Document_and_Entity_Informatio
Document and Entity Information | 12 Months Ended |
Dec. 31, 2013 | |
Document and Entity Information [Abstract] | ' |
Document Type | '20-F |
Amendment Flag | 'false |
Document Period End Date | 31-Dec-13 |
Document Fiscal Year Focus | '2013 |
Document Fiscal Period Focus | 'FY |
Trading Symbol | 'CHOP |
Entity Registrant Name | 'China Gerui Advanced Materials Group Ltd |
Entity Central Index Key | '0001449801 |
Current Fiscal Year End Date | '--12-31 |
Entity Well-known Seasoned Issuer | 'No |
Entity Current Reporting Status | 'Yes |
Entity Filer Category | 'Accelerated Filer |
Entity Common Stock, Shares Outstanding | 59,522,910 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets | ' | ' |
Cash | $237,060,422 | $228,861,009 |
Certificates of deposit | 24,200,075 | 16,372,128 |
Restricted cash | 114,803,746 | 145,413,726 |
Accounts receivable, net | 2,693,510 | 2,276,153 |
Notes receivable | 446,008 | 433,379 |
Inventories | 17,496,675 | 22,762,545 |
Prepaid purchases | 52,772,830 | 76,268,597 |
Prepaid expenses | 1,465,287 | 382,569 |
Other receivables, net | 3,123,914 | 2,270,073 |
Total current assets | 454,062,467 | 495,040,179 |
Non-current assets | ' | ' |
Property, plant and equipment, net | 132,976,737 | 134,110,657 |
Land use right, net | 30,997,489 | 13,625,738 |
Deposit on acquisition of future land use right | ' | 24,076,660 |
Deposit on acquisition of property, plant and equipment | 2,184,217 | 266,312 |
Other receivable | 6,339,434 | 3,039,835 |
Certificates of deposit | ' | 3,210,221 |
Total non-current assets | 172,495,877 | 178,329,423 |
Total assets | 626,558,344 | 673,369,602 |
Current Liabilities | ' | ' |
Accounts payable | 8,471,560 | 2,279,246 |
Notes payable | 225,812,313 | 259,546,395 |
Term loans | 50,299,816 | 57,462,962 |
Financing obligation, sale-leaseback, current portion | 6,813,055 | ' |
Land use right payable | 1,460,671 | 1,419,314 |
Income tax payable | 336,829 | 5,140,306 |
Customers deposits | 14,411,044 | 11,635,999 |
Accrued liabilities and other payables | 6,799,128 | 5,818,060 |
Total current liabilities | 314,404,416 | 343,302,282 |
Non-current liabilities | ' | ' |
Financing obligation, sale-leaseback, net of current portion | 13,025,260 | ' |
Total non-current liabilities | 13,025,260 | ' |
Total liabilities | 327,429,676 | 343,302,282 |
Commitments and contingencies (note 20) | ' | ' |
Stockholders' equity | ' | ' |
Common stock, 100,000,000 shares authorized with no par value; 59,823,730 shares issued, 59,522,910 and 59,561,899 shares outstanding as of December 31, 2013 and December 31, 2012, respectively | 140,418,118 | 140,418,118 |
Additional paid-in capital | ' | 4,978,698 |
Treasury stock, at cost, 300,820 and 261,831 shares, as of December 31, 2013 and December 31, 2012, respectively | -498,799 | -414,063 |
Retained earnings | 127,963,861 | 163,276,046 |
Accumulated comprehensive income | 31,245,488 | 21,808,521 |
Total stockholders' equity | 299,128,668 | 330,067,320 |
Total liabilities and stockholders' equity | $626,558,344 | $673,369,602 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, no par value | $0 | $0 |
Common stock, shares issued | 59,823,730 | 59,823,730 |
Common stock, shares outstanding | 59,522,910 | 59,561,899 |
Treasury stock, shares | 300,820 | 261,831 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Statement [Abstract] | ' | ' | ' | ' | ' | ' | ' |
Revenue | $46,211,805 | $30,927,996 | $43,078,588 | $45,610,707 | $165,829,096 | $265,486,082 | $341,778,295 |
Cost of revenue | -51,624,916 | -30,178,989 | -39,557,743 | -40,404,115 | -161,765,763 | -208,541,058 | -240,199,678 |
Gross Profit | -5,413,111 | 749,007 | 3,520,845 | 5,206,592 | 4,063,333 | 56,945,024 | 101,578,617 |
Operating expenses: | ' | ' | ' | ' | ' | ' | ' |
General and administrative expenses | -3,757,658 | -2,618,166 | -2,532,275 | -2,403,101 | -11,311,200 | -13,168,132 | -10,707,418 |
Selling and marketing expenses | -427,942 | -446,488 | -73,666 | -734,347 | -1,682,443 | -1,446,383 | -1,634,232 |
Warrant compensation expenses | ' | ' | ' | ' | ' | ' | -5,700,000 |
Total operating expenses | -4,185,600 | -3,064,654 | -2,605,941 | -3,137,448 | -12,993,643 | -14,614,515 | -18,041,650 |
Operating (loss)/income | -9,548,711 | -2,315,647 | 914,904 | 2,069,144 | -8,930,310 | 42,330,509 | 83,536,967 |
Other income and (expense): | ' | ' | ' | ' | ' | ' | ' |
Interest income | 1,168,191 | 1,369,269 | 845,618 | 1,236,539 | 4,619,617 | 3,576,741 | 1,913,091 |
Interest expenses | -1,187,391 | -3,490,793 | -2,580,151 | -3,359,531 | -10,617,866 | -8,228,472 | -6,470,126 |
Sundry income | 794,168 | 36,500 | 3,423 | 98,598 | 932,689 | 351,483 | 602,247 |
(Loss)/Income before income taxes | -8,823,443 | -4,400,671 | -816,206 | 44,750 | -13,995,870 | 38,030,261 | 79,582,179 |
Income tax expense | -469 | 28,312 | -29,566 | -139,824 | -141,547 | -11,897,173 | -21,961,627 |
Net (loss)/income | ($8,824,212) | ($4,372,359) | ($845,772) | ($95,074) | ($14,137,417) | $26,133,088 | $57,620,552 |
(Net loss)/Earnings per share | ' | ' | ' | ' | ' | ' | ' |
- Basic | ($0.15) | ($0.07) | ($0.01) | ' | ($0.24) | $0.45 | $1.02 |
- Diluted | ($0.15) | ($0.07) | ($0.01) | ' | ($0.24) | $0.45 | $1.02 |
Weighted average common shares outstanding | ' | ' | ' | ' | ' | ' | ' |
- Basic | 59,522,910 | 59,522,910 | 59,556,396 | 59,561,899 | 59,540,872 | 58,543,076 | ' |
- Diluted | 59,522,910 | 59,522,910 | 59,556,396 | 59,561,899 | 59,540,872 | 58,543,076 | ' |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Statement of Other Comprehensive Income [Abstract] | ' | ' | ' |
Net income | ($14,137,417) | $26,133,088 | $57,620,552 |
Other comprehensive income | ' | ' | ' |
Foreign currency translation gain | 9,436,967 | 3,355,961 | 11,038,151 |
Total comprehensive (loss)/income | ($4,700,450) | $29,489,049 | $68,658,703 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) | Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Income | Retained Earnings | Total |
Balance at Dec. 31, 2010 | $73,944,243 | $6,930,944 | $7,414,409 | $79,522,406 | $167,812,002 |
Balance, shares at Dec. 31, 2010 | 46,139,053 | ' | ' | ' | ' |
Net income | ' | ' | ' | 57,620,552 | 57,620,552 |
Foreign currency translation gain | ' | ' | 11,038,151 | ' | 11,038,151 |
Shares issued for warrant conversion | 66,473,875 | ' | ' | ' | 66,473,875 |
Shares issued for warrant conversion, shares | 13,294,775 | ' | ' | ' | ' |
Balance at Dec. 31, 2011 | 140,418,118 | 6,930,944 | 18,452,560 | 137,142,958 | 298,427,836 |
Balance, shares at Dec. 31, 2011 | 59,433,828 | ' | ' | ' | ' |
Net income | ' | ' | ' | 26,133,088 | 26,133,088 |
Foreign currency translation gain | ' | ' | 3,355,961 | ' | 3,355,961 |
Purchase of treasury stock | ' | ' | ' | ' | -1,554,674 |
Retirement of treasury stock | ' | -5,657,355 | ' | ' | -5,657,355 |
Retirement of treasury stock, shares | -1,710,098 | ' | ' | ' | ' |
Grant of restricted common shares | 2,100,000 | ' | ' | ' | ' |
Share-based compensation | ' | 3,705,109 | ' | ' | 3,705,109 |
Balance at Dec. 31, 2012 | 140,418,118 | 4,978,698 | 21,808,521 | 163,276,046 | 330,067,320 |
Balance, shares at Dec. 31, 2012 | 59,823,730 | ' | ' | ' | ' |
Net income | ' | ' | ' | -14,137,417 | -14,137,417 |
Foreign currency translation gain | ' | ' | 9,436,967 | ' | 9,436,967 |
Purchase of treasury stock | ' | ' | ' | ' | -84,736 |
Share-based compensation | ' | 32,891 | ' | ' | 32,891 |
Dividend paid to acquire land use right from a related company | ' | -5,011,589 | ' | -21,174,768 | -26,186,357 |
Balance at Dec. 31, 2013 | $140,418,118 | ' | $31,245,488 | $127,965,861 | $299,128,668 |
Balance, shares at Dec. 31, 2013 | 59,823,730 | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Cash flows from operating activities: | ' | ' | ' |
Net (loss)/income | ($14,137,417) | $26,133,088 | $57,620,552 |
Adjustments to reconcile net (loss)/income to net cash from operating activities: | ' | ' | ' |
Depreciation of property, plant and equipment | 11,524,981 | 10,899,049 | 7,994,638 |
Impairment of fixed asset | 2,713,537 | ' | ' |
(Gain)/Loss on disposal of property, plant and equipment | ' | -56,107 | 12,726 |
Amortization of land use right | 741,816 | 330,244 | 322,638 |
Stock-based compensation | 32,891 | 3,705,109 | ' |
Warrant compensation expense | ' | ' | 5,700,000 |
Bad debts | 695,244 | ' | 88,447 |
Written down of inventories | 1,416,661 | 476,266 | ' |
Changes in assets and liabilities: | ' | ' | ' |
Accounts receivable | -573,816 | 4,126,206 | -2,135,266 |
Notes receivable, net | ' | 139,228 | -554,789 |
Inventories | 4,428,013 | 1,453,507 | -16,712,453 |
Prepaid expenses | -1,056,729 | 6,435 | 621,611 |
Prepaid purchases | 25,351,739 | -29,666,016 | -16,284,440 |
Other receivable | 778,709 | -142,305 | -697,676 |
Accounts payable | 6,038,617 | -5,813,580 | 5,168,689 |
Income tax payable | -4,741,140 | -369,983 | 1,078,582 |
Customers deposit | 2,401,273 | -11,856,194 | 12,911,217 |
Accrued liabilities and other payables | 1,921,977 | -1,466,919 | 1,113,651 |
Net cash provided by/(used in) operating activities | 37,536,356 | -2,101,972 | 56,248,127 |
Cash flows from investing activities: | ' | ' | ' |
Cash paid for property, plant and equipment | -10,064,992 | -30,561,916 | -29,816,858 |
Proceeds from disposal of property, plant and equipment | ' | 59,517 | 9,655 |
Payment of acquisition of future land use right | -19,214,984 | -11,112,875 | -19,286,545 |
Cash deposit - potential business initiative program - related party | ' | ' | -5,000,000 |
Cash deposit refunded - related party | ' | ' | 5,000,000 |
Advance to unrelated third parties | -2,521,616 | -4,017,304 | -3,415,724 |
Repayment of advance to unrelated third parties | 777,028 | 5,252,326 | ' |
Repayment of advance to related parties | 311,546 | ' | ' |
Investment in certificates of deposit, net | -3,989,448 | -16,193,047 | -3,101,978 |
Net cash used in investing activities | -34,705,466 | -56,573,299 | -55,611,450 |
Cash flows from financing activities: | ' | ' | ' |
Repayment of term loans | -63,179,835 | -50,484,204 | -45,831,718 |
Proceeds from term loans | 54,468,182 | 63,184,632 | 43,815,432 |
Repayment of capital lease financing obligations, sale-leaseback | -1,612,843 | ' | ' |
Proceeds from sale-leaseback financing | 17,993,226 | ' | ' |
Repayments of notes payable | -578,986,192 | -429,512,621 | -233,584,126 |
Proceeds from notes payable | 538,277,535 | 481,505,001 | 345,317,356 |
Proceeds received from exercise of warrants | ' | ' | 66,473,875 |
Warrant compensation expense | ' | ' | -5,700,000 |
Purchase of treasury stock | -84,736 | -1,554,674 | -4,516,744 |
Changes in restricted cash, net | 34,350,716 | -25,788,547 | -47,212,098 |
Repayment of advance from unrelated third parties | -1,673,696 | ' | ' |
Advance from unrelated third party | ' | 1,587,554 | ' |
Net cash provided by financing activities | -447,643 | 38,937,141 | 118,761,977 |
Net increase/(decrease) in cash | 2,386,247 | -19,738,130 | 119,398,654 |
Effect on change of exchange rates | 5,813,166 | 1,998,222 | 7,724,965 |
Cash as of January 1 | 228,861,009 | 246,600,917 | 119,477,298 |
Cash as of December 31 | 237,060,422 | 228,861,009 | 246,600,917 |
Cash paid during the year for: | ' | ' | ' |
Interest paid | 10,617,869 | 8,322,263 | 6,254,304 |
Income tax paid | 5,024,234 | 12,267,157 | 20,883,046 |
Net cash payment during the year for: | ' | ' | ' |
Prepaid deposit of land use right as part of the dividend paid to acquire land use right from related company | $6,971,373 | ' | ' |
DESCRIPTION_OF_BUSINESS_AND_OR
DESCRIPTION OF BUSINESS AND ORGANIZATION | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||
DESCRIPTION OF BUSINESS AND ORGANIZATION | ' | ||||||
China Gerui Advanced Materials Group Limited ("the Company" or "China Gerui") was incorporated in the British Virgin Islands ("BVI") on March 11, 2008. China Gerui was incorporated solely for the purpose of acquiring the issued share capital of Wealth Rainbow Development Limited (“Wealth Rainbow”), which was organized for the sole purpose of acquiring and holding all of the outstanding equity capital in Henan Green Complex Materials Co., Ltd. (“Henan Green”). Neither China Gerui nor Wealth Rainbow has any active business operations other than their ownership of Henan Green. Through Henan Green, the Company manufactures and sells specialty, high-end, high precision, ultra thin, high strength, cold-rolled, narrow and wide strip steel products that are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing and engineering expertise, and are extensively used in the manufacturing industry throughout mainland China. The Company's products are not standardized commodity products, but are tailored to customers' requirements and then incorporated into products that end-users make for various applications. The Company sells its products to its customers in the People's Republic of China (PRC) and to a limited extent to customers outside the PRC in a diverse range of industries, including the food packaging, telecommunication, electrical appliance, and construction materials industries. | |||||||
Wealth Rainbow was formed on March 1, 2007 by our chairman and CEO's family. On October 21, 2008, Wealth Rainbow acquired 100% of the outstanding shares of Henan Green pursuant to a stock transfer agreement. Subsequent to the stock transfer, Wealth Rainbow became the sole shareholder of Henan Green. The change of ownership was approved by the Chinese Government on October 21, 2008. | |||||||
On February 26, 2013, the Company's subsidiary, Henan Green, entered into an asset transfer agreement to acquire the land use rights of Company’s related party, Zhengzhou No. 2 Iron and Steel Company Limited ("Zhengzhou Company"). Zhengzhou Company owns land use rights 24.94 acres, among which 6.69 acres of land has been leased to Henan Green. The total consideration to be paid is approximately $43.6 million. The payment of acquisition was fully settled on June 30, 2013 but the land use right transfer was still in process. The carrying amount of land use rights in an amount of $17.4 million was included as the Company's land use rights. The difference between the fair value and the carrying amount on Zhengzhou Company in the amount of $26.2 million was presented as a reduction of additional paid in capital and retained earnings for the year ended December 31, 2013 as the land use right was purchased from a related party. | |||||||
Details of the Company’s subsidiaries (“together referred to as the “Group””) which are included in these consolidated financial statements are as follows: | |||||||
Subsidiaries’ names | Place and date of incorporation | Percentage of ownership by the Company | Principal activities | ||||
Wealth Rainbow Development Limited | Hong Kong, | 100% | Intermediate holding company | ||||
"Wealth Rainbow" | People's Republic of China (“PRC”) | ||||||
1-Mar-07 | |||||||
Henan Green Complex Materials Co., Ltd. | PRC | 100% | Operating entity | ||||
"Henan Green" | 31-Dec-00 | (throughWealth Rainbow) | |||||
BASIS_OF_PRESENTATION_AND_SUMM
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||
(a) | Basis of presentation and use of estimates | ||||||||||||
The accompanying audited consolidated financial statements and related notes have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP). The preparation of the consolidated financial statements in accordance with US GAAP requires management of the Group to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Significant items subject to such estimates and assumptions include the recoverability of the carrying amount and the estimated useful lives of long-lived assets; valuation allowances for receivables, realizable values for inventories, valuation of notes receivable, fair value of warrants and share based payments and income taxes. Actual results could differ from those estimates. | |||||||||||||
The consolidated financial statements include all accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated. | |||||||||||||
As shown in the accompanying financial statements, the Company has incurred loss from operations of $8,930,310 as of December 31, 2013. The Company has been working on improving its product quality and diversifies its product lines with high profit margins or creates new demand. It has also instituted more efficient management techniques. Management believes these factors will contribute toward achieving profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. | |||||||||||||
Reclassifications. | |||||||||||||
Certain prior year information has been reclassified to be comparable with the current period presentation. This reclassification has no effect on previously reported net income. | |||||||||||||
(b) | Foreign currency translation | ||||||||||||
The Group uses United States dollars (“U.S. Dollar” or “US$” or “$”) for financial reporting purposes. The Company maintains its books and records in its respective functional currency, Chinese Renminbi (“RMB”) and Hong Kong dollars (“HK$”), being the lawful currency in the PRCand Hong Kong, respectively. Assets and liabilities of the subsidiaries are translated from RMB or HK$ into U.S. Dollars using the applicable exchange rates prevailing at the balance sheet date. Items on the statements of operations and comprehensive income and cash flows are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income included in the stockholders’equity section of the balance sheets. The exchange rates used to translate amounts in RMB and HK$ into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows: | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Balance sheet items, except for equity accounts | RMB6.0537= | RMB6.2301= | RMB6.2939= | ||||||||||
HK$7.7539= | HK$7.7507= | HK$7.7663= | |||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Items in statements of income and cash flows | RMB6.1412= | RMB6.2990= | RMB6.4475= | ||||||||||
HK$7.7565= | HK$7.7556= | HK$7.7793= | |||||||||||
(c) | Cash | ||||||||||||
Cash represents cash in banks and cash on hand. | |||||||||||||
The Group maintains bank accounts in Hong Kong and PRC and the United States. | |||||||||||||
(d) | Accounts receivable | ||||||||||||
Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts, sales returns and trade discounts. The allowance for doubtful accounts is the Group’s best estimate of the amount of probable credit losses in the Group’s existing accounts receivable. Management determines the allowance based on historical write-off experience, customer specific facts and economic conditions. | |||||||||||||
Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Group does not have any off-balance-sheet credit exposure to its customers. | |||||||||||||
(e) | Inventories | ||||||||||||
