potentially outstanding dilutive common shares excluded from the diluted net income (loss) per common share calculation as they were anti-dilutive:

	Potentially Outstanding Dilutive Common Shares
	For the Six Months Ended June 30, 2014		For the Six Months Ended June 30, 2013
Conversion Feature Shares
Common shares issuable under the conversion feature of convertible notes payable		416,979		-
Sub-total: Conversion feature shares		416,979		-
Unvested common shares issued to employees
Unvested common shares issued to directors, vest in July, October, December 2014, and January 2015		378,125		-
Sub-total: Unvested common shares issued to employees		378,125		-
Stock Option Shares
Options issued on October 5, 2010 to employees to purchase common shares with an exercise price of $5.00 per share expiring five (5) years from the date of issuance		40,000		40,000
Sub-total: Stock option shares		40,000		40,000
Warrant Shares
12,180,210 Warrants issued on August 1, 2008 to investors to purchase common shares with an exercise price of $0.50 per shares expiring five(5) from the date of issuance		-		12,180,210
1,538,464 and 76,923 Warrants issued on April 20, 2010 to investors to purchase common shares with an exercise price of $7.50 per shares expiring five(5) from the date of issuance		1,615,387		1,615,387
Sub-total: Warrant shares		1,615,387		13,795,597
Total potentially outstanding dilutive common shares		2,450,491		13,835,597

Recently Issued Accounting Pronouncements

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update change the requirements for reporting discontinued operations in Subtopic 205-20. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” The ASU states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Although “major” is not defined, the standard provides examples of when a disposal qualifies as a discontinued operation. The ASU also requires additional disclosures about discontinued operations that will provide more information about the assets, liabilities, income and expenses of discontinued operations. In addition, the ASU requires disclosure of the pre-tax profit or loss attributable to a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. The ASU is effective for public business entities for annual periods beginning on or after December 15, 2014, and interim periods within those years. The adoption of ASU 2014 -08 is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from contracts with Customers (Topic 606)". This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchanged for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

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Note 10 - Capital Lease Obligation (Tables)

6 Months Ended

Jun. 30, 2014

Leases, Capital [Abstract]

Schedule of Capital Leased Assets [Table Text Block]

	June 30, 2014			December 31, 2013
Renewable Metals
(i)    Capital lease obligation to a financing company for a term of three (3) years, collateralized by certain of Renewable Metals machinery and equipment, with interest at 14% per annum, with principal and interest due and payable in monthly installments of RMB 497,897 on the 23rd of each month.	$	419,453		$	336,065
Less current maturities		(419,453	)		(336,065	)
Capital lease obligation, net of current maturities		-			-
(ii)   Capital lease obligation to a financing company for a term of three (3) years, collateralized by certain of Renewable Metals machinery and equipment, with interest at 11.0% per annum, with principal and interest due and payable in quarterly installments of RMB3,609,102 on the 15th of each quarter.		641,257			568,925
Less current maturities		(641,257	)		(568,925	)
Capital lease obligation, net of current maturities		-			-
Total capital lease obligation		1,060,710			904,990
Less current maturities		(1,060,710	)		(904,990	)
TOTAL CAPITAL LEASE OBLIGATION, net of current maturities	$	-		$	-

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Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Fair Value of Financial Assets and Liabilities Recurring (USD $)	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 3,396,658	$ 3,396,658
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	551,597	519,129
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	551,597	519,129
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	19,559	61,429
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	19,559	61,429
Available-for-sale securities	$ 551,597	$ 519,129

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Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable (Parentheticals)										6 Months Ended	12 Months Ended			6 Months Ended	12 Months Ended
	Jun. 30, 2014 USD ($)	Feb. 28, 2014 USD ($)	Feb. 28, 2014 CNY	Dec. 31, 2013 USD ($)	Jun. 30, 2014 Short Term Borrowings [Member] Renewable Metals [Member]	Jun. 30, 2014 Short Term Borrowings [Member] Armco Metals Holdings [Member]	Jun. 30, 2014 Short Term Borrowings [Member]	Jun. 30, 2014 Temporary Short Term Loan [Member] Armco Metals Holdings [Member]	Dec. 31, 2013 Temporary Short Term Loan [Member] Armco Metals Holdings [Member]	Jun. 30, 2014 RZB Hong Kong [Member] Armco HK [Member]	Dec. 31, 2013 RZB Hong Kong [Member] Armco HK [Member]	Jun. 30, 2014 DBS Hong Kong [Member] Armco HK [Member]	Dec. 31, 2013 DBS Hong Kong [Member] Armco HK [Member]	Jun. 30, 2014 Bank of Communications Lianyungang [Member] Renewable Metals [Member]	Dec. 31, 2013 Bank of Communications Lianyungang [Member] Renewable Metals [Member]	Jun. 30, 2014 Bank of China Lianyungang [Member] Renewable Metals [Member]	Dec. 31, 2013 Bank of China Lianyungang [Member] Renewable Metals [Member]	Jun. 30, 2014 Guanhutun Credit Union [Member] Henan Armco [Member] USD ($)	Dec. 31, 2013 Guanhutun Credit Union [Member] Henan Armco [Member] USD ($)	Jun. 30, 2014 ICBC Bank [Member] Henan Armco [Member]	Dec. 31, 2013 ICBC Bank [Member] Henan Armco [Member]	Jun. 30, 2014 Renewable Metals [Member]	Jun. 30, 2014 Henan Armco [Member]	Jun. 30, 2014 Armco Metals Holdings [Member]	Dec. 31, 2013 Armco Metals Holdings [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable (Parentheticals) [Line Items]
Intеrеst ratе, basis points abovе cost of funds										2.00%	2.00%			1.20%	1.20%
Intеrеst ratе	8.00%	8.00%	8.00%	8.00%	6.00%	0.00%	7.92%	8.00%	8.00%			2.86%	2.86%	7.20%	7.20%	6.60%	6.60%			8.00%	8.00%	2.47%	9.60%	4.00%	4.00%
Loans payable, convertible notes (in Dollars)		$ 5,500,000	33,512,936															$ 5,319,351	$ 5,319,351
Discount (in Dollars)	$ 18,286	$ 1,300,000		$ 18,286

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Consolidated Balance Sheets (Unaudited) (USD $)	Jun. 30, 2014	Dec. 31, 2013
CURRENT ASSETS:
Cash	$ 702,802	$ 596,557
Pledged deposits	505,714	4,652,222
Marketable securities	551,597	519,129
Accounts receivable, net	23,318,809	25,595,516
Inventories	13,248,882	20,456,920
Advance on purchases	1,268,903	733,285
Prepayments and other current assets	774,718	1,181,371
Total Current Assets	40,371,425	53,735,000
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment	44,535,389	44,856,611
Accumulated depreciation	(10,695,728)	(9,360,933)
PROPERTY, PLANT AND EQUIPMENT, net	33,839,661	35,495,678
LAND USE RIGHTS
Land use rights	6,633,807	6,681,779
Accumulated amortization	(474,665)	(416,478)
LAND USE RIGHTS, net	6,159,142	6,265,301
Total Assets	80,370,228	95,495,979
CURRENT LIABILITIES:
Loans payable	19,641,087	27,415,638
Current maturities of capital lease obligation	1,060,710	904,990
Accounts payable	2,698,968	10,062,463
Due to related party	250,146	403,141
Customer deposits	1,879,761	649,488
Corporate income tax payable	819,686	822,207
Derivative warrant liability	19,559	61,429
Value added tax and other taxes payable	2,500,956	2,202,331
Accrued expenses and other current liabilities	1,224,489	1,228,753
Total Current Liabilities	32,652,596	52,891,989
Total Liabilities	32,652,596	52,891,989
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued or outstanding	0	0
Common stock, $0.001 par value, 74,000,000 shares authorized, 54,958,437 and 29,876,327 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively	54,958	29,876
Additional paid-in capital	45,601,982	35,790,906
Retained earnings	(1,756,919)	2,625,287
Change in unrealized gain on marketable securities	(662,044)	(694,512)
Foreign currency translation gain	4,479,655	4,852,433
Total Stockholders' Equity	47,717,632	42,603,990
Total Liabilities and Stockholders' Equity	80,370,228	95,495,979
Warrant [Member]
CURRENT LIABILITIES:
Derivative warrant liability	19,559	61,429
Chairman and CEO [Member]
CURRENT LIABILITIES:
Advances received from Chairman and CEO	792,431	668,332
Bankers Acceptance [Member] | Standby Letters of Credit [Member]
CURRENT LIABILITIES:
Banker's acceptance notes payable and letters of credit	$ 1,764,803	$ 8,473,217

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Note 3 - Pledged Deposits (Details) - Pledged Deposits (USD $)	Jun. 30, 2014		Dec. 31, 2013
Financial Instruments Owned and Pledged as Collateral [Line Items]
Total	$ 505,714		$ 4,652,222
Armco HK [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Letters of credit	7,962	[1]	5,993	[1]
Total	7,962		5,993
Renewable Metals [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Letters of credit	10,142	[2]	2,517,621	[2]
Deposit for capital lease obligation (iii)	487,298	[3]	490,823	[3]
Total	497,440		4,644,516
Bank acceptance notes payable			1,636,072
Henan Armco [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Letters of credit	312	[4]	2,113	[4]
Total	$ 312		$ 2,113

[1] $7,962 is to be released to the Company for payment towards fulfilled letters of credit when those letters of credit mature on August 15, 2014.

[2] $10,142 is to be released to the Company for payment towards fulfilled letters of credit when those letters of credit mature on August 15, 2014.

[3] $487,298 is to be released to the Company as part of the payment towards capital lease installment payment when the capital lease agreement matures on December 15, 2014.

[4] $312 is to be released to the Company on August 15, 2014

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (4,382,206)	$ (141,714)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation expense	1,405,506	1,432,247
Amortization expense	61,322	90,552
Change in fair value of derivative liability	108,975	(920,338)
Gain on disposal of property	(339)
Amortization of debt discount	1,985,325
Stock based compensation	1,182,781	501,815
Reversal of inventory reserve	(541,834)
Changes in operating assets and liabilities:
Bank acceptance notes receivable		(1,132,558)
Accounts receivable	2,116,260	6,640,189
Inventories	7,619,601	(7,689,157)
Advance on purchases	(538,812)	(40,034)
Prepayments and other current assets	396,061	(761,181)
Accounts payable	(7,266,050)	3,883,794
Customer deposits	1,237,852	(1,323,944)
Taxes payable	315,184	(1,291,579)
Advance for stock subscription		(80,000)
Accrued expenses and other current liabilities	29,042	(1,246,756)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	3,728,668	(2,078,664)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from release of pledged deposits	5,932,261	5,517,104
Payment made towards pledged deposits	(1,809,397)	(11,041,193)
(Purchase) Disposal of property, plant and equipment	1,628	(165,656)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	4,124,492	(5,689,745)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable	11,535,286	20,909,692
Repayment of loans payable	(12,970,719)	(24,503,446)
Banker's acceptance notes payable	(6,663,274)	7,376,187
Proceeds from capital lease obligation	162,600
Repayment of capital lease obligation		(315,572)
Advances from (repayment to) Chairman and CEO	144	2,153,815
Advances from (repayment to) related party	(32,534)
Proceeds from Related Party Loan		1,019,302
Proceeds from sales of common stock		1,621,356
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(7,968,497)	8,261,334
EFFECT OF EXCHANGE RATE CHANGES ON CASH	221,582	(703,283)
NET CHANGE IN CASH	106,245	(210,358)
Cash at beginning of the period	596,557	1,367,171
Cash at end of the period	702,802	1,156,813
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid	236,240	1,211,724
Income tax paid		7,157
NON CASH FINANCING AND INVESTING ACTIVITIES:
Debt discount due to convertible features	1,950,820
Reclassification from short-term debt to convertible debt	5,554,468
Reclassification of derivative liability to equity	2,101,665
Change in fair value of marketable security	32,468
Short-term Debt [Member]
NON CASH FINANCING AND INVESTING ACTIVITIES:
Common shares issued for conversion of convertible notes and accrued interest	$ 6,551,712

