General Steel (GSIH) 8-K General Steel Reports Results for the First Quarter of 2010

Exhibit 99.1

General Steel Reports Results for the First Quarter of 2010

First quarter total revenues increased 40.3% year-over-year to $453.0 million;

Aggregate shipment volume increased 44.2% year-over-year to 1.03 million metric tons

BEIJING, May 10 /PRNewswire-Asia-FirstCall/ — General Steel Holdings, Inc. ("General Steel" or "the Company") (NYSE: GSI), one of China's leading non-state-owned producers of steel products and aggregators of domestic steel companies, today announced its financial results for the first quarter ended March 31, 2010.

Highlights from the First Quarter of 2010:

— Total revenues increased 40.3% to $453.0 million from $322.8 million in the first quarter of 2009

— Aggregate shipment volume increased 44.2% to 1.03 million metric tons from 0.72 million metric tons in the first quarter of 2009

— The Company's subsidiary General Steel (China) Co., Ltd. entered into a lease agreement with Tianjin Daqiuzhuang Steel Plates Co., Ltd. to reduce the Company's overhead costs while providing a recurring monthly revenue stream of approximately $0.2 million resulting from payments due there under

— The Company's subsidiary Maoming Hengda Steel Group, Ltd., entered into a strategic alliance agreement with Zhuhai Yueyufeng Iron and Steel Co., Ltd. ("Yueyufeng") whereby Yueyufeng will invest approximately $4.4 million to fund construction of a new 400,000 metric tons capacity rebar production line

— Cash and restricted cash remains strong at $317.7 million

"We continue to achieve robust top-line growth and greater shipment volume driven by massive, multi-year infrastructure investment in rural China," said General Steel's Chairman and Chief Executive Officer Henry Yu.  "It was undoubtedly a challenging quarter as the price for raw materials increased while average selling prices remained relatively flat from January to the middle of March.  By the end of March, the situation began to improve as average selling prices increased at a rapid rate and we were able to pass our costs onto our customers and achieve a positive gross margin. Going forward, we expect average selling prices to reach a healthier level and anticipate the release of the government's newly crafted steel industry consolidation guidelines, which is expected in the coming months and may bring about opportunities for growth."

Selected Financial Results for the First Quarter of 2010

Revenues

Total revenues in the first quarter of 2010 increased 40.3% to $453.0 million from $322.8 million in the first quarter of 2009.

The year-over-year increase in total revenues was due to a 40.1% increase in shipment volumes at the Company's Longmen Joint Venture ("Longmen JV").  Revenues at Longmen JV comprised approximately 95.9% of total revenues in the first quarter of 2010.

Cost of Revenues

Total cost of revenues for the first quarter of 2010 increased 44.3% to $447.3 million from $309.9 million in the first quarter of 2009.

Cost of revenues principally consists of the cost of raw materials, labor, utilities, manufacturing costs, manufacturing-related depreciation and other fixed costs. Cost of iron ore and coke accounted for approximately 80.0% of the Company's total cost of revenues in the first quarter of 2010.

Gross Profit

Gross profit for the first quarter of 2010 decreased 55.6% year-over-year to $5.7 million from $12.9 million in the first quarter of 2009.  Gross margin for the first quarter of 2010 was 1.3%, compared to 4.0% in the first quarter of 2009 and 3.0% in the fourth quarter of 2009.

The Company noted that gross profit was adversely affected as the cost of iron ore and coke increased while average selling prices of rebar remained relatively flat from January to the middle of March 2010.  In addition, General Steel noted that depreciation costs of its two new blast furnaces at its Longmen JV, which were capitalized in the first quarter of 2009, were not capitalized in the first quarter of 2010.

Operating Expenses

Selling, general and administrative expenses for the first quarter of 2010 increased 32.4% to $12.1 million from $9.2 million in the first quarter of 2009. Selling, general and administrative expenses were 2.7% of total revenues in the first quarter of 2010, compared to 2.8% of total revenues in the first quarter of 2009.

A large portion of the increase in selling, general and administrative expenses for the first quarter of 2010 was attributable to increased production volume at the Longmen JV.

Finance and interest expenses for the first quarter of 2010 increased 273.0% to $11.0 million from $2.9 million in the first quarter of 2009. The increase was primarily due to an increase in short-term loans and discounting notes borrowed by the Longmen JV.

Net Income

Net loss for the first quarter of 2010 was $5.5 million compared to net income of $7.3 million in the first quarter of 2009. Basic and diluted losses per share for the first quarter of 2010 were $0.11, compared to basic and diluted earnings per share of $0.20 in the first quarter of 2009.

As noted above, increasing raw material costs and relatively stable average selling prices combined with other expenses were the primary reason for the decrease in net income during the first quarter of 2010.

