10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended September 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.)

1065 E Hillsdale Blvd, Suite 315, Foster City, CA	94404
(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.  56,025,872 shares of common stock are issued and outstanding as of November 14, 2014.

1

TABLE OF CONTENTS

		Page
		No.
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	32
Item 3.	Quantative and Qualitative Disclosures About Market Risk.	41
Item 4.	Controls and Procedures.	42
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	43
Item 1A.	Risk Factors.	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	43
Item 3.	Defaults Upon Senior Securities.	44
Item 4.	Mine Safety Disclosures.	44
Item 5.	Other Information.	44
Item 6.	Exhibits.	44

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 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

ARMCO METALS HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS 

	September 30, 2014			December 31, 2013
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	544,741		$	596,557
Pledged deposits		497,899			4,652,222
Marketable securities		432,520			519,129
Accounts receivable, net		53,682,200			25,595,516
Inventories		13,966,770			20,456,920
Advance on purchases		632,933			733,285
Prepayments and other current assets		828,429			1,181,371
Total Current Assets		70,585,492			53,735,000
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment		44,547,476			44,856,611
Accumulated depreciation		(11,392,774	)		(9,360,933	)
PROPERTY, PLANT AND EQUIPMENT, net		33,154,702			35,495,678
LAND USE RIGHTS
Land use rights		6,635,640			6,681,779
Accumulated amortization		(505,393	)		(416,478	)
LAND USE RIGHTS, net		6,130,247			6,265,301
Total Assets	$	109,870,441		$	95,495,979
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable	$	17,611,095		$	27,415,638
Banker's acceptance notes payable and letters of credit		1,765,291			8,473,217
Current maturities of capital lease obligation		719,800			904,990
Accounts payable		26,100,236			10,062,463
Advances received from Chairman and CEO		846,690			668,332
Due to related party		411,880			403,141
Customer deposits		1,465,206			649,488
Corporate income tax payable		2,607,237			822,207
Derivative warrant liability		5,688			61,429
Value added tax and other taxes payable		3,885,994			2,202,331
Accrued expenses and other current liabilities		1,707,725			1,228,753
Total Current Liabilities		57,126,842			52,891,989
Total Liabilities		57,126,842			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, 55,693,745 and 29,876,327 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively		55,694			29,876
Additional paid-in capital		45,791,572			35,790,906
Retained earnings		3,043,735			2,625,287
Accumulated other comprehensive income (loss):
Change in unrealized gain (loss) on marketable securities		(623,879	)		(694,512	)
Foreign currency translation gain		4,476,477			4,852,433
Total Stockholders' Equity		52,743,599			42,603,990
Total Liabilities and Stockholders' Equity	$	109,870,441		$	95,495,979

See accompanying notes to the unaudited consolidated financial statements.        

5

ARMCO METALS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

	For the Nine Months			For the Three Months			For the Nine Months			For the Three Months
	Ended			Ended			Ended			Ended
	September 30, 2014			September 30, 2014			September 30, 2013			September 30, 2013
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
NET REVENUES	$	74,996,063		$	32,198,170		$	62,497,489		$	20,470,236
COST OF GOODS SOLD		64,698,705			23,799,849			61,368,531			22,337,332
GROSS MARGIN		10,297,358			8,398,321			1,128,958			(1,867,096	)
OPERATING EXPENSES:
Selling expenses		256,624			53,934			131,033			41,347
Professional fees		473,472			117,690			320,629			3,644
General and administrative expenses		2,577,582			602,002			2,431,288			708,617
Operating cost of idle manufacturing facility		1,381,049			373,835			1,283,120			467,481
Total operating expenses		4,688,727			1,147,461			4,166,070			1,221,089
INCOME (LOSS) FROM OPERATIONS		5,608,631			7,250,860			(3,037,112	)		(3,088,185	)
OTHER EXPENSE:
Interest income		(99,118	)		(318	)		(84,263	)		(37,402	)
Interest expense		3,274,244			632,472			1,476,816			365,133
Loss on sale of marketable securities		43,434			43,434			-			-
Change in fair value of derivative liability		107,378			(1,597	)		(928,915	)		(8,577	)
Loan guarantee expense		13,002			-			35,500			12,667
Other (income) expense		61,339			(13,689	)		101,823			138,041
Total other expense		3,400,279			660,302			600,961			469,862
INCOME (LOSS) BEFORE INCOME TAXES PROVISION		2,208,352			6,590,558			(3,638,073	)		(3,558,047	)
INCOME TAX PROVISION		1,789,904			1,789,904			49,070			(12,618	)
INCOME (LOSS) FROM CONTINUING OPERATIONS		418,448			4,800,654			(3,687,143	)		(3,545,429	)
NET INCOME (LOSS)		418,448			4,800,654			(3,687,143	)		(3,545,429	)
OTHER COMPREHENSIVE INCOME (LOSS):
Change in unrealized gain (loss) on marketable securities		70,633			38,165			(123,552	)		288,054
Foreign currency translation gain (loss)		(375,956	)		(3,178	)		1,128,312			221,419
COMPREHENSIVE INCOME (LOSS)	$	113,125		$	4,835,641		$	(2,682,383	)	$	(3,035,956	)
NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED:
Net income (loss) per common share - basic	$	0.01		$	0.09		$	(0.15	)	$	(0.14	)
Net income (loss) per common share - diluted	$	0.01		$	0.09		$	(0.15	)	$	(0.14	)
Weighted Average Common Shares Outstanding - basic		45,175,355			54,955,318			24,228,958			24,693,663
Weighted Average Common Shares Outstanding - diluted		45,303,480			55,312,625			24,228,958			24,693,663

See accompanying notes to the unaudited consolidated financial statements.  

6

ARMCO METALS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Nine Months Ended September 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		1,031,547											1,033,908
Issuance of common shares for consulting services to CDII for service of one year starting from November 1, 2013		750,000		750		201,750											202,500
Issuance of common shares for consulting services to All Bright for service of 12 months starting from April 1, 2014		250,000		250		52,250											52,500
Issuance of common shares to initial investors		60,000		60		(60	)										-
Issuance of common stock in conversion of convertible notes		22,362,872		22,363		6,588,272											6,610,635
Reclassification of derivatve liabilities to conversion of convertible notes						2,113,939											2,113,939
Net Income									418,448								418,448
Change in unrealized gain (loss) on marketable securities											70,633						70,633
Foreign currency translation gain (loss)														(375,956	)		(375,956	)
Balance, September 30, 2014		55,693,745	$	55,694	$	45,791,572		$	3,043,735	$	(623,879	)	$	4,476,477		$	52,743,599

See accompanying notes to the unaudited consolidated financial statements.

7

ARMCO METALS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Nine Months			For the Nine Months
	Ended			Ended
	September 30, 2014			September 30, 2013
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	418,448		$	(3,687,143	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation expense		2,099,052			2,160,238
Amortization expense		92,082			115,787
Reversal of inventory reserve		(1,958,554	)		-
Change in fair value of derivative liability		107,378			(928,915	)
Amortization of debt discount		1,991,581			1,480
Loss on sale of marketable securities		43,434			-
Stock based compensation		1,033,908			582,236
Stock issued for third-party services		268,002			-
Adjustments to reconcile net loss to net cash used in operating activities
Changes in operating assets and liabilities:
Bank acceptance notes receivable		-			(1,627,631	)
Accounts receivable		(28,274,868	)		8,276,715
Inventories		8,314,316			(7,525,611	)
Advance on purchases		(490,624	)		(19,986	)
Prepayments and other current assets		340,861			(769,536	)
Bank acceptance notes payable		-			(1,628	)
Accounts payable		16,122,951			220,374
Customer deposits		821,096			192,984
Taxes payable		3,490,127			(1,159,877	)
Accrued expenses and other current liabilities		596,902			(1,084,168	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		5,016,092			(5,254,681	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from release of pledged deposits		5,942,529			16,370,116
Payment made towards pledged deposits		(1,815,807	)		(17,994,943	)
Purchase of property, plant and equipment		-			(169,369	)
Cash received from sale of marketable securities		113,808			-
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		4,240,530			(1,794,196	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable		11,099,278			35,857,925
Repayment of loans payable		(14,486,944	)		(31,233,878	)
Banker's acceptance notes payable		(6,656,663	)		1,399,762
Proceeds from capital lease obligation		162,600			-
Repayment of capital lease obligation		(341,574	)		(1,941,717	)
Advances from (repayment to) Chairman and CEO		172,613			1,019,701
Advances from (repayment to) related parties		11,535			1,025,407
Proceeds from convertible notes		600,000			-
Deposit for stock subscription		-			813,815
Proceeds from sales of common stock		-			1,621,356
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(9,439,155	)		8,562,371
EFFECT OF EXCHANGE RATE CHANGES ON CASH		130,717			(119,145	)
NET CHANGE IN CASH		(51,816	)		1,394,349
Cash at beginning of the period		596,557			1,367,171
Cash at end of the period	$	544,741		$	2,761,520
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid	$	715,937		$	1,629,696
Income tax paid	$	-		$	51,298
NON CASH FINANCING AND INVESTING ACTIVITIES:
Reclassification from short-term debt to convertible debt	$	5,554,468		$	-
Debt discount due to convertible features	$	1,950,820		$	-
Reclassification of derivative liability to (from) equity	$	2,113,939		$	(623,809	)
Common shares issued for conversion of convertible notes and accrued interest	$	6,610,635		$	-

See accompanying notes to the unaudited consolidated financial statements.

8

Armco Metals Holdings, Inc 

September 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.

9

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 Equity Interest of Draco Resources Inc.

On April 15, 2014, the Company entered into a Share Exchange Agreement (the “Agreement”) with Draco Resources, Inc. and its shareholders (the “Draco Resources Shareholders”). Pursuant to the terms and conditions of the Agreement between the parties, the Company plans to acquire 100% of the issued and outstanding capital stock of Draco Resources in exchange for 13,950,000 shares of its post-split common stock (the “AMCO Shares”) and a Series C stock purchase warrant (the "Series C Warrant"). The Series C Warrant is exercisable for five years at any time, following a 1:10 reverse stock split of the Company’s common stock, into 3,000,000 shares of the Company’s post-split common stock at an exercise price of $3.40 per share. The parties made customary representations and warranties and agreed to customary covenants in the Agreement. Upon the completion of the acquisition, the number of shares which Draco Resources Shareholders will receive from the Company represents approximately 74.64% of the issued and outstanding common stock of the Company immediately after the consummation of the Agreement.

On August 25, 2014, the Company, Draco Resources Shareholders, and Metawise Group, Inc., the current sole shareholder of Draco Resources, Inc., amended the Agreement. Pursuant to the terms and conditions of the amended Agreement between the parties, upon the approval of the Amendment to the Company's articles of incorporation to increase the number of the Company’s authorized shares of common stock from 74,000,000 shares to 200,000,000 shares, the Company desires to acquire and Draco Shareholders desire to exchange a 40% of the Draco Resources Shares in exchange for 51,000,000 AMCO Shares. The Company acknowledges and agrees to pay China Direct Investments, Inc. and Shanghai Heqi Investment Center (Limited Partner) or their designees 2,400,000 shares each, or 4,800,000 shares in aggregate, of AMCO Shares in connection with the transaction contemplated by this Agreement as finder's fee. Upon the completion of the acquisition, the number of shares which Draco Resources Shareholders will receive from the Company represents approximately 46.05% of the issued and outstanding common stock of the Company immediately after the consummation of the Agreement.

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On September 19, 2014, the Company, Draco Resources Shareholders, and Metawise Group, Inc. further amended the Agreement. Pursuant to the terms and conditions of the amended Agreement between the parties, upon the approval of the Amendment to the Company's articles of incorporation to increase the number of the Company's authorized shares of common stock from 74,000,000 shares to 200,000,000 shares, the Company desires to acquire and Draco Shareholders desire to exchange a 31.37% of the Draco Resources Shares in exchange for 40,000,000 AMCO Shares. The Company acknowledges and agrees to pay China Direct Investments, Inc. and Shanghai Heqi Investment Center (Limited Partner) or their designees 2,400,000 shares each, or 4,800,000 shares in aggregate, of AMCO Shares in connection with the transaction contemplated by this Agreement as finder's fee. Upon the completion of the acquisition, the number of shares which Draco Resources Shareholders will receive from the Company represents approximately 40% of the issued and outstanding common stock of the Company immediately after the consummation of the Agreement. The closing of the acquisition is subject to approvals by the Company’s shareholders, the New York Stock Exchange and any applicable governmental regulatory agencies.

On October 26, 2014, the Company was served with a lawsuit filed in Superior Court in the County of San Mateo, California (Progressive Environmental Services, Inc. vs. Metawise Group, Inc., Draco Resources, Inc., Metamining, Inc., Songqiang Chen and Armco Metals Holdings, Inc.). The complaint alleges various causes of actions against the parties other than the Company and with respect to the Company seeks declaratory relief as well as a temporary and permanent injunction to preclude the Company from acquiring a 31.37% interest in Draco Resources, Inc. from Metawise Group, Inc. at the Company’s forthcoming annual meeting scheduled to be held on November 17, 2014. The Company and its counsel have evaluated the complaint. Based on the initial review and research of the Company's councel, the Company believes the vote to acquire interest in Draco Resources and election of Songqiang Chen to its board of directors which are scheduled to take place at the annual meeting on November 17 should be deferred pending the outcome of the litigation as moving forward with the acquisition or the election of Songqiang Chen would inhibit the Company's ability to seek dismissal from the lawsuit.

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, as amended, filed with the SEC on August 11, 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.

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

Name of consolidated	State or other jurisdiction of	Date of incorporation or	Attributable
subsidiary or entity	incorporation or organization	formation	interest
		(date of acquisition, if
		applicable)
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.

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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 September 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 September 30, 2014 and December 31, 2013:

Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
September 30, 2014
Derivative liability		-		-	$	5,688	$	5,688
Available-for-sale securities	$	432,520		-		-	$	432,520
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.

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Foreign Currency Translation

The functional currency of each foreign subsidiary is determined based on management’s judgment and involves consideration of all relevant economic facts and circumstances affecting the subsidiary. Generally, the currency in which the subsidiary transacts a majority of its transactions, including billings, financing, payroll and other expenditures, would be considered the functional currency, but any dependency upon the parent and the nature of the subsidiary’s operations must also be considered. If a subsidiary’s functional currency is deemed to be the local currency, then any gain or loss associated with the translation of that subsidiary’s financial statements is included in accumulated other comprehensive income. However, if the functional currency is deemed to be the U.S. Dollar, then any gain or loss associated with the re-measurement of these financial statements from the local currency to the functional currency would be included in the consolidated statements of income and comprehensive income (loss). If the Company disposes of foreign subsidiaries, then any cumulative translation gains or losses would be recorded into the consolidated statements of income and comprehensive income (loss). If the Company determines that there has been a change in the functional currency of a subsidiary to the U.S. Dollar, any translation gains or losses arising after the date of change would be included within the statement of income and comprehensive income (loss).

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:

	September 30,		December 31,		September 30,		December 31,
	2014		2013		2013		2012
Balance sheets		6.1547		6.1122		6.1439		6.3086
Statements of operations and comprehensive income (loss)		6.1480		6.1943		6.2174		6.3116

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, and also unvested restricted stock.

Recently Issued Accounting Pronouncements

In April 2014, the FASB issued ASU No. 2014-08, “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.

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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.

In June 2014, the FASB issued ASU 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period”. The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The amendment in the ASU provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated 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:

	September 30,		December 31,
	2014		2013
Armco HK
Letters of credit	$	-	$	5,993
Sub-total – Armco HK		-		5,993
Renewable Metals
Bank acceptance notes payable		-		1,636,072
Letters of credit		10,155		2,517,621
Deposit for capital lease obligation (i)		487,432		490,823
Sub-total – Renewable Metals		497,587		4,644,516
Henan Armco
Letters of credit		312		2,113
Sub-total – Henan Armco		312		2,113
	$	497,899	$	4,652,222

(i) $487,432 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 4 – Marketable Equity Securities, Available for Sale

During the three months ended September 30, 2014, the Company sold 4,466,598 shares of its marketable securities and recognized loss of $43,434 as a component of interest and other income in the accompanying Consolidated Statements of Income.