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Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details)	0 Months Ended			1 Months Ended	0 Months Ended					1 Months Ended		0 Months Ended	1 Months Ended	0 Months Ended		1 Months Ended							3 Months Ended		6 Months Ended					1 Months Ended			0 Months Ended				0 Months Ended				1 Months Ended				0 Months Ended	1 Months Ended	0 Months Ended	6 Months Ended				1 Months Ended	6 Months Ended	1 Months Ended	6 Months Ended		0 Months Ended						0 Months Ended
	Jun. 04, 2014 USD ($)	Jun. 12, 2014 USD ($)	Jun. 16, 2014 USD ($)	Jun. 18, 2014 USD ($)	May 07, 2014 USD ($)	Apr. 07, 2014	Apr. 08, 2014	Mar. 03, 2014	Mar. 05, 2014	Jun. 25, 2014 USD ($)	Jun. 27, 2014 USD ($)	May 14, 2014 USD ($)	May 22, 2014 USD ($)	Apr. 16, 2014 USD ($)	Mar. 14, 2014	Jun. 30, 2014 USD ($)	May 30, 2014 USD ($)	Mar. 24, 2014	Mar. 26, 2014	Mar. 31, 2014	Feb. 27, 2014	Apr. 30, 2010 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2013 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2013 USD ($)	Feb. 28, 2014 USD ($)	Feb. 28, 2014 CNY	Dec. 31, 2013 USD ($)	Apr. 30, 2010 Private Placement [Member] USD ($)	Jun. 30, 2014 Warrants 2010 [Member] USD ($)	Apr. 30, 2010 Warrants 2010 [Member] USD ($)	Nov. 08, 2013 Convertible Notes Payable [Member] Variable Conversion Base Price Less Than or Equal to $0.45 [Member] Hanover Holdings I, LLC [Member]	Nov. 08, 2013 Convertible Notes Payable [Member] Variable Conversion Base Price Greater Than $0.45 [Member] Hanover Holdings I, LLC [Member]	Mar. 26, 2014 Convertible Notes Payable [Member] Default Rate [Member]	Mar. 26, 2014 Convertible Notes Payable [Member] Default Prepayment Rate [Member]	Apr. 16, 2014 Convertible Notes Payable [Member] Hanover Holdings I, LLC [Member] USD ($)	Mar. 05, 2014 Convertible Notes Payable [Member] Hanover Holdings I, LLC [Member] USD ($)	Mar. 14, 2014 Convertible Notes Payable [Member] Hanover Holdings I, LLC [Member] USD ($)	Nov. 08, 2013 Convertible Notes Payable [Member] Hanover Holdings I, LLC [Member] USD ($)	Mar. 24, 2014 Convertible Notes Payable [Member] Hanover Holdings I, LLC [Member] USD ($)	Mar. 26, 2014 Convertible Notes Payable [Member] Hanover Holdings I, LLC [Member] USD ($)	Feb. 27, 2014 Convertible Notes Payable [Member] Hanover Holdings I, LLC [Member] USD ($)	Mar. 26, 2014 Convertible Notes Payable [Member] Asher and Hanover [Member] USD ($)	Apr. 07, 2014 Convertible Notes Payable [Member] Asher Enterprises, Inc [Member] USD ($)	Mar. 28, 2014 Convertible Notes Payable [Member] Asher Enterprises, Inc [Member] USD ($)	Apr. 07, 2014 Convertible Notes Payable [Member] 15 Foreign Investors [Member] USD ($)	Jun. 30, 2014 Convertible Notes Payable [Member] USD ($)	Mar. 26, 2014 Convertible Notes Payable [Member]	Dec. 31, 2013 Convertible Notes Payable [Member] USD ($)	Sep. 23, 2013 Convertible Notes Payable [Member] USD ($)	Mar. 26, 2014 Convertible Notes Payable [Member] Minimum [Member]	Jun. 30, 2014 Convertible Notes Payable [Member] Minimum [Member]	Mar. 26, 2014 Convertible Notes Payable [Member] Maximum [Member]	Jun. 30, 2014 Convertible Notes Payable [Member] Maximum [Member]	Dec. 31, 2013 Subsequent Event [Member] Filing S-1 Within 120 Days of Note Date [Member] USD ($)	Aug. 11, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Jul. 25, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Jul. 14, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Aug. 11, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member] USD ($)	Jul. 25, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member] USD ($)	Jul. 14, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member] USD ($)	Nov. 08, 2013 Filing S-1 Within 45 Days of Note Date [Member] Hanover Holdings I, LLC [Member] USD ($)	Nov. 08, 2013 Filing S-1 Within 120 Days of Note Date [Member] Hanover Holdings I, LLC [Member] USD ($)	Nov. 08, 2013 Right to Require Purchase on 10th Trading Day After Registration Statement or Additional Closing Date [Member] Hanover Holdings I, LLC [Member] USD ($)	Nov. 08, 2013 Hanover Holdings I, LLC [Member] USD ($)	Apr. 16, 2014 Hanover Holdings I, LLC [Member] USD ($)	Jan. 13, 2014 Four Foreign Investors [Member] USD ($)	Feb. 04, 2014 Eleven Foreign Investors [Member] USD ($)	Apr. 07, 2014 Asher Enterprises, Inc [Member] USD ($)	Mar. 28, 2014 Asher Enterprises, Inc [Member] USD ($)	Apr. 07, 2014 15 Foreign Investors [Member] USD ($)
Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) [Line Items]
Stock Issued During Period, Shares, New Issues (in Shares)																						1,538,464			60,000
Sale of Stock, Price Per Share (in Dollars per share)																						$ 6.50
Stock Issued During Period, Value, New Issues																						$ 10,000,016			$ 60
Noncash or Part Noncash Acquisition, Noncash Financial or Equity Instrument Consideration, Warrants Issued (in Shares)																						1,538,464
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)																														$ 7.50		$ 7.50
Asset Management Fees																														500,000
Share-based Goods and Nonemployee Services Transaction, Quantity of Securities Issued (in Shares)																						76,923
Professional Fees																							141,328	120,488	355,782	316,985				15,000
Derivative Liability, Fair Value, Gross Liability																															53
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)																															1,615,387
Convertible Notes Payable																											5,500,000	33,512,936																												350,000									500,000	450,000		2,472,127	3,082,340	0	73,500
Proceeds from Convertible Debt																																																																	500,000	300,000
Convertible Notes Payable, Reduction Amount																																																															50,000	100,000
Accrued Liabilities																																																								50,000
Debt Instrument, Interest Rate, Stated Percentage																8.00%							8.00%		8.00%		8.00%	8.00%	8.00%						22.00%	150.00%				4.00%									8.00%
Variable Conversion Base Price (in Dollars per share)																																								$ 0.45
Variable Percentage																																	85.00%	80.00%
Debt Instrument, Face Amount																													6,200,000																					63,000	153,500
Debt Instrument, Redemption Price, Percentage of Principal Amount Redeemed																																																				115.00%		140.00%
Debt Instrument, Convertible, Conversion Price (in Dollars per share)	$ 0.16575	$ 0.173995	$ 0.1135	$ 0.20519	$ 0.23902					$ 0.20927	$ 0.20927	$ 0.22814	$ 0.186575				$ 0.184535										$ 0.317											$ 0.32011	$ 0.322405		$ 0.343995	$ 0.34663	$ 0.308635	$ 0.317																$ 0.147645	$ 0.17935	$ 0.17704					$ 0.27115					$ 0.317
Debt Conversion, Converted Instrument, Amount	25,000	100,000	63,000	50,000	25,000					50,000	36,392	25,000	25,000				25,000																				100,000	75,000	50,000		50,000	100,000	25,000		6,140	80,000	5,554,468
Interest on Convertible Debt, Net of Tax	11	3,756	2,520	150	278					136	28	78	58	1,525			44																										4,628
Debt Conversion, Converted Instrument, Shares Issued (in Shares)	150,897	596,315	577,267	244,409	105,756					239,577	174,034	109,923	134,308	374,425			135,717																					234,295	155,085		145,351	288,493	95,997		363,653	355,082	17,521,980										170,030	56,321	133,957
Fair Value Inputs, Probability of Default																																																5.00%							10.00%
Probability of Default Monthly Increase																																																1.00%
Capital Raising Event																									1,000,000
Percentage of Market Generating Dilutive Reset Events																									75.00%
Fair Value Assumptions, Expected Volatility Rate	84.00%	84.00%		98.00%	83.00%	82.00%	82.00%	101.00%	101.00%	102.00%	102.00%	83.00%	85.00%	83.00%	102.00%	102.00%	84.00%	102.00%	102.00%	102.00%	101.00%
Percentage of Debt Instrument Redemption																																																					10.00%		20.00%
Percentage of Debt Instrument Redemption Monthly Increase																																																1.00%
Derivative Liability, Current																$ 19,559							$ 19,559		$ 19,559				$ 61,429																			$ 19,559

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Note 13 - Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2014

Stockholders' Equity Note [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Number of Shares or Options			Fair Value at Date of Grant
Balance, December 31, 2012		4,198,881		$	2,614,951
Options – granted		-			-
Options – canceled		-			-
Shares – granted		1,419,532			662,256
Shares – canceled		(-	)		(-	)
Balance, December 31, 2013		5,618,413		$	3,277,207
Vested, December 31, 2013		5,101,746			3,023,732
Unvested, December 31, 2013		516,667		$	253,475
Options – granted		-			-
Options – canceled		-			-
Shares – granted		2,336,208			840,804
Shares – canceled		(-	)		(-	)
Balance, March 31, 2014		7,954,621		$	4,118,011
Vested, June 30, 2014		7,576,496			3,929,876
Unvested, June 30, 2014		378,125		$	188,135

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Note 13 - Stockholders' Equity (Details)	0 Months Ended	1 Months Ended	6 Months Ended			0 Months Ended		0 Months Ended			0 Months Ended			1 Months Ended	0 Months Ended			1 Months Ended	6 Months Ended	0 Months Ended	6 Months Ended	0 Months Ended	6 Months Ended	3 Months Ended				0 Months Ended				0 Months Ended
	Apr. 09, 2014 USD ($)	Apr. 30, 2010 USD ($)	Jun. 30, 2014 USD ($)	Jul. 11, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2014 Restricted Stock [Member] Future Event December 31, 2014 [Member] Mr. Kam Ping Chan [Member]	Feb. 08, 2012 Restricted Stock [Member] Yao [Member] USD ($)	May 03, 2014 Restricted Stock [Member] Shen [Member]	Sep. 30, 2013 Restricted Stock [Member] Shen [Member]	May 03, 2013 Restricted Stock [Member] Shen [Member] USD ($)	Jun. 30, 2014 Restricted Stock [Member] Mr. Kam Ping Chan [Member]	Jan. 02, 2014 Restricted Stock [Member] Mr. Kam Ping Chan [Member] USD ($)	Jun. 30, 2014 Restated 2009 Stock Incentive Plan [Member]	Feb. 08, 2012 Quarterly [Member] Yao [Member] USD ($)	May 03, 2013 Quarterly [Member] Shen [Member] USD ($)	Jan. 02, 2014 Quarterly [Member] Mr. Kam Ping Chan [Member] USD ($)	Jan. 02, 2012 Yao [Member]	Feb. 08, 2012 Yao [Member] USD ($)	Jun. 30, 2014 Yao [Member] USD ($)	May 03, 2013 Shen [Member] USD ($)	Jun. 30, 2014 Shen [Member] USD ($)	Jan. 02, 2014 Mr. Kam Ping Chan [Member] USD ($)	Jun. 30, 2014 Mr. Kam Ping Chan [Member] USD ($)	Mar. 31, 2014 Termination of Leasing Agreement [Member] USD ($)	Jun. 30, 2014 Consulting Fees [Member] USD ($)	Mar. 31, 2014 Consulting Fees [Member] USD ($)	Jun. 30, 2014 Legal Expenses [Member] USD ($)	Nov. 08, 2013 CD International Enterprise Inc [Member]	Apr. 07, 2014 All Bright Law Offices [Member]	Jun. 30, 2014 Renewable Metals [Member] USD ($)	Jun. 11, 2010 Renewable Metals [Member] CNY	Jun. 11, 2010 Chaoyang Steel [Member]
Note 13 - Stockholders' Equity (Details) [Line Items]
Long-term Line of Credit			$ 11,611,619																											$ 10,558,119	300,000,000
Share-based Goods and Nonemployee Services Transaction, Quantity of Securities Issued (in Shares)		76,923																														500,000
Stock Issued During Period, Shares, Issued for Services (in Shares)																								33,338	250,000	250,000		1,000,000	500,000
Share Price (in Dollars per share)							$ 0.499			$ 0.389		$ 0.323												$ 0.39	$ 0.27	$ 0.39	$ 0.27
Stock Issued During Period, Value, Issued for Services																								13,002	67,500	97,500	33,750
Stock Issued During Period, Shares, New Issues (in Shares)		1,538,464	60,000																								125,000
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures (in Shares)																	1,500,000	1,500,000		50,000		6,250
Common Stock, Par or Stated Value Per Share (in Dollars per share)			$ 0.001	$ 0.001	$ 0.001													$ 0.001
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures														62,375	4,863	505		748,500		19,450		2,019
Allocated Share-based Compensation Expense																			124,750		6,484		1,010
Portion Vesting						50.00%		50.00%	50.00%		50.00%
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures (in Shares)	2,329,958
Stock Granted, Value, Share-based Compensation, Net of Forfeitures	838,785
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)													245,379
Stock Issued During Period, Value, New Issues		10,000,016	60
Stock Issued During Period, Shares, Other (in Shares)			22,002,564
Stock Issued During Period, Value, Other			$ 6,551,712

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Note 16 - Subsequent Events

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 16 – Subsequent Events

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued.  The Management of the Company determined that there were  certain reportable subsequent events to be disclosed as follows.

On July 11, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $23,608 plus interest of $108 of the note into 133,957 shares of the Company's common stock, at a conversion price of $  0.17704 per share.

On July 25, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $10,000 plus interest of $101of the note into 56,321 shares of the Company's common stock, at a conversion price of $  0.17935 per share.

On August 11, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 plus interest of $104 of the note into 170,030 shares of the Company's common stock, at a conversion price of $ 0.147645 per share.

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Note 15 - Concentrations and Credit Risk (Tables)

6 Months Ended

Jun. 30, 2014

Risks and Uncertainties [Abstract]

Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block]

	Net Sales for the Six Months Ended						Accounts Receivable at
	June 30, 2014			June 30, 2013			June 30, 2014			December 31, 2013
Customer A		-	%		-	%		-	%		33.8	%
Customer B		15.5	%		35.6	%		-	%		25.1	%
Customer C		-	%		-	%		29.8	%		18.3	%
Customer D		54.0	%		-	%		32.6	%		-	%
Customer E		-	%		-	%		14.0	%		-	%
Customer F	%				13.8	%		-	%		-	%
		69.5	%		49.4	%		76.4	%		77.2	%

Schedule of Vendor Purchase Concentrations [Table Text Block]

	Net Purchases for the Six Months Ended						Accounts Payable at
	June 30, 2014			June 30, 2013			June 30, 2014			December 31, 2013
Vendor A		79.2	%		75.3	%		-	%		86.0	%
Vendor B		13.0	%		-	%		-	%		-	%
Vendor C		-	%		-	%		60	%		-	%
Vendor D		-	%		-	%		13	%		-	%
		92.2	%		75.3	%		73.0	%		86.0	%

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Note 2 - Significant and Critical Accounting Policies and Practices (Tables)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Schedule of Variable Interest Entities [Table Text Block]

Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition, if applicable)	Attributable interest
Armco Metal International Limited (“Armco HK”)	Hong Kong SAR	July 13, 2001	100%
Henan Armco and Metawise Trading Co., Ltd. (“Henan Armco”)	PRC	June 6, 2002	100%
Armco (Lianyungang) Renewable Metals, Inc. (“Renewable Metals”)	PRC	January 9, 2007	100%
Armco (Lianyungang) Holdings, Inc. (“Lianyungang Armco”)	PRC	June 4, 2009	100%
Armco Metals (Shanghai) Holdings. Ltd. (“Armco Shanghai”)	PRC	July 16, 2010	100%

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
June 30, 2014
Derivative liability		-		-	$	19,559	$	19,559
Available-for-sale securities	$	551,597		-		-	$	551,597
December 31, 2013
Derivative liability		-		-	$	61,429	$	61,429
Available-for-sale securities	$	519,129		-		-	$	519,129

Schedule of Foreign Exchange Contracts, Statement of Financial Position [Table Text Block]

	June 30, 2014		December 31, 2013		June 30, 2013
Balance sheets		6.1564		6.1122		6.1807
Statements of operations and comprehensive income (loss)		6.1419		6.1943		6.2437

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Potentially Outstanding Dilutive Common Shares
	For the Six Months Ended June 30, 2014		For the Six Months Ended June 30, 2013
Conversion Feature Shares
Common shares issuable under the conversion feature of convertible notes payable		416,979		-
Sub-total: Conversion feature shares		416,979		-
Unvested common shares issued to employees
Unvested common shares issued to directors, vest in July, October, December 2014, and January 2015		378,125		-
Sub-total: Unvested common shares issued to employees		378,125		-
Stock Option Shares
Options issued on October 5, 2010 to employees to purchase common shares with an exercise price of $5.00 per share expiring five (5) years from the date of issuance		40,000		40,000
Sub-total: Stock option shares		40,000		40,000
Warrant Shares
12,180,210 Warrants issued on August 1, 2008 to investors to purchase common shares with an exercise price of $0.50 per shares expiring five(5) from the date of issuance		-		12,180,210
1,538,464 and 76,923 Warrants issued on April 20, 2010 to investors to purchase common shares with an exercise price of $7.50 per shares expiring five(5) from the date of issuance		1,615,387		1,615,387
Sub-total: Warrant shares		1,615,387		13,795,597
Total potentially outstanding dilutive common shares		2,450,491		13,835,597

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Note 15 - Concentrations and Credit Risk (Details) - Customer and Credit Concentrations	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Customer A [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer		33.80%
Customer B [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer	15.50%	35.60%
Customer B [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer		25.10%
Customer C [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer	29.80%	18.30%
Customer D [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer	54.00%
Customer D [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer	32.60%
Customer E [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer	14.00%
Customer F [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer		13.80%
Sales Revenue, Net [Member]
Revenue, Major Customer [Line Items]
Customer	69.50%	49.40%
Accounts Receivable [Member]
Revenue, Major Customer [Line Items]
Customer	76.40%	77.20%

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Note 1 - Organization and Operations

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1 – Organization and Operations

Armco Metals Holdings, Inc. (formerly China Armco Metals, Inc. and Cox Distributing, Inc.)