Inventories are stated at the lower of cost or market and consist primarily of flat rolled steel. Cost is determined using the weighted average cost method. In the case of work in process and finished goods, such costs comprise of direct materials, direct labor and an appropriate proportion of overheads. Market value for raw materials is based on replacement cost for work in process and finished goods on net realizable value. Appropriate consideration is given to obsolesence, excessive levels, deterioration, and fators evaluating net realizable value. | |||||||||||||
(f) | Property, plant and equipment | ||||||||||||
Property, plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to general and administrative expenses as incurred. Depreciation of property, plant and equipment is computed by the straight-line method over the assets estimated useful lives ranging from five to fifty years. Building improvements, if any, are amortized on a straight-line basis over the estimated useful life. As at December 31, 2013 and December 31, 2012, Henan Green paid $2,184,217 and $266,312 deposit on acquisition of property, plant and equipment. | |||||||||||||
Upon sale or retirement of property, plant and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in operations. | |||||||||||||
Construction in progress represents the costs of property, plant and equipment under construction or installation. Depreciation commences when the asset is placed in service. The accumulated costs are reclassified as property, plant and equipment when installation or construction is completed. Government subsidies received reduce the cost of construction. | |||||||||||||
The estimated useful lives of the assets are as follows: | |||||||||||||
Estimated Useful Life (years) | |||||||||||||
Leasehold land improvement | 46.5 | ||||||||||||
Buildings | 20-Oct | ||||||||||||
Machinery and equipment | 20-May | ||||||||||||
Vehicles | 5 | ||||||||||||
Furniture fixtures and office equipment | 5 | ||||||||||||
(g) | Land use right | ||||||||||||
Land use right is recorded at cost less accumulated amortization. Land use rights represent the prepayments for the use of the parcels of land in the PRC where the Company’s production facilities are located, and are charged to expense over their respective land use right periods. According to the laws of the PRC, the government owns all of the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the PRC government. Land use right is amortized using the straight-line method over the land use right term of 43 to 50 years. | |||||||||||||
(h) | Impairment of long-lived assets | ||||||||||||
In accordance with FASB ASC Topic 360, Property Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. If long-lived assets are to be disposed, depreciation is discontinued, if applicable, and the assets are reclassified as held for sale at the lower of their carrying amounts or fair values less costs to sell. | |||||||||||||
The Company’s sole business is high-end cold-rolled steel processing. The company produces products by utilizing its facilities and equipment at one location in Zhengzhou, Henan Province, China. Henan Green offers chromium-plating as value-add service to its customers but chromium-plating is an integral part of the whole production process of the Company rather than a stand-alone service. As a result, the Group determined that the impairment review is appropriately evaluated at the entity level. Based on the Group’s assessment, no impairment was recognized as of December 31, 2013 and December 31, 2012. | |||||||||||||
(i) | Fair value measurements | ||||||||||||
FASB ASC Topic 820, “Fair Value Measurement and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances. | |||||||||||||
The fair value hierarchy is categorized into three levels based on the inputs as follows: | |||||||||||||
Level 1 - | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. | ||||||||||||
Level 2 - | Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. | ||||||||||||
Level 3 - | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. | ||||||||||||
The Group’s financial instruments consist principally of cash, accounts receivables, accounts payable, land use right payable, term loans, notes payables and accrued liabilities. None of which are held for trading purposes. Pursuant to ASC 820, the fair value of the Group's cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Group believes that the carrying amounts of all of its other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. | |||||||||||||
(j) | Revenue recognition | ||||||||||||
The Group generates revenue primarily from sales of steel mill flat-rolled products. | |||||||||||||
The Group recognizes its revenue upon the transfer of finished products to customers upon shipment from the Group's facilities. The Group sets the final price for a product based on the management's final measurement of the weight and dimensions of the product and confirmation that the product meets the customer's specifications as agreed in the original customer's order. The Group grants a three-week period for customers to dispute product quality. Based on the Group’s assessment and past experiences, the rate of customer disputes are considered immaterial. | |||||||||||||
In the PRC, value added tax (“VAT”) of 17% on the invoice amount is collected with respect to the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Group; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the tax authorities. | |||||||||||||
(k) | Income taxes | ||||||||||||
Under the current laws of the BVI, the Group is not subject to any income or capital gains tax, and dividend payments we make are not subject to any withholding tax in the British Virgin Islands. Under the current laws of Hong Kong, Wealth Rainbow is not subject to any capital gains tax and dividend payments and is not subject to any withholding tax in Hong Kong. | |||||||||||||
The Group is not incorporated nor does it engage in any trade or business in the United States and is not subject to United States federal income taxes. The Group did not derive any significant amount of income subject to such taxes after completion of the Share Exchange and accordingly, no relevant tax provision is made in the consolidated statements of operations. | |||||||||||||
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of income in the period that includes the enactment date. | |||||||||||||
The Group has not recorded deferred income taxes applicable to undistributed earnings of the subsidiary located in the PRC because it is the present intention of management to reinvest the undistributed earnings indefinitely in PRC. Undistributed earnings amounted to approximately $180.6 million and $189.8 million on December 31, 2013 and 2012, respectively. If the earnings of such foreign subsidiary were not indefinitely reinvested, a deferred tax liability of approximately $9.0 million and $9.5 million would have been required at December 31, 2013 and 2012, respectively. Generally, such earnings become subject to the PRC tax upon the remittance of dividends and under certain other circumstances. | |||||||||||||
The Group prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken in the tax return. There have been regular PRC tax audit and the result was not materially difference for the company’s historical income tax provision and accrued. This interpretation also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. As of December 31, 2013 and 2012, there were no amounts that had been accrued with respect to uncertain tax positions. | |||||||||||||
(l) | Commitments and contingencies | ||||||||||||
In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, product liability. The Group records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. A determination of the amount of reserves and disclosures required, if any, for these contingencies are made after considerable analysis of each individual issue. The Group accrues for contingent liabilities when an assessment of the risk of loss is probable and can be reasonably estimated. The Group discloses contingent liabilities when the risk of loss is reasonably possible or probable. (See Note 20) | |||||||||||||
(m) | Share-based compensation expense | ||||||||||||
The Company awards restricted ordinary shares and other equity-based instruments to its officers, directors and consultants (collectively "share-based payments"). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date and is recognized on a straight-line basis over the requisite service period, which generally equals the vesting period. All of the Company's stock-based compensation is based on grants instruments and no liablity awards have been granted | |||||||||||||
(n) | Earnings per share | ||||||||||||
Basic earnings per share are computed on the basis of the weighted-average number of shares of our common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted-average number of shares of our common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury method. As of December 31, 2013, the Company had a total of 144,000 warrants outstanding which were granted to its underwriter during November 2009 in connection with the sale of 4,800,000 ordinary shares. The warrants may be exercised on or after August 9, 2010 and until November 9, 2014. As of December 31, 2013, all such warrants are deemed to be anti-dilutive since the Company suffered net loss in the year ended December 31, 2013. | |||||||||||||
On May 1, 2013, the Company signed a warrant agreement with Cambelle-Inland, LLC, a Delaware limited liability company ("C-I") to obtain consulting services from C-I for the development of the Company's strategic opportunities. On May 8, 2013, the Company issued a warrant to C-I for the purchase of 500,000 ordinary shares (the “Warrant Shares”). The warrant may be exercised in full or part to purchase Warrant Shares at an initial exercise price of $2.20 per share at any time prior to the fifth anniversary of the date of issuance. As of December 31, 2013, the warrant was deemed to be anti-dilutive since the Company suffered net loss in the year ended December 31, 2013. | |||||||||||||
The following table sets forth the computation of basic and diluted net income per common share: | |||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Net (loss) / income | $ | (14,137,417 | ) | $ | 26,133,088 | $ | 57,620,552 | ||||||
Basic and diluted weighted average | |||||||||||||
outstanding shares | 59,540,872 | 58,543,076 | 56,297,652 | ||||||||||
(Net loss)/Earnings per common stock: | |||||||||||||
Basic | $ | (0.24 | ) | $ | 0.45 | $ | 1.02 | ||||||
Diluted | $ | (0.24 | ) | $ | 0.45 | $ | 1.02 | ||||||
(o) | Segment information | ||||||||||||
FASB ASC Topic 280 "Segment reporting" establishes standards for reporting information on operating segments in interim and annual financial statements. The Group has only one segment, all of the Group's operations are in the PRC and all income are derived from the sales of steel mill flat-rolled products to mainly PRC customers and less than 1% was sold to overseas customers. Accordingly, no geographic information is presented. | |||||||||||||
(p) | Guarantee | ||||||||||||
Pursuant Accounting Standards Codification (“ASC”) 460-10-25-2, the guarantor is obligated in two aspects in every guarantee or indemnification—a noncontingent liability and a contingent liability. The noncontingent liability represents the guarantor’s obligation to stand ready to perform under the terms of the guarantee in the event that the specified triggering events or conditions occur. The contingent liability represents the guarantor’s obligation to make future payments of those triggering events or conditions occur and based on the probability that the guaranteed party will not perform under the contractual terms of the guaranty agreement. | |||||||||||||
We have assessed the contingent liabilities arising from the above-described guarantees and have concluded that no liabilities in respect of the guarantees were required to be recognized as of December 31, 2013 and 2012. | |||||||||||||
(q) | Economic and political risks | ||||||||||||
The Group's operations are conducted in the PRC. Accordingly, the Group's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. | |||||||||||||
The Group's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Group's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances aboard, and rates and methods of taxation, among other things. | |||||||||||||
(r) | Credit risks | ||||||||||||
Cash held by the Company with PRC banks is subject to concentration of credit risk as it is not covered by any deposit insurance. | |||||||||||||
The Company, by policy, routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited and has not experienced significant write-downs in its accounts receivable balances. | |||||||||||||
(s) | Recently issued accounting standards | ||||||||||||
In February 2013, the FASB issued new authoritative accounting guidance related to the recognition and measurement of obligations arising from joint and several liability arrangements. This authoritative accounting guidance is effective for interim and annual periods beginning after December 15, 2013 and is to be applied retrospectively. Based on its evaluation, the Company determined this guidance does not currently impact the Company’s financial statements and disclosures. | |||||||||||||
In July 2013, the FASB issued new authoritative accounting guidance related to the reporting of unrecognized tax benefits when a net operating loss carry forward, similar tax loss, or tax credit carryforward exists. The guidance states an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward, with certain exceptions. This authoritative accounting guidance is effective for interim and annual periods beginning after December 15, 2013, and is to be applied prospectively to all unrecognized tax benefits that exist at the effective date. The Company determined this guidance does not significantly impact the Company’s financial statements and disclosures. | |||||||||||||
There are no new significant accounting standards applicable to the Company that have been issued but not yet adopted by the Company as of December 31, 2013. |
CASH
CASH | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Cash and Cash Equivalents [Abstract] | ' | ||||||||||||||||
CASH | ' | ||||||||||||||||
Cash represents cash in bank and cash on hand. Cash as of December 31, 2013 and December 31, 2012 consists of the following: | |||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Bank balances and cash (a) | $ | 376,064,243 | $ | 390,646,863 | |||||||||||||
Less: Restricted cash (b) | (114,803,746 | ) | (145,413,726 | ) | |||||||||||||
Less: Certificates of deposit (c) | (24,200,075 | ) | (16,372,128 | ) | |||||||||||||
$ | 237,060,422 | $ | 228,861,009 | ||||||||||||||
Non-current portion | |||||||||||||||||
Certificates of deposit (c) | $ | - | $ | 3,210,221 | |||||||||||||
(a) | Bank balances and cash | ||||||||||||||||
Unrestricted cash as of December 31, 2013 and December 31, 2012 was $237,060,422 and $228,861,009, respectively. As of December 31, 2013 and December 31, 2012, unrestricted cash of $232,491,635 and $221,014,759 was held respectively, in Renminbi and USD on deposit with banks located in the PRC. Renminbi is not a freely convertible currency and the remittance of funds out of the PRC is subject to the exchange restrictions imposed by the PRC government. | |||||||||||||||||
(b) | Restricted cash | ||||||||||||||||
As of December 31, 2013 and December 31, 2012, the Company’s cash amounting to $114,803,746 and $145,413,726 respectively, were restricted and deposited in certain banks as security for notes payable to the banks. | |||||||||||||||||
(c) | Certificates of deposit | ||||||||||||||||
As of December 31, 2013, seven of the Certificates of deposit were held in Renminbi on deposit with a bank located in the PRC. The annual interest rate is 2.80% and 3.08%. The Certificates of deposit mature from January 2014 to August, 2014. | |||||||||||||||||
As of December 31, 2013, cash is classified by geographical areas is set out as follows: | |||||||||||||||||
Bank balances | Restricted | Certificates | December 31, | ||||||||||||||
and cash | Cash | of deposit | 2013 | ||||||||||||||
Hong Kong | $ | 2,725,110 | $ | - | $ | - | $ | 2,725,110 | |||||||||
United States | 1,843,677 | - | - | 1,843,677 | |||||||||||||
The PRC | 232,491,635 | 114,803,746 | 24,200,075 | 371,495,456 | |||||||||||||
$ | 237,060,422 | $ | 114,803,746 | $ | 24,200,075 | $ | 376,064,243 | ||||||||||
As of December 31, 2012, cash is classified by geographical areas is set out as follows: | |||||||||||||||||
Bank balances | Restricted | Certificates | December 31, | ||||||||||||||
and cash | Cash | of deposit | 2012 | ||||||||||||||
Hong Kong | $ | 5,917,837 | $ | - | $ | - | 5,917,837 | ||||||||||
United States | 1,928,413 | - | - | 1,928,413 | |||||||||||||
The PRC | 221,014,759 | 145,413,726 | 19,582,349 | 386,010,834 | |||||||||||||
$ | 228,861,009 | $ | 145,413,726 | $ | 19,582,349 | 393,857,084 | |||||||||||
Maximum exposure to credit risk: | |||||||||||||||||
As of December 31, 2013, cash is denominated in the following currencies: | |||||||||||||||||
Bank balances | Restricted | Certificates | December 31, | ||||||||||||||
and cash | Cash | of deposit | 2013 | ||||||||||||||
USD | $ | 4,551,463 | $ | - | $ | - | $ | 4,551,463 | |||||||||
RMB (Current) | 232,491,122 | 114,803,746 | 24,200,075 | 371,494,943 | |||||||||||||
HKD | 17,837 | - | - | 17,837 | |||||||||||||
$ | 237,060,422 | $ | 114,803,746 | $ | 24,200,075 | $ | 376,064,243 | ||||||||||
As of December 31, 2012, cash is denominated in the following currencies: | |||||||||||||||||
Bank balances | Restricted | Certificates | December 31, | ||||||||||||||
and cash | Cash | of deposit | 2012 | ||||||||||||||
USD | $ | 7,906,574 | $ | - | $ | - | $ | 7,906,574 | |||||||||
RMB (Current) | 220,942,109 | 145,413,726 | 16,372,128 | 382,727,963 | |||||||||||||
RMB (Non-current) | - | - | 3,210,221 | 3,210,221 | |||||||||||||
HKD | 12,326 | - | - | 12,326 | |||||||||||||
$ | 228,861,009 | $ | 145,413,726 | $ | 19,582,349 | $ | 393,857,084 | ||||||||||
ACCOUNTS_RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2013 | |
Accounts Receivable Additional Disclosures [Abstract] | ' |
ACCOUNTS RECEIVABLE | ' |
The Group performs ongoing credit evaluations of its customers' financial conditions. The Group generally encourages its customers to use its products and settle the outstanding balance within credit terms. As of December 31, 2013 and December 31, 2012, the provision on accumulated allowance for doubtful accounts was $360,743 and $125,993 respectively. | |
INVENTORIES
INVENTORIES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
INVENTORIES | ' | ||||||||
Inventories as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials | $ | 5,237,724 | $ | 7,865,191 | |||||
Work-in-process | 2,765,072 | 3,491,181 | |||||||
Finished goods | 9,493,879 | 11,406,173 | |||||||
$ | 17,496,675 | $ | 22,762,545 | ||||||