As of September 30, 2014, the Company’s available for sale marketable securities were marked to market to its fair value of $432,520 and reported a $623,879 change in unrealized gain 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
									Other
									Comprehensive
							Accumulated		Income
							Foreign		(Loss) -
				Impairment –			Currency		Change in
				Other Than			Transaction		Unrealized
	Original cost			Temporary			Gain (Loss)		Gain (Loss)			Fair Value
Balance, December 31, 2013	$	3,396,658		$	(2,366,941	)	$	183,924	$	(694,512	)	$	519,129
Sale of marketable securities		(157,242	)										(157,242	)
Total gains or losses (realized/unrealized) included in:
Other comprehensive income (loss): Changes in unrealized gain								-		70,633			70,633
Balance, September 30, 2014	$	3,239,416		$	(2,366,941	)	$	183,924	$	(623,879	)	$	432,520

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Note 5 – Accounts Receivable

Accounts receivable consisted of the following:

	September 30,			December 31,
	2014			2013
Accounts receivable	$	53,725,350		$	25,638,666
Allowance for doubtful accounts		(43,150	)		(43,150	)
	$	53,682,200		$	25,595,516

Note 6 – Inventories

Inventories consisted of the following:

	September 30,			December 31,
	2014			2013
Raw materials – scrap metal	$	11,312,491		$	4,390,811
Finished goods – processed scrap metal		2,878,981			12,421,088
Purchased merchandise for resale		125,538			5,936,936
Write - down of inventories		(350,240	)		(2,291,915	)
	$	13,966,770		$	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 September 30, 2014 or December 31, 2013.

Slow-Moving or Obsolescence Markdowns

The Company recorded no inventory obsolescence adjustments for the interim period ended September 30, 2014 and 2013.

Lower of Cost or Market Adjustments

There were $-1,958,544 and $1,991,275 of lower of cost or market adjustments for the interim period ended September 30, 2014 and 2013.

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Note 7 – Loans Payable

Loans payable consisted of the following:

	September 30,		December 31,
	2014		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 and repaid in full		-		2,602,115
Sub-total - Armco HK		-		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 from March 25, 2015 to May 21, 2015.		8,123,873		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		2,355,923		-
Short-term borrowing, with interest rate at 8% per annum		64,991		229,050
Short- term borrowing with no interest and due upon demand		788,665		-
Loan payable, with interest at 6% per annum and due January 21, 2015		3,479,187		3,503,379
Sub-total – Renewable Metals		14,812,639		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		162,478		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		2,178,010		-
Sub-total – Henan Armco		2,340,488		8,919,490
Armco Metals Holdings
Short-term borrowings, no interest bearing, due upon demand.		100,000		-
Loans payable, with interest at 8% per annum, due January 21,2015 (i)		240,000		1,050,000
Convertible notes payable, net of discount of $12,033, with interest at 4% and 8% per annum, due March 3, 2015 and August 27, 2015.		117,968		463,709
Sub-total – Armco Metals Holdings		457,968		1,513,709
	$	17,611,095	$	27,415,638

(i) As of September 30, 2014, Armco Metals Holdings had three loans with principal amount of $550,000, $35,000 and $10,000, respectively, plus interest accrual of $39,967, in aggregate of $634,967 to Metawise Group, Inc. and its subsidiary, Draco Resources Inc, respectively. As of September 30, 2014, Armco Metals Holdings’ subsidiary, Henan Armco, prepaid Draco Resources Inc of $792,000 for commodity plan to purchase. On September 30, 2014, Armco Metals Holdings, Henan Armco, Metawise Group, Inc. and its subsidiary, Draco Resources Inc., entered into an agreement that the four parties agreed to use Henan Armco’s prepayment of $792,000 to Draco resources Inc to repay Armco Metals Holdings’ loans payable plus interest totaling $634,967 to Metawise Group, Inc., which leaving Henan Armco’s prepayment to Draco Resources Inc $157,033.

The Company also repaid $260,000 on another loan payable during the nine months ended September 30, 2014, leaving the loan payable balance of $240,000.

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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 for detailed discussion on all other convertible notes.

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.

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

Banker’s acceptance notes payable consisted of the following:

	September 30,		December 31,
	2014		2013
Renewable Metals
Banker’s acceptance notes payable maturing on March 27, 2014	$	-	$	3,272,144
Letters of credit maturing on October 6, 2014		1,765,291		5,201,073
	$	1,765,291	$	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 September 30, 2014 and December 31, 2013, the advance balance was $846,690 and $668,332, respectively.

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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 nine months ended September 30, 2014 and 2013 was 90,000 (approximately $14,639) and RMB 90,000 (approximately $14,475), respectively.

Due to Other Related Parties

Due to other related parties consists of the following:

	September 30,		December 31,
	2014		2013
Keli Yao	$	-	$	116,828
Yi Chu		411,880		286,313
Total	$	411,880	$	403,141

The balance of $411,880 due to related party represents the loan owed to the related parties, which is interest free, unsecured and repayable on demand.

Note 10 – Capital Lease Obligation

Capital lease obligation consisted of the following:

		September 30,			December 31,
		2014			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.	$	159,605		$	336,065
Less current maturities			(159,605	)		(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.		560,195			568,925
Less current maturities			(560,195	)		(568,925	)
Capital lease obligation, net of current maturities			-			-
Total capital lease obligation			719,800			904,990
Less current maturities			(719,800	)		(904,990	)
TOTAL CAPITAL LEASE OBLIGATION, net of current maturities		$	-		$	-

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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 September 30, 2014, the derivative liability associated with the warrants was valued at $0.75.

2010 Warrants Outstanding

As of September 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 September 30, 2014:

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

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

		Warrants Outstanding						Warrants Exercisable
				Average		Weighted				Average		Weighted
				Remaining		Average				Remaining		Average
Range of		Number		Contractual		Exercise		Number		Contractual		Exercise
Exercise Prices		Outstanding		Life (in years)		Price		Exercisable		Life (in years)		Price
$	7.50		1,615,387		0.55	$	7.50		1,615,387		0.55	$	7.50
$	7.50		1,615,387		0.55	$	7.50		1,615,387		0.55	$	7.50

(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 an 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 and the Additional Convertible Note are 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 6/25/14 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 “Derivative 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.

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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.

On August 27, 2014, the Company issued a convertible note which is convertible after 180 days from the issuance date, in the amount of $100,000. The note bears an interest rate of 8% per annum, and matures on August 27, 2015. The note was still outstanding as of September 30, 2014, and the note was not convertible as of September 30, 2014.

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.

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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.

On July 15, 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 $101 of 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 $106 of the note into 170,030 shares of the Company's common stock, at a conversion price of $ 0.147645 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.

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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 September 30, 2014:

- Volatility for each valuation period is 3-month to 12-month historical volatility of the Company’s weekly continuously compounded returns.

- Risk-free rate assumption is interpolated treasury rate as of the valuation date with maturity identical to the note.

- Conversion is assumed to occur at maturity, as earlier conversion would be suboptimal.

- Default would occur 0% of the time.

As of September 30, 2014, the estimated fair value of derivative liabilities on convertible notes was $5,687.

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

Balance at December 31, 2013	$	61,429
To record derivative liability as debt discount		1,950,820
Change in fair value of derivative liability		107,378
Settlement of derivative liability due to conversion of related notes	$	(2,113,939	)
Balance at September 30, 2014		5,688

Note 12 – Commitments and Contingencies

Litigation

The Company and the 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-13-679151-C), which seeks a declaratory judgment, rescission, unspecified damages, equitable and injunctive relief, and attorney’s fees. The complaint alleges that the directors of the Company 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 that allowed under the Plan.

On September 18, 2014, a hearing on both plaintiff's motion for summary judgment against defendants, and defendants' motion for summary judgment against plaintiff, was conducted. At that hearing, the Court denied plaintiff’s motion for summary judgment entirely. The Court also granted defendants’ motion for summary judgment in part, and denied it in part. Both plaintiff and the director defendants have filed motions for reconsideration asking the Court to reverse its prior order regarding summary judgment. The Court will rule on the motions for reconsideration in chambers (with no oral argument) on December 5, 2014. If the case survives the Court’s ruling on the motions for reconsideration, the parties will have a Court conference on December 19, 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 September 30, 2014 were as follows:

	Date of					Facilities
	Expiration	Total Facilities		Facilities Used		Available
Armco HK
DBS (Hong Kong) Limited (i)	October 9, 2015		20,000,000		149,197		19,850,803
RZB (Beijing) Branch (ii)	March 24, 2015		15,000,000		276,000		14,724,000
Sub-total - Armco HK			35,000,000		425,197		34,574,803
Henan Armco
Bank of China (iii)	May 23, 2014		4,874,324		-		4,874,324
ICBC (iv)	September 9, 2015		3,249,549		-		3,249,549
Guangdong Development Bank Zhengzhou Branch (v)	May 15, 2015		15,597,836		-		15,597,836
Sub-total – Henan Armco			23,721,709		-		23,721,709
Renewable Metals
Bank of China Lianyungang Branch (vi)	December 27, 2015		8,123,873		8,123,873		-
Shanghai Pudong Development Bank (vii)	April 9, 2015		2,437,162		2,355,923		81,239
Bank of Communications Lianyungang Branch (viii)	February 2, 2015		11,698,377		-		11,698,378
Sub-total – Renewable Metals			22,259,412		10,479,796		11,779,617
		$	80,981,121	$	10,904,993	$	70,076,129

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(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 RMB 50,000,000 (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.

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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 two 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 two and half months 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 1, 2014, Armco Shanghai entered into a non-cancelable operating lease for office space that will expire on July 31, 2016. The annual lease payment is RMB 674,933 (approximately $109,631).

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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

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.

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250,000 common shares earned for the quarter ended September 30, 2014 were valued at $0.15 per share, which was the market price on quarter end date, or $37,500, 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.

125,000 common shares earned for the quarter ended September 30, 2014 were valued at $0.15 per share, which was the market price on quarter end date, or $18,750, 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 nine months ended September 30, 2014, a total of $187,125 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 nine months ended September 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 nine months ended September 30, 2014, a total of $1,514 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.

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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			Fair Value at
	Options			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, September 30, 2014		7,954,621		$	4,118,011
Vested, September 30, 2014		7,826,496			4,055,132
Unvested, September 30, 2014		128,125		$	62,879

As of September 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 nine months ended September 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 transaction.

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%.

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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 rate is 81.1% and 13.5% for the nine months ended September 30, 2014 and September 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 September 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						Accounts Receivable
	for the Interim Period Ended						at
	September 30,			September 30,			September 30,			December 31,
	2014			2013			2014			2013
Customer A		-	%		-	%		-	%		33.8	%
Customer B		-	%		24.0	%		-	%		25.1	%
Customer C		15.7	%		-	%		21.1	%		18.3	%
Customer D		65.8	%		-	%		67.7	%		-	%
Customer E		-	%		18.7	%		-	%		-	%
Customer F		-	%		12.6	%		-	%		-	%
		81.5	%		55.3	%		88.8	%		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.

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Vendor Concentrations

Vendor purchase concentrations and accounts payable concentration as follows:

	Net Purchases						Accounts Payable
	for the Interim Period Ended						at
	September 30,			September 30,			September 30,			December 31,
	2014			2013			2014			2013
Vendor A		88.2	%		75.3	%		89.1	%		86.0	%
Vendor B		10.1	%		-	%		-	%		-	%
		98.3	%		75.3	%		89.1	%		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 October 29, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $30,000 plus interest of $263 of the note into 332,127 shares of the Company's common stock, at a conversion price of $ 0.09112 per share.

On October 29, 2014, the Company issued a convertible promissory note to KBM Worldwide, Inc. in the amounts of $78,500 with annual interest rate of 8%.  The note is convertible at 63% of the average 3 lowest closing bid prices for the last 10 trading days after 180 days following the Date of Issuance.

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 nine months ended September 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 gross domestic product growth fell to 7.3% in the third quarter, the slowest rate since the depths of the global financial crisis in 2009. The raw material used for steel collapsed into a bear market this year as industry majors Rio Tinto Group, BHP Billiton Ltd and Vale SA expanded supplies, spurring a global glut just as economic growth in China slowed. While lower iron ore prices are helping the Chinese steelmakers' operating margins, demand for steel is weak because of slower economic growth. Consumption in the first eight months of the year dropped 0.3 percent to 500 million tonnes. This, the first decline in steel demand in China since 2000, follows the slowdown in the property market, which in turn is causing other areas of the economy to slow. The impact of lower demand and lower raw material prices is that steel rebar prices have fallen around 30 percent this year. The lower iron ore prices have raised steel producers’ margins, which has encouraged them to boost output but demand growth is absent. While slower GDP growth raises the possibility that China government will fall back on fresh stimulus measures, the concerns about excess debt could stay its hand. The main raw materials used for steel, including iron ore, manganese ore and chrome ore, all declined during the quarter. Under the pressure from the constant declining price of iron ore, scrap steel demand and price remained sluggish in the third quarter. In respond to the market change, we continued to adjust and improve our product in selection and process. In the trading business, we continued to cut our purchases and sales in metal ores to manage market risks. In the recycling business, we significantly increased the recycling process in separating and producing more high value non-ferrous scrap products from scrap materials and also continued to increase the sales in the billet that earns higher profit margin. Mainly attributable to these efforts, our revenue and gross profit for the first nine months of 2014 increased significantly by 20% and 812%, respectively, compared to same period of last year. The gross profit significant increases were partially attributable to $1.47 million and $1.9 million of inventory reserve reversal, respectively, for the three and nine months ended September 30, 2014. Consequently, the strong growth in the third quarter turned the overall financial results into profitable resulting a net income of $4.8 million and $0.42 million, respectively, for the three and nine months ended September 30, 2014.

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                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. To manage market risks, we are evaluating other potential methods such as diversifying products and hedging tools. During the third quarter we added a new product, "woodchip", to our trading business line which our business development team has conducted extensive market and industry research and feasibility study, including but not limit, international vendor and product sourcing, shipping and logistic analysis, financing facility arrangement, and customer identification and network. While keep confident in our metal ore trading and recycling business, management has been making efforts to diversify our product line and develop new profitable products into our business line. With the proven ability and expertise of our team in international trading and sourcing, we have the unique advantage to expand our business scope and carry new product which offers mitigated risks and high return potential. We expect to consummate the first trial shipment and sales of woodchip in the fourth quarter of 2014.

              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 third quarter of 2014, our net revenue in the scrap metal recycling business increased by 167% to $32.1 million from $12.0 million in the third quarter of 2013. Our production increased by 66% to 57,497 metric tons (“MT”) from 34,692 MT in the third quarter of 2013. For the third quarter of 2014, our scrap metal business sold approximately 62,196 MT of scrap metals, generating approximately $32.1 million of revenue and $8.4 million of gross profit; for the first nine months of 2014, our scrap metal business sold approximately 126,275 MT, generating approximately $65 million of revenue and $9.9 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.

We utilize bank facilities and sales of our debt securities to finance our operations and expansions. We maintain eight 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 $70 million is available to us at September 30, 2014. 

Pending Acquisition of Draco Resources, Inc.

               We disclosed the pending transaction in our last quarterly report and proxy statement and its amendment and updated the status in our Form 8Ks. As disclosed in our latest Form 8K, On October 26^th , 2014, the Company was served with a lawsuit filed in Superior Court in the County of San Mateo, California (Progressive Environmental Services, Inc. vs. Metawise Group, Inc., Draco Resources, Inc., Metamining, Inc., Songquiang Chen and Armco Metals Holdings, Inc.). The complaint alleges various causes of actions against the parties other than the Company and with respect to the Company seeks declaratory relief as well as a temporary and permanent injunction to preclude the Company from acquiring a 31.37% interest in Draco from Metawise at the Company’s forthcoming annual meeting scheduled to be held on November 17, 2014. Counsel for Armco has reviewed the lawsuit filed in Superior Court in the County of San Mateo, California by Progressive Environmental Services, Inc. against Metawise Group, Inc., Draco Resources, Inc., Metamining, Inc., Songquiang Chen and Armco Metals Holdings, Inc. Progressive seeks a permanent injunction that would prevent the Company from acquiring any shares in Draco Resources from Metawise. Progressive currently is not seeking any monetary damages from the Company. Based on its initial review and research, counsel believes there is a legal basis to seek dismissal of the Company from lawsuit. Counsel is in agreement with the Company that that vote to acquire shares in Draco Resources and election of Mr. Chen to the Company's Board of Directors which are scheduled to take palce at the annual meeting on November 17 should be deferred pending the outcome of the litigation against Metawise and Mr. Chen. Moving forward with the acquisition or the election of Mr. Chen would inhibit the Company's ability to seek dismissal from the lawsuit.