Cox Distributing was founded as an unincorporated business in January 1984 and was incorporated as Cox Distributing, Inc. (“Cox Distributing”), a C corporation under the laws of the State of Nevada on April 6, 2007 at which time 9,100,000 shares of common stock were issued to the founder in exchange for the existing unincorporated business. No value was given to the stock issued by the newly formed corporation.  Therefore, the shares were recorded to reflect the $.001 par value and paid in capital was recorded as a negative amount ($9,100).

On June 27, 2008, Cox Distributing amended its Articles of Incorporation, and changed its name to China Armco Metals, Inc. (“Armco Metals” ) upon the acquisition of Armco Metals International Limited (formerly “Armco & Metawise (H.K) Limited” or “Armco HK”) and Subsidiaries to better identify the Company with the business conducted, through its wholly owned subsidiaries in China, import, export and distribution of ferrous and non-ferrous ores and metals, and processing and distribution of scrap steel.

On July 3, 2013, the Company changed its name from “China Armco Metals, Inc.” to “Armco Metals Holdings, Inc.”(“Armco Metals Holdings” or the “Company”).

Armco MetalsInternational Limited (formerly Armco & Metawise (H.K) Limited)and Subsidiaries

Armco MetalsInternational Limited (formerly Armco & Metawise (H.K) Limited)

Armco & Metawise (H.K) Limited was incorporated on July 13, 2001 under the laws of the Hong Kong Special Administrative Region (“HK SAR”) of the People’s Republic of China (“PRC”). Armco HK engages in the import, export and distribution of ferrous and non-ferrous ore and metals.

On March 22, 2011, Armco & Metawise (H.K) Limited amended its Memorandum and Articles of Association, and changed its name to Armco Metals International Limited (“Armco HK”).

Formation ofHenan Armco and Metawise TradingCo., Ltd.

Henan Armco and Metawise Trading Co., Ltd. (“Henan”) was incorporated on June 6, 2002 in the City of Zhengzhou, Henan Province, PRC. Henan engages in the import, export and distribution of ferrous and non-ferrous ores and metals.

Formation ofArmco(Lianyungang) Renewable Metals, Inc.

On January 9, 2007, Armco HK formed Armco (Lianyungang) Renewable Metals, Inc. (“Renewable Metals”), a wholly-owned foreign enterprise (“WOFE”) subsidiary in the City of Lianyungang, Jiangsu Province, PRC. Renewable Metals engages in the processing and distribution of scrap metal.

On December 1, 2008, Armco HK transferred its 100% equity interest in Renewable Metals to Armco Metals.

Merger of Henan with Renewable Metals, Companies under Common Control

On December 28, 2007, Armco HK entered into a Share Transfer Agreement with Renewable Metals, whereby Armco HK transferred to Renewable Metals all of its equity interest in Henan, a company under common control of Armco HK.

The acquisition of Henan has been recorded on the purchase method of accounting at historical amounts as Renewable Metals and Henan were under common control since June 2002. The consolidated financial statements have been presented as if the acquisition of Henan had occurred as of the first date of the first period presented.

Acquisitionof Armco Metal International Limited and Subsidiaries (“ArmcoHK”)Recognized as a Reverse Acquisition

On June 27, 2008, the Company entered into and consummated a share purchase agreement (the “Share Purchase Agreement”) with Armco HK and Feng Gao, who owned 100% of the issued and outstanding shares of Armco HK. In connection with the consummation of the Share Purchase Agreement, (i) Stephen Cox surrendered 7,694,000 common shares, representing his controlling interest in the Company for cancellation and resigned as an officer and director; (ii) the Company purchased from the Armco HK Shareholder 100% of the issued and outstanding shares of Armco HK’s capital stock for $6,890,000 by delivery of the Company’s purchase money promissory note; (iii) issued to Ms. Gao (a) a stock option entitling Ms. Gao to purchase 5,300,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) with an exercise price of $1.30 per share expiring on December 31, 2008 and (b) a stock option entitling Ms. Gao to purchase 2,000,000 shares of the Company’s common stock with an exercise price of $5.00 per share expiring two (2) years from the date of issuance on June 27, 2010 (the “Gao Options”). On August 12, 2008, Ms. Gao exercised her option to purchase and the Company issued 5,300,000 shares of its common stock in exchange for the $6,890,000 note owed to Ms. Gao. The shares issued represented approximately 69.7% of the issued and outstanding common stock immediately after the consummation of the Share Purchase and exercise of the option to purchase 5,300,000 shares of the Company’s common stock at $1.30 per share.

As a result of the controlling financial interest of the former stockholder of Armco HK, for financial statement reporting purposes, the merger between the Company and Armco HK has been treated as a reverse acquisition with Armco HK deemed the accounting acquirer and the Company deemed the accounting acquiree under the acquisition method of accounting in accordance with section 805-10-55 of the FASB Accounting Standards Codification. The reverse acquisition is deemed a capital transaction and the net assets of Armco HK (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the acquisition. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Armco HK which are recorded at their historical cost. The equity of the Company is the historical equity of Armco HK retroactively restated to reflect the number of shares issued by the Company in the transaction.

Formation of Armco (Lianyungang) Holdings, Inc.

On June 4, 2009, the Company formed Armco (Lianyungang) Holdings, Inc. (“Lianyungang Armco”), a WOFE subsidiary in the City of Lianyungang, Jiangsu Province, PRC. Lianyungang Armco intends to engage in marketing and distribution of the recycled scrap steel.

Formation of Armco Metals (Shanghai) Holdings, Ltd.

On July 16, 2010, the Company formed Armco Metals (Shanghai) Holdings. Ltd. (“Armco Shanghai”) as a WOFE subsidiary in Shanghai, China. Armco Shanghai serves as the headquarters for the Company’s China operations and oversees the activities of the Company in financing and international trading.

Acquisitionof Draco Resources Inc(“Draco”) Recognized as a Reverse Acquisition

On April 15, 2014, the Company entered into a Share Exchange Agreement with Draco Resources Inc ("Draco") and Metawise Group Inc ("Metawise") Nominees ("Metawise Nominees") pursuant to which the Company agreed to acquire 100% of the outstanding capital stock of Draco in exchange for i) 12,750,000 shares (post 1:10 reverse stock split as part of the contemplated acquisition("post-split")) of its common stock, and ii) a five year common stock purchase warrant to purchase 3,000,000 (post-split) shares of its common stock at an exercise price of $3.40 (post-split) per share.

On May 7, 2014 the Company entered into an amendment to the Share Exchange Agreement with Draco and the Metawise Nominees to add Metawise, the current sole shareholder of Draco, as a party.

At the closing of the Draco Acquisition, the Company will also issue an aggregate of 1,200,000 Shares (post-split) to China Direct Investments, Inc. and Shanghai Heqi Investment Center (Limited Partner) ("Compensation Shares") as finder’s fees due by Draco to those entities.

Following the completion of the Draco Acquisition, as giving effect to the distribution of the Acquisition Consideration by Metawise to the Metawise Nominees, the Metawise Nominees will own, by virtue of the issuance of the Acquisition Shares, approximately 66% of the Company’s then outstanding common stock, giving effect to the issuance of the Compensation Shares, but excluding any additional shares of its common stock issuable upon the exercise of the Acquisition Warrant or any other outstanding options or warrants. As a result of the Draco Acquisition, the Company’s stockholders’ existing share ownership and voting power will be diluted by the issuance of 13,950,000 newly issued shares of its common stock, which represent approximately 255% of its outstanding common stock as of July 11, 2014 (giving pro-forma effect to the reverse stock split described below), and approximately 72% of its outstanding common stock that would be outstanding at the closing of the Draco Acquisition, giving no effect to the shares underlying the Acquisition Warrant.

Immediately prior to the closing of the Draco Acquisition, the Company will effect a 1:10 reverse stock split of its common stock. All share numbers in the Acquisition Consideration and the Compensation Consideration are post-split numbers. At the reporting date, the Draco Acquisition is not closed and the closing date is not clear.

As of the reporting date, the Company is evaluating a change in the structure of its acquisition of Draco Resources, Inc. in order to satisfy initial listing standards with NYSE MKT. The Company continues to pursue a substantial interest in Draco. and expects that a restructured agreement will be formalized following management discussions.

XML

Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Preferred stock par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	74,000,000	74,000,000
Common stock, shares issued	54,958,437	29,876,327
Common stock, shares outstanding	54,958,437	29,876,327

XML

Note 11 - Derivative Instruments and the Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Derivatives and Fair Value [Text Block]

Note 11 – Derivative Instruments and the Fair Value of Financial Instruments

(i)     Warrants Issued in April 2010 (“2010 Warrants)

Description of Warrants

In connection with the sale of 1,538,464 shares of its common stock at $6.50 per share or $10,000,016 in gross proceeds to nine (9) accredited and institutional investors on April 20, 2010, the Company issued warrants to purchase an additional 1,538,464 shares of its common stock with an exercise price of $7.50 per share (“2010 Warrants”) expiring five (5) years from date of grant exercisable commencing 181 days following the date of issuance.  At the closing of the private offering, the Company paid Rodman & Renshaw, LLC, a FINRA member firm that served as placement agent for the Company in the offering, (i) a fee of $500,000 as compensation for their services and (ii) a warrant to purchase 76,923 shares of the Company’s common stock with an exercise price of $7.50 per share expiring five (5) years from date of grant exercisable commencing 181 days following the date of issuance, as well as a $15,000 non-accountable expense allowance to one of the nine (9) investors in the offering.

Derivative Analysis

Since the Asher and Hanover notes bear derivative feature, as discussed below, the warrants were tainted under ASC 815-15 “Derivatives and Hedging”. On June 30, 2014, the derivative liability associated with the warrants was valued at $53.

2010 Warrants Outstanding

As of June 30, 2014, 2010 warrants to purchase 1,615,387 shares of its common stock remain outstanding.

The table below summarizes the Company’s 2010 non-derivative warrant activities through June 30, 2014:

	Number of Warrant Shares			Exercise Price Range Per Share		Weighted Average Exercise Price		Fair Value at Date of Issuance		Aggregate Intrinsic Value
Balance, December 31, 2013		1,615,387		$	7.50	$	7.5	$	-	$	-
Earned and exercisable, December 31, 2013		1,615,387		$	7.50	$	7.5	$	-	$	-
Unvested, December 31, 2013		-		$	-	$	-	$	-	$	-
Granted		-			-		-		-		-
Canceled for cashless exercise		(-	)		-		-		-		-
Exercised (Cashless)		(-	)		-		-		-		-
Exercised		(-	)		-		-		-		-
Expired		-			-		-		-		-
Balance, June 30, 2014		1,615,387		$	7.50	$	7.50	$	-	$	-
Earned and exercisable, June 30, 2014		1,615,387		$	7.50	$	7.50	$	-	$	-
Unvested, June 30, 2014		-		$	-	$	-	$	-	$	-

The following table summarizes information concerning outstanding and exercisable 2010 warrants as of June 30, 2014:

	Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices	Number Outstanding		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price
$7.50		1,615,387		0.81	$	7.50		1,615,387		0.81	$	7.50
$7.50		1,615,387		0.81	$	7.5		1,615,387		0.81	$	7.5

(ii) Convertible Notes

On November 8, 2013, the Company signed a purchase agreement with Hanover Holdings I, LLC, a New York limited liability company, or Hanover, with an initial principal amount of $450,000, or the Initial Convertible Note (“ Hanover Notes”), for a purchase price of $300,000. The outstanding principal of initial note is subject to filing date reduction and effective date reduction. Filing date reduction will reduce the outstanding principal of initial note by $50,000 if the Company files the S-1registration statement per the purchase agreement within 45 days of the note date. The Company failed to meet this filing date reduction term, and accordingly, the initial principal amount was not reduced by the $50,000. Effective date reduction will reduce the outstanding principal of the initial note by another $100,000 if the S-1 registration statement takes effective within 120 days of the note date. On December 26, 2013, the Company filed a S-1 registration statement pursuant to the purchase agreement which was effective on February 14, 2014. Thus, we successfully met the effective date reduction term. As a result, the principal amount of the note was reduced to $350,000 of which $50,000 was recorded as accrued liabilities as of December 31, 2013. Additionally, the Company has the right to require Hanover to purchase, on the 10th trading day after the effective date of the Registration Statement, or the Additional Closing Date, an additional senior convertible note with an initial principal amount of $500,000, or the Additional Convertible Note, for a purchase price of $500,000.  The Initial Convertible Note matures on November 8, 2014 (subject to extension as provided in the Initial Convertible Note) and accrues interest at the rate of 4.0% per annum. On March 3, 2014, the Additional Convertible Note was issued and it will mature on the date that is the one-year anniversary of the date of issuance of the Additional Convertible Note (subject to extension as provided in the Initial Convertible Note) and will accrue interest at the rate of 4.0% per annum. The Initial Convertible Note is convertible at any time, in whole or in part, at Hanover’s option, into shares of common stock, at a conversion price equal to the Variable Conversion Price. “Variable Conversion Price” means, as of any date of determination, the product of (A) the lowest volume weighted average price of the common stock of any of the five consecutive trading days ending and including the trading day immediately preceding such date of determination (subject to adjustment) , or the Variable Conversion Base Price; and (B) the applicable Variable Percentage. “Variable Percentage” means (i) if the applicable Variable Conversion Base Price is less than or equal to $0.45 (subject to adjustment), 85% or (ii) if the applicable Variable Conversion Base Price is greater than $0.45 (subject to adjustment), 80%. The Additional Convertible Note will be convertible at any time, in whole or in part, at Hanover’s option into shares of common stock at a conversion price that will be equal to the Variable Conversion Price.