Balance Sheet

As of March 31, 2010, General Steel had cash and restricted cash of $317.7 million, compared to $274.2 million as of December 31, 2009.  Accounts receivable was $26.9 million as of March 31, 2010, compared to $8.5 million as of December 31, 2009.

The Company had an inventory balance of $237.7 million as of March 31, 2010 compared to $208.1 million on December 31, 2009.  This balance is comprised of raw material and finished products.

Conference Call

General Steel management will hold an earnings conference call at 8:00 a.m. U.S. Eastern Time on May 10, 2010 (8:00 p.m. Beijing/Hong Kong Time on May 10, 2010). Management will discuss results and highlights from the quarter and answer questions. The dial-in number and passcode for the conference call are as follows:

U.S. Toll Free: +1-800-860-2442

Passcode: General Steel Holdings

The conference call will be broadcast live over the Internet and can be accessed by clicking the following link: http://www.visualwebcaster.com/event.asp?id=68668

Additionally, an archived Web cast of this call will be available on the Investor Relations section of the General Steel's website at http://www.gshi-steel.com ..

About General Steel Holdings, Inc.

General Steel Holdings, Inc., (NYSE: GSI), headquartered in Beijing, China, operates a diverse portfolio of Chinese steel companies. With 6.3 million metric tons aggregate production capacity, its companies serve various industries and produce a variety of steel products including rebar, high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality. For more information, please visit http://www.gshi-steel.com ..

Information Regarding Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Such forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks or uncertainties. Actual results may vary materially from those expressed or implied by the statements herein. For factors that could cause actual results to vary, perhaps materially, from these forward-looking statements, please refer to the Company's Form 10-K, filed with the Securities and Exchange Commission, and other subsequent filings. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

For investor and media inquiries please contact:

In China:

Ms. Jing Ou-Yang

General Steel Holdings, Inc.

Tel:     +86-10-5879-7346

Email:  jing.ouyang@gshi-steel.com

Mr. Justin Knapp

Ogilvy Financial, Beijing

Tel:     +86-10-8520-6556

Email:  gsi@ogilvy.com

In the United States:

Ms. Jessica Barist Cohen

Ogilvy Financial, New York

Tel:     +1-646-460-9989

Email: gsi@ogilvy.com

GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2010 AND DECEMBER 31, 2009

(In thousands, except per share data)

	March 31,			December 31,
	2010			2009
	(Unaudited)			(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	91,032		$	82,118
Restricted cash		226,712			192,041
Notes receivable		24,423			29,185
Restricted notes receivable		24,225			—
Accounts receivable, net of allowance for doubtful accounts of $402 and $490 as of March 31, 2010 and December 31, 2009, respectively		22,174			8,525
Accounts receivable - related parties		4,751			—
Other receivables, net of allowance for doubtful accounts of $10 and $14 as of March 31, 2010 and December 31, 2009, respectively		5,571			5,357
Other receivables - related parties		28,716			32,670
Dividend receivable		3,426			2,372
Inventories		237,695			208,087
Advances on inventory purchases		34,930			29,099
Advances on inventory purchases - related parties		48,791			2,995
Prepaid value added tax		11,502			19,488
Deferred tax assets		5,722			3,341
Total current assets		769,670			615,278
PLANT AND EQUIPMENT, net		552,851			555,111
OTHER ASSETS:
Advances on equipment purchases		12,621			8,419
Investment in unconsolidated subsidiaries		20,180			20,022
Long-term deferred expense		1,973			2,069
Intangible assets, net of accumulated amortization		23,565			23,733
Notes issuance cost		400			406
Equipment to be disposed		2,684			3,026
Total other assets		61,423			57,675
Total assets	$	1,383,944		$	1,228,064
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term notes payable		323,987			254,608
Accounts payable	$	159,389		$	158,126
Accounts payable - related parties		52,300			48,151
Short term loans - bank		174,655			148,968
Short term loans - others		113,351			110,358
Short term loans - related parties					11,751
Other payables		15,808			16,222
Other payable - related parties		20,989			3,706
Customer deposits		220,623			208,765
Customer deposits - related parties		40,083			3,791
Deposits due to sales representatives		65,843			49,544
Taxes payable		5,676			6,921
Distribution payable to former shareholders		14,519			16,434
Total current liabilities		1,207,223			1,037,345
CONVERTIBLE NOTES PAYABLE, net of debt discount of $2,188 and $2,250 as of March 31, 2010 and December 31, 2009, respectively		1,112			1,050
DERIVATIVE LIABILITIES		19,401			23,340
Total liabilities		1,227,736			1,061,735
EQUITY:
SHAREHOLDERS' EQUITY:
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 shares issued and outstanding		3			3
Common Stock, $0.001 par value, 200,000,000 shares authorized, 51,855,695 and 51,618,594 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively		52			52
Paid-in-capital		96,585			95,588
Statutory reserves		6,162			6,162
Retained earnings		(21,919	)		(16,410	)
Accumulated other comprehensive income		8,037			8,336
Total shareholders' equity		88,920			93,731
Noncontrolling interest		67,288			72,598
Total equity		156,208			166,329
Total liabilities and equity	$	1,383,944		$	1,228,064

GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31

(In thousands except per share data)

	Three months ended March 31,
	2010			2009
	(Unaudited)			(Unaudited)
REVENUES	$	317,628		$	262,414
REVENUES - RELATED PARTIES		135,395			60,379
TOTAL REVENUES		453,023			322,793
COST OF REVENUES		317,576			252,002
COST OF REVENUES - RELATED PARTIES		129,714			57,870
TOTAL COST OF REVENUES		447,290			309,872
GROSS PROFIT		5,733			12,921
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		12,141			9,168
(LOSS) INCOME FROM OPERATIONS		(6,408	)		3,753
OTHER INCOME(EXPENSE)
Interest income		1,120			879
Finance/interest expense		(10,963	)		(2,939	)
Change in fair value of derivative liabilities		3,939			4,115
Gain from debt extinguishment		—			2,930
Government grant					3,520
Income from equity investments		1,682			(55	)
Other non-operating (expense) income, net		(4	)		510
Total other (expense) income, net		(4,226	)		8,960
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST		(10,634	)		12,713
PROVISION FOR INCOME TAXES
Current		621			164
Deferred		(2,588	)		1,222
Total (benefit) provision for income taxes		(1,967	)		1,386
NET (LOSS) INCOME BEFORE NONCONTROLLING INTEREST		(8,667	)		11,327
Less: Net (Loss) income attributable to noncontrolling interest		(3,160	)		3,993
NET (LOSS) INCOME ATTRIBUTABLE TO CONTROLLING INTEREST		(5,507	)		7,334
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments		(299	)		(177	)
Comprehensive income (loss) attributable to noncontrolling interest		165			(75	)
COMPREHENSIVE (LOSS) INCOME	$	(5,641	)	$	7,082
WEIGHTED AVERAGE NUMBER OF SHARES
Basic & Diluted		51,652,843			36,285,312
Diluted		51,652,843			36,285,312
(LOSS) EARNINGS PER SHARE
Basic & Diluted	$	(0.11	)	$	0.20
Diluted	$	(0.11	)	$	0.20

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(In thousands, except per share data)

	Preferred stock				Common stock
			Par				Par		Paid-in
	Shares		value		Shares		value		capital
BALANCE, December 31, 2008		3,092,899	$	3		36,128,833	$	36	$	37,129
Net income
Adjustment to statutory reserve
Common stock issued for compensation, $1.85						109,250		0.109		202
Common stock issued for interest payment, $3.66						152,240		0.152		558
Common stock transferred by CEO for compensation, $6.91										69
Foreign currency translation adjustments
BALANCE, March 31, 2009, unaudited		3,092,899		3		36,390,323		36		37,958
Net loss attributable to controlling interest
Net income attributable to noncontrolling interest
Disposal of subsidiaries
Distribution of dividend to noncontrolling shareholders
Adjustment to statutory reserve
Common stock issued for compensation						487,400		0.77		1,673
Common stock issued for interest payments						44,065		0.2		187
Common stock issued for repayment of debt, $6.00						300,000		0.3		1,800
Notes converted to common stock						7,045,274		7.05		32,072
Make whole shares issued on notes conversion						1,795,977		1.8		7,085
Common stock transferred by CEO for compensation, $6.91										207
Reduction of registered capital
Common stock issued for private placement						5,555,556		5.56		14,607
Foreign currency translation adjustments
BALANCE, December 31, 2009		3,092,899		3		51,618,595		52		95,589
Net loss attributable to controlling interest
Net loss attributable to noncontrolling interest
Distribution of dividend to noncontrolling shareholders
Noncontrolling interest acquired
Common stock issued for compensation						237,100		0.24		927
Common stock transferred by CEO for compensation, $6.91										69
Foreign currency translation adjustments
BALANCE, March 31, 2010, unaudited		3,092,899	$	3		51,855,695	$	52	$	96,585

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(In thousands, except per share data)