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Our Performance

Our net revenues increased by approximately 57% in the third quarter of 2014 compared to the same period in 2013 and our gross profit margin increased significantly to 26.1% from -9.1%. Our operating expenses decreased by 6% or $0.07 million in the third quarter compared to the same period in 2013 mainly due to the decreases in general and administrative expenses and operating cost of idle manufacturing facility.  Our net income in the third quarter was $4.8 million, compared with net loss of -$3.5 million in the third quarter of 2013.  The substantial increase in profit was primarily resulted from significant increase in both net revenue and gross margin of our recycling business during the quarter. By business section, in third quarter our net revenue from recycling business increased by 167% to $32 million from $12 million and the gross margin increased to 26% from -15.5% respectively, compared to same period of 2013.  Our net revenue from trading business decreased by 99% to $0.1 million from $8.5 million and the gross margin increased to 36.39% from 2.12%, respectively, compared to the same period of 2013.

Our net revenues increased by 20% in the first nine months of 2014 compared to the same period in 2013 and our gross profit margin increased significantly to 13.7% from 1.8%, respectively.  The increase in revenues in the first nine month was due to significantly increased sales from our recycling business during the first nine months compared to the same period of 2013 and partially offset by the decrease in revenues from metals ore trading business in the first nine months compared to same period of 2013. The improved gross margin was primarily attributable to the significantly increased gross profit in our recycling business and $1.9 million of inventory reserve of reversal for the period.  Our operating expenses during the first nine months of 2014 increased by $0.5 million or 12.5% compared to the same period in 2013, mainly due to increased professional fees, general and administrative expenses and selling expenses.  Our net income for the first nine months of 2014 was $0.4 million, compared to net loss of $3.7 million from the same period of a year ago.  The 2014 results reflect the increased revenue and profit margin occurred mainly in the third quarter of 2014.

RESULTS OF OPERATIONS

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

	For the Nine Months Ended September 30,									For the Three Months Ended September 30,
	2014				2013					2014				2013
Net revenues	$	74,996,063	100	%	$	62,497,489		100	%	$	32,198,170	100	%	$	20,470,236		100	%
Cost of goods sold		64,698,705	86.3	%		59,377,256		95.0	%		23,799,849	73.9	%		20,827,982		101.7	%
Lower of Cost or market adjustment		-				1,991,275		n/a			-				1,509,350		n/a
Gross profit		10,297,358	13.7	%		1,128,958		1.8	%		8,398,321	26.1	%		(1,867,096	)	(9.1	)%
Total operating expenses		4,688,727	6.3	%		4,166,070		6.7	%		1,147,461	3.56	%		1,221,089		6.0	%
Operating income (loss)	$	5,608,631	7.5	%	$	(3,037,112	)	(4.9	)%		7,250,860	22.5	%		(3,088,185	)	(15.1	)%

Net Revenues

Net revenues for the third quarter of 2014 increased by approximately 57.3% over the same period in 2013, primarily as a result of an increase in sales of scrap steel of $17.7 million and an increase in sales of billet of $2.4 million, partially offset by $8.6 million decrease in sales of chromium.

Net revenues for the first nine months of 2014 increased by approximately 20% over the same period in 2013, mainly as sales of scrap steel increased by $18.7 million and sales of billet increased by $6.5 million, partially offset by $9.8 million decrease in sales of chromium, $2.3 million decrease in sales of manganese, and $ 0.7 million in sales of titanium. Revenue for the nine month period increased compared to the same period of 2013 primarily due to increased orders for our products received from our existing major customers in the period. The type of products we buy and sell are subject to change and are dependent upon availability and the demands of our customers.

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Cost of Goods Sold

Cost of goods sold for the third quarter of 2014 was $23.8 million, an increase of $1.5 million over the same period in 2013 and represents a gross profit margin of 26.1% compared to -9.1% in the third quarter of 2013. This gross profit margin increase was primarily due to the significantly increased margins on our sales of scrap metals which we sorted out and produced high value of non ferrous scraps from the raw materials of scraps acquired at lower cost and we had an inventory reserve of reversal of $1.5 million as result of the price recovered from the write-off in the previous period.

For the first nine months of 2014, cost of goods sold was $64.7 million, an increase of $3.33 million from the same period in 2013, and represents a gross profit margin of 13.7% compared to 1.8% for the same period in 2013. This profit margin increase was, as described previously, primarily due to the increase in profit margins in sales of scrap metals compared to same period in 2013 and an inventory reserve of reversal of $1.99 million in the period.

Total Operating Expenses

Operating expenses for the three and nine months ended September 30, 2014 were $1.1 million and $4.7 million, representing a decrease of $0.07 million and an increase of $0.5 million, compared to the three and nine months ended September 30, 2013, respectively.  

For the three months ended September 30, 2014, the decrease in operating expenses was primarily due to a decrease in general and administrative expenses of $0.11 million, and a decrease in operating cost of idle manufacturing facility of $0.10 million.  These decreases were partially offset by an increase in profession fees of $0.11 million including legal fees, audit fees, investor relations, website design and SEC filing services, and an increase in selling expenses of $0.01 million due to increased sales.

For the nine months ended September 30, 2014, the increase in operating expenses was primarily due to an increase in professional fees of $0.15 million including legal fees, audit fees, investor relations, website design and SEC filing services, an increase in general and administration expenses of $0.15 million, an increase in selling expenses of $0.13 million, and an increase in operating cost of idle manufacturing facility of $0.10 million.

Other (Income) expense

Total other expense for the three and nine months ended September 30, 2014 were $0.66 million and $3.4 million, respectively. During the three and nine months ended September 30, 2013, we had other expenses of $0.47 million and $0.6 million, respectively.

For the three months ended September 30, 2014, interest expenses increased $0.27 million over the comparative period in 2013, mainly due to increases in use of borrowings in the third quarter, interest income decreased $0.04 million compared to last same period, and we had a loss on sales of marketable securities of $0.04 million for the quarter. These increases in total other expenses were partially offset by a $0.15 million increase in other income and a decrease in loan guarantee expense of $0.01 million.

For the nine months ended September 30, 2014, total other expenses increased $2.7 million, compared to the same period in 2013, mainly due to an increase in non-cash interest expense of $1.7 million as result of discount associated with conversion of convertible notes, an increase in change in fair value of derivative liability of $1.03 million and a loss on sales of marketable securities of $0.04 million. These increases in total other expenses were partially offset by an increase in other income of $0.04 million, a decrease in loan guarantee expense of $0.02 million, and an increase in interest income of $0.01 million.

Income tax (benefit) expense

Income tax (benefit) expenses for the three and nine months ended September 30, 2014 was $1.8 million for both periods. In the comparative periods in 2013, income tax (benefit) expense was $($12,618) and $0.05 million, respectively.  The increase in income tax payable was due to the increase in income from our recycling business in the third quarter of 2014 which is subject to a 25% income tax rate.

The effective rate is 81.1% and 13.5% for the nine months ended September 30, 2014 and September 30, 2013, respectively. The high effective rate was mainly due to the net income generated by our Renewable Resources subsidiary was offset by other entities’ net losses and led to a much smaller total net income at consolidate level.

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Net income (loss)

Our net income in the third quarter of 2014 was 4.8 million, compared with a net loss of $3.5 million in the third quarter of 2013. The significant improvement in profit is primarily due to the substantial increase in gross profit margin to 26% in this quarter from -9.1% of same period in 2013 and the 57% increase in net revenue compared to same period of last year described above, partially offset by a $0.2 million increase in total other expenses.

Our net income for the first nine months of 2014 was $0.42 million, compared to net loss of $3.7 million from the same period of 2013 due to an increase of $9.2 million in gross profit, partially offset by an increase of $0.5 million in total operating expenses, an increase in total other expenses of $2.8 million and an increase of $1.7 million in income tax provision, each of them described above.

Comprehensive Income (Loss)

During the three and nine months ended September 30, 2014, our comprehensive income amounted to $4.8 million and $0.11 million, respectively, compared to comprehensive loss of $3.0 million and $2.7 million in the comparative periods in 2013, respectively. 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 $0.38 million the first nine months of 2014, comparable to a gain of $1.1 million for the same period in 2013. These non-cash losses and gains had the effect of decreasing our reported comprehensive income in 2014 and increasing in 2013, respectively.

LIQUIDITY AND CAPITAL RESOURCES

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

 The following table provides certain selected balance sheet comparisons as of September 30, 2014 and December 31, 2013. 

					Increase
	30-Sep-14		31-Dec-13		(decrease)			%
Cash	$	544,741	$	596,557	$	(51,816	)		(8.7	)%
Pledged deposits		497,899		4,652,222		(4,154,323	)		(89.3	)%
Marketable securities		432,520		519,129		(86,609	)		(16.7	)%
Accounts receivable, net		53,682,200		25,595,516		28,086,684			109.7	%
Inventories		13,966,770		20,456,920		(6,490,150	)		(31.7	)%
Advance on purchases		632,933		733,285		(100,352	)		(13.7	)%
Prepayments and other current assets		828,429		1,181,371		(352,942	)		(29.9	)%
Total Current Assets		70,585,492		53,735,000		16,850,492			31.4	%
Loan payable		17,611,095		27,415,638		(9,804,543	)		(35.8	)%
Banker's acceptance notes payable and LC		1,765,291		8,473,217		(6,707,926	)		(79.2	)%
Current maturities of capital lease obligation		719,800		904,990		(185,190	)		(20.5	)%
Accounts payable		26,100,236		10,062,463		16,037,773			159.4	%
Advance received from Chairman and CEO		846,690		668,332		178,358			26.7	%
Due to related party		411,880		403,141		8,739			2.2	%
Customer deposits		1,465,206		649,488		815,718			125.6	%
Corporate income tax payable		2,607,237		822,207		1,785,030			217.1	%
Derivative Liability		5,688		61,429		(55,741	)		(90.7	)%
Value added tax and other taxes payable		3,885,994		2,202,331		1,683,663			76.4	%
Accrued expenses and other current liabilities		1,707,725		1,228,753		478,972			39.0	%
Total Current Liabilities		57,126,842		52,891,989		4,234,853			8.0	%

36

               Our cash balance at September 30, 2014 totaled $0.54 million, a decrease of $0.1 million as compared to $0.6 million at December 31, 2013.  At September 30, 2014 our working capital was $13.5 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 nine months of 2014.

                 Our current assets at September 30, 2014 were $70.6 million, an increase of $16.9 million, or 31%, from December 31, 2013. This overall increase was primarily attributable to the increase of $28.1 million in accounts receivable, partially offset by a decrease of $6.5 million in inventories, a decrease of $4.2 million in pledged deposits, a decrease of $0.4 million in prepayment and other current assets, a decrease of $0.1 million in advance on purchases, a decrease of $0.09 million in marketable securities, and a decrease of $0.05 million in cash.

                 Our accounts receivable increased $28.1 million at September 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. For the account receivable at the quarter end, as of November 7, 2014, approximately $41 million of which has been received and the remaining balance is expect to be received in November and December of 2014.

                 Inventories decreased $6.5 million at September 30, 2014 compared to December 31, 2013, primarily due to our sales of inventories and the decreased purchases in metal ore trading business during the first nine months of 2014.

                Pledged deposits at September 30, 2014 of $0.50 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 prepayments and other current assets decreased $0.4 million at September 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 decreased $0.1 million at September 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 decreased $0.09 million at September 30, 2014 compared to December 31, 2013 due to the temporary decrease in the market value of the securities and our sales of portion of the securities on market during the period.

Cash remained flat at around $0.6 million at September 30, 2014 compared to December 31, 2013.

                At September 30, 2014, our total current liabilities increased $4.2 million, or 8%, from December 31, 2013, which reflected  mainly an increase in accounts payable of $16.0 million, an increase in corporate income tax payable of $1.8 million, an increase in value added tax and other taxes payable of $1.7 million, an increase in customer deposits of $0.8 million, an increase in accrued expenses and other current liabilities of $0.48 million, and an increase in advances received from Chairman and CEO of $0.18 million and an increase in short term borrowing of $0.1 million, partially offset by a decrease in loan payable of $9.8 million, a decrease in banker's acceptance notes payable and letter of credit of $6.71 million, a decrease in current maturities of capital lease obligation of $0.19 million, and a decrease in derivative liability of $0.06 million.

               Accounts payable increased $16.0 million at September 30, 2014 compared to December 31, 2013 mainly due to our increased purchases of scrap materials for our recycling production during the third quarter of 2014. All of the payable has been paid as of report date.

               Loans payable decreased $9.8 million at September 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 nine months 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.

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

                Corporate income tax payable increased $1.79 million at September 30, 2014, compared to December 31, 2013. The increase is mainly due to the significant increase in income from our recycling business operation.

               Value added tax and other taxes payable increased $1.68 million at September 30, 2014 from December 31, 2013 mainly due to the increased sales in the first nine months of 2014.

               Customer deposits increased $0.82 million at September 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.

Accrued expenses and other current liabilities increased $0.48 million at September 30, 2014, compared to December 31, 2013. The increase was mainly due to the increase in the accrued cost for our increased recycling production.

Current maturities of capital lease obligation decreased $0.19 million at September 30, 2014 compared to December 31, 2013 reflecting the decrease of capital lease obligation due within one year.

At September 30, 2014, we owed our Chairman and CEO, Mr. Kexuan Yao, $0.85 million for funds he advanced to us for working capital purposes, a net increase of $0.18 million from December 31, 2013 as result of new advances used for our operation during the first nine months of 2014.

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

As of September 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 $70 million was available under these facilities at September 30, 2014. We have approximately $20 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:

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 an 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 November 1, 2014, all of the principal and accrued interest under the note have been converted to common stock of the Company.

38

On August 27, 2014, the Company issued a convertible promissory note to MAGNA EQUITIES II, LLC in the amounts of $100,000 with annual interest rate of 8%. The note is matured on August 27, 2015, with conversion right after 180 days following the Date of Issuance.

On October 29, 2014, the Company issued a convertible promissory note to KBM Worldwide, Inc. in the amounts of $78,500 with annual interest rate of 8%. The note is convertible at 63% of the average 3 lowest closing bid prices for the last 10 trading days after 180 days following the Date of Issuance.

On October 10, 2014, 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 export sight letter of credit bill transit interest at 1.75% per annum over LIBOR or 1.75% per annum over bank's cost of funds, and pays export usance letter of credit bill transit interest at 2% per annum over LIBOR or 2% per annum over bank's cost of funds. 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 September 30, 2014, the balance outstanding under this facility was $149,197. 

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 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. 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 September 30, 2014, the outstanding under this facility was $276,000.  

                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. The renewal of the facility is under process. At September 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 September 30, 2014, no balance was outstanding under this facility. 

              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 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. At September 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 RMB 50,000,000 (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 September 30, 2014, the balance outstanding under this facility was $8,123,873.

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              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 September 30, 2014, the balance outstanding under this facility was $2,355,923.  

              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 September 30, 2014, no balance was outstanding under this facility.  

Statement of Cash Flows

For the first nine months of 2014, our net decrease in cash was $0.05 million, and was comprised of $9.4 million used in financing activities, offset by $5.01 million provided by operating activities and $4.24 million provided by investing activities.

For the first nine months of 2013, our net increase in cash totaled $1.4 million, and was comprised of $8.6 million provided by financing activities, offset by $5.3 million used in operating activities and 1.8 million used in investing activities.

Cash Flows from Operating Activities

For the first nine months of 2014 cash provided by operations of $5.02 million was mainly comprised of an increase accounts payable of $16 million, a decrease in inventories of $8.3 million, an increase in taxes payable of $3.49 million, an increase in customer deposits of $0.8 million, an increase in accrued expenses and other current liabilities of $0.60 million, and a decrease in prepayments and other current assets of $0.34 million. These cash outflows were partially offset by an increase in accounts receivable of $28.3 million and an increase in advance on purchases of $0.49 million.  

For the first nine months of 2013 cash used in operations of $5.3 million was mainly comprised of an increase in inventories of $7.5 million, an increase in bank acceptance notes receivable of $1.6 million, a decrease in taxes payable of $1.2 million, a decrease in accrued expenses and other current liabilities of $1.1 million, an increase in prepayments and other current assets of $0.8 million, and an increase in advance on purchases of $0.02 million. These cash outflows were partially offset by a decrease in accounts receivable of $8.3 million, a decrease in accounts payable of $0.22 million, and a decrease in customer deposits of $0.2 million.