On September 23, 2013 and December 10, 2013, the Company issued Notes (“Asher Notes”) to Asher Enterprises, Inc. (the “Holder”) which are convertible in 180 days (at which time they will require derivative treatment), in the amounts of $153,500 (1st tranche included no deferred financing cost or legal fees) and $63,000 (2nd tranche included no deferred financing cost or legal fees) (the “Convertible Note” or the “Note”). The 9/23/13 and 12/10/13 Asher Convertible Notes are convertible at 58% of the average 3 lowest closing bid prices for the last 10 trading days and contains a full ratchet reset. The holders have the right after 180 days following the Date of Issuance (on 3/22/14 the 9/23/13 note became convertible, and on 6/8/14 the 12/10/13 note became convertible), and until any time until the Convertible Note is fully paid, to convert any outstanding and unpaid principal portion of the Convertible Note, and accrued interest, into fully paid and non-assessable shares of Common Stock. The Holder was not issued warrants with the Convertible Note. The Convertible Note: (a) bears interest at 8% per annum; (b) the principal and accrued interest is due and payable on 6/25/13 and 9/12/14; (c) is convertible optionally by the Holder at any time after 180 days; (d) bears 22% interest on default with a 150% payment penalty under specific default provisions; (e) redeemable at 115% through 140% for days 0-180; (f) and is subject to dilutive adjustments for share issuances (full ratchet reset feature). The Company analyzed the conversion option of all the convertible notes for derivative accounting consideration under ASC 815-15 "Derivatives and Hedging" and determined that the embedded conversion feature should be classified as a liability due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The embedded conversion feature was measured at fair value at the date of inception and at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings.  

On January 13, 2014, the Company issued convertible notes for a total of $2,472,127 to four foreign investors. The notes will mature on October 13, 2014. On February 4, 2014, the Company issued convertible notes for a total of $3,082,340 to another eleven foreign investors. The notes will mature on February 4, 2014. All these notes bear interest at 8% per annum, and convertible optionally by the holders at any time at a conversion price of $0.317. The derivative features of the Asher and Hanover Notes taint (due to the indeterminate number of shares) the convertible notes issued on January 13, and February 4, 2014. See more details in Note 7.

Conversions to Common Stock

On February 27, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 plus interest of $4,628 of the note into 95,997 shares of the Company's common stock, at a conversion price of $0.308635 per share.

On March 5, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $75,000 of the note due November 1, 2014 into 234,295 shares of the Company's common stock, at a conversion price of $0.32011 per share.

On March 14, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $50,000 of the note due November 1, 2014 into 155,085 shares of the Company's common stock, at a conversion price of $0.322405 per share.

On March 24, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $50,000 of the note due November 1, 2014 into 145,351 shares of the Company's common stock, at a conversion price of $0.343995 per share.

On March 26, 2014, the Company received a conversion notice from its convertible note holder, Hanover, to convert $100,000 of the note due November 1, 2014 into 288,493 shares of the Company's common stock, at a conversion price of $0.34663 per share.

On March 28, 2014, $80,000 of principal under the Asher Note issued on September 23, 2013 was converted to 355,082 shares of the Company’s common stock.

On April 7, 2014, $73,500 of principal under Asher Note issued on September 23, 2013 and accrual interest of $6,140 was converted to 363,653 shares of the Company’s common stock and the remaining principal balance under the note is $0.

On April 7, 2014, the Company received conversion notices from its 15 foreign convertible notes holders to convert $5,554,468 of the note into 17,521,980 shares of the Company's common stock, at a conversion price of $ 0.317 per share.

On April 16, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $100,000 of the note and accrual interest of $1,525 into 374,425 shares of the Company's common stock, at a conversion price of $ 0.27115 per share.

On May 7, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $278 into 105,756 shares of the Company's common stock, at a conversion price of $ 0.23902 per share.

On May 14, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $78 into 109,923 shares of the Company's common stock, at a conversion price of $ 0.22814 per share.

On May 22, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $58 into 134,308 shares of the Company's common stock, at a conversion price of $0.186575 per share.

On May 30, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $44 into 135,717 shares of the Company's common stock, at a conversion price of $ 0.184535 per share.

On June 4, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $25,000 of the note and accrual interest of $11 into 150,897 shares of the Company's common stock, at a conversion price of $ 0.16575 per share

On June 12, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $100,000 plus interest of $3,756 of the note into 596,315 shares of the Company's common stock, at a conversion price of $ $ 0.173995 per share.

On June 16, 2014, $63,000 of principal under the Asher Note issued on December 10, 2013 and accrual interest of $2,520 were converted into 577,267 shares of the Company’s common stock, at a conversion price of $0.1135 per share.

On June 18, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $50,000 plus interest of $150 of the note into 244,409 shares of the Company's common stock, at a conversion price of $ $ 0.20519 per share.

On June 25, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $50,000 plus interest of $136 of the note into 239,577 shares of the Company's common stock, at a conversion price of $ $ 0.20927 per share.

On June 27, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $36,392 plus interest of $28 of the note into 174,034 shares of the Company's common stock, at a conversion price of $ $ 0.20927 per share.

Valuation Methodology

The Company analyzed the conversion feature with the reset provisions within the Convertible Note and has utilized a third party valuation consultant to assist the Company to fair value the compound embedded derivatives using a multinomial lattice models that values the derivative liabilities within the convertible notes based on a probability weighted discount cash flow model.

Valuation Assumptions –Initial valuation, Conversion and Change in Fair Value of Derivative Liability Related to Convertible Notes

The following assumptions were used for the valuation of the derivative liability related to issuance date, conversions, and the quarterly period ending June 30, 2014:

● The underlying stock price was used as the fair value of the common stock;

● An event of default would occur 5% of the time, increasing 1.00% per month to a maximum of 10% – to-date the 1 note is not in default and has not been converted by the holder nor redeemed by the Company;

● Capital raising events of $1,000,000 would occur in each quarter at 75% of market generating dilutive reset events at prices below the current exercise price or stock price;

● The projected annual volatility for each valuation period was based on the historical volatility of the Company which has been actively trading for the last 3 years:

1 Year

2/27/14 101%

3/3/14 101%

3/5/14 101%

3/14/14 102%

3/24/14 102%

3/26/14 102%

3/31/14 102%

4/7/14 82%

4/8/14 82%

4/16/14 83%

5/7/14 83%

5/14/14 83%

5/22/14 85%

5/30/14 84%

6/4/14 84%

6/12/14 84%

6/18/14 98%

6/25/14 102%

6/27/14 102%

6/30/14 102%

● The Holder would redeem through maturity based on availability of alternative financing, 10% of the time increasing 1.0% monthly to a maximum of 20%; and;

● The Holder would automatically convert the note at maturity if the registration was effective and the company was not in default.

As of June 30, 2014, the estimated fair value of derivative liabilities on convertible notes was $19,559.

The following table summarizes the change of fair value of the derivative debt liabilities:

Balance at December 31, 2012	$	-
To record derivative liability as debt discount		60,795
Change in fair value of derivative liability		634
Balance at December 31, 2013	$	61,429
To record derivative liability as debt discount		1,950,820
Change in fair value of derivative liability		108,975
Settlement of derivative liability due to conversion of related notes	$	(2,101,665	)
Balance at June 30, 2014		19,559

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 13, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Armco Metals Holdings, Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		55,318,745
Amendment Flag	false
Entity Central Index Key	0001410711
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

XML

Note 12 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 12 – Commitments and Contingencies

Litigation

The Company and its directors are a party to a lawsuit filed on March 29, 2013 by Albert Perron, derivatively on behalf of the Company, in the District Court for Clark County, Nevada (Case No. A- I 3-679151-C), which seeks a declaratory judgment, rescission, unspecified damages, equitable and injunctive relief, and attorney's fees. The Plaintiffs complaint alleges that the directors breached their fiduciary duties to the Company by exceeding their authority under the Company's Amended and Restated 2009 Stock Incentive Plan (the "Plan"), as further amended, by issuing shares to Mr. Kexuan Yao ("Mr. Yao") that exceeded the amount allowed under the Plan. The director defendants William Thomson ("Mr. Thomson") and Mr. Yao have tiled an answer to this lawsuit in which they have denied the claims being made. The Court's previous entry of default against Jinping (K.P.) Chan, Tao Pang and Weiping Shen (collectively, the "Remaining Defendants") has been lifted and their responses to Plaintiff's complaint are due August 20, 2014. Pretrial discovery has been completed, including taking the depositions of Mr. Thomson (Director and Audit Committee Chair) and Christina Xiong (Corporate and Board Secretary). The Company's position is that the shares at issue in this matter were granted to Mr. Yao in accordance with the Plan. The director defendants Mr. Thomson and Mr. Yao moved for summary judgment ("Motion for Summary Judgment") on the Plaintiff's meritless claims on July 18, 2014. The Remaining Defendants intend to join the Motion for Summary Judgment. A briefing schedule was entered by the Court on August 6, 2014, ordering Plaintiff to file a response to the Motion for Summary Judgment on or before August 22, 2014. A hearing on the Motion for Summary Judgment is currently scheduled for September 18, 2014. 

Uncommitted Trade Credit Facilities

The Company entered into uncommitted trade credit facilities with certain financial institutions. Substantially all of the uncommitted trade credit facilities were guaranteed by Mr. Yao.

The uncommitted trade credit facilities at June 30, 2014 were as follows:

Date of Expiration		Total Facilities			Facilities Used		Facilities Available
Armco HK
DBS (Hong Kong) Limited (i)	October 21, 2014		20,000,000			1,053,500		18,946,500
RZB (Beijing) Branch (ii)	March 24, 2015		15,000,000			-		15,000,000
Sub-total - Armco HK			35,000,000			1,053,500		33,946,500
Henan Armco
Bank of China (iii)	May 23, 2015		4,872,978			-		4,872,978
ICBC (iv)	September 09, 2014		3,248,652			-		3,248,652
Guangdong Development Bank Zhengzhou Branch (v)	May 6, 2015		15,593,529			-		15,593,529
Sub-total – Henan Armco			23,715,159			-		23,715,159
Renewable Metals
Bank of China Lianyungang Branch (vi)	December 27, 2015		8,121,630			8,121,630		-
Shanghai Pudong Development Bank (vii)	August 25, 2014		2,436,489			2,436,489		-
Bank of Communications Lianyungang Branch (viii)	October 6, 2014		11,695,147			-		11,695,147
Sub-total – Renewable Metals			22,253,266			10,558,119		11,695,148
		$	80,968,425		$	11,611,619	$	69,356,807
				%

(i) On December 21, 2011, Armco HK entered into a Banking Facilities Agreement with DBS Bank (Hong Kong) Limited of $20,000,000 for issuance of commercial letters of credit in connection with the Company’s purchase of metal ore.  The Company pays interest at LIBOR or DBS Bank’s cost of funds plus 2.50% per annum on issued letters of credit in addition to an export bill collection commission equal to 12.5% of the first $50,000 and 6.25% of the balance and an opening commission of 25% on the first $50,000 and 6.25% of the balance for each issuance.  Amounts advanced under this facility are repaid from the proceeds of the sale of metal ore.  The lender may terminate the facility at anytime at its sole discretion. The facility is secured by the charge on cash deposit of the borrower, the borrower’s restricted pledged deposit in the minimum amount of 3% of the letter of credit amount, the Company’s letter of comfort and the guarantee of Mr. Yao.

(ii) On March 25, 2014, Armco HK entered into Amendment No. 5 to the March 25, 2009 uncommitted Trade Finance Facility with RZB Austria Finance (Hong Kong) Limited. The amendment provides for the issuance of $15,000,000 of commercial letters of credit in connection with the purchase of metal ore, an increase of $5,000,000 over the amounts provided for in the March 25, 2010 facility. The Company pays interest at 200 basis points per annum plus the lender’s cost of funds per annum on issued letters of credit in addition to fees upon issuance of the letter of credit of 6.25% for issuance commissions, negotiation commissions, commission-in-lieu and collection commissions.  Amounts advanced under this facility are repaid from the proceeds of the sale of metal ore.  The lender may, however, terminate the facility at any time or at its sole discretion upon the occurrence of any event which causes a material market disruption in respect of unusual movement in the level of funding costs to the lender or the unusual loss of liquidity in the funding market. The lender has the sole discretion to decide whether or not such event has occurred.  The facility is secured by restricted cash deposits held by the lender, the personal guarantee of Mr. Yao, the Company’s guarantee, and a security interest in the contract for the purchase of the ore for which the letter of credit has been issued and the contract for the sale of the ore.

(iii) On June 8, 2013, Henan Armco obtained a RMB 30,000,000 (approximately $4.8 million) line of credit from Bank of China for issuance of letters of credit to finance the purchase of metal ore and scrap metal expiring May 23, 2014. The facility is secured by the guarantee provided by Renewable Metals and the pledge of movable assets provided by the borrower. Amounts advanced under this line of credit are repaid from the proceeds of the sale of metal ore.

(iv) On September 10, 2013, Henan Armco obtained a RMB 20,000,000 (approximately $3.2 million) line of credit from ICBC, for issuance of letters of credit to finance the purchase of metal ore and scrap metal expiring one (1) year from the date of issuance. The facility is guaranteed by Renewable Metals and Mr. Yao, the Company’s Chairman and Chief Executive Officer.

(v) On May 16, 2014, Henan Armco obtained a RMB 96,000,000 (approximately $15.6 million) line of credit from Guangdong Development Bank Zhengzhou Branch for issuance of letters of credit to finance the purchase of metal ore.  The Company pays interest at 120% of the applicable base rate for lending published by the People’s Bank of China (“PBC”) at the time the loan is made on issued letters of credit.  The facility is secured by the guarantee provided by Mr. Yao and Renewable Metals jointly and the pledge of movable assets provided by the borrower. Amounts advanced under this line of credit are repaid from the proceeds of the sale of metal ore.

(vi) On March 15, 2013, Renewable Metals entered into a line of credit facility in the amount of RMB50,000,000 (approximately $8.1 million) from Bank of China, Lianyungang Branch for the purchase of raw materials. The facility is expiring December 27, 2015 with interest at 7.872% per annum. The facility is secured by Renewable metals properties, machinery and equipment and land use rights, and guaranteed by Mr. Yao, Ms. Yi Chu, and Henan Armco, respectively.

(vii) On July 24, 2012, Renewable Metals entered into a line of credit facility in the amount of RMB 15,000,000 (approximately $2.4 million) from Shanghai Pudong Development Bank for the purchase of raw materials. The term of the facility is 12 months with interest at 120% of the applicable base rate for lending published by the People’s Bank of China (“PBOC”) at the time the loan is drawn down per annum. The facility is secured by Armco machinery’s land use right and guarantees provided Mr. Yao, Ms. Yi Chu.