Due to the decline in steel market, inventories were written down in the amounts of $1.42 million and $0.48 million to its net realizable value for the year ended December 31, 2013 and December 31, 2012, respectively. | |||||||||
PREPAID_PURCHASES
PREPAID PURCHASES | 12 Months Ended |
Dec. 31, 2013 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' |
PREPAID PURCHASES | ' |
Prepaid purchases represent amounts prepaid to suppliers for the purchases of raw materials and accessories. |
OTHER_RECEIVABLES
OTHER RECEIVABLES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Receivables [Abstract] | ' | ||||||||
OTHER RECEIVABLES | ' | ||||||||
Other receivables as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current portion | |||||||||
Advances to staff, net | $ | 9,655 | $ | 211,671 | |||||
Loan advanced to unrelated third parties, net | 16,519 | 796,818 | |||||||
Loan advanced to a related company | - | 318,332 | |||||||
Standby guarantee fund | 2,643,012 | 530,489 | |||||||
Others | 454,728 | 412,763 | |||||||
$ | 3,123,914 | $ | 2,270,073 | ||||||
Non-current portion | |||||||||
Loan advanced to an unrelated third party | $ | 3,118,264 | $ | 3,039,835 | |||||
Standby guarantee fund | 3,221,170 | - | |||||||
$ | 6,339,434 | $ | 3,039,835 | ||||||
Current portion | |||||||||
Other receivables represent advances to staff, third parties, related company, standby guarantee and petty cash to department staff for daily expenditures. These amounts are interest free and with no fixed repayment terms. As of December 31, 2013 and December 31, 2012, the provision on accumulated allowance for doubtful accounts on current portion was $474,213 and $Nil respectively for some loans to staff. | |||||||||
Included in other receivables as of December 31, 2013 and December 31, 2012, $2,643,012 and $530,489, respectively, represented fund held by an unrelated third party, Chen Xin which deposited the funding to Minsheng Bank of China for guarantee of note payable for Henan Green. | |||||||||
Non-current portion | |||||||||
As of December 31, 2013 and December 31, 2012, $3,118,264 and $3,039,835, respectively, represented advance to the third party with repayment due in October 2015 and the advance is interest bearing. Interest and principal would be repaid on the due date. | |||||||||
$3,221,170 was used as deposit of the sale-leaseback financing arrangement with amount outstanding $19,838,315 (see note 12). |
PROPERTY_PLANT_AND_EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||||||
PROPERTY, PLANT AND EQUIPMENT | ' | ||||||||||||
Property, plant and equipment as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
Buildings | $ | 25,740,518 | $ | 24,976,660 | |||||||||
Leasehold land improvement | 22,746 | 22,102 | |||||||||||
Machinery and equipment | 93,721,937 | 106,179,264 | |||||||||||
Leased machinery and equipment | 21,474,470 | - | |||||||||||
Vehicles | 3,285,893 | 3,216,660 | |||||||||||
Office equipment | 439,588 | 419,456 | |||||||||||
Construction in progress | 29,576,864 | 34,969,529 | |||||||||||
174,262,016 | 169,783,671 | ||||||||||||
Less: Accumulated depreciation | (41,287,279 | ) | (35,673,014 | ) | |||||||||
$ | 132,974,737 | $ | 134,110,657 | ||||||||||
Depreciation expense for the years ended December 31 2013, 2012 and 2011 was $11,524,981, $10,899,049 and $7,994,638 respectively. | |||||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
Cost of revenue | $ | 11,112,719 | $ | 10,429,977 | $ | 7,610,716 | |||||||
General and administrative expenses | 412,262 | 469,072 | 383,922 | ||||||||||
$ | 11,524,981 | $ | 10,899,049 | $ | 7,994,638 | ||||||||
Construction in progress consisted of the construction of a plant and production lines on 300 acres of land and the improvement project on the 300,000 tons production lines and plant facilities and the staff quarters project. The total construction in progress as at December 31, 2013 and December 31, 2012 were $29,576,864 and $34,969,529, respectively. | |||||||||||||
Estimated cost | |||||||||||||
Balance at | to complete as of | ||||||||||||
December 31, | December 31, | Estimated time | |||||||||||
2013 | 2014 | to complete | |||||||||||
Production lines | $ | 2,477,407 | $ | - | December 2014 | ||||||||
Plant | 9,117,122 | 5,779,553 | April 2014 | ||||||||||
Staff quarters | 17,982,335 | 1,972,403 | July 2014 | ||||||||||
$ | 29,576,864 | $ | 7,751,956 | ||||||||||
Henan Green signed an agreement to construct addition of the new laminated steel production line. The new production line is subject to further testing and technical upgrades until December 2014 when official production will be launched. Plant includes the decoration expenses incurred for the new plant and electricity system installation. It is expected to be completed before end of April 2014. The Company improved the staffs' benefits and constructed a staff quarter for the experience staffs and their family to live, it is estimated to be completed before end of July 2014. | |||||||||||||
During the year 2013, $14,206,188 of the Company's production lines were transferred to fixed assets from Construction in progress. | |||||||||||||
No depreciation has been provided for construction in progress. | |||||||||||||
As of December 31, 2013, $9.1 million of buildings was secured for note payable. | |||||||||||||
As of December 31, 2103, machinery and equipment included machinery and equipment with net carrying amount of approximately $23.9 million is subject to a sale-leaseback financing transaction. There is no such transaction in 2012. These machinery and equipment are depreciated over a period of ten to twenty years. Impairment loss of $2,723,248 was recognised at the sale - leaseback financing transaction date: | |||||||||||||
Sale proceeds (Fair value of the machinery and equipment) | $ | 21,244,260 | |||||||||||
Carrying amount | (23,967,508 | ) | |||||||||||
Impairment loss | $ | (2,723,248 | ) |
LAND_USE_RIGHT
LAND USE RIGHT | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
LAND USE RIGHT [Abstract] | ' | ||||||||
LAND USE RIGHT | ' | ||||||||
Land use right as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Land use right, net | $ | 30,997,489 | $ | 13,625,738 | |||||
Land use right represents the value of land approved to the Company for industrial production purpose by the local government in Zhengzhou, PRC. The right will be expired between June 30, 2053, June 30, 2054 and Mar 31, 2056 for the land with 58.6 acres (351.61 Chinese mu), 50 acres (300 Chinese mu) and 24.94 acre (151.36 Chinese mu) respectively. Land use right payable for the 58.6 acres as of December 31, 2013 and December 31, 2012 was $1,460,671 and $1,419,314 respectively. | |||||||||
The Company acquired the land use right of 58.6 acres in February 2010. Although there is no payment schedule to settle the outstanding amount of $1,460,671 until the Company receives notification from the local government. As it is repayable on demand, it is recorded as current liability. | |||||||||
On February 26, 2013, the Company's subsidiary, Henan Green acquired land use right with totaling 24.94 acres from a related party, Zhengzhou Company, among which 6.69 acres of land has been leased to Henan Green in prior years. The payment of acquisition was fully settled as at June 30, 2013 and the transfer of land use right is still in process. The total consideration is of approximately $43.6 million (RMB 268,000,000). | |||||||||
The consideration was allocated as follows: | |||||||||
Land use rights | $ | 29,009,733 | |||||||
Replacement cost | 20,704,280 | ||||||||
Total consideration | $ | 49,714,013 | |||||||
Based on Accounting Standard Codification ("ASC") 805-50, the Group recorded the value of $17,444,274 as the cost of land use right which was the net carrying amount recorded in the book of Group’s related party; the former owner of the Group, Zhengzhou Company, at the date of transfer. Zhengzhou Company was the former owner of the Group and is 40% owned by our chairman and CEO. The balance of $26,186,357 above cost was treated as a return of capital in the equity amounts. An amount of $5,011,589 was recorded as a reduction in additional paid in capital and the balance of $21,174,768 applied to retained earnings. | |||||||||
Land use right is amortized using the straight-line method over the lease term of 43 to 50 years. The amortization expense for the years ended December 31, 2013, 2012 and 2011 were $741,816, $330,244, and $322,638, respectively. The total future amortization is as follows: | |||||||||
31-Dec | |||||||||
2014 | $ | 1,570,364 | |||||||
2015 | 1,570,364 | ||||||||
2016 | 1,570,364 | ||||||||
2017 | 1,570,364 | ||||||||
2018 | 1,570,364 | ||||||||
Over 5 years | 23,145,669 | ||||||||
$ | 30,997,489 | ||||||||
NOTES_PAYABLE
NOTES PAYABLE | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes Payable [Abstract] | ' | ||||||||
NOTES PAYABLE | ' | ||||||||
Notes payable as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Classified by financial institutions: | |||||||||
China Citic Bank | $ | 37,332,540 | $ | 35,312,435 | |||||
Bank of Zhengzhou | - | 6,420,443 | |||||||
Minsheng Bank of China | 9,250,541 | 19,261,328 | |||||||
Guangdong Development Bank | 14,866,940 | 22,471,549 | |||||||
Shanghai Pudong Development Bank | 3,303,765 | 25,681,771 | |||||||
China Merchants Bank | - | 11,235,775 | |||||||
China Everbright Bank | 19,822,588 | 27,286,881 | |||||||
Bank of Luoyang | 49,226,093 | 43,337,988 | |||||||
Bank of Communications | 46,583,081 | 22,792,572 | |||||||
Bank of Pingdingshan | 28,907,941 | 32,102,213 | |||||||
Bank of Xuchan | - | 2,407,666 | |||||||
Commercial bank of Kaifeng | 13,215,059 | 4,815,332 | |||||||
Huaxia Bank | - | 1,605,111 | |||||||
Ping An Bank | 3,303,765 | 4,815,331 | |||||||
$ | 225,812,313 | $ | 259,546,395 | ||||||
Additional information: | |||||||||
Maximum balance outstanding during the year | $ | 323,096,618 | $ | 309,304,826 | |||||
Interest expense | $ | 6,446,941 | $ | 4,701,767 | |||||
Finance charge per contract | 0.05 | % | 0.05%-0.15 | % | |||||
All notes payable are secured by corresponding restricted cash. The amount of restricted cash required to be placed ranging from 10% to 100% of such notes. When the restricted cash is not sufficient to secure the note, certificate of deposits, inventories, Henan Green's assets or guarantees by Henan Green's director or other third parties are further requested by banks. As of December 31, 2013 and December 31, 2012, the Group's cash of $114,803,746 and $145,413,726, respectively were restricted for such purpose. All the notes payable have terms of six months. Local PRC banks had certain covenants on the Henan Green, which required Henan Green to notify the banks if Henan Green was not in compliance. Henan Green was not in compliance with its financial covenants during 2013 and 2012. The terms of the notes payable prohibit making advances or providing guarantees to other unrelated parties without prior consent of the banks. Banks may call the notes if Henan Green was not in compliance with its financial covenants. Banks have not called the notes or assessed penalty on Henan Green for these violations. Henan Green does not believe that any penalty will be assessed by banks for these covenant violations and therefore no provision has been made for the years ended December 31, 2013 and 2012. | |||||||||
TERM_LOANS
TERM LOANS | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||
TERM LOANS | ' | ||||||||||||
In order to provide working capital for operations, the Group entered into the following short term loan agreements as of December 31, 2013 and December 31, 2012: | |||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
Classified by financial institutions: | |||||||||||||
Guangdong Development Bank | $ | 5,781,588 | $ | - | |||||||||
China Citic Bank | 6,607,530 | 6,420,443 | |||||||||||
China Merchants Bank | 4,955,647 | 9,630,664 | |||||||||||
Bank of Zhengzhou | 3,303,765 | 7,704,531 | |||||||||||
Shanghai Pudong Development Bank | 23,043,758 | 16,051,107 | |||||||||||
Bank of Xuchang | 4,955,647 | 4,815,332 | |||||||||||
China Everbright Bank | 1,651,881 | 1,605,111 | |||||||||||
Commercial Bank of Kaifeng | - | 3,210,221 | |||||||||||
Ping An Bank | - | 8,025,553 | |||||||||||
$ | 50,299,816 | $ | 57,462,962 | ||||||||||
Additional information: | |||||||||||||
Maximum balance outstanding during the year | $ | 64,093,034 | $ | 62,278,294 | |||||||||
Interest expense | $ | 3,829,188 | $ | 3,525,936 | |||||||||
Range of interest rate per month | 0.465% - 0.621 | % | 0.465% - 1.205 | % | |||||||||
Weighted average interest rate | 6.98 | % | 3.29 | % | |||||||||
All term loans are fixed term loans with a period of 12 months or less. Local PRC banks had imposed covenant on Henan Green. For those loan facilities obtained from banks, all these terms loans are either guaranteed and secured by Henan Green's assets, including its machinery, land use right and inventories, or guaranteed and secured by a related party, Zhengzhou Company's land and plant properties, or guaranteed by Henan Green’s director or other third parties. Henan Green was not in compliance with its financial covenants during 2013 and 2012. The terms of the bank loans prohibit making advances or providing guarantees to other unrelated parties without prior consent of the banks. Banks may call the loans if Henan Green was not in compliance with its financial covenants. Banks have not called the loans or assessed a penalty on the Henan Green for these violations. Henan Green does not believe that any penalty will be assessed by the banks for these covenant violations and therefore no provision has been made for the years ended December 31, 2013 and 2012. | |||||||||||||
A summary of the principal payments for the outstanding term loans during the following fiscal year is as follows: | |||||||||||||
Total | |||||||||||||
Principal payment | outstanding | ||||||||||||
Name of bank | Collateral | Term of loans | due during 2013 | loan amount | |||||||||
Guangdong Development Bank | Guaranteed by third party and Mingwang Lu (Chairman and CEO of the Company) | December 24, 2013 to June 24, 2014 | $ | 5,781,588 | $ | 5,781,588 | |||||||
China Citic Bank | Secured by Henan Green's assets and Mingwang Lu | July 3, 2013 to March 12, 2014 | 3,303,765 | 3,303,765 | |||||||||
China Citic Bank | Secured by Henan Green's assets and Mingwang Lu | October 10, 2013 to | 3,303,765 | 3,303,765 | |||||||||
5-Jul-14 | |||||||||||||
China Merchants Bank | Guaranteed by third party, Mingwang Lu and Yi Lu (Director of the Company) | September 10, 2013 to September 10, 2014 | 4,955,647 | 4,955,647 | |||||||||
China Everbright Bank | Guaranteed by third party, Mingwang Lu and Yi Lu | July 16, 2013 to January 15, 2014 | 1,651,881 | 1,651,881 | |||||||||
Bank of Zhengzhou | Guaranteed by third party and Mingwang Lu | October 31, 2013 to October 30, 2014 | 3,303,765 | 3,303,765 | |||||||||
Shanghai Pudong Development Bank | Guaranteed by third party and Mingwang Lu | January 31, 2013 to January 30, 2014 | 5,616,400 | 5,616,400 | |||||||||
Shanghai Pudong Development Bank | Guaranteed by third party and Mingwang Lu | February 22, 2013 to February 21, 2014 | 2,643,012 | 2,643,012 | |||||||||
Shanghai Pudong Development Bank | Guaranteed by third party and Mingwang Lu | November 26, 2013 to November 25, 2014 | 825,941 | 825,941 | |||||||||
Shanghai Pudong Development Bank | Secured by Henan Green's land and Mingwang Lu | November 25, 2013 to November 24, 2014 | 6,607,529 | 6,607,529 | |||||||||
Shanghai Pudong Development Bank | Secured by third party and Mingwang Lu | November 27, 2013 to November 26, 2014 | 4,047,111 | 4,047,111 | |||||||||
Shanghai Pudong Development Bank | Guaranteed by third party and Mingwang Lu | November 28, 2013 to November 27, 2014 | 3,303,765 | 3,303,765 | |||||||||
Bank of Xuchang | Guaranteed by third party | April 25, 2013 to April 24, 2014 | 4,955,647 | 4,955,647 | |||||||||
$ | 50,299,816 | $ | 50,299,816 | ||||||||||
FINANCING_OBLIGATION_SALELEASE
FINANCING OBLIGATION, SALE-LEASEBACK | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Leases [Abstract] | ' | ||||||||
FINANCING OBLIGATION, SALE-LEASEBACK | ' | ||||||||
In August 2013, in order to provide working capital for operations, the Company entered into the refinancing of certain machinery and equipment in PRC under a sale lease-back arrangement. The facility was sold for $21,244,260, of which $3,221,170 was used as standby guarantee fund. The transaction has been accounted for as a financing arrangement, wherein the machinery and equipment (see note 8) remains on the Company's books and will continue to be depreciated. | |||||||||
The following is the finacing obligation under the sale-leaseback and is being reduced based on payments under the lease. | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Financial company: | |||||||||
Cinda Financial Leasing Co, Ltd. | |||||||||
- Current portion | $ | 6,813,055 | $ | - | |||||
- Non-current portion | $ | 13,025,260 | $ | - | |||||
Additional information: | |||||||||
Maximum balance outstanding during the year | $ | 21,474,470 | $ | - | |||||
Interest expense | 341,738 | - | |||||||
Interest rate per year | 6.46% | - | |||||||
The sale-leaseback transaction has a term of 3 years from August 27, 2013 to August 27, 2016 and requires minimum annual rental payments as follows: | |||||||||
Total | |||||||||
31-Dec | |||||||||
2014 | $ | 7,931,332 | |||||||
2015 | 7,931,332 | ||||||||
2016 | 5,948,499 | ||||||||
Total minimum lease payments | 21,811,163 | ||||||||
Less: amount representing interest | (1,972,848 | ) | |||||||
19,838,315 | |||||||||
Less: current portion | (6,813,055 | ) | |||||||
Long-term portion | $ | 13,025,260 | |||||||
The Company has the option to purchase the property at the end of the lease. |
ACCRUED_LIABILITIES_AND_OTHER_
ACCRUED LIABILITIES AND OTHER PAYABLES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accrued Liabilities and Other Liabilities [Abstract] | ' | ||||||||
ACCRUED LIABILITIES AND OTHER PAYABLES | ' | ||||||||
Accrued liabilities and other payables as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Accrued liabilities | |||||||||
Accrued expenses | $ | 3,940,603 | $ | 3,185,415 | |||||
Other tax payables | 1,118,527 | 494,446 | |||||||
5,059,130 | 3,679,861 | ||||||||
Other payables | |||||||||
Loan advanced from unrelated third parties | - | 1,685,366 | |||||||
Other payable for purchasing machinery and | - | 96,307 | |||||||
equipment | |||||||||
Temporary receipt for staff quarters | 1,558,166 | 48,205 | |||||||
Others | 181,832 | 308,321 | |||||||
1,739,998 | 2,138,199 | ||||||||
$ | 6,799,128 | $ | 5,818,060 | ||||||
Accrued expenses mainly represent accrued staff benefits and accrued wages. | |||||||||
Other tax payables represent payables other than income tax which consist of value added tax and city maintenance and construction tax. | |||||||||