Cash Flows from Investing Activities

For the nine months ended September 30, 2014 net cash from in investing activities of $4.24 million was due to proceeds received from the release of pledge deposits of $5.94 million and cash received from sales of marketable securities of $0.11 million, partially offset by payment made toward pledged deposits of $1.82 million.

For the nine months ended September 30, 2013 net cash from in investing activities of $1.8 million was due to proceeds received from the release of pledge deposits of $16.4 million, partially offset by purchases of property and equipments of $0.2 million and payment made toward pledged deposits of $18.0 million.

Cash Flows from Financing Activities

For the nine months ended September 30, 2014 cash used in financing activities of $ 9.44 million was mainly due to repayment of loans payable of $14.49 million, a decrease in banker’s acceptance notes payable of $6.66 million, and repayment of capital lease obligation of $0.34 million, partially offset by proceeds from loans payable of $11.10 million, proceeds from capital lease obligation of 0.16 million, proceeds from convertible notes of $0.6 million, advances from CEO of $0.17, and advances from related party of $0.01 million.

For the nine months ended September 30, 2013 cash provided by financing activities of $ 8.6 million was mainly due to proceeds from loans payable of $35.9 million, banker’s acceptance notes payable of $1.4 million, proceeds from sales of common stock of $1.6 million, proceeds from CEO loan of $1.0 million, advances from CEO of $1.0 million, deposit for stock subscription of $0.8 million, partially offset by repayment of loans payable of $31.2 million, and repayment of capital lease obligation of $2.0 million.

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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.

Contractual Obligations and Commitments.

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

	PAYMENTS DUE BY PERIOD
			Less than		1-3		3-5		More than
	Total		1 year		years		years		5 years
Contractual obligations
Banker's acceptance notes payable and letters of credit	$	1,765,291	$	1,765,291	$	-	$	-	$	-
Short-Term Loans Payable		17,611,095		17,611,095		-		-		-
Capital Lease Obligations		719,800		719,800		-		-		-
Operating Lease Obligations		201,045		27,415		173,630		-		-
Purchase Obligations		-		-		-		-		-
Other Long-Term Liabilities Reflected on the Registrant's Balance Sheet under GAAP		-		-		-		-		-
Total	$	20,297,231	$	20,123,601	$	173,630	$	-	$	-

 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.

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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.

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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 both Plaintiff’s Motion for Summary Judgment against Defendants, and Defendants’ Motion for Summary Judgment Against Plaintiff, was conducted on September 18, 2014.  At that hearing, the Court denied Plaintiff’s Motion for Summary Judgment entirely.  The Court also granted Defendants’ Motion for Summary Judgment in part, and denied it in part.  Both Plaintiff and the Director Defendants have filed Motions for Reconsideration asking the Court to reverse its prior Order regarding summary judgment.  The Court will rule on the Motions for Reconsideration in chambers (with no oral argument) on December 5, 2014.  If the case survives the Court’s ruling on the Motions for Reconsideration, the parties will have a Court conference on December 19, 2014.

           On October 26th , 2014, the Company was served with a lawsuit filed in Superior Court in the County of San Mateo, California (Progressive Environmental Services, Inc. vs. Metawise Group, Inc., Draco Resources, Inc., Metamining, Inc., Songquiang Chen and Armco Metals Holdings, Inc.). The complaint alleges various causes of actions against the parties other than the Company and with respect to the Company seeks declaratory relief as well as a temporary and permanent injunction to preclude the Company from acquiring a 31.37% interest in Draco from Metawise at the Company’s forthcoming annual meeting scheduled to be held on November 17, 2014. Counsel for Armco has reviewed the lawsuit filed in Superior Court in the County of San Mateo, California by Progressive Environmental Services, Inc. against Metawise Group, Inc., Draco Resources, Inc., Metamining, Inc., Songquiang Chen and Armco Metals Holdings, Inc. Progressive seeks a permanent injunction that would prevent the Company from acquiring any shares in Draco Resources from Metawise. Progressive currently is not seeking any monetary damages from the Company. Based on its initial review and research, counsel believes there is a legal basis to seek dismissal of the Company from the lawsuit. Counsel is in agreement with the Company that the vote to acquire shares in Draco Resources and election of Mr. Chen to the Company's Board of Directors which are scheduled to take place at the annual meeting on November 17th should be deferred pending the outcome of the litigation against Metawise and Mr. Chen.  Moving forward with the acquisition or the election of Mr. Chen would inhibit the Company’s ability to seek dismissal from the lawsuit.

Item 1A.       Risk Factors.

The Company is subject to a number of risk factors regarding its business and operations which are described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K, as amended, for the year ended December 31, 2013 and our other filings with the Securities and Exchange Commission.

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

                    On October 29, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $30,000 plus interest of $263 of the note into 332,127 shares of the Company's common stock, at a conversion price of $ 0.09112 per share.

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Item 3.          Defaults Upon Senior Securities.

None. 

Item 4.          Mine Safety Disclosures.

Not applicable to our company’s operations.

Item 5.          Other Information.

None.

Item 6.          Exhibits.

No.	Description
10.23	Form of Amendment No. 2 to Share Exchange Agreement dated August 25, 2014 by and among Armco Metals Holdings, Inc., Draco Resources Inc., Metawise Group Inc., Songqiang Chen, Jian Fang, Changlin Yan, Hongye Chen, Fanjie Wang, Tong Huang, Honglin Zhang and Hongbing Lin (incorporated by reference to the Current Report on Form 8-K as filed with the Securities and Exchange Commission on August 29, 2014).
10.24	Form of Amendment No. 3 to Share Exchange Agreement dated September 22, 2014 by and among Armco Metals Holdings, Inc., Draco Resources Inc., Metawise Group Inc., Songqiang Chen, Jian Fang, Changli Yan, Hongye Chen, Fajie Wang, Tong Huang, Honglin Zhang and Hongbing Lin (incorporated by reference to the Current Report on Form 8-K as filed with the Securities and Exchange Commission on September 23, 2014).
10.25	Form of Convertible Promissory Note of $78,500 dated October 29, 2014 by and between Armco Metals Holdings, Inc. and KBM Worldwide, Inc.
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

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.
November 14, 2014	By: /s/ Kexuan Yao
	Kexuan Yao, Chief Executive Officer
	By: /s/ Fengtao Wen
	Fengtao Wen, Chief Financial Officer

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EX-10

Exhibit 10.25

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

Principal Amount: $78,500.00	Issue Date: October 29, 2014
Purchase Price: $78,500.00

CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, ARMCO METALS HOLDINGS, INC., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of KBM WORLDWIDE, INC., a New York corporation, or registered assigns (the “Holder”) the sum of $78,500.00 together with any interest as set forth herein, on July 31, 2015 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

The following terms shall apply to this Note:

Article I. CONVERSION RIGHTS

1.1      Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

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1.2     Conversion Price.

(a)     Calculation of Conversion Price. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 63% multiplied by the Market Price (as defined herein) (representing a discount rate of 37%). “Market Price” means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets”. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

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(b)     Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

1.3      Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

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If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

1.4     Method of Conversion.

(a)     Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.

(b)     Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

(c)     Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

(d)     Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement.

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(e)     Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.

(f)     Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.

(g)     Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.

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1.5      Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

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The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

1.6     Effect of Certain Events.

(a)     Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

(b)     Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

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(c)     Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

(d)     Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.

The Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”) and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.

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Additionally, the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

(e)     Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

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(f)     Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.

1.7     Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the “Maximum Share Amount”), which shall be 4.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower’s ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.

1.8     Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s failure to convert this Note.

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1.9     Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the periods set forth on the table immediately following this paragraph (the “Prepayment Periods”), the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to Holder, or upon the order of the Holder as specified by the Holder in writing to the Borrower, at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”) equal to the percentage (“Prepayment Percentage”) as set forth in the table immediately following this paragraph opposite the applicable Prepayment Period, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.     

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Prepayment Period	Prepayment Percentage
1. The period beginning on the Issue Date and ending on the date which is thirty (30) days following the Issue Date.	110%
2.  The period beginning on the date which is thirty-one (31) days following the Issue Date and ending on the date which is sixty (60) days following the Issue Date	115%
3.  The period beginning on the date which is sixty-one (61) days following the Issue Date and ending on the date which is ninety (90) days following the Issue Date	120%
4.  The period beginning on the date that is ninety-one (91) day from the Issue Date and ending one hundred twenty (120) days following the Issue Date	125%
5.  The period beginning on the date that is one hundred twenty-one (121) day from the Issue Date and ending one hundred fifty (150) days following the Issue Date	130%
6.  The period beginning on the date that is one hundred fifty-one (151) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date	135%

After the expiration of one hundred eighty (180) days following the Issue Date, the Borrower shall have no right of prepayment.

Article II. CERTAIN COVENANTS

2.1     Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s disinterested directors.

2.2     Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.

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2.3     Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note.

2.4     Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

2.5     Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.

Article III. EVENTS OF DEFAULT

If any of the following events of default (each, an “Event of Default”) shall occur:

3.1     Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.

3.2     Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.

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3.3     Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.

3.4     Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

3.5     Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

3.6     Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

3.7     Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

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3.8     Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the Pink Sheets electronic quotation system) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

3.9     Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

3.10     Liquidation.     Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

3.11     Cessation of Operations.     Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

3.12     Maintenance of Assets.     The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

3.13     Financial Statement Restatement.     The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

3.14     Reverse Splits.          The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

3.15      Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

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3.16     Cross-Default.  Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein).  UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of written notice to the Borrower by such Holders (the “Default Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity. 

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If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

Article IV. MISCELLANEOUS

4.1     Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

4.2     Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

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   If to the Borrower, to:

ARMCO METALS HOLDINGS, INC.

One Waters Park Drive - Suite 98

San Mateo, CA 94403

Attn: KEXUAN YAO, Chief Executive Officer

facsimile:

 With a copy by fax only to (which copy shall not constitute notice):

[enter name of law firm]

Attn: [attorney name]

[enter address line 1]

[enter city, state, zip]

facsimile: [enter fax number]

 If to the Holder:

KBM WORLDWIDE, INC.

80 Cuttermill Road – Suite 410

Great Neck, NY 11021

Attn: Seth Kramer, President

e-mail: info@kbmworldwide.com

 With a copy by fax only to (which copy shall not constitute notice):

Naidich Wurman Birnbaum & Maday, LLP

Att: Judah A. Eisner, Esq.

Attn: Bernard S. Feldman, Esq.

facsimile: 516-466-3555

e-mail: dyork@nwbmlaw.com

4.3     Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

4.4     Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

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4.5     Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.

4.6     Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

4.7     Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

4.8     Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

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4.9     Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.

4.10     Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this October 29, 2014.

ARMCO METALS HOLDINGS, INC.

By: _______________________________         

KEXUAN YAO

Chief Executive Officer

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EXHIBIT A -- NOTICE OF CONVERSION

The undersigned hereby elects to convert $_________________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of ARMCO METALS HOLDINGS, INC., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of October 29, 2014 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

Box Checked as to applicable instructions:

[ ] The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

Name of DTC Prime Broker:

Account Number:

[ ] The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

KBM WORLDWIDE, INC.

80 Cuttermill Road – Suite 410

Great Neck, NY 11021

Attention: Certificate Delivery

e-mail: info@kbmworldwide.com

Date of Conversion:                                  _____________

Applicable Conversion Price:                $____________

Number of Shares of Common Stock to be Issued

    Pursuant to Conversion of the Notes:           ______________

Amount of Principal Balance Due remaining

    Under the Note after this conversion: ______________

KBM WORLDWIDE, INC.

By:_____________________________

Name:     Seth Kramer

Title:      President

Date: October 29, 2014

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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 September 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:  November 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 September 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: November 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 September 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: November 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	9 Months Ended
	Sep. 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 9 - Related Party Transactions (Details) - Due to Other Related Parties (USD $)	Sep. 30, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Due to related parties	$ 411,880	$ 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	$ 411,880	$ 286,313

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Note 6 - Inventories (Details) - Inventories (USD $)	Sep. 30, 2014	Dec. 31, 2013
Inventories [Abstract]
Raw materials – scrap metal	$ 11,312,491	$ 4,390,811
Finished goods – processed scrap metal	2,878,981	12,421,088
Purchased merchandise for resale	125,538	5,936,936
Write - down of inventories	(350,240)	(2,291,915)
	$ 13,966,770	$ 20,456,920

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Note 10 - Capital Lease Obligation (Details) - Capital Lease Obligation (USD $)	Sep. 30, 2014	Dec. 31, 2013
Capital Leased Assets [Line Items]
Capital lease obligation	$ 719,800	$ 904,990
Less current maturities	(719,800)	(904,990)
Machinery and Equipment [Member]
Capital Leased Assets [Line Items]
Capital lease obligation, net of current maturities	159,605	336,065
Less current maturities	(159,605)	(336,065)
Other Machinery and Equipment [Member]
Capital Leased Assets [Line Items]
Capital lease obligation	560,195	568,925
Less current maturities	$ (560,195)	$ (568,925)

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Note 5 - Accounts Receivable (Details) - Accounts Receivable (USD $)	Sep. 30, 2014	Dec. 31, 2013
Accounts Receivable [Abstract]
Accounts receivable	$ 53,725,350	$ 25,638,666
Allowance for doubtful accounts	(43,150)	(43,150)
	$ 53,682,200	$ 25,595,516

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

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

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

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

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

		Warrants Outstanding						Warrants Exercisable
				Average		Weighted				Average		Weighted
				Remaining		Average				Remaining		Average
Range of		Number		Contractual		Exercise		Number		Contractual		Exercise
Exercise Prices		Outstanding		Life (in years)		Price		Exercisable		Life (in years)		Price
$	7.50		1,615,387		0.55	$	7.50		1,615,387		0.55	$	7.50
$	7.50		1,615,387		0.55	$	7.50		1,615,387		0.55	$	7.50

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

Balance at December 31, 2013	$	61,429
To record derivative liability as debt discount		1,950,820
Change in fair value of derivative liability		107,378
Settlement of derivative liability due to conversion of related notes	$	(2,113,939	)
Balance at September 30, 2014		5,688

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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		9 Months Ended							1 Months Ended			0 Months Ended				1 Months Ended		0 Months Ended				1 Months Ended				0 Months Ended	1 Months Ended	0 Months Ended					0 Months Ended		0 Months Ended						0 Months Ended
	Aug. 11, 2014 USD ($)	Jul. 15, 2014 USD ($)	Jun. 04, 2014 USD ($)	Jul. 25, 2014 USD ($)	Jun. 12, 2014 USD ($)	Jun. 16, 2014 USD ($)	Jun. 18, 2014 USD ($)	May 07, 2014 USD ($)	Jun. 25, 2014 USD ($)	Jun. 27, 2014 USD ($)	May 14, 2014 USD ($)	May 22, 2014 USD ($)	May 30, 2014 USD ($)	Apr. 30, 2010 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Aug. 27, 2014 USD ($)	Mar. 03, 2014	Feb. 28, 2014 USD ($)	Feb. 28, 2014 CNY	Dec. 31, 2013 USD ($)	Apr. 30, 2010 Private Placement [Member] USD ($)	Sep. 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 $0.45 [Member] Hanover Holdings I, LLC [Member]	Sep. 23, 2013 Convertible Notes Payable [Member] Default Rate [Member]	Sep. 23, 2013 Convertible Notes Payable [Member] Default Prepayment Rate [Member]	Sep. 23, 2013 Convertible Notes Payable [Member] Minimum [Member]	Sep. 23, 2013 Convertible Notes Payable [Member] Maximum [Member]	Apr. 16, 2014 Convertible Notes Payable [Member] Hanover Holdings I, LLC [Member] USD ($)	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 ($)	Apr. 07, 2014 Convertible Notes Payable [Member] 15 Foreign Investors [Member] USD ($)	Sep. 30, 2014 Convertible Notes Payable [Member] USD ($)	Dec. 10, 2013 Convertible Notes Payable [Member] USD ($)	Sep. 23, 2013 Convertible Notes Payable [Member] USD ($)	Dec. 31, 2013 Subsequent Event [Member] Filing S-1 Within 120 Days of Note Date [Member] USD ($)	Oct. 29, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Oct. 29, 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 ($)	Jan. 13, 2014 Four Foreign Investors [Member] USD ($)	Feb. 04, 2014 Eleven Foreign Investors [Member] USD ($)	Apr. 07, 2014 Asher Enterprises, Inc [Member] USD ($)	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															117,690	3,644	473,472	320,629						15,000
Derivative Liability, Fair Value, Gross Liability																									0.75
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)																									1,615,387
Convertible Notes Payable																			100,000		5,500,000	33,512,936																									350,000					500,000	450,000	2,472,127	3,082,340	0
Proceeds from Convertible Debt																	600,000																																			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%	4.00%	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)	$ 0.147645	$ 0.17704	$ 0.16575	$ 0.17935	$ 0.173995	$ 0.1135	$ 0.20519	$ 0.23902	$ 0.20927	$ 0.20927	$ 0.22814	$ 0.186575	$ 0.184535								$ 0.317												$ 0.27115	$ 0.32011	$ 0.322405		$ 0.343995	$ 0.34663	$ 0.308635	$ 0.317									$ 0.09112								$ 0.317
Debt Conversion, Converted Instrument, Amount	25,000	23,608	25,000	10,000	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													73,500
Interest on Convertible Debt, Net of Tax	106	108	11	101	3,756	2,520	150	278	136	28	78	58	44																				1,525						4,628
Debt Conversion, Converted Instrument, Shares Issued (in Shares)	170,030	133,957	150,897	56,321	596,315	577,267	244,409	105,756	239,577	174,034	109,923	134,308	135,717																				374,425	234,295	155,085		145,351	288,493	95,997		363,653	355,082	17,521,980					332,127
Derivative Liability, Current															$ 5,688		$ 5,688						$ 61,429																					$ 5,687