(viii) On July 1, 2011, Renewable Metals obtained a RMB 72,000,000 (approximately $11.7 million) line of credit from Bank of Communications, Lianyungang Branch expiring two (2) years from the date of issuance, for issuance of letters of credit in connection with the purchase of scrap metal. The letters of credit require Renewable Metals to pledge cash deposit equal to 20% of the letter of credit for letters of credit at sight, or 30% for other domestic letters of credit and for extended domestic letters of credit, the collateral of inventory equal to 166% of the letter of credit. The facility is secured by Renewable Metals inventories and guarantee provided by Mr. Yao, the Company’s Chairman and Chief Executive Officer.

Employment with the Chairman and CEO

On February 8, 2012, the Company and Mr. Yao, entered into an Employment Agreement (the “Employment Agreement”), to employ Mr. Yao as the Company’s Chairman of the Board of Directors, President, and Chief Executive Officer. The initial term of employment under the agreement is from January 1, 2012 (the “Effective Date”) until December 31, 2014, unless sooner terminated in accordance with the terms of the Employment Agreement. Pursuant to the Employment Agreement, Mr. Yao is entitled to, among others, the following compensation and benefits:

a. Base Salary.  The Company shall pay the Executive a salary at a minimum rate of (i) $250,000 per annum for the period beginning on the Effective Date through December 31, 2012; (ii) $275,000 per annum for the period beginning on January 1, 2013 through December 31, 2013; and (iii) $300,000 per annum for the period beginning on January 1, 2014 through December 31, 2014 (the “Base Salary”).  Base Salary shall be payable in accordance with the customary payroll practices of the Company applicable to senior executives.

b. Bonus.  Each year during the Term, in addition to Base Salary, the Executive shall be entitled to an annual cash bonus in an amount equal to 50% of the Executive’s Base Salary for such year. Any such bonus shall be payable no later 2 and half months following the year with respect to which the Base Salary is payable.

c. Restricted Shares.  On the Effective Date, Executive shall receive 1,500,000 shares of the Company’s common stock (“Restricted Shares”) subject to the terms and conditions of the Amended and Restated China Armco Metals, Inc. 2009 Stock Incentive Plan (the "Incentive Plan"). The Restricted Shares shall vest according to Vesting Schedule attached the Employment Agreement as Exhibit A; provided, however, if the Executive is terminated pursuant to Section 5 of this Agreement, the Executive shall forfeit all the unvested Restricted Shares as of such termination.

d. Equity Incentive Compensation.  The Executive shall be entitled to participate in any equity compensation plan of the Company in which he is eligible to participate, and may, without limitation, be granted in accordance with any such plan options to purchase shares of Company’s common stock, shares of restricted stock and other equity awards in the discretion of the Board or the Committee. Any equity incentive compensation shall be payable no later than 2 and halfmonths of the following tax year in which such compensation is granted

e. Eligibility to participate in the Company’s benefit plans that are generally provided for executive employees.

Operating Leases

(i)     Operating Lease - OfficeSpace

On July 16, 2012, Armco Shanghai entered into a non-cancelable operating lease for office space that will expire on July 31, 2014. The lease agreement has been renewed on July 1, 2014 and will expire on July 31, 2016. The annual lease payment is RMB 674,933 (approximately $109,631).

On December 17, 2010, Armco Metals Holdings entered into a non-cancelable operating lease for office space that expired on December 31, 2013. The monthly rental payment is $4,004 in 2013. After the contract expired, the Company continued the lease with the same landlord on a month by month basis.

(ii)     Operating Lease of Property, Plant and Equipment and Facilities

InitialLeaseSigned on June 24, 2010

On June 24, 2011, Renewable Metals entered into a non-cancelable operating lease agreement with an independent third party for property, plant, equipment and facilities expiring one (1) year from date of signing. Renewable Metals is required to pay RMB 30 per metric ton of scrap metal processed at this facility over the term of the lease, which were accrued and included in the inventory of finished goods – processed scrap metal and transferred to cost of goods sold upon shipment of processed scrap metal.

First Renewal on April 13, 2012

On April 13, 2012, Renewable Metals renewed the aforementioned non-cancelable operating lease agreement for property, plant, equipment and facilities for an additional two-year term commencing on June 25, 2012, in consideration for (i) the issuance of one (1) million shares of the Company’s common stock and (ii) the payment of RMB1,000,000 (approximately $159,000) in cash. Pursuant to the lease agreement, the Company issued one million shares to the third party on April 13, 2012.  The cash amount is to be paid during the second year of the lease term.

On March 31, 2013, Renewable Metals terminated this operating lease agreement. Under the terms and conditions of the Termination Agreement, Hebang agreed to forgive the cash amount to be paid under the amended Leasing Agreement and Renewable Metals agreed to let Hebang keep the 1 million shares. Also see Note 13.

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Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
NET REVENUES	$ 32,879,242	$ 27,684,176	$ 42,797,893	$ 42,027,253
COST OF GOODS SOLD	29,816,401	25,332,787	40,898,856	39,031,199
GROSS MARGIN	3,062,841	2,351,389	1,899,037	2,996,054
OPERATING EXPENSES:
Selling expenses	101,835	60,460	202,690	89,686
Professional fees	141,328	120,488	355,782	316,985
General and administrative expenses	537,454	675,977	1,975,580	1,722,671
Operating cost of idle manufacturing facility	472,242	392,418	1,007,214	815,639
Total operating expenses	1,252,859	1,249,343	3,541,266	2,944,981
INCOME (LOSS) FROM OPERATIONS	1,809,982	1,102,046	(1,642,229)	51,073
OTHER EXPENSE:
Interest income	(532)	(44,136)	(98,800)	(46,861)
Interest expense	1,968,830	382,311	2,641,772	1,111,683
Change in fair value of derivative liability	586,884	(304,392)	108,975	(920,338)
Loan guarantee expense		10,333	13,002	22,833
Other (income) expense	16,725	39,678	75,028	(36,218)
Total other expense	2,571,907	83,794	2,739,977	131,099
INCOME (LOSS) BEFORE INCOME TAXES PROVISION	(761,925)	1,018,252	(4,382,206)	(80,026)
INCOME TAX PROVISION		70,198		61,688
NET INCOME (LOSS)	(761,925)	948,054	(4,382,206)	(141,714)
OTHER COMPREHENSIVE INCOME (LOSS):
Change in unrealized income (loss) of marketable securities	10,530	(417,105)	32,468	(411,606)
Foreign currency translation gain (loss)	35,780	1,146,411	(372,778)	906,893
COMPREHENSIVE LOSS	$ (715,615)	$ 1,677,360	$ (4,722,516)	$ 353,573
NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED:
Net income (loss) per common share - basic and diluted (in Dollars per share)	$ (0.01)	$ 0.04	$ (0.11)	$ (0.01)
Weighted Average Common Shares Outstanding - basic and diluted (in Shares)	50,808,455	23,974,603	40,320,346	23,974,603

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Note 6 - Inventories

6 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

Note 6 – Inventories

Inventories consisted of the following:

	June 30, 2014			December 31, 2013
Raw materials – scrap metal	$	5,206,529		$	4,390,811
Finished goods – processed scrap metal		9,745,128			12,421,088
Purchased merchandise for resale		74,306			5,936,936
Write - down of inventories		(1,777,081	)		(2,291,915	)
	$	13,248,882		$	20,456,920

Renewable Metals raw materials and finished goods are collateralized for loans from the Bank of Communications Limited Lianyungang Branch. Raw materials consisted of scrap metals to be processed and finished goods were comprised of all of the processed scrap metal at Renewable Metals. Due to the short duration time for the processing of its scrap metal, there was no material work-in-process inventory at June 30, 2014 or December 31, 2013.

Slow-Moving or Obsolescence Markdowns

The Company recorded no inventory obsolescence adjustments for the six months ended June 30, 2014 and 2013.

Lower of Cost or Market Adjustments

There were $-541,834 and $486,837 of lower of cost or market adjustments for the six months ended June 30, 2014 and 2013.

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Note 5 - Accounts Receivable

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 5 – Accounts Receivable

Accounts receivable consisted of the following:

	June 30, 2014			December 31, 2013
Accounts receivable	$	23,361,959		$	25,638,666
Allowance for doubtful accounts		(43,150	)		(43,150	)
	$	23,318,809		$	25,595,516

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation - Unaudited Interim Financial Information

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Interim results are not necessarily indicative of the results for the full year.  These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2013 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on April 4, 2014.

Consolidation, Policy [Policy Text Block]

Principlesof Consolidation

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

The Company's consolidated subsidiaries and/or entities as of June 30, 2014 are as follows:

Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition, if applicable)	Attributable interest
Armco Metal International Limited (“Armco HK”)	Hong Kong SAR	July 13, 2001	100%
Henan Armco and Metawise Trading Co., Ltd. (“Henan Armco”)	PRC	June 6, 2002	100%
Armco (Lianyungang) Renewable Metals, Inc. (“Renewable Metals”)	PRC	January 9, 2007	100%
Armco (Lianyungang) Holdings, Inc. (“Lianyungang Armco”)	PRC	June 4, 2009	100%
Armco Metals (Shanghai) Holdings. Ltd. (“Armco Shanghai”)	PRC	July 16, 2010	100%

The consolidated financial statements include all accounts of the Company and the consolidated subsidiaries and/or entities as of reporting period ending date(s) and for the reporting period(s) then ended.

All inter-company balances and transactions have been eliminated.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period). Management makes its best estimate of the outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, pledged deposits, accounts receivable, advance on purchases, prepayments and other current assets, accounts payable, customer deposits, corporate income/VAT tax payable, accrued expenses and other current liabilities approximate their fair values because of the short maturity of these instruments.

The Company’s loans payable, banker’s acceptance notes payable, and capital lease obligation approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2014 and December 31, 2013.

The Company’s Level 3 financial liabilities consist of the derivative warrant issued in April 2010 and convertible note with embedded conversion feature issued in September, November, and December 2013, and January through March 2014, for which there are no current market for these securities such that the determination of fair value requires significant judgment or estimation.  The Company valued the automatic conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions using a lattice model, with the assistance of a valuation specialist, for which management understands the methodologies. These models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

It is not, however, practical to determine the fair value of advances from significant stockholder and lease arrangement with the significant stockholder, if any, due to their related party nature.

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

Level 1 Financial Assets – Marketable Securities

The Company uses Level 1 of the fair value hierarchy to measure the fair value of the marketable securities and marks the available for sale marketable securities at fair value in the statement of financial position at each balance sheet date and reports the unrealized holding gains and losses for available-for-sale securities in other comprehensive income (loss) until realized provided the unrealized holding gains and losses is temporary. If the fair value of an investment is less than its cost basis at the balance sheet date of the reporting period for which impairment is assessed, and it is determined that the impairment is other than temporary, then an impairment loss is recognized in earnings equal to the entire difference between the investment’s cost and its fair value at the balance sheet date of the reporting period.

Level 3 Financial Liabilities – Derivative Liabilities

The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative warrant liability and derivative convertible debt liabilities at every reporting period and recognizes gains or losses in the consolidated statements of operations and comprehensive income (loss) that are attributable to the change in the fair value of the derivative liabilities.

The following table sets forth by level within the fair value hierarchy the Company's financial assets and liabilities that were accounted for at fair value as of June 30, 2014, and December 31, 2013:

Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
June 30, 2014
Derivative liability		-		-	$	19,559	$	19,559
Available-for-sale securities	$	551,597		-		-	$	551,597
December 31, 2013
Derivative liability		-		-	$	61,429	$	61,429
Available-for-sale securities	$	519,129		-		-	$	519,129

Fair Value of Non-Financial Assets or Liabilities Measured on a Recurring Basis

The Company’s non-financial assets include inventories. The Company identifies potentially excess and slow-moving inventories by evaluating turn rates, inventory levels and other factors. Excess quantities are identified through evaluation of inventory aging, review of inventory turns and historical sales experiences. The Company provides lower of cost or market reserves for such identified excess and slow-moving inventories. The Company establishes a reserve for inventory shrinkage, if any, based on the historical results of physical inventory cycle counts.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

The financial records of the Company's Chinese operating subsidiaries are maintained in their local currency, the Renminbi (“RMB”), which is the functional currency. Assets and liabilities are translated from the local currency into the reporting currency, U.S. dollars, at the exchange rate prevailing at the balance sheet date. Revenues and expenses are translated at weighted average exchange rates for the period to approximate translation at the exchange rates prevailing at the dates those elements are recognized in the consolidated financial statements. Foreign currency translation gain (loss) resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining accumulated other comprehensive income in the consolidated statement of stockholders’ equity.

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rate adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC. Commencing July 21, 2005, China adopted a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies. The exchange rate of the US dollar against the RMB was adjusted from approximately RMB 8.28 per U.S. dollar to approximately RMB 8.11 per U.S. dollar on July 21, 2005. Since then, the PBOC administers and regulates the exchange rate of the U.S. dollar against the RMB taking into account demand and supply of RMB, as well as domestic and foreign economic and financial conditions.

Unless otherwise noted, the rate presented below per U.S. $1.00 was the midpoint of the interbank rate as quoted by OANDA Corporation (www.oanda.com) contained in its consolidated financial statements. Management believes that the difference between RMB vs. U.S. dollar exchange rate quoted by the PBOC and RMB vs. U.S. dollar exchange rate reported by OANDA Corporation were immaterial. Translations do not imply that the RMB amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars. Translation of amounts from RMB into U.S. dollars has been made at the following exchange rates for the respective periods:

	June 30, 2014		December 31, 2013		June 30, 2013
Balance sheets		6.1564		6.1122		6.1807
Statements of operations and comprehensive income (loss)		6.1419		6.1943		6.2437

Net Income (Loss) per Common Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options, warrants and convertible debt instruments.

For the periods presented, the computation of diluted loss per share equaled basic loss per share as the inclusion of any dilutive instruments would have had an antidilutive effect on the earnings per share calculation in the periods presented.