Advances from unrelated third parties amounted to $Nil and $1,685,366 as of December 31, 2013 and December 31, 2012 respectively. These advances were non-interest bearing with no secured assets and no repayment schedule. | |||||||||
Temporary receipt for staff quarters represents the rent received in advance for staff quarters. The use of land of staff quarters is industrial use. The management considered to lease the staff quarters to individuals by changing the usage of land from industrial use to residential use. Application for change of usage of land would be submitted by the Company later on. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||
STOCKHOLDERS' EQUITY | ' | ||||||||||||
(a) | Restricted Ordinary Shares | ||||||||||||
On October 1, 2012, the Compensation Committee of the Board of Directors of the Company approved grants of restricted ordinary shares to certain officers and directors of the Company under the Company’s 2010 Share Incentive Plan. Except for 400,000 shares granted to Mr. Meng, the Company's Chief Finance Officer, which vested immediately upon granting, all shares granted have been vested on January 3, 2013 subject to the continuous service of the recipient through December 31, 2012 and the other terms and conditions of the grant. | |||||||||||||
The following grant was made in accordance with the terms of 2010 Share Incentive Plan for the period / year indicated. | |||||||||||||
Grant Date | Restricted Shares | Grant Price | |||||||||||
1-Oct-12 | 2,100,000 | $ | 1.78 | ||||||||||
The shares were valued at the closing price of the Company's common stock on grant date. | |||||||||||||
The compensation expense recognized is based on the market value of the Company's common stock on the date the restricted stock award is granted and is not adjusted in subsequent periods. The amount recognized is amortized over the vesting period. Compensation expense is included in general administration expense in the accompanying consolidated statement of operations. The amount of compensation expense for the year ended December 31, 2013, 2012 and 2011 amounted to $32,891, $3,705,109 and $Nil, respectively. | |||||||||||||
A summary of restricted stock activity under the 2010 share incentive plan for the year ended December 31, 2013 is as follows: | |||||||||||||
Number of Shares | Weighted Average Grant Price and Fair Value | ||||||||||||
Non-vested, December 31, 2012 | 1,700,000 | 1.78 | |||||||||||
Vested shares | (1,700,000 | ) | 1.78 | ||||||||||
Non-vested, December 31, 2013 | - | - | |||||||||||
1,700,000 shares were vested on January 1, 2013. | |||||||||||||
(b) | Treasury Stock | ||||||||||||
On April 1, 2011, the Company's Board of Directors approved a board resolution and announced that the Company would repurchase its ordinary shares in the open market up to an aggregate of $10 million. From May to December, 2012 and from May to December, 2011, the Company repurchased 795,031 shares at a cost of $1,554,674 and 1,176,898 shares at a cost of $4,516,744 respectively. During the 2nd quarter of 2013, the Company repurchased 38,989 shares at a cost of $84,736. | |||||||||||||
A total of 1,710,098 shares have been cancelled in the fourth quarter of 2012. There was a total 300,820 and 261,831 shares remained as Treasury stock as of December 31, 2013 and December 31, 2012, respectively. | |||||||||||||
(c) | Warrants | ||||||||||||
The Company also granted in connection with its November 2009 public offering the Underwriter Representative (and its designees) a warrant (the “Underwriter Representative Warrant”) for the purchase of an aggregate of 144,000 ordinary shares (the “Warrant Shares”) for an aggregate purchase price of $100.00. In accordance with U.S. GAAP, the Company accounts for the warrants as equity instruments. The Underwriter Representative Warrant may be exercised in full or part to purchase Warrant Shares at an initial exercise price of $6.00 per share. No provision was made as the fair value of warrant is not material. | |||||||||||||
On May 1, 2013, the Company signed a warrant agreement with Cambelle-Inland, LLC, a Delaware limited liability company ("C-I") to obtain consulting services from C-I for the development of the Company's strategic opportunities. On May 8, 2013, the Company issued a warrant to C-I for the purchase of 500,000 ordinary shares (the “Warrant Shares”). In accordance with U.S. GAAP, the Company accounts for the warrants as equity instruments. The warrant may be exercised in full or part to purchase Warrant Shares at an initial exercise price of $2.20 per share at any time prior to the fifth anniversary of the date of issuance. The fair value of warrants amounted to approximately $197,500 which was calculated by using Black Scholes Option Calculator. The fair value of each of warrant was estimated using the following assumptions: | |||||||||||||
December 31, | |||||||||||||
2013 | |||||||||||||
Expected volatility | 57 | % | |||||||||||
Expected term (in years) | 4.4 | ||||||||||||
Risk free rate | 1.46 | % | |||||||||||
Expected dividend rate | 0 | % | |||||||||||
A summary of all warrants outstanding as of December 31, 2013 and December 31, 2012 is presented below: | |||||||||||||
Warrants | Exercise Price | Terms | |||||||||||
Balance as of December 31, 2012 | 144,000 | $ | 6 | 0.9 years | |||||||||
Granted | 500,000 | 2.2 | 4.4 years | ||||||||||
Exercised | - | ||||||||||||
Expired | - | ||||||||||||
Outstanding as of December 31, 2013 | 644,000 | ||||||||||||
(d) | Retained Earnings | ||||||||||||
Retained earnings as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
Retained earnings | $ | 116,536,602 | $ | 151,890,125 | |||||||||
Statutory surplus reserves | 11,427,259 | 11,385,921 | |||||||||||
$ | 127,963,861 | $ | 163,276,046 | ||||||||||
In accordance with PRC Company Law, the Group is required to allocate at least 10% profit to the statutory surplus reserve. Appropriation to the statutory surplus reserve by the PRC subsidiary, Henan Green is based on profit arrived under PRC accounting standards for business enterprises for each year. | |||||||||||||
The profit arrived at must be set off against any accumulated losses sustained by Henan Green in prior years, before allocation is made to the statutory surplus reserve. Appropriation to the statutory surplus reserve must be made before distribution of dividends to shareholders. The appropriation is required until the statutory surplus reserve reaches 50% of the registered capital. This statutory surplus reserve is not distributable in the form of cash dividends. | |||||||||||||
As of December 31, 2013, the Group's subsidiary, Henan Green, allocated $41,338 which was the 10% of net profits of the year ended December 31, 2013 to the statutory surplus reserves. Only allocation to reserve was made for the first quarter of 2013 as Henan Green suffered net loss since the second quarter of 2013. | |||||||||||||
A supplemental information of the movement of statutory surplus reserves and registered capital of Henan Green as of December 31, 2013 and December 31, 2012 are as follow: | |||||||||||||
Statutory surplus | Registered | Percentage | |||||||||||
reserves | capital | reached | |||||||||||
At December 31, 2012 | $ | 11,385,921 | $ | 83,603,944 | 14 | % | |||||||
Statutory surplus reserves transferred from net profits | 41,338 | - | |||||||||||
Balances at December 31, 2013 | $ | 11,427,259 | $ | 83,603,944 | 14 | % | |||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||
INCOME TAXES | ' | ||||||||||||
The Company is domiciled in the British Virgin Islands, the law of which does not require the company to pay any income taxes or other taxes based on income, business activity or assets. | |||||||||||||
The Company's subsidiary, Wealth Rainbow, is domiciled in Hong Kong and subject to statutory profits tax of 16.5% on earnings and profits in Hong Kong. | |||||||||||||
All of the Company's income is generated by its PRC subsidiary, Henan Green in the PRC. | |||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Current income tax expense | $ | 141,547 | $ | 11,897,173 | $ | 21,961,627 | |||||||
The Group's income tax provision in respect of operations in PRC is calculated at the applicable tax rates on the estimated assessable profits for the year based on existing legislation, interpretations and practices in respect thereof. The standard tax rate applicable to the Group changed from 33% to 25%, effective on January 1, 2008. | |||||||||||||
The following is a reconciliation of effective Income tax rate with the PRC statutory income tax rate: | |||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
(Loss) / Income before tax | $ | (13,995,870 | ) | $ | 38,030,261 | $ | 79,582,179 | ||||||
Expected PRC income tax expense at statutory tax rate of 25% | (3,498,968 | ) | 9,507,565 | 19,895,544 | |||||||||
Depreciation allowance over-claimed in 2011 | - | 1,127,816 | - | ||||||||||
Unused tax losses for PRC | 3,059,134 | ||||||||||||
Net losses not realizable currently for Hong Kong and BVI tax purposes | 581,381 | - | - | ||||||||||
Non deductible tax expenses | - | 1,261,792 | 2,066,083 | ||||||||||
Actual income tax expense | $ | 141,547 | $ | 11,897,173 | $ | 21,961,627 | |||||||
The PRC tax system is subject to substantial uncertainties and has been subject to recently enacted changes, the interpretation and enforcement of which are also uncertain. There can be no assurance that changes in PRC tax laws or their interpretation or their application will not subject the Group to substantial PRC taxes in future. | |||||||||||||
The new PRC income tax law imposes a 10% withholding income tax, subject to reduction based on tax treaty where applicable, for dividends distributed by a foreign invested enterprise to its immediate holding company outside China (5% withholding income tax for dividends paid to HK companies). Such dividends were exempted from PRC tax under the previous income tax law and regulations. The foreign investment enterprises are subject to the withholding tax beginning January 1, 2008. All of the Group’s income is generated in the PRC, through Henan Green. The Company considers undistributed earnings of Henan Green as of December 31, 2013, to be permanently reinvested in the PRC. As a result, no deferred tax expense and deferred liability recorded for dividend withholding tax. | |||||||||||||
The Company currently has unprovided defered tax assets in the amount of approximately $1.8 million arising from operating loss carry forwards. The Company has recorded a 100% valuation allowance against net deferred tax assets due to uncertainty of their ultimate realization. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS | ' |
The Company’s subsidiary, Henan Green, entered into a rental agreement for land use right with a total size of 24.94 acres, of which 6.69 acres land was lease from Zhengzhou Company, the Company’s related party, from January 1, 2008 to December 31, 2027. Rental paid to Zhengzhou Company for the years ended December 31, 2013, 2012 and 2011 were $Nil, $12,867 and $11,428, respectively. However, on February 26, 2013, Henan Green started the process to acquire the above land use right from Zhengzhou Company. The payment of acquisition was fully settled as at June 30, 2013 and the transfer of land use right is still in process. The total consideration is of approximately $43.6 million (RMB 268,000,000). | |
As of December 31, 2013 and 2012, $Nil and $318,332 respectively represented loan to Zhengzhou Company. There was no agreement signed with the related party and no interest income was received. | |
Since January 2010, the company have paid Mr. Harry Edelson, a director, a monthly fee of $10,000 in return for his verbal agreement to perform certain Investor relations services. These services have included or may include the following; (a) helping to promote awareness of the Company within the investment community through introductions to investors, investment banks, and research analysis; (b) participation in future deal or non-deal road shows and financing activities of the Company upon request and at the discretion of the Company and the Board of Directors; (c) assistance in investor conference presentations, whether or not management of the Company is able to be present; (d) providing occasional office use and communication facilities where required by the Company; (e) monitoring and providing capital market feedback on the Company; and (f) such other activities as may be required of him, from time to time, by the Board or executive management team of the Company. |
SIGNIFICANT_CONCENTRATIONS
SIGNIFICANT CONCENTRATIONS | 12 Months Ended |
Dec. 31, 2013 | |
Risks and Uncertainties [Abstract] | ' |
SIGNIFICANT CONCENTRATIONS | ' |
Our credit risk is considered limited due to a relatively large customer base and its dispersion across geographic areas of the PRC. During the years ended December 31, 2013, 2012 and 2011, the Company had no customer which accounted for 10% or more of total revenue. As of December 31, 2013, the Company had no customer which accounted for 10% or more of total accounts receivable. As of December 31, 2012, the Company had one customer which accounted for approximately 15% of total accounts receivable. As of December 31, 2011, the Company had one customer which accounted for approximately 12% of total accounts receivable. | |
All of the Group's suppliers are located in the PRC. During the year ended December 31, 2013, the Company had three suppliers which each accounted for approximately 41%, 26% and 18% of total purchases, respectively. During the year ended December 31, 2012, the Company had three suppliers which each accounted for approximately 37%, 23% and 20% of total purchases, respectively. During the year ended December 31, 2011, the Company had three suppliers which each accounted for approximately 43%, 25% and 11% of total purchases, respectively. As of December 31, 2013, the Company had one supplier which accounted for approximately 52% of total accounts payable. As of December 31, 2012, the Company had two suppliers which accounted for approximately 23% and 10%, respectively of total accounts payable. As of December 31, 2011, the Company had two suppliers which accounted for approximately 55% and 18%, respectively of total accounts payable. | |
During the years ended December 31, 2013, 2012 and 2011, the sales to overseas customers contributed less than 1% of the total revenue. |
FOREIGN_OPERATIONS
FOREIGN OPERATIONS | 12 Months Ended |
Dec. 31, 2013 | |
FOREIGN OPERATIONS [Abstract] | ' |
FOREIGN OPERATIONS | ' |
Operations | |
All of the Group’s operations are carried out and all of its assets are located in the PRC. Accordingly, the Group’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC. The Group’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency fluctuation and remittances and methods of taxation, among other things. | |
Dividends and reserves | |
Under laws of the PRC, net income after taxation can only be distributed as dividends after appropriation has been made for the following: (i) cumulative prior years' losses, if any; (ii) allocations to the "Statutory Surplus Reserve" of at least 10% of net income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the registered capital of the Company’s subsidiary, Henan Green; (iii) allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to Henan Green's "Statutory Common Welfare Fund", which is established for the purpose of providing employee facilities and other collective benefits to employees in China; and (iv) allocations to any discretionary surplus reserve, if approved by equity stockholders. | |
LEASE_COMMITMENTS
LEASE COMMITMENTS | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Leases, Operating [Abstract] | ' | ||||||||||||
LEASE COMMITMENTS | ' | ||||||||||||
Operating Lease commitments | |||||||||||||
Rental expense for obligations under operating leases (Leasehold and Reservoir rental) was $95,258, $28,744 and $26,938 for the years ended December 31, 2013, 2012 and 2011 respectively. The total future minimum lease payments under non-cancellable operating leases as of December 31, 2013 are payable as follows: | |||||||||||||
Years Ended December 31, | Leasehold rental | Reservoir rental | Total | ||||||||||
2014 | $ | 40,058 | $ | 16,519 | $ | 56,577 | |||||||
2015 | - | 16,519 | 16,519 | ||||||||||
2016 | - | 16,519 | 16,519 | ||||||||||
2017 | - | 16,519 | 16,519 | ||||||||||
2018 | - | 16,519 | 16,519 | ||||||||||
Over five years | - | 247,785 | 247,785 | ||||||||||
$ | 40,058 | $ | 330,380 | $ | 370,438 | ||||||||
Sale-leaseback financing | |||||||||||||
The total future minimum lease payments under non-cancellable sale-leaseback financing arrangement as of December 31, 2013 are payable as follows (see note 12): | |||||||||||||
Total | |||||||||||||
31-Dec | |||||||||||||
2014 | $ | 7,931,332 | |||||||||||
2015 | 7,931,332 | ||||||||||||
2016 | 5,948,499 | ||||||||||||
2017 | - | ||||||||||||
2018 | - | ||||||||||||
Over five years | - | ||||||||||||
$ | 21,811,163 | ||||||||||||
CONTINGENCIES_AND_COMMITMENTS
CONTINGENCIES AND COMMITMENTS | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
CONTINGENCIES AND COMMITMENTS | ' |
The Group had the following contingencies and commitments as of December 31, 2013: | |
Guarantee | |
As of December 31, 2013, the Company has the following effective guarantee agreement: | |
On October 22, 2013, the Company's subsidiary, Henan Green, entered into a cross-corporate guarantee agreement with Henan Shaolin Auto Co., Ltd, a non-related company. Under the agreement, both companies are contingent as guarantor with maximum aggregate potential amount of future payment approximately of $33.0 million. Guarantor can request debtor to guarantee not less than 120% of the amount being guaranteed. The guarantee period is effective when the borrower entered into the borrowing agreement. | |
On November 25, 2013, the Company's subsidiary, Henan Green, entered into a cross-corporate guarantee agreement with Henan Xibao Metallurgy Materials Group Co. Ltd, a non-related company. Under the agreement, both companies are contingent as guarantor with maximum aggregate potential amount of future payment approximately of $49.6 million. Guarantor can request debtor to guarantee not less than 120% of the amount being guaranteed. The guarantee period is effective when the borrower entered into the borrowing agreement. | |
On December 5, 2013, the Company's subsidiary, Henan Green, entered into a cross-corporate guarantee agreement with Zhengzhou Panhong Commerce & Trade Co Ltd, a non-related company. Under the agreement, both companies are contingent as guarantor with maximum aggregate potential amount of future payment approximately of $16.5 million. Guarantor can request debtor to guarantee not less than 120% of the amount being guaranteed. The guarantee period is effective when the borrower entered into the borrowing agreement. | |