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Note 3 - Pledged Deposits (Tables)

9 Months Ended

Sep. 30, 2014

Transfers and Servicing [Abstract]

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

	September 30,		December 31,
	2014		2013
Armco HK
Letters of credit	$	-	$	5,993
Sub-total – Armco HK		-		5,993
Renewable Metals
Bank acceptance notes payable		-		1,636,072
Letters of credit		10,155		2,517,621
Deposit for capital lease obligation (i)		487,432		490,823
Sub-total – Renewable Metals		497,587		4,644,516
Henan Armco
Letters of credit		312		2,113
Sub-total – Henan Armco		312		2,113
	$	497,899	$	4,652,222

(i) $487,432 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 7 - Loans and Convertible Note Payable (Details) - Loans Payable (USD $)	Sep. 30, 2014		Dec. 31, 2013
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	$ 17,611,095		$ 27,415,638
Short-term borrowings, no interest bearing, due upon demand.	100,000
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	2,178,010
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	2,340,488		8,919,490
Short Term Borrowings [Member] | Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	14,812,639		13,876,076
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	240,000	[1]	1,050,000	[1]
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			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	8,123,873		8,180,361
Pudong Development Bank [Member] | Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	2,355,923
Pudong Development Bank [Member] | Pudong Development Bank [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	3,479,187		3,503,379
Guanhutun Credit Union [Member] | Henan Armco [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	788,665
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			3,106,363
Renewable Metals [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	162,478		163,607
Henan Armco [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	64,991		229,050
Armco Metals Holdings [Member]
Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable [Line Items]
Loans payable	457,968		1,513,709
Convertible notes payable, net of discount of $12,033, with interest at 4% and 8% per annum, due March 3, 2015 and August 27, 2015.	$ 117,968		$ 463,709

[1] As of September 30, 2014, Armco Metals Holdings had three loans with principal amount of $550,000, $35,000 and $10,000, respectively, plus interest accrual of $39,967, in aggregate of $634,967 to Metawise Group, Inc. and its subsidiary, Draco Resources Inc, respectively. As of September 30, 2014, Armco Metals Holdings' subsidiary, Henan Armco, prepaid Draco Resources Inc of $792,000 for commodity plan to purchase. On September 30, 2014, Armco Metals Holdings, Henan Armco, Metawise Group, Inc. and its subsidiary, Draco Resources Inc., entered into an agreement that the four parties agreed to use Henan Armco's prepayment of $792,000 to Draco resources Inc to repay Armco Metals Holdings' loans payable plus interest totaling $634,967 to Metawise Group, Inc., which leaving Henan Armco's prepayment to Draco Resources Inc $157,033.

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Note 3 - Pledged Deposits (Details) (Renewable Metals [Member], USD $)	Sep. 30, 2014		Dec. 31, 2013
Renewable Metals [Member]
Note 3 - Pledged Deposits (Details) [Line Items]
Pledged Assets, Not Separately Reported, Other	$ 487,432	[1]	$ 490,823	[1]

[1] $487,432 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 1 - Organization and Operations (Details) (USD $)	0 Months Ended							0 Months Ended			0 Months Ended		0 Months Ended	6 Months Ended		0 Months Ended
	Aug. 12, 2008	Sep. 30, 2014	Sep. 19, 2014	Aug. 25, 2014	Apr. 15, 2014	Dec. 31, 2013	Apr. 06, 2007	Apr. 15, 2014 Convertible Common Stock [Member] Draco Resources [Member]	Sep. 30, 2014 Amendment [Member]	Aug. 31, 2014 Amendment [Member]	Apr. 15, 2014 Reverse Stock Split [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]	Sep. 19, 2014 Draco Resources [Member] Finders Fee [Member] China Direct Investments, Inc. [Member]	Aug. 25, 2014 Draco Resources [Member] Finders Fee [Member] China Direct Investments, Inc. [Member]	Sep. 19, 2014 Draco Resources [Member] Finders Fee [Member] Shanghai Heqi Investment Center [Member]	Aug. 25, 2014 Draco Resources [Member] Finders Fee [Member] Shanghai Heqi Investment Center [Member]	Sep. 19, 2014 Draco Resources [Member] Finders Fee [Member]	Aug. 25, 2014 Draco Resources [Member] Finders Fee [Member]	Sep. 19, 2014 Draco Resources [Member]	Aug. 25, 2014 Draco Resources [Member]	Apr. 15, 2014 Draco Resources [Member]	Sep. 19, 2014 Draco Resources [Member]	Aug. 25, 2014 Draco Resources [Member]
Note 1 - Organization and Operations (Details) [Line Items]
Common Stock, Shares, Issued		55,693,745				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)		$ 45,791,572			$ 9,100	$ 35,790,906
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		2,400,000	2,400,000	2,400,000	2,400,000	4,800,000	4,800,000	40,000,000	51,000,000
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													5,300,000	2,000,000
Investment Options, Exercise Price (in Dollars per share)	$ 1.30													$ 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
Incremental Common Shares Attributable to Dilutive Effect of Equity Unit Purchase Agreements																								13,950,000
Stockholders' Equity Note, Stock Split, Conversion Ratio											10
Business Acquisition, Share Price (in Dollars per share)								$ 3.40
Percentage of Outstanding Common Stock after Acquisition																						40.00%	46.05%	74.64%
Common Stock, Shares Authorized		74,000,000	74,000,000	74,000,000		74,000,000			200,000,000	200,000,000
Business Acquisition, Percentage of Voting Interests Acquired																									31.37%	40.00%

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Note 8 - Banker's Acceptance Notes Payable and Letters of Credit (Details) - Banker’s Acceptance Notes Payable (USD $)	Sep. 30, 2014	Dec. 31, 2013
Short-term Debt [Line Items]
Short-term debt	$ 1,765,291	$ 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	$ 1,765,291	$ 5,201,073

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Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations (Supplier Concentration Risk [Member])	9 Months Ended
	Sep. 30, 2014	Sep. 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	88.20%	75.30%
Vendor A [Member] | Account Payable [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor	89.10%	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	10.10%
Cost of Goods, Total [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor	98.30%	75.30%
Account Payable [Member]
Note 15 - Concentrations and Credit Risk (Details) - Vendor Purchase and Accounts Payable Concentrations [Line Items]
Vendor	89.10%	86.00%

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Note 12 - Commitments and Contingencies (Details)	1 Months Ended			1 Months Ended			12 Months Ended	1 Months Ended	12 Months Ended			33 Months Ended	0 Months Ended			1 Months Ended						0 Months Ended					1 Months Ended		0 Months Ended						33 Months Ended		12 Months Ended	1 Months Ended
	Dec. 21, 2011	Sep. 30, 2014 USD ($)	Dec. 21, 2011 Each Issuance [Member] Opening Commission [Member] DBS Hong Kong [Member] USD ($)	Dec. 21, 2011 Commission [Member] DBS Hong Kong [Member] USD ($)	Dec. 21, 2011 Balance Outstanding [Member] DBS Hong Kong [Member]	Dec. 21, 2011 Opening Commission [Member] DBS Hong Kong [Member]	Dec. 20, 2011 Commission [Member] RZB Hong Kong [Member]	Feb. 08, 2012 Yao [Member]	Dec. 31, 2014 Yao [Member] USD ($)	Dec. 31, 2013 Yao [Member] USD ($)	Dec. 31, 2012 Yao [Member] USD ($)	Sep. 30, 2014 Yao [Member]	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] USD ($)	May 16, 2014 Henan Armco [Member] Guangdong Development Bank [Member] CNY	Sep. 30, 2014 Henan Armco [Member] USD ($)	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. 01, 2011 Renewable Metals [Member] Bank of Communications Lianyungang [Member]	Jul. 01, 2011 Renewable Metals [Member] Bank of Communications Lianyungang [Member] USD ($)	Jul. 01, 2011 Renewable Metals [Member] Bank of Communications Lianyungang [Member] CNY	Sep. 30, 2014 Renewable Metals [Member] USD ($)	Jun. 11, 2010 Renewable Metals [Member] USD ($)	Jun. 11, 2010 Renewable Metals [Member] CNY	Sep. 30, 2014 Armco Shanghai [Member] USD ($)	Sep. 30, 2014 Armco Shanghai [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		$ 80,981,121															15,000,000	$ 3,200,000	20,000,000	$ 4,800,000	30,000,000	$ 15,600,000	96,000,000	$ 23,721,709	$ 8,100,000	50,000,000	$ 2,400,000	15,000,000		$ 11,700,000	72,000,000	$ 22,259,412						$ 20,000,000
Debt Instrument, Basis Spread on Variable Rate																2.00%	2.00%																					2.50%
Export Bill Collection Commission				12.50%	6.25%	25.00%	6.25%
Long-term Line of Credit		10,904,993	50,000	50,000																												10,479,796	45,400,000	300,000,000
Pledged Deposits	3.00%
Letters of Credit Outstanding, Amount																5,000,000
undefined																						120.00%	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%
Cash Collateral Other Domestic Letters of Credit																													30.00%
Inventory Collateral																													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 6 - Inventories (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Inventory Valuation and Obsolescence [Member]	Dec. 31, 2013 Inventory Valuation and Obsolescence [Member]	Sep. 30, 2014 Lower of Cost or Market [Member]	Sep. 30, 2013 Lower of Cost or Market [Member]
Note 6 - Inventories (Details) [Line Items]
Inventory Adjustments	$ 350,240	$ 2,291,915	$ 0	$ 0	$ (1,958,544)	$ 1,991,275
Inventory, Work in Process, Gross	$ 0	$ 0

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Note 3 - Pledged Deposits

9 Months Ended

Sep. 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:

	September 30,		December 31,
	2014		2013
Armco HK
Letters of credit	$	-	$	5,993
Sub-total – Armco HK		-		5,993
Renewable Metals
Bank acceptance notes payable		-		1,636,072
Letters of credit		10,155		2,517,621
Deposit for capital lease obligation (i)		487,432		490,823
Sub-total – Renewable Metals		497,587		4,644,516
Henan Armco
Letters of credit		312		2,113
Sub-total – Henan Armco		312		2,113
	$	497,899	$	4,652,222

(i) $487,432 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 12 - Commitments and Contingencies (Details) - Uncommitted Trade Credit Facilities		9 Months Ended
	Sep. 30, 2014 USD ($)	Sep. 30, 2014 DBS Hong Kong [Member] Armco HK [Member] USD ($)		Sep. 30, 2014 RZB Beijing Branch [Member] Armco HK [Member] USD ($)		Sep. 30, 2014 Bank of China Lianyungang [Member] Henan Armco [Member] USD ($)		Sep. 30, 2014 Bank of China Lianyungang [Member] Renewable Metals [Member] USD ($)		Sep. 30, 2014 ICBC Bank [Member] Henan Armco [Member] USD ($)		Sep. 30, 2014 Guangdong Development Bank [Member] Henan Armco [Member] USD ($)		Sep. 30, 2014 Shanghai Pudong Development Banks [Member] Renewable Metals [Member] USD ($)		Sep. 30, 2014 Bank of Communications Lianyungang [Member] Renewable Metals [Member] USD ($)		Sep. 30, 2014 Armco HK [Member] USD ($)	Sep. 30, 2014 Henan Armco [Member] USD ($)	Sep. 30, 2014 Renewable Metals [Member] USD ($)	Jun. 11, 2010 Renewable Metals [Member] USD ($)	Jun. 11, 2010 Renewable Metals [Member] CNY
Line of Credit Facility [Line Items]
Date of Expiration		Oct. 09, 2015	[1]	Mar. 24, 2015	[2]	May 23, 2014	[3]	Dec. 27, 2015	[4]	Sep. 09, 2015	[5]	May 15, 2015	[6]	Apr. 09, 2015	[7]	Feb. 02, 2015	[8]
Total Facilities	$ 80,981,121	$ 20,000,000	[1]	$ 15,000,000	[2]	$ 4,874,324	[3]	$ 8,123,873	[4]	$ 3,249,549	[5]	$ 15,597,836	[6]	$ 2,437,162	[7]	$ 11,698,377	[8]	$ 35,000,000	$ 23,721,709	$ 22,259,412
Facilities Used	10,904,993	149,197	[1]	276,000	[2]		[3]	8,123,873	[4]		[5]		[6]	2,355,923	[7]		[8]	425,197		10,479,796	45,400,000	300,000,000
Facilities Available	$ 70,076,129	$ 19,850,803	[1]	$ 14,724,000	[2]	$ 4,874,324	[3]		[4]	$ 3,249,549	[5]	$ 15,597,836	[6]	$ 81,239	[7]	$ 11,698,378	[8]	$ 34,574,803	$ 23,721,709	$ 11,779,617

[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 3 - Pledged Deposits (Details) - Pledged Deposits (USD $)	Sep. 30, 2014		Dec. 31, 2013
Financial Instruments Owned and Pledged as Collateral [Line Items]
Total	$ 497,899		$ 4,652,222
Armco HK [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Letters of credit			5,993
Total			5,993
Renewable Metals [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Letters of credit	10,155		2,517,621
Deposit for capital lease obligation (i)	487,432	[1]	490,823	[1]
Total	497,587		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		2,113
Total	$ 312		$ 2,113

[1] $487,432 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 7 - Loans and Convertible Note Payable (Tables)

9 Months Ended

Sep. 30, 2014

Loans Payable [Abstract]

Loans Payable [Table Text Block]

	September 30,		December 31,
	2014		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 and repaid in full		-		2,602,115
Sub-total - Armco HK		-		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 from March 25, 2015 to May 21, 2015.		8,123,873		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		2,355,923		-
Short-term borrowing, with interest rate at 8% per annum		64,991		229,050
Short- term borrowing with no interest and due upon demand		788,665		-
Loan payable, with interest at 6% per annum and due January 21, 2015		3,479,187		3,503,379
Sub-total – Renewable Metals		14,812,639		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		162,478		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		2,178,010		-
Sub-total – Henan Armco		2,340,488		8,919,490
Armco Metals Holdings
Short-term borrowings, no interest bearing, due upon demand.		100,000		-
Loans payable, with interest at 8% per annum, due January 21,2015 (i)		240,000		1,050,000
Convertible notes payable, net of discount of $12,033, with interest at 4% and 8% per annum, due March 3, 2015 and August 27, 2015.		117,968		463,709
Sub-total – Armco Metals Holdings		457,968		1,513,709
	$	17,611,095	$	27,415,638

(i) As of September 30, 2014, Armco Metals Holdings had three loans with principal amount of $550,000, $35,000 and $10,000, respectively, plus interest accrual of $39,967, in aggregate of $634,967 to Metawise Group, Inc. and its subsidiary, Draco Resources Inc, respectively. As of September 30, 2014, Armco Metals Holdings’ subsidiary, Henan Armco, prepaid Draco Resources Inc of $792,000 for commodity plan to purchase. On September 30, 2014, Armco Metals Holdings, Henan Armco, Metawise Group, Inc. and its subsidiary, Draco Resources Inc., entered into an agreement that the four parties agreed to use Henan Armco’s prepayment of $792,000 to Draco resources Inc to repay Armco Metals Holdings’ loans payable plus interest totaling $634,967 to Metawise Group, Inc., which leaving Henan Armco’s prepayment to Draco Resources Inc $157,033.