The following table shows the potentially outstanding dilutive common shares excluded from the diluted net income (loss) per common share calculation as they were anti-dilutive:

	Potentially Outstanding Dilutive Common Shares
	For the Six Months Ended June 30, 2014		For the Six Months Ended June 30, 2013
Conversion Feature Shares
Common shares issuable under the conversion feature of convertible notes payable		416,979		-
Sub-total: Conversion feature shares		416,979		-
Unvested common shares issued to employees
Unvested common shares issued to directors, vest in July, October, December 2014, and January 2015		378,125		-
Sub-total: Unvested common shares issued to employees		378,125		-
Stock Option Shares
Options issued on October 5, 2010 to employees to purchase common shares with an exercise price of $5.00 per share expiring five (5) years from the date of issuance		40,000		40,000
Sub-total: Stock option shares		40,000		40,000
Warrant Shares
12,180,210 Warrants issued on August 1, 2008 to investors to purchase common shares with an exercise price of $0.50 per shares expiring five(5) from the date of issuance		-		12,180,210
1,538,464 and 76,923 Warrants issued on April 20, 2010 to investors to purchase common shares with an exercise price of $7.50 per shares expiring five(5) from the date of issuance		1,615,387		1,615,387
Sub-total: Warrant shares		1,615,387		13,795,597
Total potentially outstanding dilutive common shares		2,450,491		13,835,597

Earnings Per Share, Policy [Policy Text Block]

Net Income (Loss) per Common Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options, warrants and convertible debt instruments.

For the periods presented, the computation of diluted loss per share equaled basic loss per share as the inclusion of any dilutive instruments would have had an antidilutive effect on the earnings per share calculation in the periods presented.

The following table shows the potentially outstanding dilutive common shares excluded from the diluted net income (loss) per common share calculation as they were anti-dilutive:

	Potentially Outstanding Dilutive Common Shares
	For the Six Months Ended June 30, 2014		For the Six Months Ended June 30, 2013
Conversion Feature Shares
Common shares issuable under the conversion feature of convertible notes payable		416,979		-
Sub-total: Conversion feature shares		416,979		-
Unvested common shares issued to employees
Unvested common shares issued to directors, vest in July, October, December 2014, and January 2015		378,125		-
Sub-total: Unvested common shares issued to employees		378,125		-
Stock Option Shares
Options issued on October 5, 2010 to employees to purchase common shares with an exercise price of $5.00 per share expiring five (5) years from the date of issuance		40,000		40,000
Sub-total: Stock option shares		40,000		40,000
Warrant Shares
12,180,210 Warrants issued on August 1, 2008 to investors to purchase common shares with an exercise price of $0.50 per shares expiring five(5) from the date of issuance		-		12,180,210
1,538,464 and 76,923 Warrants issued on April 20, 2010 to investors to purchase common shares with an exercise price of $7.50 per shares expiring five(5) from the date of issuance		1,615,387		1,615,387
Sub-total: Warrant shares		1,615,387		13,795,597
Total potentially outstanding dilutive common shares		2,450,491		13,835,597

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update change the requirements for reporting discontinued operations in Subtopic 205-20. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” The ASU states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Although “major” is not defined, the standard provides examples of when a disposal qualifies as a discontinued operation. The ASU also requires additional disclosures about discontinued operations that will provide more information about the assets, liabilities, income and expenses of discontinued operations. In addition, the ASU requires disclosure of the pre-tax profit or loss attributable to a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. The ASU is effective for public business entities for annual periods beginning on or after December 15, 2014, and interim periods within those years. The adoption of ASU 2014 -08 is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from contracts with Customers (Topic 606)". This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchanged for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

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Note 13 - Stockholders' Equity

6 Months Ended

Jun. 30, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 13 – Stockholders’ Equity

Issuance of Common Stock to Parties Other Than Employees for Acquiring Goods or Services

Loan Guarantee - Henan Chaoyang Steel Co., Ltd.

On June 11, 2010 the Company entered into a Guaranty Cooperation Agreement with Henan Chaoyang Steel Co., Ltd. (“Henan Chaoyang”) to provide additional liquidity to meet anticipated working capital requirements of Renewable Metals’ scrap metal recycling facility. Under the terms of the guaranty, Henan Chaoyang agreed to provide loan guarantees to Renewable Metals’ existing and pending bank lines of credit of up to 300 million RMB in the aggregate (approximately $45,400,000) for five (5) years expiring June 30, 2015. As consideration for the guaranty, the Company issued a designee of Henan Chaoyang 500,000 shares of its common stock. These shares are earned ratably over the term of the agreement and the unearned shares are forfeitable in the event of nonperformance by the guarantor.

Shares Earned during the Year Ending December 31, 2014

33,338 common shares earned for the quarter ended March 31, 2014 were valued at $0.39 per share, which was the market price on quarter end date, or $13,002, which was recorded as loan guarantee expense.

Consulting Services Agreement – CD International Enterprise Inc

On November 8, 2013, the Company entered into a Consulting Services Agreement (“Consulting Agreement”) with CD International Enterprise Inc (“CDI”), a US company. Pursuant to the Consulting Agreement, CDI agreed to provide consulting services from November 1, 2013 to October 31, 2014 in exchange for 1,000,000 shares of common stock of the Company. These shares are earned ratably over the term of the agreement and the unearned shares are forfeitable in the event of nonperformance by the CDI.

Shares Earned during the Year Ending December 31, 2014

250,000 common shares earned for the quarter ended March 31, 2014 were valued at $0.39 per share, which was the market price on quarter end date, or $97,500, which was recorded as consulting expenses.

250,000 common shares earned for the quarter ended June 30, 2014 were valued at $0.27 per share, which was the market price on quarter end date, or $67,500, which was recorded as consulting expenses.

Legal Services Agreement–All Bright Law Offices

On April 7, 2014, the Company entered into a Legal Services Agreement (“Legal Agreement”) with All Bright Law Office Pursuant to the Legal Agreement, All Bright agreed to provide Chinese-law related legal counsel services from April 1, 2013 to March 31, 2015 in exchange for 500,000 shares of common stock of the Company. These shares are earned ratably over the term of the agreement and the unearned shares are forfeitable in the event of nonperformance by the All Bright.

Shares Earned during the Year Ending December 31, 2014

125,000 common shares earned for the quarter ended June 30, 2014 were valued at $0.27 per share, which was the market price on quarter end date, or $33,750, which was recorded as legal expenses.

Issuance of Common Stock under the 2009 Stock Incentive Plan as Amended

On February 8, 2012, the Company awarded 1,500,000 shares of its restricted common stock, par value $.001 per share, pursuant to the Amended and Restated 2009 Stock Incentive Plan, to Mr. Kexuan Yao, the Company’s Chief Executive Officer. The term of employment under the agreement is from January 1, 2012 (the “Effective Date”) until December 31, 2014, unless sooner terminated in accordance with the terms of the Employment Agreement. These shares were valued at $0.499 per share or $748,500 on the date of grant and are amortized over the vesting period, or $62,375 per quarter. During the six months ended June 30, 2014, a total of $124,750 stock-base compensation expense was recognized.

On May 3, 2013, the Company agreed to pay Director Mr. Weiping Shen 50,000 shares of the Company’s restricted common stock in conjunction with his re-appointment to the Company's board of directors vesting 50% on September 30, 2013 and 50% on May 3, 2014.  The restricted stock vests only if Mr. Shen is still a director of the Company on the vesting date (with limited exceptions), and the shares are eligible for the payment of dividends, if the Board of Directors was to declare dividends on the Company’s common stock. These shares were valued at $0.389 per share or $19,450 on the date of grant and are being amortized over the vesting period, or $4,863 per quarter. During the six months ended June 30, 2014, a total of $6,484 stock-base compensation expense was recognized.

On January 2, 2014, the Company agreed to pay Director Mr. Kam Ping Chan 6,250 shares of the Company’s restricted common stock in conjunction with his re-appointment to the Company's board of directors vesting 50% on June 30, 2014 and 50% on December 31, 2014, effectively January 1, 2014.  The restricted stock vests only if Mr. Chan is still a director of the Company on the vesting date (with limited exceptions), and the shares are eligible for the payment of dividends, if the Board of Directors was to declare dividends on the Company’s common stock. These shares were valued at $0.323 per share or $2,019 on the date of grant and are being amortized over the vesting period, or $505 per quarter in 2014. During the six months ended June 30, 2014, a total of $1,010 stock-base compensation expense was recognized.

On April 9, 2014, the Company granted 2,329,958 shares of its common stock to certain of its employees for the first quarter of their 2014 service of approximately $838,785, in lieu of cash, which were recorded as compensation expense for the quarter ended March 31, 2014.

Summaryofthe Company’s Amended and Restated 2009 Stock Incentive Plan Activities

The table below summarizes the Company’s Amended and Restated 2009 Stock Incentive Plan activities:

	Number of Shares or Options			Fair Value at Date of Grant
Balance, December 31, 2012		4,198,881		$	2,614,951
Options – granted		-			-
Options – canceled		-			-
Shares – granted		1,419,532			662,256
Shares – canceled		(-	)		(-	)
Balance, December 31, 2013		5,618,413		$	3,277,207
Vested, December 31, 2013		5,101,746			3,023,732
Unvested, December 31, 2013		516,667		$	253,475
Options – granted		-			-
Options – canceled		-			-
Shares – granted		2,336,208			840,804
Shares – canceled		(-	)		(-	)
Balance, March 31, 2014		7,954,621		$	4,118,011
Vested, June 30, 2014		7,576,496			3,929,876
Unvested, June 30, 2014		378,125		$	188,135

As of June 30, 2014, there were 245,379 shares of common stock remaining available for issuance under the Amended and Restated 2009 Stock Incentive Plan.

During the six months ended June 30, 2014, the Company issued 60,000 adjustment shares to four investors pursuant to the anti-dilution provision of the Company’s 2008 Offering Subscription Agreement, which was triggered by the Company’s 2013 offering. Per the anti-dilution provision, the investors are entitled to an adjustment to the Purchase Price for such shares that they purchased in the 2008 Offering and have held the purchase from 2008 offering to January 28, 2013(2013 Offering date). The Company debit additional paid in capital and credit to common stock of $60 to reflect this transactions.

Issuance of common stock for debt conversion

During the six months ended June 30, 2014, the Company issued a total of 22,002,564 shares for conversion of debt and accrued interest of $6,551,712. See details in Note 11.

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Note 9 - Related Party Transactions

6 Months Ended

Jun. 30, 2014

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

Note 9 – Related Party Transactions

The related parties consist of the following:

Kexuan Yao (“Mr. Yao”	The Company’s Chairman, Chief Executive Officer and principal stockholder
Keli Yao	Kexuan Yao’s brother
Yi Chu	Kexuan Yao’s wife

Advances from Chairman and CEO

From time to time, the Chairman, CEO and significant stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand. As of June 30, 2014 and December 31, 2013, the advance balance was $792,431 and $668,332, respectively.

Promissory Note from Chairman and CEO

On March 29, 2013, the Company executed a promissory note in the amount of RMB 6,300,000 (approximately $1,000,000) payable to the Chairman, CEO and significant stockholder of the Company.  The note, which is due one year from the date of issuance, accrues interest at 8% per annum.  The proceeds are used for working capital purposes. The note was subsequently converted into shares of common stock of the Company in October 28, 2013. See more details in Note 13.

Operating Lease from Chairman and CEO

On January 1, 2006, Henan entered into a non-cancellable operating lease for its 176.37 square meters commercial office space in the City of Zhengzhou, Henan Province, PRC from Mr. Yao for RMB 10, 000 per month. The lease expired on December 31, 2008 and has been extended through December 31, 2014. Rental expense incurred for the six months ended 30 June, 2014 and 2013 was RMB 60,000 (approximately $9,746) and RMB 60,000 (approximately $9,610), respectively.

Due to Other Related Parties

Due to other related parties consists of the following:

	June 30, 2014		December 31, 2013
Keli Yao		-		116,828
Yi Chu		250,146		286,313
Total		250,146		403,141

The balance of $250,146 due to related party represents the loan owed to the related parties, which is interest free, unsecured and repayable on demand.

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Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Non-Derivative Warrant Activities (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Non-Derivative Warrant Activities [Line Items]
Exercise Price Per Share	$ 7.50
Exercise Price Per Share	$ 7.50
Earned and Exercisable [Member] | Warrants 2010 [Member]
Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Non-Derivative Warrant Activities [Line Items]
Exercise Price Per Share	$ 7.50
Number of Warrant Shares (in Shares)	1,615,387
Exercise Price Per Share	$ 7.50
Earned and Exercisable [Member] | Warrants 2010 [Member] | Weighted Average [Member]
Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Non-Derivative Warrant Activities [Line Items]
Exercise Price Per Share	$ 7.50
Exercise Price Per Share	$ 7.50
Warrants 2010 [Member]
Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Non-Derivative Warrant Activities [Line Items]
Number of Warrant Shares (in Shares)		1,615,387
Exercise Price Per Share	$ 7.50	$ 7.50
Number of Warrant Shares (in Shares)	1,615,387
Exercise Price Per Share	$ 7.50	$ 7.50
Warrants 2010 [Member] | Weighted Average [Member]
Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Non-Derivative Warrant Activities [Line Items]
Exercise Price Per Share	$ 7.50	$ 7.5
Exercise Price Per Share	$ 7.50	$ 7.5

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Note 7 - Loans and Convertible Note Payable

6 Months Ended

Jun. 30, 2014

Loans Payable [Abstract]

Loans Payable [Text Block]

Note 7 – Loans and Convertible Note Payable

Loans payable consisted of the following:

	June 30, 2014		December 31, 2013
Armco HK
Loan payable to RZB Austria Finance (Hong Kong) Limited, collateralized by certain of the Company’s inventory, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at the bank’s cost of funds plus 200 basis points per annum, with principal and interest due April 1, 2014 and repaid in full	$	-	$	504,248
Loan payables to DBS, collateralized by certain of the Company’s inventory, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at an average of 2.86% per annum, balance is due September 23, 2014		935,019		2,602,115
Sub-total - Armco HK		935,019		3,106,363
Renewable Metals
Loan payable to Bank of Communications, Lianyungang Branch, under trade credit facilities, collateralized by Renewable Metals inventories and guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 120% of the bank’s benchmark rate per annum (average 7.2%), balance due June 2, 2014 and paid in full		-		1,963,286
Loan payable to Bank of China, Lianyungang Branch, under trade credit facilities, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 6.6% per annum payable monthly, balance due September 25, 2014		8,121,629		8,180,361
Loan payable to Pudong Development Bank, Lianyungang Branch, under trade credit facilities, guaranteed by the Company’s Chairman and Chief Executive Officer, with interest at 7.92% per annum payable monthly, balance due from March 27, 2015 through April 7, 2015		2,436,489		-
Short-term borrowing, with interest rate at 8% per annum		64,973		229,050
Short-term borrowing with no interest and due upon demand		1,294,588		-
Loan payable, with interest at 6% per annum and due January 21, 2015		3,478,226		3,503,379
Sub-total – Renewable Metals		15,395,905		13,876,076
Henan Armco
Loan Payable to ICBC, with interest at 2.47% per annum, and repaid in full on March 28, 2014		-		2,755,926
Loan Payable to Guanhutun Credit Union, collateralized by Henan’s building and leasehold improvement, with interest at 9.6% per annum, balance due March 16, 2015		162,432		163,607
Loans payable, with interest at 8% per annum, and due in 2014. The creditors agreed to exchange $5,319,351 into convertible notes in January and February, 2014		-		5,999,957
Short-term borrowing, no interest bearing due upon demand		2,117,409		-
Sub-total – Henan Armco		2,339,841		8,919,490
Armco Metals Holdings
Short term borrowing, with 0% interest, due on demand		110,000
Loans payable, with interest at 8% per annum, due from October 21, 2014 through November 8, 2014		790,000		1,050,000
Convertible notes payable, net of discount of $18,286, with interest at 4% per annum, due on March 3, 2015.		70,322		463,709
Sub-total – Armco Metals Holdings		970,322		1,513,709
	$	19,641,087	$	27,415,638

Collateralization of Property, Plant and Equipment

Both Renewable Metals and Lianyungang Armco’s property, plant and equipment representing substantially all of the Company’s property, plant and equipment are collateralized for loans from the Bank of China Lianyungang Branch .