On December 20, 2013, the Company's subsidiary, Henan Green, entered into a cross-corporate guarantee agreement with Henan Huatai Special Cable Co., Limited, a non-related company. Under the agreement, both companies are contingent as guarantor with maximum aggregate potential amount of future payment approximately of $33.0 million. Guarantor can request debtor to guarantee not less than 120% of the amount being guaranteed. The guarantee period is effective when the borrower entered into the borrowing agreement. | |
Legal proceedings or claims | |
As of December 31, 2013, the Group’s management has evaluated all such proceedings and claims, and determined that the Group was not subject to any loss contingencies either for legal proceedings or claims that would significantly affect the Company's financial condition. In addition, the management has not aware of any product liability claims arising as of December 31, 2013 and therefore, the Group has not recognized any product liability claims accrual. | |
Service agreement signed | |
The Company has a service agreement with Cambelle-Inland, LLC that provided consultation services upon the agreement expire on April 30, 2014. As of December 31, 2013, the Company’s remaining potential minimum cash obligation to this agreement was $125,000. | |
Asset agreement signed | |
On February 26, 2013, the Company's subsidiary, Henan Green acquired land use right with totaling 24.94 acres from a related party, Zhengzhou Company. The payment of acquisition was fully settled as at June 30, 2013 and the transfer of land use right is still in process. The total consideration is of approximately $43.6 million (RMB 268,000,000). In addition, if any party breaches its representations and warranties provided in the asset transfer agreement, the breaching party is required to pay the other parties for damages in an amount of approximately $0.16 million (RMB 1 million). | |
Except as described above, we do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to an investment in our securities. |
SUBSEQUENT_EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENT | ' |
Guarantee | |
On January 8, 2014, the Company's subsidiary, Henan Green, entered into a cross-corporate guarantee agreement with Henan Liantong Aluminum Co. Limited, a non-related company. Under the agreement, both companies are contingent as guarantor with maximum aggregate potential amount of future payment approximately of $16.5 million. Guarantor can request debtor to guarantee not less than 120% of the amount being guaranteed. The guarantee period is effective when the borrower entered into the borrowing agreement. | |
CONDENSED_PARENT_COMPANY_FINAN
CONDENSED PARENT COMPANY FINANCIAL INFORMATION | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ' | ||||||||||||
CONDENSED PARENT COMPANY FINANCIAL INFORMATION | ' | ||||||||||||
The Company records its investment in subsidiaries under the equity method of accounting as prescribed in FASB ASC Topic 323, “Investments - Equity Method and Joint Ventures”. Such investment and long-term loans to subsidiaries are presented on the balance sheet as “Investments in subsidiaries” and the income of the subsidiaries is presented as “Equity in income of subsidiaries” on the statement of income. | |||||||||||||
These supplemental condensed parent company financial statements should be read in conjunction with the notes to the Company’s Consolidated Financial Statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.GAAP have been condensed or omitted. | |||||||||||||
As of December 31, 2013, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except as separately disclosed in the Company’s Consolidated Financial Statements. | |||||||||||||
CONDENSED BALANCE SHEETS | |||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
Assets | |||||||||||||
Cash | $ | 4,368,588 | $ | 7,645,949 | |||||||||
Prepaid expenses | 30,000 | - | |||||||||||
Investments in subsidiaries | 294,843,080 | 322,526,371 | |||||||||||
Total assets | $ | 299,241,668 | $ | 330,172,320 | |||||||||
Liabilities and Stockholders' Equity | |||||||||||||
Current liabilities | |||||||||||||
Accrued liabilities and other payables | $ | 113,000 | $ | 105,000 | |||||||||
Total liabilities | 113,000 | 105,000 | |||||||||||
Stockholders' Equity | |||||||||||||
Common stock | 140,418,118 | 140,418,118 | |||||||||||
Additional paid in capital | - | 4,978,698 | |||||||||||
Treasury stock | (498,799 | ) | (414,063 | ) | |||||||||
Retained earnings | 127,963,861 | 163,276,046 | |||||||||||
Accumulated other comprehensive income | 31,245,488 | 21,808,521 | |||||||||||
Total stockholders' equity | 299,128,668 | 330,067,320 | |||||||||||
Total liabilities and stockholders' equity | $ | 299,241,668 | $ | 330,172,320 | |||||||||
CONDENSED STATEMENT OF INCOME | |||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
General and administrative expenses | $ | (3,203,515 | ) | $ | (2,419,836 | ) | $ | (9,439,791 | ) | ||||
Equity (loss)/income of subsidiaries | (10,933,902 | ) | 28,552,924 | 67,060,343 | |||||||||
Net (loss) / income | $ | (14,137,417 | ) | $ | 26,133,088 | $ | 57,620,552 | ||||||
CONDENSED STATEMENT OF CASH FLOWS | |||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Net cash used in operating activities | $ | (3,192,625 | ) | $ | (2,421,284 | ) | $ | (7,887,611 | ) | ||||
Net cash used in investing activities | - | - | (48,000,000 | ) | |||||||||
Net cash (used in)/provided by financing activities | (84,736 | ) | (1,554,674 | ) | 61,957,131 | ||||||||
Cash as of January 1 | 7,645,949 | 11,621,907 | 5,552,387 | ||||||||||
Cash as of December 31 | $ | 4,368,588 | $ | 7,645,949 | $ | 11,621,907 | |||||||
QUARTERLY_CONSOLIDATED_FINANCI
QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||
QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) | ' | ||||||||||||||||
For the quarters ended | |||||||||||||||||
31-Mar-13 | 30-Jun-13 | 30-Sep-13 | 31-Dec-13 | ||||||||||||||
Revenue: | |||||||||||||||||
Steel mill flat-rolled products | $ | 45,610,707 | $ | 43,078,588 | $ | 30,927,996 | $ | 46,211,805 | |||||||||
Cost of revenue | (40,404,115 | ) | (39,557,743 | ) | (30,178,989 | ) | (51,624,916 | ) | |||||||||
Gross Profit/(Loss) | 5,206,592 | 3,520,845 | 749,007 | (5,413,111 | ) | ||||||||||||
Operating expenses: | |||||||||||||||||
General and administrative expenses | (2,403,101 | ) | (2,532,275 | ) | (2,618,166 | ) | (3,757,658 | ) | |||||||||
Selling and marketing expenses | (734,347 | ) | (73,666 | ) | (446,488 | ) | (427,942 | ) | |||||||||
Total operating expenses | (3,137,448 | ) | (2,605,941 | ) | (3,064,654 | ) | (4,185,600 | ) | |||||||||
Operating income/(loss) | 2,069,144 | 914,904 | (2,315,647 | ) | (9,598,711 | ) | |||||||||||
Other income (expenses) | |||||||||||||||||
Interest income | 1,236,539 | 845,618 | 1,369,269 | 1,168,191 | |||||||||||||
Interest expenses | (3,359,531 | ) | (2,580,151 | ) | (3,490,793 | ) | (1,187,391 | ) | |||||||||
Sundry income | 98,598 | 3,423 | 36,500 | 794,168 | |||||||||||||
Income before income taxes | 44,750 | (816,206 | ) | (4,400,671 | ) | (8,823,743 | ) | ||||||||||
Income tax expense | (139,824 | ) | (29,566 | ) | 28,312 | (469 | ) | ||||||||||
Net loss attributable to common stockholders | $ | (95,074 | ) | $ | (845,772 | ) | $ | (4,372,359 | ) | $ | (8,824,212 | ) | |||||
Net (loss)/income per share | |||||||||||||||||
- Basic | $ Nil | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.15 | ) | |||||||
- Diluted | $ Nil | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.15 | ) | |||||||
Weighted average common shares outstanding | |||||||||||||||||
- Basic | 59,561,899 | 59,556,396 | 59,522,910 | 59,522,910 | |||||||||||||
- Diluted | 59,561,899 | 59,556,396 | 59,522,910 | 59,522,910 | |||||||||||||
BASIS_OF_PRESENTATION_AND_SUMM1
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||
Basis of presentation and use of estimates | ' | ||||||||||||
(a) | Basis of presentation and use of estimates | ||||||||||||
The accompanying audited consolidated financial statements and related notes have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP). The preparation of the consolidated financial statements in accordance with US GAAP requires management of the Group to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Significant items subject to such estimates and assumptions include the recoverability of the carrying amount and the estimated useful lives of long-lived assets; valuation allowances for receivables, realizable values for inventories, valuation of notes receivable, fair value of warrants and share based payments and income taxes. Actual results could differ from those estimates. | |||||||||||||
The consolidated financial statements include all accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated. | |||||||||||||
As shown in the accompanying financial statements, the Company has incurred loss from operations of $10,168,867 as of December 31, 2013. The Company has been working on improving its product quality and diversifies its product lines with high profit margins or creates new demand. It has also instituted more efficient management techniques. Management believes these factors will contribute toward achieving profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. | |||||||||||||
Reclassifications. | |||||||||||||
Certain prior year information has been reclassified to be comparable with the current period presentation. This reclassification has no effect on previously reported net income. | |||||||||||||
Foreign currency translation | ' | ||||||||||||
(b) | Foreign currency translation | ||||||||||||
The Group uses United States dollars (“U.S. Dollar” or “US$” or “$”) for financial reporting purposes. The Company maintains its books and records in its respective functional currency, Chinese Renminbi (“RMB”) and Hong Kong dollars (“HK$”), being the lawful currency in the PRCand Hong Kong, respectively. Assets and liabilities of the subsidiaries are translated from RMB or HK$ into U.S. Dollars using the applicable exchange rates prevailing at the balance sheet date. Items on the statements of operations and comprehensive income and cash flows are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income included in the stockholders’equity section of the balance sheets. The exchange rates used to translate amounts in RMB and HK$ into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows: | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Balance sheet items, except for equity accounts | RMB6.0537= | RMB6.2301= | RMB6.2939= | ||||||||||
HK$7.7539= | HK$7.7507= | HK$7.7663= | |||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Items in statements of income and cash flows | RMB6.1412= | RMB6.2990= | RMB6.4475= | ||||||||||
HK$7.7565= | HK$7.7556= | HK$7.7793= | |||||||||||
Cash | ' | ||||||||||||
(c) | Cash | ||||||||||||
Cash represents cash in banks and cash on hand. | |||||||||||||
The Group maintains bank accounts in Hong Kong and PRC and the United States. | |||||||||||||
Accounts receivable | ' | ||||||||||||
(d) | Accounts receivable | ||||||||||||
Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts, sales returns and trade discounts. The allowance for doubtful accounts is the Group’s best estimate of the amount of probable credit losses in the Group’s existing accounts receivable. Management determines the allowance based on historical write-off experience, customer specific facts and economic conditions. | |||||||||||||
Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Group does not have any off-balance-sheet credit exposure to its customers. | |||||||||||||
Inventories | ' | ||||||||||||
(e) | Inventories | ||||||||||||
Inventories are stated at the lower of cost or market and consist primarily of flat rolled steel. Cost is determined using the weighted average cost method. In the case of work in process and finished goods, such costs comprise of direct materials, direct labor and an appropriate proportion of overheads. Market value for raw materials is based on replacement cost for work in process and finished goods on net realizable value. Appropriate consideration is given to obsolesence, excessive levels, deterioration, and fators evaluating net realizable value. | |||||||||||||
Property, plant and equipment | ' | ||||||||||||
(f) | Property, plant and equipment | ||||||||||||
Property, plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to general and administrative expenses as incurred. Depreciation of property, plant and equipment is computed by the straight-line method over the assets estimated useful lives ranging from five to fifty years. Building improvements, if any, are amortized on a straight-line basis over the estimated useful life. As at December 31, 2013 and December 31, 2012, Henan Green paid $2,184,217 and $266,312 deposit on acquisition of property, plant and equipment. | |||||||||||||
Assets subject to capital leases are deprecated over the lesser of the estimated useful life of the asset or length of the contract. | |||||||||||||
Upon sale or retirement of property, plant and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in operations. | |||||||||||||
Construction in progress represents the costs of property, plant and equipment under construction or installation. Depreciation commences when the asset is placed in service. The accumulated costs are reclassified as property, plant and equipment when installation or construction is completed. Government subsidies received reduce the cost of construction. | |||||||||||||
The estimated useful lives of the assets are as follows: | |||||||||||||
Estimated Useful Life (years) | |||||||||||||
Leasehold land improvement | 46.5 | ||||||||||||
Buildings | 20-Oct | ||||||||||||
Machinery and equipment | 20-May | ||||||||||||
Vehicles | 5 | ||||||||||||
Furniture fixtures and office equipment | 5 | ||||||||||||
Land use right | ' | ||||||||||||
(g) | Land use right | ||||||||||||
Land use right is recorded at cost less accumulated amortization. Land use rights represent the prepayments for the use of the parcels of land in the PRC where the Company’s production facilities are located, and are charged to expense over their respective land use right periods. According to the laws of the PRC, the government owns all of the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the PRC government. Land use right is amortized using the straight-line method over the land use right term of 43 to 50 years. | |||||||||||||
Impairment of long-lived assets | ' | ||||||||||||
(h) | Impairment of long-lived assets | ||||||||||||
In accordance with FASB ASC Topic 360, Property Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. If long-lived assets are to be disposed, depreciation is discontinued, if applicable, and the assets are reclassified as held for sale at the lower of their carrying amounts or fair values less costs to sell. | |||||||||||||
The Company’s sole business is high-end cold-rolled steel processing. The company produces products by utilizing its facilities and equipment at one location in Zhengzhou, Henan Province, China. Henan Green offers chromium-plating as value-add service to its customers but chromium-plating is an integral part of the whole production process of the Company rather than a stand-alone service. As a result, the Group determined that the impairment review is appropriately evaluated at the entity level. Based on the Group’s assessment, no impairment was recognized as of December 31, 2013 and December 31, 2012. | |||||||||||||
Fair value measurements | ' | ||||||||||||
(i) | Fair value measurements | ||||||||||||
FASB ASC Topic 820, “Fair Value Measurement and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances. | |||||||||||||
The fair value hierarchy is categorized into three levels based on the inputs as follows: | |||||||||||||
Level 1 - | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. | ||||||||||||
Level 2 - | Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. | ||||||||||||
Level 3 - | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. | ||||||||||||
The Group’s financial instruments consist principally of cash, accounts receivables, accounts payable, land use right payable, term loans, notes payables and accrued liabilities. None of which are held for trading purposes. Pursuant to ASC 820, the fair value of the Group's cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Group believes that the carrying amounts of all of its other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. | |||||||||||||
Revenue recognition | ' | ||||||||||||
(j) | Revenue recognition | ||||||||||||
The Group generates revenue primarily from sales of steel mill flat-rolled products. | |||||||||||||
The Group recognizes its revenue upon the transfer of finished products to customers upon shipment from the Group's facilities. The Group sets the final price for a product based on the management's final measurement of the weight and dimensions of the product and confirmation that the product meets the customer's specifications as agreed in the original customer's order. The Group grants a three-week period for customers to dispute product quality. Based on the Group’s assessment and past experiences, the rate of customer disputes are considered immaterial. | |||||||||||||
In the PRC, value added tax (“VAT”) of 17% on the invoice amount is collected with respect to the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Group; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the tax authorities. | |||||||||||||
Income taxes | ' | ||||||||||||
Under the current laws of the BVI, the Group is not subject to any income or capital gains tax, and dividend payments we make are not subject to any withholding tax in the British Virgin Islands. Under the current laws of Hong Kong, Wealth Rainbow is not subject to any capital gains tax and dividend payments and is not subject to any withholding tax in Hong Kong. | |||||||||||||
The Group is not incorporated nor does it engage in any trade or business in the United States and is not subject to United States federal income taxes. The Group did not derive any significant amount of income subject to such taxes after completion of the Share Exchange and accordingly, no relevant tax provision is made in the consolidated statements of operations. | |||||||||||||
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of income in the period that includes the enactment date. | |||||||||||||
The Group has not recorded deferred income taxes applicable to undistributed earnings of the subsidiary located in the PRC because it is the present intention of management to reinvest the undistributed earnings indefinitely in PRC. Undistributed earnings amounted to approximately $180.6 million and $189.8 million on December 31, 2013 and 2012, respectively. If the earnings of such foreign subsidiary were not indefinitely reinvested, a deferred tax liability of approximately $9.0 million and $9.5 million would have been required at December 31, 2013 and 2012, respectively. Generally, such earnings become subject to the PRC tax upon the remittance of dividends and under certain other circumstances. | |||||||||||||