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Note 6 - Inventories (Tables)

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	September 30,			December 31,
	2014			2013
Raw materials – scrap metal	$	11,312,491		$	4,390,811
Finished goods – processed scrap metal		2,878,981			12,421,088
Purchased merchandise for resale		125,538			5,936,936
Write - down of inventories		(350,240	)		(2,291,915	)
	$	13,966,770		$	20,456,920

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Note 10 - Capital Lease Obligation (Details) - Capital Lease Obligation (Parentheticals) (CNY)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Aug. 27, 2014	Mar. 03, 2014	Feb. 28, 2014
Capital Leased Assets [Line Items]
Interest Rate	8.00%	8.00%	8.00%	4.00%	8.00%
Capital Lease Obligation	3 years	3 years
Machinery and Equipment [Member]
Capital Leased Assets [Line Items]
Interest Rate	14.00%	14.00%
Principal and Interest	497,897	497,897
Other Machinery and Equipment [Member]
Capital Leased Assets [Line Items]
Interest Rate	11.00%	11.00%
Principal and Interest	3,609,102	3,609,102

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Note 4 - Marketable Equity Securities, Available for Sale (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Dec. 31, 2013
Note 4 - Marketable Equity Securities, Available for Sale (Details) [Line Items]
Marketable Securities, Shares Sold (in Shares)	4,466,598
Marketable Securities, Realized Gain (Loss)	$ (43,434)
Available-for-sale Securities	3,239,416	3,239,416	3,396,658
Available-for-sale Securities, Change in Net Unrealized Holding Gain (Loss), Net of Tax		(623,879)
Estimate of Fair Value Measurement [Member]
Note 4 - Marketable Equity Securities, Available for Sale (Details) [Line Items]
Available-for-sale Securities	$ 432,520	$ 432,520

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

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Schedule of Short-term Debt [Table Text Block]

	September 30,		December 31,
	2014		2013
Renewable Metals
Banker’s acceptance notes payable maturing on March 27, 2014	$	-	$	3,272,144
Letters of credit maturing on October 6, 2014		1,765,291		5,201,073
	$	1,765,291	$	8,473,217

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Note 9 - Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2014

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

	September 30,		December 31,
	2014		2013
Keli Yao	$	-	$	116,828
Yi Chu		411,880		286,313
Total	$	411,880	$	403,141

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Note 2 - Significant and Critical Accounting Policies and Practices

9 Months Ended

Sep. 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, as amended, filed with the SEC on August 11, 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 September 30, 2014 are as follows:

Name of consolidated	State or other jurisdiction of	Date of incorporation or	Attributable
subsidiary or entity	incorporation or organization	formation	interest
		(date of acquisition, if
		applicable)
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 September 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 September 30, 2014 and December 31, 2013:

Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
September 30, 2014
Derivative liability		-		-	$	5,688	$	5,688
Available-for-sale securities	$	432,520		-		-	$	432,520
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 functional currency of each foreign subsidiary is determined based on management’s judgment and involves consideration of all relevant economic facts and circumstances affecting the subsidiary. Generally, the currency in which the subsidiary transacts a majority of its transactions, including billings, financing, payroll and other expenditures, would be considered the functional currency, but any dependency upon the parent and the nature of the subsidiary’s operations must also be considered. If a subsidiary’s functional currency is deemed to be the local currency, then any gain or loss associated with the translation of that subsidiary’s financial statements is included in accumulated other comprehensive income. However, if the functional currency is deemed to be the U.S. Dollar, then any gain or loss associated with the re-measurement of these financial statements from the local currency to the functional currency would be included in the consolidated statements of income and comprehensive income (loss). If the Company disposes of foreign subsidiaries, then any cumulative translation gains or losses would be recorded into the consolidated statements of income and comprehensive income (loss). If the Company determines that there has been a change in the functional currency of a subsidiary to the U.S. Dollar, any translation gains or losses arising after the date of change would be included within the statement of income and comprehensive income (loss).

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:

	September 30,		December 31,		September 30,		December 31,
	2014		2013		2013		2012
Balance sheets		6.1547		6.1122		6.1439		6.3086
Statements of operations and comprehensive income (loss)		6.1480		6.1943		6.2174		6.3116

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, and also unvested restricted stock.

Recently Issued Accounting Pronouncements

In April 2014, the FASB issued ASU No. 2014-08, “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.

In June 2014, the FASB issued ASU 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period”. The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The amendment in the ASU provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

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Note 10 - Capital Lease Obligation (Tables)

9 Months Ended

Sep. 30, 2014

Leases, Capital [Abstract]

Schedule of Capital Leased Assets [Table Text Block]

		September 30,			December 31,
		2014			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.	$	159,605		$	336,065
Less current maturities			(159,605	)		(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.		560,195			568,925
Less current maturities			(560,195	)		(568,925	)
Capital lease obligation, net of current maturities			-			-
Total capital lease obligation			719,800			904,990
Less current maturities			(719,800	)		(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 $)	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 3,239,416	$ 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	432,520	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	432,520	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	5,688	61,429
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	5,688	61,429
Available-for-sale securities	$ 432,520	$ 519,129

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Note 9 - Related Party Transactions (Details)	9 Months Ended			12 Months Ended						1 Months Ended			0 Months Ended	9 Months Ended
	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2013 CNY	Dec. 31, 2013 USD ($)	Aug. 27, 2014	Mar. 03, 2014	Feb. 28, 2014	Sep. 30, 2014 Chairman, CEO and Significant Stockholders [Member] USD ($)	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	Sep. 30, 2014 Operating Lease From Related Party [Member] USD ($)	Sep. 30, 2014 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	$ 411,880			$ 403,141				$ 846,690	$ 668,332
Notes Payable, Related Parties											1,000,000	6,300,000
Debt Instrument, Term	3 years			3 years						1 year
Debt Instrument, Interest Rate, Stated Percentage	8.00%			8.00%	8.00%	4.00%	8.00%			8.00%
Area of Land (in Square Meters)																176.37
Operating Leases, Rent Expense		$ 14,475	90,000										10,000	$ 14,639	90,000

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Consolidated Balance Sheets (Unaudited) (USD $)	Sep. 30, 2014	Dec. 31, 2013
CURRENT ASSETS:
Cash	$ 544,741	$ 596,557
Pledged deposits	497,899	4,652,222
Marketable securities	432,520	519,129
Accounts receivable, net	53,682,200	25,595,516
Inventories	13,966,770	20,456,920
Advance on purchases	632,933	733,285
Prepayments and other current assets	828,429	1,181,371
Total Current Assets	70,585,492	53,735,000
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment	44,547,476	44,856,611
Accumulated depreciation	(11,392,774)	(9,360,933)
PROPERTY, PLANT AND EQUIPMENT, net	33,154,702	35,495,678
LAND USE RIGHTS
Land use rights	6,635,640	6,681,779
Accumulated amortization	(505,393)	(416,478)
LAND USE RIGHTS, net	6,130,247	6,265,301
Total Assets	109,870,441	95,495,979
CURRENT LIABILITIES:
Loans payable	17,611,095	27,415,638
Current maturities of capital lease obligation	719,800	904,990
Accounts payable	26,100,236	10,062,463
Due to related party	411,880	403,141
Customer deposits	1,465,206	649,488
Corporate income tax payable	2,607,237	822,207
Derivative warrant liability	5,688	61,429
Value added tax and other taxes payable	3,885,994	2,202,331
Accrued expenses and other current liabilities	1,707,725	1,228,753
Total Current Liabilities	57,126,842	52,891,989
Total Liabilities	57,126,842	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, 55,693,745 and 29,876,327 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively	55,694	29,876
Additional paid-in capital	45,791,572	35,790,906
Retained earnings	3,043,735	2,625,287
Accumulated other comprehensive income (loss):
Change in unrealized gain (loss) on marketable securities	(623,879)	(694,512)
Foreign currency translation gain	4,476,477	4,852,433
Total Stockholders' Equity	52,743,599	42,603,990
Total Liabilities and Stockholders' Equity	109,870,441	95,495,979
Bankers Acceptance [Member] | Standby Letters of Credit [Member]
CURRENT LIABILITIES:
Banker's acceptance notes payable and letters of credit	1,765,291	8,473,217
Warrant [Member]
CURRENT LIABILITIES:
Derivative warrant liability	5,688	61,429
Chairman and CEO [Member]
CURRENT LIABILITIES:
Advances received from Chairman and CEO	$ 846,690	$ 668,332

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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		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 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)
Sale of marketable securities			(157,242)
Sale of marketable securities			113,808
Other comprehensive income (loss): Changes in unrealized gain	38,165	288,054	70,633	(123,552)
Balance, September 30, 2014	3,239,416		3,239,416
Balance, September 30, 2014	4,476,477		4,476,477
Balance, September 30, 2014	(623,879)		(623,879)
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)
Sale of marketable securities			(157,242)
Other comprehensive income (loss): Changes in unrealized gain			70,633
Other comprehensive income (loss): Changes in unrealized gain			70,633
Balance, September 30, 2014	432,520		432,520
Balance, September 30, 2014	(2,366,941)		(2,366,941)
Balance, September 30, 2014	183,924		183,924
Balance, September 30, 2014	$ (623,879)		$ (623,879)

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 418,448	$ (3,687,143)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation expense	2,099,052	2,160,238
Amortization expense	92,082	115,787
Reversal of inventory reserve	(1,958,554)
Change in fair value of derivative liability	107,378	(928,915)
Amortization of debt discount	1,991,581	1,480
Loss on sale of marketable securities	43,434
Stock based compensation	1,033,908	582,236
Stock issued for third-party services	268,002
Changes in operating assets and liabilities:
Bank acceptance notes receivable		(1,627,631)
Accounts receivable	(28,274,868)	8,276,715
Inventories	8,314,316	(7,525,611)
Advance on purchases	(490,624)	(19,986)
Prepayments and other current assets	340,861	(769,536)
Bank acceptance notes payable		(1,628)
Accounts payable	16,122,951	220,374
Customer deposits	821,096	192,984
Taxes payable	3,490,127	(1,159,877)
Accrued expenses and other current liabilities	596,902	(1,084,168)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	5,016,092	(5,254,681)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from release of pledged deposits	5,942,529	16,370,116
Payment made towards pledged deposits	(1,815,807)	(17,994,943)
Purchase of property, plant and equipment		(169,369)
Cash received from sale of marketable securities	113,808
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	4,240,530	(1,794,196)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable	11,099,278	35,857,925
Repayment of loans payable	(14,486,944)	(31,233,878)
Banker's acceptance notes payable	(6,656,663)	1,399,762
Proceeds from capital lease obligation	162,600
Repayment of capital lease obligation	(341,574)	(1,941,717)
Advances from (repayment to) Chairman and CEO	172,613	1,019,701
Advances from (repayment to) related parties	11,535	1,025,407
Proceeds from convertible notes	600,000
Deposit for stock subscription		813,815
Proceeds from sales of common stock		1,621,356
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(9,439,155)	8,562,371
EFFECT OF EXCHANGE RATE CHANGES ON CASH	130,717	(119,145)
NET CHANGE IN CASH	(51,816)	1,394,349
Cash at beginning of the period	596,557	1,367,171
Cash at end of the period	544,741	2,761,520
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid	715,937	1,629,696
Income tax paid		51,298
NON CASH FINANCING AND INVESTING ACTIVITIES:
Reclassification from short-term debt to convertible debt	5,554,468
Debt discount due to convertible features	1,950,820
Reclassification of derivative liability to (from) equity	2,113,939	(623,809)
Short-term Debt [Member]
NON CASH FINANCING AND INVESTING ACTIVITIES:
Common shares issued for conversion of convertible notes and accrued interest	$ 6,610,635

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Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Outstanding and Exercisable Warrants (USD $)	9 Months Ended
	Sep. 30, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices	$ 7.50
Warrant [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number Outstanding	1,615,387
Average Remaining Contractual Life (in years)	0.55
Weighted Average Exercise Price	$ 7.50
Number Exercisable	1,615,387
Average Remaining Contractual Life (in years)	200 days
Weighted Average Exercise Price	$ 7.50

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Note 13 - Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

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

	Number of
	Shares or			Fair Value at
	Options			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, September 30, 2014		7,954,621		$	4,118,011
Vested, September 30, 2014		7,826,496			4,055,132
Unvested, September 30, 2014		128,125		$	62,879

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Note 14 - Income Taxes (Details)	9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 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	81.10%	13.50%
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 16 - Subsequent Events

9 Months Ended

Sep. 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 October 29, 2014, the Company received a conversion notice from its convertible notes holder, Hanover, to convert $30,000 plus interest of $263 of the note into 332,127 shares of the Company's common stock, at a conversion price of $ 0.09112 per share.

On October 29, 2014, the Company issued a convertible promissory note to KBM Worldwide, Inc. in the amounts of $78,500 with annual interest rate of 8%.  The note is convertible at 63% of the average 3 lowest closing bid prices for the last 10 trading days after 180 days following the Date of Issuance.

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Note 15 - Concentrations and Credit Risk (Tables)

9 Months Ended

Sep. 30, 2014

Risks and Uncertainties [Abstract]

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

	Net Sales						Accounts Receivable
	for the Interim Period Ended						at
	September 30,			September 30,			September 30,			December 31,
	2014			2013			2014			2013
Customer A		-	%		-	%		-	%		33.8	%
Customer B		-	%		24.0	%		-	%		25.1	%
Customer C		15.7	%		-	%		21.1	%		18.3	%
Customer D		65.8	%		-	%		67.7	%		-	%
Customer E		-	%		18.7	%		-	%		-	%
Customer F		-	%		12.6	%		-	%		-	%
		81.5	%		55.3	%		88.8	%		77.2	%

Schedule of Vendor Purchase Concentrations [Table Text Block]

	Net Purchases						Accounts Payable
	for the Interim Period Ended						at
	September 30,			September 30,			September 30,			December 31,
	2014			2013			2014			2013
Vendor A		88.2	%		75.3	%		89.1	%		86.0	%
Vendor B		10.1	%		-	%		-	%		-	%
		98.3	%		75.3	%		89.1	%		86.0	%

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

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Schedule of Variable Interest Entities [Table Text Block]

Name of consolidated	State or other jurisdiction of	Date of incorporation or	Attributable
subsidiary or entity	incorporation or organization	formation	interest
		(date of acquisition, if
		applicable)
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
September 30, 2014
Derivative liability		-		-	$	5,688	$	5,688
Available-for-sale securities	$	432,520		-		-	$	432,520
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]

	September 30,		December 31,		September 30,		December 31,
	2014		2013		2013		2012
Balance sheets		6.1547		6.1122		6.1439		6.3086
Statements of operations and comprehensive income (loss)		6.1480		6.1943		6.2174		6.3116

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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	1 Months Ended			0 Months Ended		0 Months Ended
	Aug. 11, 2014	Jul. 15, 2014	Jun. 04, 2014	Jul. 25, 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	Feb. 28, 2014	Oct. 29, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Oct. 29, 2014 Subsequent Event [Member] Hanover Holdings I, LLC [Member]	Oct. 29, 2014 Subsequent Event [Member] KBM Worldwide, Inc [Member]
Note 16 - Subsequent Events (Details) [Line Items]
Debt Conversion, Original Debt, Amount															$ 30,000		$ 78,500
Interest Accrued on Convertible Note																$ 263
Debt Conversion, Converted Instrument, Shares Issued (in Shares)	170,030	133,957	150,897	56,321	596,315	577,267	244,409	105,756	239,577	174,034	109,923	134,308	135,717		332,127
Debt Instrument, Convertible, Conversion Price (in Dollars per share)	$ 0.147645	$ 0.17704	$ 0.16575	$ 0.17935	$ 0.173995	$ 0.1135	$ 0.20519	$ 0.23902	$ 0.20927	$ 0.20927	$ 0.22814	$ 0.186575	$ 0.184535	$ 0.317		$ 0.09112
Debt Conversion, Original Debt, Interest Rate of Debt																	8.00%

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Note 1 - Organization and Operations

9 Months Ended

Sep. 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 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.