Collateralization of Land Use Rights

Both Renewable Metals and Lianyungang Armco’s land use rights representing all of the Company’s land use rights are collateralized for loans from the Bank of China Lianyungang Branch .

Convertible notes payable

During 2013, the Company’s subsidiary borrowed an aggregate of approximately $6.2 million from 15 non-U.S. lenders who are not its affiliates under the terms of loan contracts. In January and February 2014, the Company and its subsidiary entered into note exchange agreements with each of these lenders pursuant to which the Company exchanged the loan contracts for 8% convertible notes in the aggregate amount of RMB 33,512,936 (approximately $5.5 million net of discount of $1.3 million), which represented the remaining principal balance due under the loan contracts. The convertible notes bear interest at the rate of 8% per annum, mature nine months from the date of issuance, and are convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion price of $0.317 per share. All the notes were converted on April 7, 2014. See note 11.

The Company analyzed the modification of the term under ASC 470-60 “Trouble Debt Restructurings” and ASC 470-50 “Extinguishment of Debt”. The Company determined the modification is substantial and the transaction should be accounted for as an extinguishment with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. The Company also determined that the fair value of the new debt is the same as the fair value of the old debt. Thus no gain or loss was recognized upon the extinguishment.

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Note 8 - Banker's Acceptance Notes Payable and Letters of Credit

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Short-term Debt [Text Block]

Note 8 – Banker’s Acceptance Notes Payable and Letters of Credit

Banker’s acceptance notes payable consisted of the following:

	June 30, 2014		December 31, 2013
Renewable Metals
Banker’s acceptance notes payable maturing on March 27, 2014	$	-	$	3,272,144
Letters of credit maturing October 6, 2014		1,764,803		5,201,073
	$	1,764,803	$	8,473,217

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Note 10 - Capital Lease Obligation

6 Months Ended

Jun. 30, 2014

Leases, Capital [Abstract]

Capital Leases in Financial Statements of Lessee Disclosure [Text Block]

Note 10 – Capital Lease Obligation

Capital lease obligation consisted of the following:

	June 30, 2014			December 31, 2013
Renewable Metals
(i)    Capital lease obligation to a financing company for a term of three (3) years, collateralized by certain of Renewable Metals machinery and equipment, with interest at 14% per annum, with principal and interest due and payable in monthly installments of RMB 497,897 on the 23rd of each month.	$	419,453		$	336,065
Less current maturities		(419,453	)		(336,065	)
Capital lease obligation, net of current maturities		-			-
(ii)   Capital lease obligation to a financing company for a term of three (3) years, collateralized by certain of Renewable Metals machinery and equipment, with interest at 11.0% per annum, with principal and interest due and payable in quarterly installments of RMB3,609,102 on the 15th of each quarter.		641,257			568,925
Less current maturities		(641,257	)		(568,925	)
Capital lease obligation, net of current maturities		-			-
Total capital lease obligation		1,060,710			904,990
Less current maturities		(1,060,710	)		(904,990	)
TOTAL CAPITAL LEASE OBLIGATION, net of current maturities	$	-		$	-

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Note 12 - Commitments and Contingencies (Details) - Uncommitted Trade Credit Facilities		6 Months Ended
	Jun. 30, 2014 USD ($)	Jun. 30, 2014 DBS Hong Kong [Member] Armco HK [Member] USD ($)		Jun. 30, 2014 RZB Beijing Branch [Member] Armco HK [Member] USD ($)		Jun. 30, 2014 Bank of China Lianyungang [Member] Henan Armco [Member] USD ($)		Jun. 30, 2014 Bank of China Lianyungang [Member] Renewable Metals [Member] USD ($)		Jun. 30, 2014 ICBC Bank [Member] Henan Armco [Member] USD ($)		Jun. 30, 2014 Guangdong Development Bank [Member] Henan Armco [Member] USD ($)		Jun. 30, 2014 Shanghai Pudong Development Banks [Member] Renewable Metals [Member] USD ($)		Jun. 30, 2014 Bank of Communications Lianyungang [Member] Renewable Metals [Member] USD ($)		Jun. 30, 2014 Armco HK [Member] USD ($)	Jun. 30, 2014 Henan Armco [Member] USD ($)	Jun. 30, 2014 Renewable Metals [Member] USD ($)	Jun. 11, 2010 Renewable Metals [Member] CNY
Line of Credit Facility [Line Items]
Date of Expiration		Oct. 21, 2014	[1]	Mar. 24, 2015	[2]	May 23, 2015	[3]	Dec. 27, 2015	[4]	Sep. 09, 2014	[5]	May 06, 2015	[6]	Aug. 25, 2014	[7]	Oct. 06, 2014	[8]
Total Facilities	$ 80,968,425	$ 20,000,000	[1]	$ 15,000,000	[2]	$ 4,872,978	[3]	$ 8,121,630	[4]	$ 3,248,652	[5]	$ 15,593,529	[6]	$ 2,436,489	[7]	$ 11,695,147	[8]	$ 35,000,000	$ 23,715,159	$ 22,253,266
Facilities Used	11,611,619	1,053,500	[1]		[2]		[3]	8,121,630	[4]		[5]		[6]	2,436,489	[7]		[8]	1,053,500		10,558,119	300,000,000
Facilities Available	$ 69,356,807	$ 18,946,500	[1]	$ 15,000,000	[2]	$ 4,872,978	[3]		[4]	$ 3,248,652	[5]	$ 15,593,529	[6]		[7]	$ 11,695,147	[8]	$ 33,946,500	$ 23,715,159	$ 11,695,148

[1] On December 21, 2011, Armco HK entered into a Banking Facilities Agreement with DBS Bank (Hong Kong) Limited of $20,000,000 for issuance of commercial letters of credit in connection with the Company's purchase of metal ore. The Company pays interest at LIBOR or DBS Bank's cost of funds plus 2.50% per annum on issued letters of credit in addition to an export bill collection commission equal to 12.5% of the first $50,000 and 6.25% of the balance and an opening commission of 25% on the first $50,000 and 6.25% of the balance for each issuance. Amounts advanced under this facility are repaid from the proceeds of the sale of metal ore. The lender may terminate the facility at anytime at its sole discretion. The facility is secured by the charge on cash deposit of the borrower, the borrower's restricted pledged deposit in the minimum amount of 3% of the letter of credit amount, the Company's letter of comfort and the guarantee of Mr. Yao.

[2] On March 25, 2014, Armco HK entered into Amendment No. 5 to the March 25, 2009 uncommitted Trade Finance Facility with RZB Austria Finance (Hong Kong) Limited. The amendment provides for the issuance of $15,000,000 of commercial letters of credit in connection with the purchase of metal ore, an increase of $5,000,000 over the amounts provided for in the March 25, 2010 facility. The Company pays interest at 200 basis points per annum plus the lender's cost of funds per annum on issued letters of credit in addition to fees upon issuance of the letter of credit of 6.25% for issuance commissions, negotiation commissions, commission-in-lieu and collection commissions. Amounts advanced under this facility are repaid from the proceeds of the sale of metal ore. The lender may, however, terminate the facility at any time or at its sole discretion upon the occurrence of any event which causes a material market disruption in respect of unusual movement in the level of funding costs to the lender or the unusual loss of liquidity in the funding market. The lender has the sole discretion to decide whether or not such event has occurred. The facility is secured by restricted cash deposits held by the lender, the personal guarantee of Mr. Yao, the Company's guarantee, and a security interest in the contract for the purchase of the ore for which the letter of credit has been issued and the contract for the sale of the ore.

[3] On June 8, 2013, Henan Armco obtained a RMB 30,000,000 (approximately $4.8 million) line of credit from Bank of China for issuance of letters of credit to finance the purchase of metal ore and scrap metal expiring May 23, 2014. The facility is secured by the guarantee provided by Renewable Metals and the pledge of movable assets provided by the borrower. Amounts advanced under this line of credit are repaid from the proceeds of the sale of metal ore.

[4] On March 15, 2013, Renewable Metals entered into a line of credit facility in the amount of RMB50,000,000 (approximately $8.1 million) from Bank of China, Lianyungang Branch for the purchase of raw materials. The facility is expiring December 27, 2015 with interest at 7.872% per annum. The facility is secured by Renewable metals properties, machinery and equipment and land use rights, and guaranteed by Mr. Yao, Ms. Yi Chu, and Henan Armco, respectively.

[5] On September 10, 2013, Henan Armco obtained a RMB 20,000,000 (approximately $3.2 million) line of credit from ICBC, for issuance of letters of credit to finance the purchase of metal ore and scrap metal expiring one (1) year from the date of issuance. The facility is guaranteed by Renewable Metals and Mr. Yao, the Company's Chairman and Chief Executive Officer.

[6] On May 16, 2014, Henan Armco obtained a RMB 96,000,000 (approximately $15.6 million) line of credit from Guangdong Development Bank Zhengzhou Branch for issuance of letters of credit to finance the purchase of metal ore. The Company pays interest at 120% of the applicable base rate for lending published by the People's Bank of China ("PBC") at the time the loan is made on issued letters of credit. The facility is secured by the guarantee provided by Mr. Yao and Renewable Metals jointly and the pledge of movable assets provided by the borrower. Amounts advanced under this line of credit are repaid from the proceeds of the sale of metal ore.

[7] On July 24, 2012, Renewable Metals entered into a line of credit facility in the amount of RMB 15,000,000 (approximately $2.4 million) from Shanghai Pudong Development Bank for the purchase of raw materials. The term of the facility is 12 months with interest at 120% of the applicable base rate for lending published by the People's Bank of China ("PBOC") at the time the loan is drawn down per annum. The facility is secured by Armco machinery's land use right and guarantees provided Mr. Yao, Ms. Yi Chu.

[8] On July 1, 2011, Renewable Metals obtained a RMB 72,000,000 (approximately $11.7 million) line of credit from Bank of Communications, Lianyungang Branch expiring two (2) years from the date of issuance, for issuance of letters of credit in connection with the purchase of scrap metal. The letters of credit require Renewable Metals to pledge cash deposit equal to 20% of the letter of credit for letters of credit at sight, or 30% for other domestic letters of credit and for extended domestic letters of credit, the collateral of inventory equal to 166% of the letter of credit. The facility is secured by Renewable Metals inventories and guarantee provided by Mr. Yao, the Company's Chairman and Chief Executive Officer.

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Note 13 - Stockholders' Equity (Details) - Amended and Restated 2009 Stock Incentive Plan Activities (USD $)	3 Months Ended		12 Months Ended
	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Amended and Restated 2009 Stock Incentive Plan Activities [Abstract]
Number of Shares or Options		7,954,621	5,618,413	4,198,881
Fair Value at Date of Grant		$ 4,118,011	$ 3,277,207	$ 2,614,951
Number of Shares or Options, Vested	7,576,496		5,101,746
Fair Value at Date of Grant, Vested	3,929,876		3,023,732
Number of Shares or Options, Unvested	378,125		516,667
Fair Value at Date of Grant, Unvested	188,135		253,475
Number of Shares or Options, Granted		2,336,208	1,419,532
Fair Value at Date of Grant, Granted		$ 840,804	$ 662,256

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Note 12 - Commitments and Contingencies (Details)	1 Months Ended			0 Months Ended		1 Months Ended			12 Months Ended	0 Months Ended	1 Months Ended	12 Months Ended			0 Months Ended			1 Months Ended						0 Months Ended					1 Months Ended			7 Months Ended				12 Months Ended	1 Months Ended
	Dec. 21, 2011	Jun. 30, 2014 USD ($)	Dec. 21, 2011 Each Issuance [Member] Opening Commission [Member] DBS Hong Kong [Member] USD ($)	Jul. 02, 2014 Subsequent Event [Member] Armco Shanghai [Member] USD ($)	Jul. 02, 2014 Subsequent Event [Member] Armco Shanghai [Member] CNY	Dec. 21, 2011 Commission [Member] DBS Hong Kong [Member]	Dec. 21, 2011 Opening Commission [Member] DBS Hong Kong [Member] USD ($)	Dec. 21, 2011 Balance Outstanding [Member] DBS Hong Kong [Member]	Dec. 20, 2011 Commission [Member] RZB Hong Kong [Member]	Jan. 02, 2012 Yao [Member]	Feb. 08, 2012 Yao [Member]	Dec. 31, 2014 Yao [Member] USD ($)	Dec. 31, 2013 Yao [Member] USD ($)	Dec. 31, 2012 Yao [Member] USD ($)	Apr. 13, 2012 Renewable Metals [Member] USD ($)	Apr. 13, 2012 Renewable Metals [Member] CNY	Jun. 24, 2011 Renewable Metals [Member] Per Metric Ton Scrap Metal [Member] CNY	Mar. 25, 2014 Henan Armco [Member] ICBC Bank [Member] USD ($)	Mar. 25, 2014 Henan Armco [Member] ICBC Bank [Member] CNY	Sep. 10, 2013 Henan Armco [Member] ICBC Bank [Member] USD ($)	Sep. 10, 2013 Henan Armco [Member] ICBC Bank [Member] CNY	Jun. 08, 2013 Henan Armco [Member] ICBC Bank [Member] USD ($)	Jun. 08, 2013 Henan Armco [Member] China CITIC Bank [Member] CNY	May 16, 2014 Henan Armco [Member] Guangdong Development Bank [Member] CNY	Sep. 19, 2012 Henan Armco [Member] Guangdong Development Bank [Member] USD ($)	Jun. 30, 2014 Henan Armco [Member] USD ($)	Mar. 15, 2013 Renewable Metals [Member] Bank of China Lianyungang [Member] USD ($)	Mar. 15, 2013 Renewable Metals [Member] Bank of China Lianyungang [Member] CNY	Jul. 24, 2014 Renewable Metals [Member] Shanghai Pudong Development Banks [Member] USD ($)	Jul. 24, 2014 Renewable Metals [Member] Shanghai Pudong Development Banks [Member] CNY	Jul. 24, 2012 Renewable Metals [Member] Shanghai Pudong Development Banks [Member] CNY	Jul. 31, 2011 Renewable Metals [Member] Bank of Communications Lianyungang [Member] USD ($)	Jul. 31, 2011 Renewable Metals [Member] Bank of Communications Lianyungang [Member] CNY	Jun. 30, 2014 Renewable Metals [Member] USD ($)	Jun. 11, 2010 Renewable Metals [Member] CNY	Dec. 31, 2013 Armco Metals Holdings [Member] USD ($)	Dec. 21, 2011 DBS Hong Kong [Member] USD ($)
Note 12 - Commitments and Contingencies (Details) [Line Items]
Line of Credit Facility, Current Borrowing Capacity		$ 80,968,425																$ 5,000,000	15,000,000	$ 3,200,000	20,000,000	$ 4,800,000	30,000,000	96,000,000	$ 15,600,000	$ 23,715,159	$ 8,100,000	50,000,000	$ 2,400,000	15,000,000	15,000,000	$ 11,700,000	72,000,000	$ 22,253,266			$ 20,000,000
Debt Instrument, Basis Spread on Variable Rate																		2.00%	2.00%																		2.50%
Export Bill Collection Commission						12.50%	25.00%	6.25%	6.25%
Long-term Line of Credit		11,611,619	50,000				50,000																											10,558,119	300,000,000
Pledged Deposits	3.00%
undefined																								120.00%					120.00%	120.00%
Line of Credit Facility, Interest Rate at Period End																											7.872%	7.872%
Cash Collateral Letters of Credit at Sight																																20.00%	20.00%
Cash Collateral Other Domestic Letters of Credit																																30.00%	30.00%
Inventory Collateral																																166.00%	166.00%
Salaries, Wages and Officers' Compensation												300,000	275,000	250,000
Bonus Percentage of Base Salary													50.00%
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures (in Shares)										1,500,000	1,500,000
Operating Leases, Rent Expense, Net				109,631	674,933																															4,004
Operating Leases, Future Minimum Payments Due (in Yuan Renminbi)																	30
Payments for Leasing Costs															$ 159,000	1,000,000
Noncash or Part Noncash Acquisition, Noncash Financial or Equity Instrument Consideration, Shares Issued (in Shares)															1,000,000	1,000,000