The Group prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken in the tax return. There have been regular PRC tax audit and the result was not materially difference for the company’s historical income tax provision and accrued. This interpretation also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. As of December 31, 2013 and 2012, there were no amounts that had been accrued with respect to uncertain tax positions. | |||||||||||||
Commitments and contingencies | ' | ||||||||||||
(l) | Commitments and contingencies | ||||||||||||
In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, product liability. The Group records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. A determination of the amount of reserves and disclosures required, if any, for these contingencies are made after considerable analysis of each individual issue. The Group accrues for contingent liabilities when an assessment of the risk of loss is probable and can be reasonably estimated. The Group discloses contingent liabilities when the risk of loss is reasonably possible or probable. (See Note 20) | |||||||||||||
Share-based compensation expense | ' | ||||||||||||
(m) | Share-based compensation expense | ||||||||||||
The Company awards restricted ordinary shares and other equity-based instruments to its officers, directors and consultants (collectively "share-based payments"). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date and is recognized on a straight-line basis over the requisite service period, which generally equals the vesting period. All of the Company's stock-based compensation is based on grants instruments and no liablity awards have been granted | |||||||||||||
Earnings per share | ' | ||||||||||||
(n) | Earnings per share | ||||||||||||
Basic earnings per share are computed on the basis of the weighted-average number of shares of our common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted-average number of shares of our common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury method. As of December 31, 2013, the Company had a total of 144,000 warrants outstanding which were granted to its underwriter during November 2009 in connection with the sale of 4,800,000 ordinary shares. The warrants may be exercised on or after August 9, 2010 and until November 9, 2014. As of December 31, 2013, all such warrants are deemed to be anti-dilutive since the Company suffered net loss in the year ended December 31, 2013. | |||||||||||||
On May 1, 2013, the Company signed a warrant agreement with Cambelle-Inland, LLC, a Delaware limited liability company ("C-I") to obtain consulting services from C-I for the development of the Company's strategic opportunities. On May 8, 2013, the Company issued a warrant to C-I for the purchase of 500,000 ordinary shares (the “Warrant Shares”). The warrant may be exercised in full or part to purchase Warrant Shares at an initial exercise price of $2.20 per share at any time prior to the fifth anniversary of the date of issuance. As of December 31, 2013, the warrant was deemed to be anti-dilutive since the Company suffered net loss in the year ended December 31, 2013. | |||||||||||||
The following table sets forth the computation of basic and diluted net income per common share: | |||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Net (loss) / income | $ | (15,375,974 | ) | $ | 26,133,088 | $ | 57,620,552 | ||||||
Basic and diluted weighted average | |||||||||||||
outstanding shares | 59,540,872 | 58,543,076 | 56,297,652 | ||||||||||
(Net loss)/Earnings per common stock: | |||||||||||||
Basic | $ | (0.26 | ) | $ | 0.45 | $ | 1.02 | ||||||
Diluted | $ | (0.24 | ) | $ | 0.45 | $ | 1.02 | ||||||
Segment information | ' | ||||||||||||
(o) | Segment information | ||||||||||||
FASB ASC Topic 280 "Segment reporting" establishes standards for reporting information on operating segments in interim and annual financial statements. The Group has only one segment, all of the Group's operations are in the PRC and all income are derived from the sales of steel mill flat-rolled products to mainly PRC customers and less than 1% was sold to overseas customers. Accordingly, no geographic information is presented. | |||||||||||||
Guarantee | ' | ||||||||||||
(p) | Guarantee | ||||||||||||
Pursuant Accounting Standards Codification (“ASC”) 460-10-25-2, the guarantor is obligated in two aspects in every guarantee or indemnification—a noncontingent liability and a contingent liability. The noncontingent liability represents the guarantor’s obligation to stand ready to perform under the terms of the guarantee in the event that the specified triggering events or conditions occur. The contingent liability represents the guarantor’s obligation to make future payments of those triggering events or conditions occur and based on the probability that the guaranteed party will not perform under the contractual terms of the guaranty agreement. | |||||||||||||
We have assessed the contingent liabilities arising from the above-described guarantees and have concluded that no liabilities in respect of the guarantees were required to be recognized as of December 31, 2013 and 2012. | |||||||||||||
Economic and political risks | ' | ||||||||||||
(q) | Economic and political risks | ||||||||||||
The Group's operations are conducted in the PRC. Accordingly, the Group's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. | |||||||||||||
The Group's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Group's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances aboard, and rates and methods of taxation, among other things. | |||||||||||||
Credit risks | ' | ||||||||||||
(r) | Credit risks | ||||||||||||
Cash held by the Company with PRC banks is subject to concentration of credit risk as it is not covered by any deposit insurance. | |||||||||||||
The Company, by policy, routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited and has not experienced significant write-downs in its accounts receivable balances. | |||||||||||||
Recently issued accounting standards not yet adopted | ' | ||||||||||||
(s) | Recently issued accounting standards | ||||||||||||
In February 2013, the FASB issued new authoritative accounting guidance related to the recognition and measurement of obligations arising from joint and several liability arrangements. This authoritative accounting guidance is effective for interim and annual periods beginning after December 15, 2013 and is to be applied retrospectively. Based on its evaluation, the Company determined this guidance does not currently impact the Company’s financial statements and disclosures. | |||||||||||||
In July 2013, the FASB issued new authoritative accounting guidance related to the reporting of unrecognized tax benefits when a net operating loss carry forward, similar tax loss, or tax credit carryforward exists. The guidance states an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward, with certain exceptions. This authoritative accounting guidance is effective for interim and annual periods beginning after December 15, 2013, and is to be applied prospectively to all unrecognized tax benefits that exist at the effective date. The Company determined this guidance does not significantly impact the Company’s financial statements and disclosures. | |||||||||||||
There are no new significant accounting standards applicable to the Company that have been issued but not yet adopted by the Company as of December 31, 2013. | |||||||||||||
DESCRIPTION_OF_BUSINESS_AND_OR1
DESCRIPTION OF BUSINESS AND ORGANIZATION (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||
Schedule of subsidiaries | ' | ||||||
Subsidiaries’ names | Place and date of incorporation | Percentage of ownership by the Company | Principal activities | ||||
Wealth Rainbow Development Limited | Hong Kong, | 100% | Intermediate holding company | ||||
"Wealth Rainbow" | People's Republic of China (“PRC”) | ||||||
1-Mar-07 | |||||||
Henan Green Complex Materials Co., Ltd. | PRC | 100% | Operating entity | ||||
"Henan Green" | 31-Dec-00 | (throughWealth Rainbow) |
BASIS_OF_PRESENTATION_AND_SUMM2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||
Summary of exchange rates | ' | ||||||||||||
2013 | 2012 | 2011 | |||||||||||
Balance sheet items, except for equity accounts | RMB6.0537= | RMB6.2301= | RMB6.2939= | ||||||||||
HK$7.7539= | HK$7.7507= | HK$7.7663= | |||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Items in statements of income and cash flows | RMB6.1412= | RMB6.2990= | RMB6.4475= | ||||||||||
HK$7.7565= | HK$7.7556= | HK$7.7793= | |||||||||||
Schedule of Estimated Useful Life of Property, Plant and Equipment | ' | ||||||||||||
Estimated Useful Life (years) | |||||||||||||
Leasehold land improvement | 46.5 | ||||||||||||
Buildings | 20-Oct | ||||||||||||
Machinery and equipment | 20-May | ||||||||||||
Vehicles | 5 | ||||||||||||
Furniture fixtures and office equipment | 5 | ||||||||||||
Schedule of the Computation of Basic and Diluted Net Income per Common Share | ' | ||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Net (loss) / income | $ | (14,137,417 | ) | $ | 26,133,088 | $ | 57,620,552 | ||||||
Basic and diluted weighted average | |||||||||||||
outstanding shares | 59,540,872 | 58,543,076 | 56,297,652 | ||||||||||
(Net loss)/Earnings per common stock: | |||||||||||||
Basic | $ | (0.24 | ) | $ | 0.45 | $ | 1.02 | ||||||
Diluted | $ | (0.24 | ) | $ | 0.45 | $ | 1.02 |
CASH_Tables
CASH (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Cash and Cash Equivalents [Abstract] | ' | ||||||||||||||||
Schedule of Cash | ' | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Bank balances and cash (a) | $ | 376,064,243 | $ | 390,646,863 | |||||||||||||
Less: Restricted cash (b) | (114,803,746 | ) | (145,413,726 | ) | |||||||||||||
Less: Certificates of deposit (c) | (24,200,075 | ) | (16,372,128 | ) | |||||||||||||
$ | 237,060,422 | $ | 228,861,009 | ||||||||||||||
Non-current portion | |||||||||||||||||
Certificates of deposit (c) | $ | - | $ | 3,210,221 | |||||||||||||
Schedule of Cash Classified by Geographic Area | ' | ||||||||||||||||
As of December 31, 2013, cash is classified by geographical areas is set out as follows: | |||||||||||||||||
Bank balances | Restricted | Certificates | December 31, | ||||||||||||||
and cash | Cash | of deposit | 2013 | ||||||||||||||
Hong Kong | $ | 2,725,110 | $ | - | $ | - | $ | 2,725,110 | |||||||||
United States | 1,843,677 | - | - | 1,843,677 | |||||||||||||
The PRC | 232,491,635 | 114,803,746 | 24,200,075 | 371,495,456 | |||||||||||||
$ | 237,060,422 | $ | 114,803,746 | $ | 24,200,075 | $ | 376,064,243 | ||||||||||
As of December 31, 2012, cash is classified by geographical areas is set out as follows: | |||||||||||||||||
Bank balances | Restricted | Certificates | December 31, | ||||||||||||||
and cash | Cash | of deposit | 2012 | ||||||||||||||
Hong Kong | $ | 5,917,837 | $ | - | $ | - | 5,917,837 | ||||||||||
United States | 1,928,413 | - | - | 1,928,413 | |||||||||||||
The PRC | 221,014,759 | 145,413,726 | 19,582,349 | 386,010,834 | |||||||||||||
$ | 228,861,009 | $ | 145,413,726 | $ | 19,582,349 | 393,857,084 | |||||||||||
Schedule of Foreign Currency Cash Balances | ' | ||||||||||||||||
As of December 31, 2013, cash is denominated in the following currencies: | |||||||||||||||||
Bank balances | Restricted | Certificates | December 31, | ||||||||||||||
and cash | Cash | of deposit | 2013 | ||||||||||||||
USD | $ | 4,551,463 | $ | - | $ | - | $ | 4,551,463 | |||||||||
RMB (Current) | 232,491,122 | 114,803,746 | 24,200,075 | 371,494,943 | |||||||||||||
HKD | 17,837 | - | - | 17,837 | |||||||||||||
$ | 237,060,422 | $ | 114,803,746 | $ | 24,200,075 | $ | 376,064,243 | ||||||||||
As of December 31, 2012, cash is denominated in the following currencies: | |||||||||||||||||
Bank balances | Restricted | Certificates | December 31, | ||||||||||||||
and cash | Cash | of deposit | 2012 | ||||||||||||||
USD | $ | 7,906,574 | $ | - | $ | - | $ | 7,906,574 | |||||||||
RMB (Current) | 220,942,109 | 145,413,726 | 16,372,128 | 382,727,963 | |||||||||||||
RMB (Non-current) | - | - | 3,210,221 | 3,210,221 | |||||||||||||
HKD | 12,326 | - | - | 12,326 | |||||||||||||
$ | 228,861,009 | $ | 145,413,726 | $ | 19,582,349 | $ | 393,857,084 |
INVENTORIES_Tables
INVENTORIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of Inventories | ' | ||||||||
Inventories as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials | $ | 5,237,724 | $ | 7,865,191 | |||||
Work-in-process | 2,765,072 | 3,491,181 | |||||||
Finished goods | 9,493,879 | 11,406,173 | |||||||
$ | 17,496,675 | $ | 22,762,545 |
OTHER_RECEIVABLES_Tables
OTHER RECEIVABLES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Receivables [Abstract] | ' | ||||||||
Schedule of Other Receivables | ' | ||||||||
Other receivables as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current portion | |||||||||
Advances to staff, net | $ | 9,655 | $ | 211,671 | |||||
Loan advanced to unrelated third parties, net | 16,519 | 796,818 | |||||||
Loan advanced to a related company | - | 318,332 | |||||||
Standby guarantee fund | 2,643,012 | 530,489 | |||||||
Others | 454,728 | 412,763 | |||||||
$ | 3,123,914 | $ | 2,270,073 | ||||||
Non-current portion | |||||||||
Loan advanced to an unrelated third party | $ | 3,118,264 | $ | 3,039,835 | |||||
Standby guarantee fund | 3,221,170 | - | |||||||
$ | 6,339,434 | $ | 3,039,835 |
PROPERTY_PLANT_AND_EQUIPMENT_T
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||||||
Schedule of Property, Plant and Equipment | ' | ||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
Buildings | $ | 25,740,518 | $ | 24,976,660 | |||||||||
Leasehold land improvement | 22,746 | 22,102 | |||||||||||
Machinery and equipment | 93,721,937 | 106,179,264 | |||||||||||
Leased machinery and equipment | 21,474,470 | - | |||||||||||
Vehicles | 3,285,893 | 3,216,660 | |||||||||||
Office equipment | 439,588 | 419,456 | |||||||||||
Construction in progress | 29,576,864 | 34,969,529 | |||||||||||
174,262,016 | 169,783,671 | ||||||||||||
Less: Accumulated depreciation | (41,287,279 | ) | (35,673,014 | ) | |||||||||
$ | 132,974,737 | $ | 134,110,657 | ||||||||||
Schedule of depreciation details | ' | ||||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
Cost of revenue | $ | 11,112,719 | $ | 10,429,977 | $ | 7,610,716 | |||||||
General and administrative expenses | 412,262 | 469,072 | 383,922 | ||||||||||
$ | 11,524,981 | $ | 10,899,049 | $ | 7,994,638 | ||||||||
Schedule of Construction in Progress | ' | ||||||||||||
Estimated cost | |||||||||||||
Balance at | to complete as of | ||||||||||||
December 31, | December 31, | Estimated time | |||||||||||
2013 | 2014 | to complete | |||||||||||
Production lines | $ | 2,477,407 | $ | - | December 2014 | ||||||||
Plant | 9,117,122 | 5,779,553 | April 2014 | ||||||||||
Staff quarters | 17,982,335 | 1,972,403 | July 2014 | ||||||||||
$ | 29,576,864 | $ | 7,751,956 | ||||||||||
Machinery and equipment | ' | ||||||||||||
Sale proceeds (Fair value of the machinery and equipment) | $ | 21,244,260 | |||||||||||
Carrying amount | (23,967,508 | ) | |||||||||||
Impairment loss | $ | (2,723,248 | ) | ||||||||||
LAND_USE_RIGHT_Tables
LAND USE RIGHT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
LAND USE RIGHT [Abstract] | ' | ||||||||
Schedule of Land Use Rights | ' | ||||||||
Land use right as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Land use right, net | $ | 30,997,489 | $ | 13,625,738 | |||||
Distribution of consideration | ' | ||||||||
The consideration was allocated as follows: | |||||||||
Land use rights | $ | 29,009,733 | |||||||
Replacement cost | 20,704,280 | ||||||||
Total consideration | $ | 49,714,013 | |||||||
Schedule of Future Amortization of Land Use Rights | ' | ||||||||
The total future amortization is as follows: | |||||||||
31-Dec | |||||||||
2014 | $ | 1,570,364 | |||||||
2015 | 1,570,364 | ||||||||
2016 | 1,570,364 | ||||||||
2017 | 1,570,364 | ||||||||
2018 | 1,570,364 | ||||||||
Over 5 years | 23,145,669 | ||||||||
$ | 30,997,489 |
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes Payable [Abstract] | ' | ||||||||
Schedule of Notes Payable | ' | ||||||||
Notes payable as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Classified by financial institutions: | |||||||||
China Citic Bank | $ | 37,332,540 | $ | 35,312,435 | |||||
Bank of Zhengzhou | - | 6,420,443 | |||||||
Minsheng Bank of China | 9,250,541 | 19,261,328 | |||||||
Guangdong Development Bank | 14,866,940 | 22,471,549 | |||||||
Shanghai Pudong Development Bank | 3,303,765 | 25,681,771 | |||||||
China Merchants Bank | - | 11,235,775 | |||||||
China Everbright Bank | 19,822,588 | 27,286,881 | |||||||
Bank of Luoyang | 49,226,093 | 43,337,988 | |||||||
Bank of Communications | 46,583,081 | 22,792,572 | |||||||
Bank of Pingdingshan | 28,907,941 | 32,102,213 | |||||||
Bank of Xuchan | - | 2,407,666 | |||||||
Commercial bank of Kaifeng | 13,215,059 | 4,815,332 | |||||||
Huaxia Bank | - | 1,605,111 | |||||||
Ping An Bank | 3,303,765 | 4,815,331 | |||||||
$ | 225,812,313 | $ | 259,546,395 | ||||||
Additional information: | |||||||||
Maximum balance outstanding during the year | $ | 323,096,618 | $ | 309,304,826 | |||||
Interest expense | $ | 6,446,941 | $ | 4,701,767 | |||||
Finance charge per contract | 0.05 | % | 0.05%-0.15 | % |
TERM_LOANS_Tables
TERM LOANS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||
Schedule of Short Term Loans | ' | ||||||||||||
In order to provide working capital for operations, the Group entered into the following short term loan agreements as of December 31, 2013 and December 31, 2012: | |||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
Classified by financial institutions: | |||||||||||||
Guangdong Development Bank | $ | 5,781,588 | $ | - | |||||||||
China Citic Bank | 6,607,530 | 6,420,443 | |||||||||||
China Merchants Bank | 4,955,647 | 9,630,664 | |||||||||||
Bank of Zhengzhou | 3,303,765 | 7,704,531 | |||||||||||
Shanghai Pudong Development Bank | 23,043,758 | 16,051,107 | |||||||||||
Bank of Xuchang | 4,955,647 | 4,815,332 | |||||||||||
China Everbright Bank | 1,651,881 | 1,605,111 | |||||||||||
Commercial Bank of Kaifeng | - | 3,210,221 | |||||||||||
Ping An Bank | - | 8,025,553 | |||||||||||
$ | 50,299,816 | $ | 57,462,962 | ||||||||||
Additional information: | |||||||||||||
Maximum balance outstanding during the year | $ | 64,093,034 | $ | 62,278,294 | |||||||||
Interest expense | $ | 3,829,188 | $ | 3,525,936 | |||||||||
Range of interest rate per month | 0.465% - 0.621 | % | 0.465% - 1.205 | % | |||||||||
Weighted average interest rate | 6.98 | % | 3.29 | % | |||||||||
Schedule of Debt | ' | ||||||||||||
A summary of the principal payments for the outstanding term loans during the following fiscal year is as follows: | |||||||||||||
Total | |||||||||||||
Principal payment | outstanding | ||||||||||||