Acquisition of 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.

Acquisition of Equity Interest of Draco Resources Inc.

On April 15, 2014, the Company entered into a Share Exchange Agreement (the “Agreement”) with Draco Resources, Inc. and its shareholders (the “Draco Resources Shareholders”). Pursuant to the terms and conditions of the Agreement between the parties, the Company plans to acquire 100% of the issued and outstanding capital stock of Draco Resources in exchange for 13,950,000 shares of its post-split common stock (the “AMCO Shares”) and a Series C stock purchase warrant (the "Series C Warrant"). The Series C Warrant is exercisable for five years at any time, following a 1:10 reverse stock split of the Company’s common stock, into 3,000,000 shares of the Company’s post-split common stock at an exercise price of $3.40 per share. The parties made customary representations and warranties and agreed to customary covenants in the Agreement. Upon the completion of the acquisition, the number of shares which Draco Resources Shareholders will receive from the Company represents approximately 74.64% of the issued and outstanding common stock of the Company immediately after the consummation of the Agreement.

On August 25, 2014, the Company, Draco Resources Shareholders, and Metawise Group, Inc., the current sole shareholder of Draco Resources, Inc., amended the Agreement. Pursuant to the terms and conditions of the amended Agreement between the parties, upon the approval of the Amendment to the Company's articles of incorporation to increase the number of the Company’s authorized shares of common stock from 74,000,000 shares to 200,000,000 shares, the Company desires to acquire and Draco Shareholders desire to exchange a 40% of the Draco Resources Shares in exchange for 51,000,000 AMCO Shares. The Company acknowledges and agrees to pay China Direct Investments, Inc. and Shanghai Heqi Investment Center (Limited Partner) or their designees 2,400,000 shares each, or 4,800,000 shares in aggregate, of AMCO Shares in connection with the transaction contemplated by this Agreement as finder's fee. Upon the completion of the acquisition, the number of shares which Draco Resources Shareholders will receive from the Company represents approximately 46.05% of the issued and outstanding common stock of the Company immediately after the consummation of the Agreement.

On September 19, 2014, the Company, Draco Resources Shareholders, and Metawise Group, Inc. further amended the Agreement. Pursuant to the terms and conditions of the amended Agreement between the parties, upon the approval of the Amendment to the Company's articles of incorporation to increase the number of the Company's authorized shares of common stock from 74,000,000 shares to 200,000,000 shares, the Company desires to acquire and Draco Shareholders desire to exchange a 31.37% of the Draco Resources Shares in exchange for 40,000,000 AMCO Shares. The Company acknowledges and agrees to pay China Direct Investments, Inc. and Shanghai Heqi Investment Center (Limited Partner) or their designees 2,400,000 shares each, or 4,800,000 shares in aggregate, of AMCO Shares in connection with the transaction contemplated by this Agreement as finder's fee. Upon the completion of the acquisition, the number of shares which Draco Resources Shareholders will receive from the Company represents approximately 40% of the issued and outstanding common stock of the Company immediately after the consummation of the Agreement. The closing of the acquisition is subject to approvals by the Company’s shareholders, the New York Stock Exchange and any applicable governmental regulatory agencies.

On October 26, 2014, the Company was served with a lawsuit filed in Superior Court in the County of San Mateo, California (Progressive Environmental Services, Inc. vs. Metawise Group, Inc., Draco Resources, Inc., Metamining, Inc., Songqiang Chen and Armco Metals Holdings, Inc.). The complaint alleges various causes of actions against the parties other than the Company and with respect to the Company seeks declaratory relief as well as a temporary and permanent injunction to preclude the Company from acquiring a 31.37% interest in Draco Resources, Inc. from Metawise Group, Inc. at the Company’s forthcoming annual meeting scheduled to be held on November 17, 2014. The Company and its counsel have evaluated the complaint. Based on the initial review and research of the Company's councel, the Company believes the vote to acquire interest in Draco Resources and election of Songqiang Chen to its board of directors which are scheduled to take place at the annual meeting on November 17 should be deferred pending the outcome of the litigation as moving forward with the acquisition or the election of Songqiang Chen would inhibit the Company's ability to seek dismissal from the lawsuit.

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Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)	Sep. 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	55,693,745	29,876,327
Common stock, shares outstanding	55,693,745	29,876,327

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

9 Months Ended

Sep. 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 September 30, 2014, the derivative liability associated with the warrants was valued at $0.75.

2010 Warrants Outstanding

As of September 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 September 30, 2014:

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

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

		Warrants Outstanding						Warrants Exercisable
				Average		Weighted				Average		Weighted
				Remaining		Average				Remaining		Average
Range of		Number		Contractual		Exercise		Number		Contractual		Exercise
Exercise Prices		Outstanding		Life (in years)		Price		Exercisable		Life (in years)		Price
$	7.50		1,615,387		0.55	$	7.50		1,615,387		0.55	$	7.50
$	7.50		1,615,387		0.55	$	7.50		1,615,387		0.55	$	7.50

(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 an 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 and the Additional Convertible Note are 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 6/25/14 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 “Derivative 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.

On August 27, 2014, the Company issued a convertible note which is convertible after 180 days from the issuance date, in the amount of $100,000. The note bears an interest rate of 8% per annum, and matures on August 27, 2015. The note was still outstanding as of September 30, 2014, and the note was not convertible as of September 30, 2014.

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.

On July 15, 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 $101 of 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 $106 of the note into 170,030 shares of the Company's common stock, at a conversion price of $ 0.147645 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 September 30, 2014:

- Volatility for each valuation period is 3-month to 12-month historical volatility of the Company’s weekly continuously compounded returns.

- Risk-free rate assumption is interpolated treasury rate as of the valuation date with maturity identical to the note.

- Conversion is assumed to occur at maturity, as earlier conversion would be suboptimal.

- Default would occur 0% of the time.

As of September 30, 2014, the estimated fair value of derivative liabilities on convertible notes was $5,687.

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

Balance at December 31, 2013	$	61,429
To record derivative liability as debt discount		1,950,820
Change in fair value of derivative liability		107,378
Settlement of derivative liability due to conversion of related notes	$	(2,113,939	)
Balance at September 30, 2014		5,688

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Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 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		0
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	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Note 12 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 12 – Commitments and Contingencies

Litigation

The Company and the 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-13-679151-C), which seeks a declaratory judgment, rescission, unspecified damages, equitable and injunctive relief, and attorney’s fees. The complaint alleges that the directors of the Company 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 that allowed under the Plan.

On September 18, 2014, a hearing on both plaintiff's motion for summary judgment against defendants, and defendants' motion for summary judgment against plaintiff, was conducted. At that hearing, the Court denied plaintiff’s motion for summary judgment entirely. The Court also granted defendants’ motion for summary judgment in part, and denied it in part. Both plaintiff and the director defendants have filed motions for reconsideration asking the Court to reverse its prior order regarding summary judgment. The Court will rule on the motions for reconsideration in chambers (with no oral argument) on December 5, 2014. If the case survives the Court’s ruling on the motions for reconsideration, the parties will have a Court conference on December 19, 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 September 30, 2014 were as follows:

	Date of					Facilities
	Expiration	Total Facilities		Facilities Used		Available
Armco HK
DBS (Hong Kong) Limited (i)	October 9, 2015		20,000,000		149,197		19,850,803
RZB (Beijing) Branch (ii)	March 24, 2015		15,000,000		276,000		14,724,000
Sub-total - Armco HK			35,000,000		425,197		34,574,803
Henan Armco
Bank of China (iii)	May 23, 2014		4,874,324		-		4,874,324
ICBC (iv)	September 9, 2015		3,249,549		-		3,249,549
Guangdong Development Bank Zhengzhou Branch (v)	May 15, 2015		15,597,836		-		15,597,836
Sub-total – Henan Armco			23,721,709		-		23,721,709
Renewable Metals
Bank of China Lianyungang Branch (vi)	December 27, 2015		8,123,873		8,123,873		-
Shanghai Pudong Development Bank (vii)	April 9, 2015		2,437,162		2,355,923		81,239
Bank of Communications Lianyungang Branch (viii)	February 2, 2015		11,698,377		-		11,698,378
Sub-total – Renewable Metals			22,259,412		10,479,796		11,779,617
		$	80,981,121	$	10,904,993	$	70,076,129

(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 RMB 50,000,000 (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 two 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 two and half months 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 1, 2014, Armco Shanghai entered into a non-cancelable operating lease for office space that 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

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.

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Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
NET REVENUES	$ 32,198,170	$ 20,470,236	$ 74,996,063	$ 62,497,489
COST OF GOODS SOLD	23,799,849	22,337,332	64,698,705	61,368,531
GROSS MARGIN	8,398,321	(1,867,096)	10,297,358	1,128,958
OPERATING EXPENSES:
Selling expenses	53,934	41,347	256,624	131,033
Professional fees	117,690	3,644	473,472	320,629
General and administrative expenses	602,002	708,617	2,577,582	2,431,288
Operating cost of idle manufacturing facility	373,835	467,481	1,381,049	1,283,120
Total operating expenses	1,147,461	1,221,089	4,688,727	4,166,070
INCOME (LOSS) FROM OPERATIONS	7,250,860	(3,088,185)	5,608,631	(3,037,112)
OTHER EXPENSE:
Interest income	(318)	(37,402)	(99,118)	(84,263)
Interest expense	632,472	365,133	3,274,244	1,476,816
Loss on sale of marketable securities	43,434		43,434
Change in fair value of derivative liability	(1,597)	(8,577)	107,378	(928,915)
Loan guarantee expense		12,667	13,002	35,500
Other (income) expense	(13,689)	138,041	61,339	101,823
Total other expense	660,302	469,862	3,400,279	600,961
INCOME (LOSS) BEFORE INCOME TAXES PROVISION	6,590,558	(3,558,047)	2,208,352	(3,638,073)
INCOME TAX PROVISION	1,789,904	(12,618)	1,789,904	49,070
INCOME (LOSS) FROM CONTINUING OPERATIONS	4,800,654	(3,545,429)	418,448	(3,687,143)
NET INCOME (LOSS)	4,800,654	(3,545,429)	418,448	(3,687,143)
OTHER COMPREHENSIVE INCOME (LOSS):
Change in unrealized gain (loss) on marketable securities	38,165	288,054	70,633	(123,552)
Foreign currency translation gain (loss)	(3,178)	221,419	(375,956)	1,128,312
COMPREHENSIVE INCOME (LOSS)	$ 4,835,641	$ (3,035,956)	$ 113,125	$ (2,682,383)
NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED:
Net income (loss) per common share - basic (in Dollars per share)	$ 0.09	$ (0.14)	$ 0.01	$ (0.15)
Net income (loss) per common share - diluted (in Dollars per share)	$ 0.09	$ (0.14)	$ 0.01	$ (0.15)
Weighted Average Common Shares Outstanding - basic (in Shares)	54,955,318	24,693,663	45,175,355	24,228,958
Weighted Average Common Shares Outstanding - diluted (in Shares)	55,312,625	24,693,663	45,303,480	24,228,958

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Note 6 - Inventories

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

Note 6 – Inventories

Inventories consisted of the following:

	September 30,			December 31,
	2014			2013
Raw materials – scrap metal	$	11,312,491		$	4,390,811
Finished goods – processed scrap metal		2,878,981			12,421,088
Purchased merchandise for resale		125,538			5,936,936
Write - down of inventories		(350,240	)		(2,291,915	)
	$	13,966,770		$	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 September 30, 2014 or December 31, 2013.

Slow-Moving or Obsolescence Markdowns

The Company recorded no inventory obsolescence adjustments for the interim period ended September 30, 2014 and 2013.

Lower of Cost or Market Adjustments

There were $-1,958,544 and $1,991,275 of lower of cost or market adjustments for the interim period ended September 30, 2014 and 2013.

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Note 5 - Accounts Receivable

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

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

Note 5 – Accounts Receivable

Accounts receivable consisted of the following:

	September 30,			December 31,
	2014			2013
Accounts receivable	$	53,725,350		$	25,638,666
Allowance for doubtful accounts		(43,150	)		(43,150	)
	$	53,682,200		$	25,595,516

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Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 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, as amended, filed with the SEC on August 11, 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.

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 September 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 September 30, 2014 and December 31, 2013:

Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
September 30, 2014
Derivative liability		-		-	$	5,688	$	5,688
Available-for-sale securities	$	432,520		-		-	$	432,520
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 functional currency of each foreign subsidiary is determined based on management’s judgment and involves consideration of all relevant economic facts and circumstances affecting the subsidiary. Generally, the currency in which the subsidiary transacts a majority of its transactions, including billings, financing, payroll and other expenditures, would be considered the functional currency, but any dependency upon the parent and the nature of the subsidiary’s operations must also be considered. If a subsidiary’s functional currency is deemed to be the local currency, then any gain or loss associated with the translation of that subsidiary’s financial statements is included in accumulated other comprehensive income. However, if the functional currency is deemed to be the U.S. Dollar, then any gain or loss associated with the re-measurement of these financial statements from the local currency to the functional currency would be included in the consolidated statements of income and comprehensive income (loss). If the Company disposes of foreign subsidiaries, then any cumulative translation gains or losses would be recorded into the consolidated statements of income and comprehensive income (loss). If the Company determines that there has been a change in the functional currency of a subsidiary to the U.S. Dollar, any translation gains or losses arising after the date of change would be included within the statement of income and comprehensive income (loss).

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.

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, and also unvested restricted stock.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

In April 2014, the FASB issued ASU No. 2014-08, “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.

In June 2014, the FASB issued ASU 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period”. The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The amendment in the ASU provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

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Note 13 - Stockholders' Equity

9 Months Ended

Sep. 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.

250,000 common shares earned for the quarter ended September 30, 2014 were valued at $0.15 per share, which was the market price on quarter end date, or $37,500, 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.

125,000 common shares earned for the quarter ended September 30, 2014 were valued at $0.15 per share, which was the market price on quarter end date, or $18,750, 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 nine months ended September 30, 2014, a total of $187,125 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 nine months ended September 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 nine months ended September 30, 2014, a total of $1,514 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			Fair Value at
	Options			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, September 30, 2014		7,954,621		$	4,118,011
Vested, September 30, 2014		7,826,496			4,055,132
Unvested, September 30, 2014		128,125		$	62,879

As of September 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 nine months ended September 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 transaction.

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Note 9 - Related Party Transactions

9 Months Ended

Sep. 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 September 30, 2014 and December 31, 2013, the advance balance was $846,690 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 nine months ended September 30, 2014 and 2013 was 90,000 (approximately $14,639) and RMB 90,000 (approximately $14,475), respectively.

Due to Other Related Parties

Due to other related parties consists of the following:

	September 30,		December 31,
	2014		2013
Keli Yao	$	-	$	116,828
Yi Chu		411,880		286,313
Total	$	411,880	$	403,141

The balance of $411,880 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) - Change of Fair Value of Derivative Debt Liabilities (USD $)	9 Months Ended
	Sep. 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	$ 5,688	$ 61,429
To record derivative liability as debt discount	1,950,820
Settlement of derivative liability due to conversion of related notes	(2,113,939)
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	$ 107,378

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Note 7 - Loans and Convertible Note Payable

9 Months Ended

Sep. 30, 2014

Loans Payable [Abstract]

Loans Payable [Text Block]

Note 7 – Loans Payable

Loans payable consisted of the following:

	September 30,		December 31,
	2014		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 and repaid in full		-		2,602,115
Sub-total - Armco HK		-		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 from March 25, 2015 to May 21, 2015.		8,123,873		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		2,355,923		-
Short-term borrowing, with interest rate at 8% per annum		64,991		229,050
Short- term borrowing with no interest and due upon demand		788,665		-
Loan payable, with interest at 6% per annum and due January 21, 2015		3,479,187		3,503,379
Sub-total – Renewable Metals		14,812,639		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		162,478		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		2,178,010		-
Sub-total – Henan Armco		2,340,488		8,919,490
Armco Metals Holdings
Short-term borrowings, no interest bearing, due upon demand.		100,000		-
Loans payable, with interest at 8% per annum, due January 21,2015 (i)		240,000		1,050,000
Convertible notes payable, net of discount of $12,033, with interest at 4% and 8% per annum, due March 3, 2015 and August 27, 2015.		117,968		463,709
Sub-total – Armco Metals Holdings		457,968		1,513,709
	$	17,611,095	$	27,415,638

(i) As of September 30, 2014, Armco Metals Holdings had three loans with principal amount of $550,000, $35,000 and $10,000, respectively, plus interest accrual of $39,967, in aggregate of $634,967 to Metawise Group, Inc. and its subsidiary, Draco Resources Inc, respectively. As of September 30, 2014, Armco Metals Holdings’ subsidiary, Henan Armco, prepaid Draco Resources Inc of $792,000 for commodity plan to purchase. On September 30, 2014, Armco Metals Holdings, Henan Armco, Metawise Group, Inc. and its subsidiary, Draco Resources Inc., entered into an agreement that the four parties agreed to use Henan Armco’s prepayment of $792,000 to Draco resources Inc to repay Armco Metals Holdings’ loans payable plus interest totaling $634,967 to Metawise Group, Inc., which leaving Henan Armco’s prepayment to Draco Resources Inc $157,033.