									Accumu-
									lated
	Retained earnings					Contri-			other
	(deficits)					bution			compre-			Noncon-
	Statutory		Unre-			receiv-			hensive			trolling
	reserves		stricted			able			income			interests			Totals
BALANCE, December 31, 2008	$	4,902	$	10,092		$	(960	)	$	8,705		$	54,330			114,237
Net income				7,335									3,993			11,328
Adjustment to statutory reserve		260		(260	)											—
Common stock issued for compensation, $1.85																202
Common stock issued for interest payment, $3.66																558
Common stock transferred by CEO for compensation, $6.91																69
Foreign currency translation adjustments										(177	)		(75	)		(252	)
BALANCE, March 31, 2009, unaudited		5,162		17,167			(960	)		8,528			58,248			126,142
Net loss attributable to controlling interest				(32,579	)											(32,579	)
Net income attributable to noncontrolling interest													17,570			17,570
Disposal of subsidiaries													(293	)		(293	)
Distribution of  dividend to noncontrolling shareholders													(3,305	)		(3,305	)
Adjustment to statutory reserve		1,000		(1,000	)											—
Common stock issued for compensation																1,674
Common stock issued for interest payments																187
Common stock issued for repayment of debt, $6.00																1,800
Notes converted  to common stock																32,079
Make whole shares issued on notes conversion																7,087
Common stock transferred by CEO for compensation, $6.91																207
Reduction of registered capital							960									960
Common stock issued for private placement																14,613
Foreign currency translation adjustments										(192	)		378			186
BALANCE, December 31, 2009		6,162		(16,412	)		—			8,336			72,598			166,328
Net loss attributable to controlling interest				(5,507	)											(5,507	)
Net loss attributable to noncontrolling  interest													(3,160	)		(3,160	)
Distribution of dividend to noncontrolling  shareholders													(1,045	)		(1,045	)
Noncontrolling interest acquired													(1,270	)		(1,270	)
Common stock issued for compensation																927
Common stock transferred by CEO for compensation, $6.91																69
Foreign currency translation adjustments										(299	)		165			(134	)
BALANCE, March 31, 2010, unaudited	$	6,162	$	(21,919	)	$	—		$	8,037		$	67,288		$	156,208

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2010, 2009

(In thousands except per share data)

	Three months ended March 31,
	2010			2009
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income attributable to controlling interest	$	(5,507	)	$	7,334
Net income (loss) attributable to noncontrolling interest		(3,160	)		3,993
Consolidated net (loss) income		(8,667	)		11,327
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization		9,586			6,249
Debt extinguishment		—			(2,930	)
Bad debt allowance		(94	)		(3,518	)
Stock issued for services and compensation		996			271
Income from investment		(1,682	)		—
Amortization of deferred note issuance cost and discount on convertible notes		68			21
Change in fair value of derivative instrument		(3,939	)		(4,115	)
Deferred tax assets		(2,484	)		989
Changes in operating assets and liabilities:
Accounts receivable		(13,556	)		(11,764	)
Accounts receivable - related parties		(4,750	)		—
Notes receivable		4,760			20,838
Other receivables		256			2,759
Other receivables - related parties		(389	)		(1,736	)
Inventories		(36,689	)		(48,394	)
Advances on inventory purchases		(5,945	)		10,249
Advances on inventory purchases - related parties		(44,257	)		(7,552	)
Accounts payable		1,556			1,285
Accounts payable - related parties		8,699			21,861
Other payables		(1,384	)		7,230
Other payables - related parties		17,291			8,180
Accrued liabilities		1,614			3,883
Customer deposits		14,521			6,103
Customer deposits - related parties		36,280			(5,121	)
Taxes payable		9,978			190
Net cash (used in) provided by operating activities		(18,231	)		16,305
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquired long term investment		—			(6,593	)
Dividend receivable		(1,554	)		—
Deposits due to sales representatives		16,894			35,723
Advance on equipment purchases		(4,664	)		1,198
Cash proceeds from sale of equipment		—			—
Equipments purchase		(6,713	)		(41,415	)
Intangible assets purchase		(103	)		(163	)
Payments to original shareholders		(3,732	)		—
Net cash provided by (used in) investing activities		128			(11,250	)
CASH FLOWS FINANCING ACTIVITIES:
Restricted cash		(34,660	)		(43,802	)
Notes receivable - restricted		(24,216	)		—
Borrowings on short term loans - bank		95,015			51,733
Payments on short term loans - bank		(69,336	)		(33,548	)
Borrowings on short term loan - others		27,945			13,296
Payments on short term loans - others		(24,954	)		(7,151	)
Payments on short term loans - others-related parties		(11,747	)		—
Borrowings on short term notes payable		251,725			158,810
Payments on short term notes payable		(182,369	)		(120,138	)
Net cash provided by financing activities		27,403			19,200
EFFECTS OF EXCHANGE RATE CHANGE IN CASH		(386	)		(22	)
INCREASE (DECREASE) IN CASH		8,914			24,233
CASH, beginning of year		82,118			14,895
CASH, end of year	$	91,032		$	39,128

SOURCE  General Steel Holdings, Inc.