Name of bank | Collateral | Term of loans | due during 2013 | loan amount | |||||||||
Guangdong Development Bank | Guaranteed by third party and Mingwang Lu (Chairman and CEO of the Company) | December 24, 2013 to June 24, 2014 | $ | 5,781,588 | $ | 5,781,588 | |||||||
China Citic Bank | Secured by Henan Green's assets and Mingwang Lu | July 3, 2013 to March 12, 2014 | 3,303,765 | 3,303,765 | |||||||||
China Citic Bank | Secured by Henan Green's assets and Mingwang Lu | October 10, 2013 to | 3,303,765 | 3,303,765 | |||||||||
5-Jul-14 | |||||||||||||
China Merchants Bank | Guaranteed by third party, Mingwang Lu and Yi Lu (Director of the Company) | September 10, 2013 to September 10, 2014 | 4,955,647 | 4,955,647 | |||||||||
China Everbright Bank | Guaranteed by third party, Mingwang Lu and Yi Lu | July 16, 2013 to January 15, 2014 | 1,651,881 | 1,651,881 | |||||||||
Bank of Zhengzhou | Guaranteed by third party and Mingwang Lu | October 31, 2013 to October 30, 2014 | 3,303,765 | 3,303,765 | |||||||||
Shanghai Pudong Development Bank | Guaranteed by third party and Mingwang Lu | January 31, 2013 to January 30, 2014 | 5,616,400 | 5,616,400 | |||||||||
Shanghai Pudong Development Bank | Guaranteed by third party and Mingwang Lu | February 22, 2013 to February 21, 2014 | 2,643,012 | 2,643,012 | |||||||||
Shanghai Pudong Development Bank | Guaranteed by third party and Mingwang Lu | November 26, 2013 to November 25, 2014 | 825,941 | 825,941 | |||||||||
Shanghai Pudong Development Bank | Secured by Henan Green's land and Mingwang Lu | November 25, 2013 to November 24, 2014 | 6,607,529 | 6,607,529 | |||||||||
Shanghai Pudong Development Bank | Secured by third party and Mingwang Lu | November 27, 2013 to November 26, 2014 | 4,047,111 | 4,047,111 | |||||||||
Shanghai Pudong Development Bank | Guaranteed by third party and Mingwang Lu | November 28, 2013 to November 27, 2014 | 3,303,765 | 3,303,765 | |||||||||
Bank of Xuchang | Guaranteed by third party | April 25, 2013 to April 24, 2014 | 4,955,647 | 4,955,647 | |||||||||
$ | 50,299,816 | $ | 50,299,816 |
FINANCING_OBLIGATION_SALELEASE1
FINANCING OBLIGATION, SALE-LEASEBACK (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Leases [Abstract] | ' | ||||||||
Schedule of working capital lease | ' | ||||||||
In order to provide working capital for operations, the Group entered into the following capital lease agreement as of December 31, 2013 and December 31, 2012: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Financial company: | |||||||||
Cinda Financial Leasing Co, Ltd. | |||||||||
- Current portion | $ | 6,813,055 | $ | - | |||||
- Non-current portion | $ | 13,025,260 | $ | - | |||||
Additional information: | |||||||||
Maximum balance outstanding during the year | $ | 21,474,470 | $ | - | |||||
Interest expense | 341,738 | - | |||||||
Interest rate per year | 6.4575 | % | - | ||||||
Schedule of future lease payments | ' | ||||||||
Future minimum lease payments under capital leases for the years ending December 31, 2013 are as follows: | |||||||||
Total | |||||||||
31-Dec | |||||||||
2014 | $ | 7,931,332 | |||||||
2015 | 7,931,332 | ||||||||
2016 | 5,948,499 | ||||||||
Total minimum lease payments | 21,811,163 | ||||||||
Less: amount representing interest | (1,972,848 | ) | |||||||
19,838,315 | |||||||||
Less: current portion | (6,813,055 | ) | |||||||
Long-term portion | $ | 13,025,260 |
ACCRUED_LIABILITIES_AND_OTHER_1
ACCRUED LIABILITIES AND OTHER PAYABLES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accrued Liabilities and Other Liabilities [Abstract] | ' | ||||||||
Schedule of Accrued Liabilities and Other Payables | ' | ||||||||
Accrued liabilities and other payables as of December 31, 2013 and December 31, 2012 consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Accrued liabilities | |||||||||
Accrued expenses | $ | 3,940,603 | $ | 3,185,415 | |||||
Other tax payables | 1,118,527 | 494,446 | |||||||
5,059,130 | 3,679,861 | ||||||||
Other payables | |||||||||
Loan advanced from unrelated third parties | - | 1,685,366 | |||||||
Other payable for purchasing machinery and | - | 96,307 | |||||||
equipment | |||||||||
Temporary receipt for staff quarters | 1,558,166 | 48,205 | |||||||
Others | 181,832 | 308,321 | |||||||
1,739,998 | 2,138,199 | ||||||||
$ | 6,799,128 | $ | 5,818,060 |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||
Schedule of Grants for the Year | ' | ||||||||||||
The following grant was made in accordance with the terms of 2010 Share Incentive Plan for the period / year indicated. | |||||||||||||
Grant Date | Restricted Shares | Grant Price | |||||||||||
1-Oct-12 | 2,100,000 | $ | 1.78 | ||||||||||
Summary of Stock Option Activity Under Stock Option and Incentive Plans | ' | ||||||||||||
A summary of restricted stock activity under the 2010 share incentive plan for the year ended December 31, 2013 is as follows: | |||||||||||||
Number of Shares | Weighted Average Grant Price and Fair Value | ||||||||||||
Non-vested, December 31, 2012 | 1,700,000 | 1.78 | |||||||||||
Vested shares | (1,700,000 | ) | 1.78 | ||||||||||
Non-vested, December 31, 2013 | - | - | |||||||||||
Schedule of Assumptions of Warrants | ' | ||||||||||||
December 31, | |||||||||||||
2013 | |||||||||||||
Expected volatility | 57 | % | |||||||||||
Expected term (in years) | 4.4 | ||||||||||||
Risk free rate | 1.46 | % | |||||||||||
Expected dividend rate | 0 | % | |||||||||||
Summary of Warrants Activity | ' | ||||||||||||
A summary of all warrants outstanding as of December 31, 2013 and December 31, 2012 is presented below: | |||||||||||||
Warrants | Exercise Price | Terms | |||||||||||
Balance as of December 31, 2012 | 144,000 | $ | 6 | 0.9 years | |||||||||
Granted | 500,000 | 2.2 | 4.4 years | ||||||||||
Exercised | - | ||||||||||||
Expired | - | ||||||||||||
Outstanding as of December 31, 2013 | 644,000 | ||||||||||||
Schedule of Retained Earnings | ' | ||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
Retained earnings | $ | 116,536,602 | $ | 151,890,125 | |||||||||
Statutory surplus reserves | 11,427,259 | 11,385,921 | |||||||||||
$ | 127,963,861 | $ | 163,276,046 | ||||||||||
Schedule of Statutory Reserves | ' | ||||||||||||
Statutory surplus | Registered | Percentage | |||||||||||
reserves | capital | reached | |||||||||||
At December 31, 2012 | $ | 11,385,921 | $ | 83,603,944 | 14 | % | |||||||
Statutory surplus reserves transferred from net profits | 41,338 | - | |||||||||||
Balances at December 31, 2013 | $ | 11,427,259 | $ | 83,603,944 | 14 | % |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||
Schedule of Income Tax Expense | ' | ||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Current income tax expense | $ | 141,547 | $ | 11,897,173 | $ | 21,961,627 | |||||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
(Loss) / Income before tax | $ | (13,995,870 | ) | $ | 38,030,261 | $ | 79,582,179 | ||||||
Expected PRC income tax expense at statutory tax rate of 25% | (3,498,968 | ) | 9,507,565 | 19,895,544 | |||||||||
Depreciation allowance over-claimed in 2011 | - | 1,127,816 | - | ||||||||||
Unused tax losses for PRC | 3,059,134 | ||||||||||||
Net losses not realizable currently for Hong Kong and BVI tax purposes | 581,381 | - | - | ||||||||||
Non deductible tax expenses | - | 1,261,792 | 2,066,083 | ||||||||||
Actual income tax expense | $ | 141,547 | $ | 11,897,173 | $ | 21,961,627 | |||||||
LEASE_COMMITMENTS_Tables
LEASE COMMITMENTS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Leases, Operating [Abstract] | ' | ||||||||||||
Schedule of Future Minimum Payments under Operating Leases | ' | ||||||||||||
The total future minimum lease payments under non-cancellable operating leases as of December 31, 2013 are payable as follows: | |||||||||||||
Years Ended December 31, | Leasehold rental | Reservoir rental | Total | ||||||||||
2014 | $ | 40,058 | $ | 16,519 | $ | 56,577 | |||||||
2015 | - | 16,519 | 16,519 | ||||||||||
2016 | - | 16,519 | 16,519 | ||||||||||
2017 | - | 16,519 | 16,519 | ||||||||||
2018 | - | 16,519 | 16,519 | ||||||||||
Over five years | - | 247,785 | 247,785 | ||||||||||
$ | 40,058 | $ | 330,380 | $ | 370,438 | ||||||||
Schedule of Future Minimum Payments under Capital Leases | ' | ||||||||||||
The total future minimum lease payments under non-cancellable capital leases as of December 31, 2013 are payable as follows (see note 12): | |||||||||||||
Total | |||||||||||||
31-Dec | |||||||||||||
2014 | $ | 7,931,332 | |||||||||||
2015 | 7,931,332 | ||||||||||||
2016 | 5,948,499 | ||||||||||||
2017 | - | ||||||||||||
2018 | - | ||||||||||||
Over five years | - | ||||||||||||
$ | 21,811,163 |
CONDENSED_PARENT_COMPANY_FINAN1
CONDENSED PARENT COMPANY FINANCIAL INFORMATION (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ' | ||||||||||||
CONDENSED BALANCE SHEETS | ' | ||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
Assets | |||||||||||||
Cash | $ | 4,368,588 | $ | 7,645,949 | |||||||||
Prepaid expenses | 30,000 | - | |||||||||||
Investments in subsidiaries | 294,843,080 | 322,526,371 | |||||||||||
Total assets | $ | 299,241,668 | $ | 330,172,320 | |||||||||
Liabilities and Stockholders' Equity | |||||||||||||
Current liabilities | |||||||||||||
Accrued liabilities and other payables | $ | 113,000 | $ | 105,000 | |||||||||
Total liabilities | 113,000 | 105,000 | |||||||||||
Stockholders' Equity | |||||||||||||
Common stock | 140,418,118 | 140,418,118 | |||||||||||
Additional paid in capital | - | 4,978,698 | |||||||||||
Treasury stock | (498,799 | ) | (414,063 | ) | |||||||||
Retained earnings | 127,963,861 | 163,276,046 | |||||||||||
Accumulated other comprehensive income | 31,245,488 | 21,808,521 | |||||||||||
Total stockholders' equity | 299,128,668 | 330,067,320 | |||||||||||
Total liabilities and stockholders' equity | $ | 299,241,668 | $ | 330,172,320 | |||||||||
CONDENSED STATEMENT OF INCOME | ' | ||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
General and administrative expenses | $ | (3,203,515 | ) | $ | (2,419,836 | ) | $ | (9,439,791 | ) | ||||
Equity (loss)/income of subsidiaries | (10,933,902 | ) | 28,552,924 | 67,060,343 | |||||||||
Net (loss) / income | $ | (14,137,417 | ) | $ | 26,133,088 | $ | 57,620,552 | ||||||
CONDENSED STATEMENT OF CASH FLOWS | ' | ||||||||||||
For the years ended | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Net cash used in operating activities | $ | (3,192,625 | ) | $ | (2,421,284 | ) | $ | (7,887,611 | ) | ||||
Net cash used in investing activities | - | - | (48,000,000 | ) | |||||||||
Net cash (used in)/provided by financing activities | (84,736 | ) | (1,554,674 | ) | 61,957,131 | ||||||||
Cash as of January 1 | 7,645,949 | 11,621,907 | 5,552,387 | ||||||||||
Cash as of December 31 | $ | 4,368,588 | $ | 7,645,949 | $ | 11,621,907 | |||||||
QUARTERLY_CONSOLIDATED_FINANCI1
QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of Quarterly Financial Information | ' | ||||||||||||||||
For the quarters ended | |||||||||||||||||
31-Mar-13 | 30-Jun-13 | 30-Sep-13 | 31-Dec-13 | ||||||||||||||
Revenue: | |||||||||||||||||
Steel mill flat-rolled products | $ | 45,610,707 | $ | 43,078,588 | $ | 30,927,996 | $ | 46,211,805 | |||||||||
Cost of revenue | (40,404,115 | ) | (39,557,743 | ) | (30,178,989 | ) | (51,624,916 | ) | |||||||||
Gross Profit/(Loss) | 5,206,592 | 3,520,845 | 749,007 | (5,413,111 | ) | ||||||||||||
Operating expenses: | |||||||||||||||||
General and administrative expenses | (2,403,101 | ) | (2,532,275 | ) | (2,618,166 | ) | (3,757,658 | ) | |||||||||
Selling and marketing expenses | (734,347 | ) | (73,666 | ) | (446,488 | ) | (427,942 | ) | |||||||||
Total operating expenses | (3,137,448 | ) | (2,605,941 | ) | (3,064,654 | ) | (4,185,600 | ) | |||||||||
Operating income/(loss) | 2,069,144 | 914,904 | (2,315,647 | ) | (9,598,711 | ) | |||||||||||
Other income (expenses) | |||||||||||||||||
Interest income | 1,236,539 | 845,618 | 1,369,269 | 1,168,191 | |||||||||||||
Interest expenses | (3,359,531 | ) | (2,580,151 | ) | (3,490,793 | ) | (1,187,391 | ) | |||||||||
Sundry income | 98,598 | 3,423 | 36,500 | 794,168 | |||||||||||||
Income before income taxes | 44,750 | (816,206 | ) | (4,400,671 | ) | (8,823,743 | ) | ||||||||||
Income tax expense | (139,824 | ) | (29,566 | ) | 28,312 | (469 | ) | ||||||||||
Net loss attributable to common stockholders | $ | (95,074 | ) | $ | (845,772 | ) | $ | (4,372,359 | ) | $ | (8,824,212 | ) | |||||
Net (loss)/income per share | |||||||||||||||||
- Basic | $ Nil | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.15 | ) | |||||||
- Diluted | $ Nil | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.15 | ) | |||||||
Weighted average common shares outstanding | |||||||||||||||||
- Basic | 59,561,899 | 59,556,396 | 59,522,910 | 59,522,910 | |||||||||||||
- Diluted | 59,561,899 | 59,556,396 | 59,522,910 | 59,522,910 | |||||||||||||
DESCRIPTION_OF_BUSINESS_AND_OR2
DESCRIPTION OF BUSINESS AND ORGANIZATION (Details Narrative) (Zhengzhou Company [Member], USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Zhengzhou Company [Member] | ' |
Carrying amount of land use rights | $1,740,000 |
Reduction of additional paid in capital and retained earnings | $2,620,000 |
BASIS_OF_PRESENTATION_AND_SUMM3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
RMB [Member] | ' | ' | ' |
Foreign exchange rate | 6.0537 | 6.2301 | 6.2939 |
Average exchange rate | 6.1412 | 6.299 | 6.4475 |
HK [Member] | ' | ' | ' |
Foreign exchange rate | 7.7539 | 7.7507 | 7.7663 |
Average exchange rate | 7.7565 | 7.7556 | 7.7793 |
BASIS_OF_PRESENTATION_AND_SUMM4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 12 Months Ended |
Dec. 31, 2013 | |
Leasehold Land Improvement [Member] | ' |
Property, Plant and Equipment, Useful Life | '46 years 6 months |
Building [Member] | Minimum [Member] | ' |
Property, Plant and Equipment, Useful Life | '10 years |
Building [Member] | Maximum [Member] | ' |
Property, Plant and Equipment, Useful Life | '20 years |
Machinery and Equipment [Member] | Minimum [Member] | ' |
Property, Plant and Equipment, Useful Life | '5 years |
Machinery and Equipment [Member] | Maximum [Member] | ' |
Property, Plant and Equipment, Useful Life | '20 years |
Vehicles [Member] | ' |
Property, Plant and Equipment, Useful Life | '5 years |
Furniture and Fixtures [Member] | ' |
Property, Plant and Equipment, Useful Life | '5 years |
BASIS_OF_PRESENTATION_AND_SUMM5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Accounting Policies [Abstract] | ' | ' | ' | ' | ' | ' | ' |
Net (loss) / income | ($8,824,212) | ($4,372,359) | ($845,772) | ($95,074) | ($14,137,417) | $26,133,088 | $57,620,552 |
Basic and diluted weighted average outstanding shares | ' | ' | ' | ' | 59,540,872 | 58,543,076 | 56,297,652 |
(Net loss)/Earnings per common stock: | ' | ' | ' | ' | ' | ' | ' |
Basic | ($0.15) | ($0.07) | ($0.01) | ' | ($0.24) | $0.45 | $1.02 |
Diluted | ($0.15) | ($0.07) | ($0.01) | ' | ($0.24) | $0.45 | $1.02 |
BASIS_OF_PRESENTATION_AND_SUMM6
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Accounting Policies [Abstract] | ' | ' |
Loss from operations | ($10,168,867) | ' |
Net realizable value inventories | 142,000 | 48,000 |
Acquisition of property, plant and equipment | 2,184,217 | 266,312 |
Undistributed earnings | 18,060,000 | 18,980,000 |
Deferred tax liability | $900,000 | $950,000 |
CASH_Details
CASH (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Cash Details | ' | ' | ' | ' |
Bank balances and cash | $376,064,243 | $390,646,863 | ' | ' |
Less: Restricted cash | -114,803,746 | -145,413,726 | ' | ' |
Less: Certificates of deposit | -24,200,075 | -16,372,128 | ' | ' |
Cash | 237,060,422 | 228,861,009 | 246,600,917 | 119,477,298 |
Certificates of deposit | ' | $3,210,221 | ' | ' |
CASH_Details1
CASH (Details1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Bank balances and cash | $237,060,422 | $228,861,009 | $246,600,917 | $119,477,298 |
Restricted cash | 114,803,746 | 145,413,726 | ' | ' |
Certificates of deposit | ' | 3,210,221 | ' | ' |
Cash and Cash Equivalents, at Carrying Value, Total | 376,064,243 | 393,857,084 | ' | ' |
HONG KONG [Member] | ' | ' | ' | ' |
Bank balances and cash | 2,725,110 | 5,917,837 | ' | ' |
Restricted cash | ' | ' | ' | ' |
Certificates of deposit | ' | ' | ' | ' |
Cash and Cash Equivalents, at Carrying Value, Total | 2,725,110 | 5,917,837 | ' | ' |
UNITED STATES [Member] | ' | ' | ' | ' |
Bank balances and cash | 1,843,677 | 1,928,413 | ' | ' |
Restricted cash | ' | ' | ' | ' |
Certificates of deposit | ' | ' | ' | ' |
Cash and Cash Equivalents, at Carrying Value, Total | 1,843,677 | 1,928,413 | ' | ' |
CHINA [Member] | ' | ' | ' | ' |
Bank balances and cash | 232,491,635 | 221,014,759 | ' | ' |
Restricted cash | 114,803,746 | 145,413,726 | ' | ' |
Certificates of deposit | 24,200,075 | 19,582,349 | ' | ' |
Cash and Cash Equivalents, at Carrying Value, Total | $371,495,456 | $386,010,834 | ' | ' |
CASH_Details2
CASH (Details2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Bank balances and cash | $237,060,422 | $228,861,009 | $246,600,917 | $119,477,298 |
Restricted cash | 114,803,746 | 145,413,726 | ' | ' |
Certificates of deposit | 24,200,075 | 16,372,128 | ' | ' |
Cash and Cash Equivalents, at Carrying Value, Total | 376,064,243 | 393,857,084 | ' | ' |
USD [Member] | ' | ' | ' | ' |
Bank balances and cash | 4,551,463 | 7,906,574 | ' | ' |
Restricted cash | ' | ' | ' | ' |
Certificates of deposit | ' | ' | ' | ' |
Cash and Cash Equivalents, at Carrying Value, Total | 4,551,463 | ' | ' | ' |
RMB (current) [Member] | ' | ' | ' | ' |
Bank balances and cash | 232,491,122 | 220,942,109 | ' | ' |
Restricted cash | 114,803,746 | 145,413,726 | ' | ' |
Certificates of deposit | 24,200,075 | 16,372,128 | ' | ' |
Cash and Cash Equivalents, at Carrying Value, Total | 371,494,943 | ' | ' | ' |
HKD [Member] | ' | ' | ' | ' |
Bank balances and cash | 17,837 | 12,326 | ' | ' |
Restricted cash | ' | ' | ' | ' |
Certificates of deposit | ' | ' | ' | ' |
Cash and Cash Equivalents, at Carrying Value, Total | 17,837 | ' | ' | ' |
Rmb (Noncurrent) [Member] | ' | ' | ' | ' |
Bank balances and cash | ' | ' | ' | ' |
Restricted cash | ' | ' | ' | ' |
Certificates of deposit | ' | $3,210,221 | ' | ' |
ACCOUNTS_RECEIVABLE_Details_Na
ACCOUNTS RECEIVABLE (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounts Receivable Additional Disclosures [Abstract] | ' | ' |
Accounts receivable, allowance for doubtful accounts | $360,743 | $125,993 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Inventory Disclosure [Abstract] | ' | ' |
Raw materials | $5,237,724 | $7,865,191 |
Work in process | 2,765,072 | 3,491,181 |
Finished goods | 9,493,879 | 11,406,173 |
Inventory, Net, Total | 17,496,675 | 22,762,545 |
Inventory impairment provision | $142,000 | $48,000 |
OTHER_RECEIVABLES_Details
OTHER RECEIVABLES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Receivables [Abstract] | ' | ' |
Advances to staff | $211,671 | $9,655 |
Loan advanced to unrelated third parties, net | 796,818 | 16,519 |