The Company also repaid $260,000 on another loan payable during the nine months ended September 30, 2014, leaving the loan payable balance of $240,000.

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 for detailed discussion on all other convertible notes.

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

9 Months Ended

Sep. 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:

	September 30,		December 31,
	2014		2013
Renewable Metals
Banker’s acceptance notes payable maturing on March 27, 2014	$	-	$	3,272,144
Letters of credit maturing on October 6, 2014		1,765,291		5,201,073
	$	1,765,291	$	8,473,217

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Note 10 - Capital Lease Obligation

9 Months Ended

Sep. 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:

		September 30,			December 31,
		2014			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.	$	159,605		$	336,065
Less current maturities			(159,605	)		(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.		560,195			568,925
Less current maturities			(560,195	)		(568,925	)
Capital lease obligation, net of current maturities			-			-
Total capital lease obligation			719,800			904,990
Less current maturities			(719,800	)		(904,990	)
TOTAL CAPITAL LEASE OBLIGATION, net of current maturities		$	-		$	-

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Note 13 - Stockholders' Equity (Details) - Amended and Restated 2009 Stock Incentive Plan Activities (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Amended and Restated 2009 Stock Incentive Plan Activities [Abstract]
Number of Shares or Options	5,618,413	4,198,881
Fair Value at Date of Grant	$ 3,277,207	$ 2,614,951
Number of Shares or Options, Vested	7,826,496	5,101,746
Fair Value at Date of Grant, Vested	4,055,132	3,023,732
Number of Shares or Options, Unvested	516,667
Fair Value at Date of Grant, Unvested	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
Number of Shares or Options	7,954,621	5,618,413
Fair Value at Date of Grant	4,118,011	3,277,207
Number of Shares or Options, Unvested	128,125	516,667
Fair Value at Date of Grant, Unvested	$ 62,879	$ 253,475

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Note 15 - Concentrations and Credit Risk (Details) - Customer and Credit Concentrations	9 Months Ended
	Sep. 30, 2014	Sep. 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		24.00%
Customer B [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer		25.10%
Customer C [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer	15.70%
Customer C [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer	21.10%	18.30%
Customer D [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer	65.80%
Customer D [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer	67.70%
Customer E [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer		18.70%
Customer F [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Customer		12.60%
Sales Revenue, Net [Member]
Revenue, Major Customer [Line Items]
Customer	81.50%	55.30%
Accounts Receivable [Member]
Revenue, Major Customer [Line Items]
Customer	88.80%	77.20%

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Note 13 - Stockholders' Equity (Details)	0 Months Ended	1 Months Ended	9 Months Ended	0 Months Ended		0 Months Ended			0 Months Ended			1 Months Ended	0 Months Ended		1 Months Ended	9 Months Ended	33 Months Ended	0 Months Ended	9 Months Ended	0 Months Ended	9 Months Ended	3 Months Ended						0 Months Ended					0 Months Ended
	Apr. 09, 2014 USD ($)	Apr. 30, 2010 USD ($)	Sep. 30, 2014 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 ($)	Jun. 30, 2014 Restricted Stock [Member] Mr. Kam Ping Chan [Member]	Jan. 02, 2014 Restricted Stock [Member] Mr. Kam Ping Chan [Member] USD ($)	Sep. 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 ($)	Feb. 08, 2012 Yao [Member] USD ($)	Sep. 30, 2014 Yao [Member] USD ($)	Sep. 30, 2014 Yao [Member]	May 03, 2013 Shen [Member] USD ($)	Sep. 30, 2014 Shen [Member] USD ($)	Jan. 02, 2014 Mr. Kam Ping Chan [Member] USD ($)	Sep. 30, 2014 Mr. Kam Ping Chan [Member] USD ($)	Mar. 31, 2014 Termination of Leasing Agreement [Member] USD ($)	Sep. 30, 2014 Consulting Fees [Member] USD ($)	Jun. 30, 2014 Consulting Fees [Member] USD ($)	Mar. 31, 2014 Consulting Fees [Member] USD ($)	Sep. 30, 2014 Legal Expenses [Member] USD ($)	Jun. 30, 2014 Legal Expenses [Member] USD ($)	Nov. 08, 2013 CD International Enterprise Inc [Member]	Apr. 07, 2014 All Bright Law Offices [Member]	Sep. 30, 2014 Renewable Metals [Member] USD ($)	Jun. 11, 2010 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			$ 10,904,993																											$ 10,479,796	$ 45,400,000	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	$ 0.15	$ 0.27	$ 0.39	$ 0.15	$ 0.27
Stock Issued During Period, Value, Issued for Services																						13,002	37,500	67,500	97,500	18,750	33,750
Stock Issued During Period, Shares, New Issues (in Shares)		1,538,464	60,000																				250,000			125,000	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
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																187,125			6,484		1,514
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

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Note 12 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of Line of Credit Facilities [Table Text Block]

	Date of					Facilities
	Expiration	Total Facilities		Facilities Used		Available
Armco HK
DBS (Hong Kong) Limited (i)	October 9, 2015		20,000,000		149,197		19,850,803
RZB (Beijing) Branch (ii)	March 24, 2015		15,000,000		276,000		14,724,000
Sub-total - Armco HK			35,000,000		425,197		34,574,803
Henan Armco
Bank of China (iii)	May 23, 2014		4,874,324		-		4,874,324
ICBC (iv)	September 9, 2015		3,249,549		-		3,249,549
Guangdong Development Bank Zhengzhou Branch (v)	May 15, 2015		15,597,836		-		15,597,836
Sub-total – Henan Armco			23,721,709		-		23,721,709
Renewable Metals
Bank of China Lianyungang Branch (vi)	December 27, 2015		8,123,873		8,123,873		-
Shanghai Pudong Development Bank (vii)	April 9, 2015		2,437,162		2,355,923		81,239
Bank of Communications Lianyungang Branch (viii)	February 2, 2015		11,698,377		-		11,698,378
Sub-total – Renewable Metals			22,259,412		10,479,796		11,779,617
		$	80,981,121	$	10,904,993	$	70,076,129

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Note 7 - Loans and Convertible Note Payable (Details) - Loans Payable (Parentheticals)												9 Months Ended	12 Months Ended			9 Months Ended	12 Months Ended
	Sep. 30, 2014	Aug. 27, 2014 USD ($)	Mar. 03, 2014	Feb. 28, 2014 USD ($)	Feb. 28, 2014 CNY	Dec. 31, 2013	Sep. 30, 2014 Short Term Borrowings [Member] Renewable Metals [Member]	Dec. 31, 2013 Short Term Borrowings [Member] Renewable Metals [Member]	Sep. 30, 2014 Short Term Borrowings [Member]	Sep. 30, 2014 Temporary Short Term Loan [Member] Armco Metals Holdings [Member]	Dec. 31, 2013 Temporary Short Term Loan [Member] Armco Metals Holdings [Member]	Sep. 30, 2014 RZB Hong Kong [Member] Armco HK [Member]	Dec. 31, 2013 RZB Hong Kong [Member] Armco HK [Member]	Sep. 30, 2014 DBS Hong Kong [Member] Armco HK [Member]	Dec. 31, 2013 DBS Hong Kong [Member] Armco HK [Member]	Sep. 30, 2014 Bank of Communications Lianyungang [Member] Renewable Metals [Member]	Dec. 31, 2013 Bank of Communications Lianyungang [Member] Renewable Metals [Member]	Sep. 30, 2014 Bank of China Lianyungang [Member] Renewable Metals [Member]	Dec. 31, 2013 Bank of China Lianyungang [Member] Renewable Metals [Member]	Sep. 30, 2014 Guanhutun Credit Union [Member] Henan Armco [Member] USD ($)	Dec. 31, 2013 Guanhutun Credit Union [Member] Henan Armco [Member] USD ($)	Sep. 30, 2014 ICBC Bank [Member] Henan Armco [Member]	Dec. 31, 2013 ICBC Bank [Member] Henan Armco [Member]	Dec. 31, 2013 Renewable Metals [Member]	Sep. 30, 2014 Henan Armco [Member]	Dec. 31, 2013 Henan Armco [Member]	Sep. 30, 2014 Armco Metals Holdings [Member] USD ($)	Dec. 31, 2013 Armco Metals Holdings [Member] USD ($)
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%	4.00%	8.00%	8.00%	8.00%	6.00%	6.00%	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%	9.60%	8.00%	4.00%
Loans payable, convertible notes (in Dollars)		$ 100,000		$ 5,500,000	33,512,936															$ 5,319,351	$ 5,319,351
Discount (in Dollars)				$ 1,300,000																							$ 12,033	$ 12,033

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Note 15 - Concentrations and Credit Risk

9 Months Ended

Sep. 30, 2014

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

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 September 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						Accounts Receivable
	for the Interim Period Ended						at
	September 30,			September 30,			September 30,			December 31,
	2014			2013			2014			2013
Customer A		-	%		-	%		-	%		33.8	%
Customer B		-	%		24.0	%		-	%		25.1	%
Customer C		15.7	%		-	%		21.1	%		18.3	%
Customer D		65.8	%		-	%		67.7	%		-	%
Customer E		-	%		18.7	%		-	%		-	%
Customer F		-	%		12.6	%		-	%		-	%
		81.5	%		55.3	%		88.8	%		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						Accounts Payable
	for the Interim Period Ended						at
	September 30,			September 30,			September 30,			December 31,
	2014			2013			2014			2013
Vendor A		88.2	%		75.3	%		89.1	%		86.0	%
Vendor B		10.1	%		-	%		-	%		-	%
		98.3	%		75.3	%		89.1	%		86.0	%

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

9 Months Ended

Sep. 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
									Other
									Comprehensive
							Accumulated		Income
							Foreign		(Loss) -
				Impairment –			Currency		Change in
				Other Than			Transaction		Unrealized
	Original cost			Temporary			Gain (Loss)		Gain (Loss)			Fair Value
Balance, December 31, 2013	$	3,396,658		$	(2,366,941	)	$	183,924	$	(694,512	)	$	519,129
Sale of marketable securities		(157,242	)										(157,242	)
Total gains or losses (realized/unrealized) included in:
Other comprehensive income (loss): Changes in unrealized gain								-		70,633			70,633
Balance, September 30, 2014	$	3,239,416		$	(2,366,941	)	$	183,924	$	(623,879	)	$	432,520

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Note 7 - Loans and Convertible Note Payable (Details)	9 Months Ended
	Sep. 30, 2014 USD ($)	Aug. 27, 2014 USD ($)	Aug. 11, 2014 USD ($)	Jul. 25, 2014 USD ($)	Jul. 15, 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 ($)	Mar. 03, 2014	Feb. 28, 2014 USD ($)	Feb. 28, 2014 CNY	Dec. 31, 2013 USD ($)	Sep. 30, 2014 Henan Armco [Member] After Agreement to Repay [Member] Draco Resources Inc [Member] USD ($)	Sep. 30, 2014 Henan Armco [Member] Draco Resources Inc [Member] USD ($)	Sep. 30, 2014 Loan 1 [Member] Metawise Group, Inc. [Member] USD ($)	Sep. 30, 2014 Loan 2 [Member] Metawise Group, Inc. [Member] USD ($)	Sep. 30, 2014 Loan 3 [Member] Metawise Group, Inc. [Member] USD ($)	Sep. 30, 2014 Metawise Group, Inc. [Member] USD ($)
Note 7 - Loans and Convertible Note Payable (Details) [Line Items]
Number of Loans	3
Debt Instrument, Face Amount																			$ 6,200,000			$ 550,000	$ 35,000	$ 10,000
Accrued Liabilities																									39,967
Long-term Debt, Gross																									634,967
Prepaid Interest																				157,033	792,000
Repayments of Debt	260,000
Loans Payable	240,000
Debt Instrument, Interest Rate, Stated Percentage	8.00%	8.00%														4.00%	8.00%	8.00%	8.00%
Convertible Notes Payable		100,000															5,500,000	33,512,936
Debt Instrument, Unamortized Discount																	$ 1,300,000
Debt Instrument, Convertible, Conversion Price (in Dollars per share)			$ 0.147645	$ 0.17935	$ 0.17704	$ 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 2 - Significant and Critical Accounting Policies and Practices (Details) - Exchange Rates (RMB Into U.S. Dollars)	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
Balance Sheet [Member]
Note 2 - Significant and Critical Accounting Policies and Practices (Details) - Exchange Rates (RMB Into U.S. Dollars) [Line Items]
Financial Statement	6.1547	6.1122	6.1439	6.3086
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	6.1480	6.1943	6.2174	6.3116

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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, December 31, 2013 at Dec. 31, 2013															$ 42,603,990
Balance, December 31, 2013 (in Shares) at Dec. 31, 2013															29,876,327
Issuance of Common Shares Value	34	750	250	60	12,968	201,750	52,250	(60)				13,002	202,500	52,500
Issuance of Common Shares (in Shares)	33,338	750,000	250,000	60,000											60,000
Issuance of common stock in conversion of convertible notes				22,363				6,588,272							6,610,635
Issuance of common stock in conversion of convertible notes (in Shares)				22,362,872
Reclassification of derivatve liabilities to conversion of convertible notes								2,113,939							2,113,939
Net Income									418,448						418,448
Change in unrealized gain (loss) on marketable securities										70,633					70,633
Foreign currency translation gain (loss)											(375,956)				(375,956)
Stock based compensation				2,361				1,031,547							1,033,908
Stock based compensation (in Shares)				2,361,208
Balance, September 30, 2014 at Sep. 30, 2014				$ 55,694				$ 45,791,572	$ 3,043,735	$ (623,879)	$ 4,476,477				$ 52,743,599
Balance, September 30, 2014 (in Shares) at Sep. 30, 2014				55,693,745											55,693,745

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Note 4 - Marketable Equity Securities, Available for Sale

9 Months Ended

Sep. 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

During the three months ended September 30, 2014, the Company sold 4,466,598 shares of its marketable securities and recognized loss of $43,434 as a component of interest and other income in the accompanying Consolidated Statements of Income.

As of September 30, 2014, the Company’s available for sale marketable securities were marked to market to its fair value of $432,520 and reported a $623,879 change in unrealized gain 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
									Other
									Comprehensive
							Accumulated		Income
							Foreign		(Loss) -
				Impairment –			Currency		Change in
				Other Than			Transaction		Unrealized
	Original cost			Temporary			Gain (Loss)		Gain (Loss)			Fair Value
Balance, December 31, 2013	$	3,396,658		$	(2,366,941	)	$	183,924	$	(694,512	)	$	519,129
Sale of marketable securities		(157,242	)										(157,242	)
Total gains or losses (realized/unrealized) included in:
Other comprehensive income (loss): Changes in unrealized gain								-		70,633			70,633
Balance, September 30, 2014	$	3,239,416		$	(2,366,941	)	$	183,924	$	(623,879	)	$	432,520

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Note 11 - Derivative Instruments and the Fair Value of Financial Instruments (Details) - Non-Derivative Warrant Activities (USD $)	9 Months Ended	12 Months Ended
	Sep. 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] | 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
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
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	$ 7.50
Exercise Price Per Share	$ 7.50	$ 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

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Note 5 - Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

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

	September 30,			December 31,
	2014			2013
Accounts receivable	$	53,725,350		$	25,638,666
Allowance for doubtful accounts		(43,150	)		(43,150	)
	$	53,682,200		$	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

9 Months Ended

Sep. 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 rate is 81.1% and 13.5% for the nine months ended September 30, 2014 and September 30, 2013, respectively.