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Note 12 - Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of Line of Credit Facilities [Table Text Block]

Date of Expiration		Total Facilities			Facilities Used		Facilities Available
Armco HK
DBS (Hong Kong) Limited (i)	October 21, 2014		20,000,000			1,053,500		18,946,500
RZB (Beijing) Branch (ii)	March 24, 2015		15,000,000			-		15,000,000
Sub-total - Armco HK			35,000,000			1,053,500		33,946,500
Henan Armco
Bank of China (iii)	May 23, 2015		4,872,978			-		4,872,978
ICBC (iv)	September 09, 2014		3,248,652			-		3,248,652
Guangdong Development Bank Zhengzhou Branch (v)	May 6, 2015		15,593,529			-		15,593,529
Sub-total – Henan Armco			23,715,159			-		23,715,159
Renewable Metals
Bank of China Lianyungang Branch (vi)	December 27, 2015		8,121,630			8,121,630		-
Shanghai Pudong Development Bank (vii)	August 25, 2014		2,436,489			2,436,489		-
Bank of Communications Lianyungang Branch (viii)	October 6, 2014		11,695,147			-		11,695,147
Sub-total – Renewable Metals			22,253,266			10,558,119		11,695,148
		$	80,968,425		$	11,611,619	$	69,356,807
				%

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Note 7 - Loans and Convertible Note Payable (Details)	Jun. 30, 2014 USD ($)	Jun. 27, 2014 USD ($)	Jun. 25, 2014 USD ($)	Jun. 18, 2014 USD ($)	Jun. 16, 2014 USD ($)	Jun. 12, 2014 USD ($)	Jun. 04, 2014 USD ($)	May 30, 2014 USD ($)	May 22, 2014 USD ($)	May 14, 2014 USD ($)	May 07, 2014 USD ($)	Feb. 28, 2014 USD ($)	Feb. 28, 2014 CNY	Dec. 31, 2013 USD ($)
Loans Payable [Abstract]
Debt Instrument, Face Amount														$ 6,200,000
Debt Instrument, Interest Rate, Stated Percentage	8.00%											8.00%	8.00%	8.00%
Convertible Notes Payable												5,500,000	33,512,936
Debt Instrument, Unamortized Discount	$ 18,286											$ 1,300,000		$ 18,286
Debt Instrument, Convertible, Conversion Price (in Dollars per share)		$ 0.20927	$ 0.20927	$ 0.20519	$ 0.1135	$ 0.173995	$ 0.16575	$ 0.184535	$ 0.186575	$ 0.22814	$ 0.23902	$ 0.317

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Note 15 - Concentrations and Credit Risk

6 Months Ended

Jun. 30, 2014

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

Note 15 – Concentrations and Credit Risk

Credit RiskArising from Financial Instruments

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents.

As of June 30, 2014 and December 31, 2013, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in the PRC, none of which are insured. However, the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts.

Customers and Credit Concentrations

Customer concentrations and credit concentrations are as follows:

	Net Sales for the Six Months Ended						Accounts Receivable at
	June 30, 2014			June 30, 2013			June 30, 2014			December 31, 2013
Customer A		-	%		-	%		-	%		33.8	%
Customer B		15.5	%		35.6	%		-	%		25.1	%
Customer C		-	%		-	%		29.8	%		18.3	%
Customer D		54.0	%		-	%		32.6	%		-	%
Customer E		-	%		-	%		14.0	%		-	%
Customer F	%				13.8	%		-	%		-	%
		69.5	%		49.4	%		76.4	%		77.2	%

A reduction in sales from or loss of such customers would have a material adverse effect on the Company’s results of operations and financial condition.

Vendor Concentrations

Vendor purchase concentrations and accounts payable concentration as follows:

	Net Purchases for the Six Months Ended						Accounts Payable at
	June 30, 2014			June 30, 2013			June 30, 2014			December 31, 2013
Vendor A		79.2	%		75.3	%		-	%		86.0	%
Vendor B		13.0	%		-	%		-	%		-	%
Vendor C		-	%		-	%		60	%		-	%
Vendor D		-	%		-	%		13	%		-	%
		92.2	%		75.3	%		73.0	%		86.0	%

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Note 4 - Marketable Equity Securities, Available for Sale (Tables)

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

			Fair Value Measurement Using Level 1 Inputs
	Original cost		Impairment – Other Than Temporary			Accumulated Foreign Currency Transaction Gain (Loss)		Other Comprehensive Income (Loss) - Change in Unrealized Loss			Fair Value
Balance, December 31, 2013	$	3,396,658	$	(2,366,941	)	$	183,924	$	(694,512	)	$	519,129
Purchases, issuances and settlements
Total gains or losses (realized/unrealized) included in:
Other comprehensive income (loss): Changes in unrealized loss							-		32,468			32,468
Balance, June 30, 2014	$	3,396,658	$	(2,366,941	)	$	183,924	$	(662,044	)	$	551,597

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Note 6 - Inventories (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Inventory Valuation and Obsolescence [Member]	Dec. 31, 2013 Inventory Valuation and Obsolescence [Member]	Jun. 30, 2014 Lower of Cost or Market [Member]	Jun. 30, 2013 Lower of Cost or Market [Member]
Note 6 - Inventories (Details) [Line Items]
Inventory Adjustments	$ 1,777,081	$ 2,291,915	$ 0	$ 0	$ 541,834	$ 486,837
Inventory, Work in Process, Gross	$ 0	$ 0

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Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Exchange Rates (RMB Into U.S. Dollars)	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
Balance Sheet [Member]
Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Exchange Rates (RMB Into U.S. Dollars) [Line Items]
Financial Statement	6.1564	6.1122	6.1807
Statement of Operations and Comprehensive Income (Loss) [Member]
Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Exchange Rates (RMB Into U.S. Dollars) [Line Items]
Financial Statement	6.1419	6.1943	6.2437

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Consolidated Statement of Stockholders' Equity (Unaudited) (USD $)	Common Stock [Member] Chaoyang Steel [Member]	Common Stock [Member] CD International Enterprise Inc [Member]	Common Stock [Member] All Bright [Member]	Common Stock [Member]	Additional Paid-in Capital [Member] Chaoyang Steel [Member]	Additional Paid-in Capital [Member] CD International Enterprise Inc [Member]	Additional Paid-in Capital [Member] All Bright [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Net Unrealized Investment Gain (Loss) [Member]	Accumulated Translation Adjustment [Member]	Chaoyang Steel [Member]	CD International Enterprise Inc [Member]	All Bright [Member]	Total
Balance at Dec. 31, 2013				$ 29,876				$ 35,790,906	$ 2,625,287	$ (694,512)	$ 4,852,433				$ 42,603,990
Balance (in Shares) at Dec. 31, 2013				29,876,327											29,876,327
Issuance of Common Shares	34	500	125	60	12,968	164,500	33,625	(60)				13,002	165,000	33,750
Issuance of Common Shares (in Shares)	33,338	500,000	125,000	60,000											60,000
Issuance of common stock in conversion of convertible notes				22,002				6,529,710							6,551,712
Issuance of common stock in conversion of convertible notes (in Shares)				22,002,564
Reclassification of derivative liabilities due to conversion of convertible notes								2,101,665							2,101,665
Net Loss									(4,382,206)						(4,382,206)
Change in unrealized loss on marketable securities										32,468					32,468
Foreign currency translation gain (loss)											(372,778)				(372,778)
Stock-based compensation				2,361				968,668							971,029
Stock-based compensation (in Shares)				2,361,208
Balance at Jun. 30, 2014				$ 54,958				$ 45,601,982	$ (1,756,919)	$ (662,044)	$ 4,479,655				$ 47,717,632
Balance (in Shares) at Jun. 30, 2014				54,958,437											54,958,437

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Note 4 - Marketable Equity Securities, Available for Sale

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 4 – Marketable Equity Securities, Available for Sale

As of June 30, 2014, the Company’s available for sale marketable securities were marked to market to its fair value of $551,597 and reported a $662,044 change in unrealized loss on marketable securities as other comprehensive income (loss) in its Stockholders’ Equity.

The table below provides a summary of the changes in the fair value of marketable securities, available for sale measured at fair value on a recurring basis using Level 1 of the fair value hierarchy to measure the fair value.

			Fair Value Measurement Using Level 1 Inputs
	Original cost		Impairment – Other Than Temporary			Accumulated Foreign Currency Transaction Gain (Loss)		Other Comprehensive Income (Loss) - Change in Unrealized Loss			Fair Value
Balance, December 31, 2013	$	3,396,658	$	(2,366,941	)	$	183,924	$	(694,512	)	$	519,129
Purchases, issuances and settlements
Total gains or losses (realized/unrealized) included in:
Other comprehensive income (loss): Changes in unrealized loss							-		32,468			32,468
Balance, June 30, 2014	$	3,396,658	$	(2,366,941	)	$	183,924	$	(662,044	)	$	551,597

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Note 10 - Capital Lease Obligation (Details) - Capital Lease Obligation (Parentheticals) (USD $)				6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Feb. 28, 2014	Dec. 31, 2013	Jun. 30, 2014 Machinery and Equipment [Member]	Dec. 31, 2013 Machinery and Equipment [Member]	Jun. 30, 2014 Other Machinery and Equipment [Member]	Dec. 31, 2013 Other Machinery and Equipment [Member]
Capital Leased Assets [Line Items]
Interest Rate	8.00%	8.00%	8.00%	14.00%	14.00%	11.00%	11.00%
Principal and Interest				$ 497,897	$ 497,897	$ 3,609,102	$ 3,609,102

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Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations (Supplier Concentration Risk [Member])	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Vendor A [Member] | Cost of Goods, Total [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor	79.20%	75.30%
Vendor A [Member] | Account Payable [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor		86.00%
Vendor B [Member] | Cost of Goods, Total [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor	13.00%
Vendor C [Member] | Account Payable [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor	60.00%
Vendor D [Member] | Account Payable [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor	13.00%
Cost of Goods, Total [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor	92.20%	75.30%
Account Payable [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor	73.00%	86.00%

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Note 5 - Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	June 30, 2014			December 31, 2013
Accounts receivable	$	23,361,959		$	25,638,666
Allowance for doubtful accounts		(43,150	)		(43,150	)
	$	23,318,809		$	25,595,516

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Note 2 - Significant and Critical Accounting Policies and Practices (Details) (China, Yuan Renminbi)	Jul. 21, 2005	Jul. 20, 2005
China, Yuan Renminbi
Note 2 - Significant and Critical Accounting Policies and Practices (Details) [Line Items]
Foreign Currency Exchange Rate, Translation	8.11	8.28

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Note 14 - Income Taxes

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 14 – Income Taxes

Armco Metals Holdings is a non-operating holding company. Armco HK, the Company’s Hong Kong Subsidiary is subject to Hong Kong SAR income taxes. Henan Armco, Renewable Metals, Lianyungang Armco and Armco Shanghai, the Company’s PRC subsidiaries are subject to PRC income taxes, file income tax returns under the Income Tax Law of the People’s Republic of China concerning Foreign Investment Enterprises and Foreign Enterprises and local income tax laws (the ‘PRC Income Tax Law”) accordingly. Henan Armco, Renewable Metals, Lianyungang Armco and Armco Shanghai derive substantially all of their income (loss) before income taxed and related tax expenses from PRC sources.

United States Income Tax

Armco Metals Holdings is incorporated in the State of Nevada and is subjected to United Sates of America tax law.

Hong Kong SAR Income Tax

Armco HK is registered and operates in the Hong Kong Special Administrative Region (“HK SAR”) of the People’s Republic of

China (“PRC”) and is subject to HK SAR tax law. Armco HK’s statutory income tax rate is 16.5%.

PRC Income Tax

Henan Armco, Renewable Metals, Lianyungang Armco and Armco Shanghai are governed by and file separate income tax returns under the PRC Income Tax Law, which, until January 2008, generally subject to tax at a statutory rate of 33% (30% state income tax plus 3% local income tax) on income reported in the statutory financial statements after appropriate tax adjustments. On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”), effective January 1, 2008. Under the New CIT Law, the corporate income tax rate applicable to all Companies, including both domestic and foreign-invested companies, will be 25%. However, tax concession granted to eligible companies prior to March 16, 2007 will be grand fathered in.

The effective tax rate is 0% and -77% for the six months ended June 30, 2014 and June 30, 2013, respectively.