Loan advanced to a related company | 318,332 | ' |
Standby guarantee fund | 530,489 | 2,643,012 |
Others | 412,763 | 454,728 |
Net, Current, Total | 3,123,914 | 2,270,073 |
Loan advanced to unrelated third parties, net | 3,039,835 | 3,118,264 |
Standby guarantee fund | ' | 3,221,170 |
Net, Non-current, Total | $6,339,434 | $3,039,835 |
PROPERTY_PLANT_AND_EQUIPMENT_D
PROPERTY, PLANT AND EQUIPMENT (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Property and equipment | $174,262,016 | $169,783,671 | ' |
Accumulated depreciation | -41,287,279 | -35,673,014 | ' |
Property, Plant and Equipment, Net, Total | 132,976,737 | 134,110,657 | ' |
Depreciation expense | 11,524,981 | 10,899,049 | 7,994,638 |
Building [Member] | ' | ' | ' |
Property and equipment | 25,740,518 | 24,976,660 | ' |
Leasehold Land Improvement [Member] | ' | ' | ' |
Property and equipment | 22,746 | 22,102 | ' |
Machinery and Equipment [Member] | ' | ' | ' |
Property and equipment | 93,721,937 | 106,179,264 | ' |
Leased machinery and equipment [Member] | ' | ' | ' |
Property and equipment | 21,474,470 | ' | ' |
Vehicles [Member] | ' | ' | ' |
Property and equipment | 3,285,893 | 3,216,660 | ' |
Office Equipment [Member] | ' | ' | ' |
Property and equipment | 439,588 | 419,456 | ' |
Construction in Progress [Member] | ' | ' | ' |
Property and equipment | $29,576,864 | $34,969,529 | ' |
PROPERTY_PLANT_AND_EQUIPMENT_D1
PROPERTY, PLANT AND EQUIPMENT (Details 1) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Property, Plant and Equipment [Abstract] | ' | ' | ' |
Cost of revenue | $12,351,276 | $10,429,977 | $7,610,716 |
General and administrative expenses | 412,262 | 469,072 | 383,922 |
Total expense | $11,524,981 | $10,899,049 | $7,994,638 |
PROPERTY_PLANT_AND_EQUIPMENT_D2
PROPERTY, PLANT AND EQUIPMENT (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Production Lines [Member] | Plant [Member] | Staff Quarters [Member] | |||
Construction in Progress, Gross | $29,576,864 | $34,969,529 | $2,477,407 | $9,117,122 | $17,982,335 |
Estimated cost to complete construction | $7,751,956 | ' | ' | $5,779,553 | $1,972,403 |
Estimated time to complete | ' | ' | 'December 2014 | ' April 2014 | 'July 2014 |
PROPERTY_PLANT_AND_EQUIPMENT_D3
PROPERTY, PLANT AND EQUIPMENT (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Property, Plant and Equipment [Abstract] | ' | ' | ' |
Depreciation expense | $11,524,981 | $10,899,049 | $7,994,638 |
Construction in progress | 29,576,864 | 34,969,529 | ' |
Buildings was secured for note payable | 9,100,000 | ' | ' |
Impairment | $2,723,248 | ' | ' |
LAND_USE_RIGHT_Details
LAND USE RIGHT (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
LAND USE RIGHT [Abstract] | ' | ' |
Land use right, net | $30,997,489 | $13,625,738 |
Land use rights | 29,009,733 | ' |
Replacement cost | 20,704,280 | ' |
Total consideration | $49,714,013 | ' |
LAND_USE_RIGHT_Details_1
LAND USE RIGHT (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
LAND USE RIGHT [Abstract] | ' | ' |
2013 | $1,570,364 | ' |
2014 | 1,570,364 | ' |
2015 | 1,570,364 | ' |
2016 | 1,570,364 | ' |
2017 | 1,570,364 | ' |
Over 5 years | 23,145,669 | ' |
Land use right, net | $30,997,489 | $13,625,738 |
LAND_USE_RIGHT_Details_Narrati
LAND USE RIGHT (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
LAND USE RIGHT [Abstract] | ' | ' | ' |
Amortization expense | $741,816 | $330,244 | $322,638 |
NOTES_PAYABLE_Details
NOTES PAYABLE (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | $225,812,313 | $259,546,395 |
Maximum balance outstanding during the year | 323,096,618 | 309,304,826 |
Interest expense | 6,446,941 | 4,701,767 |
Finance charge per contract | '0.050% | '0.05%-0.15% |
China Citic Bank [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | 37,332,540 | 35,312,435 |
Bank Of Zhengzhou [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | ' | 6,420,443 |
Minsheng Bank of China [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | 14,866,940 | 19,261,328 |
Guangdong Development Bank [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | 3,303,765 | 22,471,549 |
Shanghai Pudong Development Bank [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | ' | 25,681,771 |
China Merchants Bank [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | 19,822,588 | 11,235,775 |
China Everbright Bank [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | 49,226,093 | 27,286,881 |
Bank Of Luoyang [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | 46,583,081 | 43,337,988 |
Bank Of Communications [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | 28,907,941 | 22,792,572 |
Bank Of Pingdingshan [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | ' | 32,102,213 |
Bank Of Xuchan [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | 13,215,059 | 2,407,666 |
Commercial Bank Of Kaifeng [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | 9,250,541 | 4,815,332 |
Huaxia Bank [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | ' | 1,605,111 |
Ping An Bank [Member] | ' | ' |
Short-term Debt [Line Items] | ' | ' |
Notes Payable Current | $3,303,765 | $4,815,331 |
NOTES_PAYABLE_Details_Narrativ
NOTES PAYABLE (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes Payable [Abstract] | ' | ' |
Restricted group cash | $114,803,746 | $145,413,726 |
TERM_LOANS_Details
TERM LOANS (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | $50,299,816 | $57,462,962 |
Maximum balance outstanding during the year | 64,093,034 | 62,278,294 |
Interest expense | 3,829,188 | 3,525,936 |
Range of interest rate | '0.465% - 0.621% | '0.465% - 1.205% |
Weighted average interest rate | 6.98% | 3.29% |
Guangdong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | 5,781,588 | ' |
China Citic Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | 6,607,530 | 6,420,443 |
China Merchants Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | 4,955,647 | 9,630,664 |
Bank Of Zhengzhou [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | 3,303,765 | 7,704,531 |
Shanghai Pudong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | 23,043,758 | 16,051,107 |
Bankof Xuchang [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | 4,955,647 | 4,815,332 |
China Everbright Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | 1,651,881 | 1,605,111 |
Commercial Bank Of Kaifeng [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | ' | 3,210,221 |
Ping An Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Long Term Debt Current | ' | $8,025,553 |
TERM_LOANS_Details_1
TERM LOANS (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | $50,299,816 | ' |
Term loans | 50,299,816 | 57,462,962 |
Guangdong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 5,781,588 | ' |
Term loans | 5,781,588 | ' |
Collateral | 'Guaranteed by third party and Mingwang Lu (Chairman and CEO of the Company) | ' |
Term of loan, start date | 24-Dec-13 | ' |
Term of loan, end date | 24-Jun-14 | ' |
China Citic Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Term loans | 6,607,530 | 6,420,443 |
China Merchants Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 4,955,647 | ' |
Term loans | 4,955,647 | 9,630,664 |
Collateral | 'Guaranteed by third party, Mingwang Lu and Yi Lu (Director of the Company) | ' |
Term of loan, start date | 10-Sep-13 | ' |
Term of loan, end date | 10-Sep-14 | ' |
China Everbright Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 1,651,881 | ' |
Term loans | 1,651,881 | 1,605,111 |
Collateral | 'Guaranteed by third party, Mingwang Lu and Yi Lu | ' |
Term of loan, start date | 16-Jul-13 | ' |
Term of loan, end date | 15-Jan-14 | ' |
Bank Of Zhengzhou [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 3,303,765 | ' |
Term loans | 3,303,765 | 7,704,531 |
Collateral | 'Guaranteed by third party and Mingwang Lu | ' |
Term of loan, start date | 31-Oct-13 | ' |
Term of loan, end date | 30-Oct-14 | ' |
Shanghai Pudong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Term loans | 23,043,758 | 16,051,107 |
Bankof Xuchang [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 4,955,647 | ' |
Term loans | 4,955,647 | 4,815,332 |
Collateral | 'Guaranteed by third party | ' |
Term of loan, start date | 25-Apr-13 | ' |
Term of loan, end date | 24-Apr-14 | ' |
Loan One [Member] | China Citic Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 3,303,765 | ' |
Term loans | 3,303,765 | ' |
Collateral | 'Secured by Henan Green's assets and Mingwang Lu | ' |
Term of loan, start date | 3-Jul-13 | ' |
Term of loan, end date | 12-Mar-14 | ' |
Loan One [Member] | Shanghai Pudong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 5,616,400 | ' |
Term loans | 5,616,400 | ' |
Collateral | 'Guaranteed by third party and Mingwang Lu | ' |
Term of loan, start date | 31-Jan-13 | ' |
Term of loan, end date | 30-Jan-14 | ' |
Loan Two [Member] | China Citic Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 3,303,765 | ' |
Term loans | 3,303,765 | ' |
Collateral | 'Secured by Henan Green's assets and Mingwang Lu | ' |
Term of loan, start date | 10-Oct-13 | ' |
Term of loan, end date | 5-Jul-14 | ' |
Loan Two [Member] | Shanghai Pudong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 2,643,012 | ' |
Term loans | 2,643,012 | ' |
Collateral | 'Guaranteed by third party and Mingwang Lu | ' |
Term of loan, start date | 22-Feb-13 | ' |
Term of loan, end date | 21-Feb-14 | ' |
Loan Three [Member] | Shanghai Pudong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 825,941 | ' |
Term loans | 825,941 | ' |
Collateral | 'Guaranteed by third party and Mingwang Lu | ' |
Term of loan, start date | 26-Nov-13 | ' |
Term of loan, end date | 25-Nov-14 | ' |
Loan Four [Member] | Shanghai Pudong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 6,607,529 | ' |
Term loans | 6,607,529 | ' |
Collateral | 'Secured by Henan Green's land and Mingwang Lu | ' |
Term of loan, start date | 25-Nov-13 | ' |
Term of loan, end date | 24-Nov-14 | ' |
Loan Five [Member] | Shanghai Pudong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 4,047,111 | ' |
Term loans | 4,047,111 | ' |
Collateral | 'Secured by third party and Mingwang Lu | ' |
Term of loan, start date | 27-Nov-13 | ' |
Term of loan, end date | 26-Nov-14 | ' |
Loan Six [Member] | Shanghai Pudong Development Bank [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Principal payment due during 2012 | 3,303,765 | ' |
Term loans | $3,303,765 | ' |
Collateral | 'Guaranteed by third party and Mingwang Lu | ' |
Term of loan, start date | 28-Nov-13 | ' |
Term of loan, end date | 27-Nov-14 | ' |
FINANCING_OBLIGATION_SALELEASE2
FINANCING OBLIGATION, SALE-LEASEBACK (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current portion | $6,813,055 | ' |
Non-current portion | 13,025,260 | ' |
Cinda Financial Leasing Co, Ltd. [Member] | ' | ' |
Current portion | 6,813,055 | ' |
Non-current portion | 13,025,260 | ' |
Additional information: | ' | ' |
Maximum balance outstanding during the year | 21,474,470 | ' |
Interest expense | $341,738 | ' |
Interest rate per year | 6.46% | ' |
FINANCING_OBLIGATION_SALELEASE3
FINANCING OBLIGATION, SALE-LEASEBACK (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Leases [Abstract] | ' | ' |
2014 | $7,931,332 | ' |
2015 | 7,931,332 | ' |
2016 | 5,948,499 | ' |
Total minimum lease payments | 21,811,163 | ' |
Less: amount representing interest | -1,972,848 | ' |
Total minimum lease payments, Net | 19,838,315 | ' |
Less: current portion | -6,813,055 | ' |
Long-term portion | $13,025,260 | ' |
ACCRUED_LIABILITIES_AND_OTHER_2
ACCRUED LIABILITIES AND OTHER PAYABLES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accrued Liabilities and Other Liabilities [Abstract] | ' | ' |
Accrued expenses | $3,940,603 | $3,185,415 |
Other tax payables | 1,118,527 | 494,446 |
Accrued liabilites total | 5,059,130 | 3,679,861 |
Loan advanced from unrelated third parties | ' | 1,685,366 |
Payables to purchase of machinery and equipment | ' | 96,307 |
Temporary receipt for staff quarters | 1,558,166 | 48,205 |
Others | 181,832 | 308,321 |
Other payables total | 1,739,998 | 2,138,199 |
Other payables and accrued liabilities | $6,799,128 | $5,818,060 |
ACCRUED_LIABILITIES_AND_OTHER_3
ACCRUED LIABILITIES AND OTHER PAYABLES (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accrued Liabilities And Other Payables Details Narrative | ' | ' |
Advances from unrelated third parties | ' | $1,685,366 |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Stockholders' Equity Note [Abstract] | ' |
Grant Date | 1-Oct-12 |
Shares granted | 2,100,000 |
Grant price | $1.78 |
STOCKHOLDERS_EQUITY_Details_1
STOCKHOLDERS' EQUITY (Details 1) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Number of Shares | ' |
Balance | 1,700,000 |
Vested shares | ($1,700,000) |
Balance | ' |
Weighted Average Grant Price and Fair Value | ' |
Balance | $1.78 |
Vested shares | $1.78 |
Balance | ' |
STOCKHOLDERS_EQUITY_Details_2
STOCKHOLDERS' EQUITY (Details 2) (Warrant [Member]) | 12 Months Ended |
Dec. 31, 2013 | |
Warrant [Member] | ' |
Stockholders Equity Note [Line Items] | ' |
Expected volatility | 57.00% |
Expected term (in years) | '4 years 4 months 24 days |
Risk free rate | 1.46% |
Expected dividend rate | 0.00% |
STOCKHOLDERS_EQUITY_Details_3
STOCKHOLDERS' EQUITY (Details 3) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Stockholders' Equity Note [Abstract] | ' |
Balance | 144,000 |
Granted | 500,000 |
Balance | 644,000 |
Balance, Exercise Price | $6 |
Granted | $2.20 |
Terms, outstanding | '10 months 24 days |
Terms, Granted | '4 years 4 months 24 days |
STOCKHOLDERS_EQUITY_Details_4
STOCKHOLDERS' EQUITY (Details 4) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholders' Equity Note [Abstract] | ' | ' |
Retained earnings | $116,536,602 | $151,890,125 |
Statutory surplus reserves | 11,427,259 | 11,385,921 |
Retained Earnings (Accumulated Deficit), Total | $127,963,861 | $163,276,046 |
STOCKHOLDERS_EQUITY_Details_5
STOCKHOLDERS' EQUITY (Details 5) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Stockholders' Equity Note [Abstract] | ' |
Balance | $11,385,921 |
Statutory surplus reserves transferred from net profits | 41,338 |
Balance | 11,427,259 |
Balance, Registered capital | 83,603,944 |
Balance, Registered capital | $83,603,944 |
Percentage reached, Statutory Reserves and Registered Capital. Balance | 14.00% |
Percentage reached, Statutory Reserves and Registered Capital, Balance | 14.00% |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' | ' | ' | ' |
Current income tax expense | $469 | ($28,312) | $29,566 | $139,824 | $141,547 | $11,897,173 | $21,961,627 |
INCOME_TAXES_Details_1
INCOME TAXES (Details 1) (USD $) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' | ' | ' | ' |
Income before tax | ($8,823,443) | ($4,400,671) | ($816,206) | $44,750 | ($13,995,870) | $38,030,261 | $79,582,179 |
Expected PRC income tax expense at statutory tax rate of 25% | ' | ' | ' | ' | -3,498,968 | 9,507,565 | 19,895,544 |
Depreciation allowance over-claimed in 2011 | ' | ' | ' | ' | ' | 1,127,816 | ' |
Unused tas losses for PRC | ' | ' | ' | ' | 3,089,134 | ' | ' |
Net losses not realizable currently for PRC, Hong Kong and BVI tax purposes | ' | ' | ' | ' | 581,381 | ' | ' |
Non deductible tax expenses | ' | ' | ' | ' | ' | 1,261,792 | 2,066,083 |
Actual income tax expense | $469 | ($28,312) | $29,566 | $139,824 | $141,547 | $11,897,173 | $21,961,627 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Related Party Transaction [Line Items] | ' | ' | ' |
Rent expense | $95,258 | $28,744 | $26,938 |
Zhengzhou Company [Member] | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Rent expense | ' | 12,867 | 11,428 |
Business acquisition, loan | ' | $318,332 | ' |
SIGNIFICANT_CONCENTRATIONS_Det
SIGNIFICANT CONCENTRATIONS (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Supplier One Concentration Risk [Member] | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Concentration Risk, Percentage | 41.00% | 37.00% | 43.00% |
Supplier Two Concentration Risk [Member] | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Concentration Risk, Percentage | 26.00% | 23.00% | 25.00% |
Supplier Three Concentration Risk [Member] | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Concentration Risk, Percentage | 18.00% | 20.00% | 11.00% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Concentration Risk, Percentage | 10.00% | 15.00% | 12.00% |
Accounts Payable [Member] | Supplier One Concentration Risk [Member] | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Concentration Risk, Percentage | 52.00% | 23.00% | 55.00% |
Accounts Payable [Member] | Supplier Two Concentration Risk [Member] | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Concentration Risk, Percentage | ' | 10.00% | 18.00% |
LEASE_COMMITMENTS_Details
LEASE COMMITMENTS (Details) (USD $) | Dec. 31, 2013 |
Leases Operating [Line Items] | ' |
2014 | $56,577 |
2015 | 16,519 |
2016 | 16,519 |
2017 | 16,519 |
2018 | 16,519 |
Over five years | 247,785 |
Operating Leases, Future Minimum Payments Due, Total | 370,438 |
Leasehold Rental [Member] | ' |
Leases Operating [Line Items] | ' |
2014 | 40,058 |
2015 | ' |
2016 | ' |
2017 | ' |
2018 | ' |
Over five years | ' |
Operating Leases, Future Minimum Payments Due, Total | 40,058 |
Reservoir Rental [Member] | ' |
Leases Operating [Line Items] | ' |
2014 | 16,519 |
2015 | 16,519 |
2016 | 16,519 |
2017 | 16,519 |
2018 | 16,519 |
Over five years | 247,785 |
Operating Leases, Future Minimum Payments Due, Total | $330,380 |
LEASE_COMMITMENTS_Details_1
LEASE COMMITMENTS (Details 1) (USD $) | Dec. 31, 2013 |
Lease Commitments Details 1 | ' |
2014 | $7,931,332 |
2015 | 7,931,332 |
2016 | 5,948,499 |
2017 | ' |
2018 | ' |
Over five years | ' |
Capital lease commitments, Future Minimum Payments Due, Total | $21,811,163 |
LEASE_COMMITMENTS_Details_Narr
LEASE COMMITMENTS (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Lease Commitments Details Narrative | ' | ' | ' |
Rent expense | $95,258 | $28,744 | $26,938 |
CONDENSED_PARENT_COMPANY_FINAN2
CONDENSED PARENT COMPANY FINANCIAL INFORMATION (Condensed Balance Sheets) (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Assets | ' | ' | ' | ' |
Cash | $237,060,422 | $228,861,009 | $246,600,917 | $119,477,298 |
Prepaid expenses | 1,465,287 | 382,569 | ' | ' |
Total assets | 626,558,344 | 673,369,602 | ' | ' |
Current Liabilities | ' | ' | ' | ' |
Accrued liabilities and other payables | 6,799,128 | 5,818,060 | ' | ' |
Total liabilities | 327,429,676 | 343,302,282 | ' | ' |
Stockholders' Equity | ' | ' | ' | ' |
Common stock | 140,418,118 | 140,418,118 | ' | ' |
Additional paid-in capital | ' | 4,978,698 | ' | ' |
Treasury stock | -498,799 | -414,063 | ' | ' |
Retained earnings | 127,963,861 | 163,276,046 | ' | ' |
Accumulated comprehensive income | 31,245,488 | 21,808,521 | ' | ' |
Total stockholders' equity | 299,128,668 | 330,067,320 | 298,427,836 | 167,812,002 |
Total liabilities and stockholders' equity | 626,558,344 | 673,369,602 | ' | ' |
Parent Company [Member] | ' | ' | ' | ' |
Assets | ' | ' | ' | ' |
Cash | 4,368,588 | 7,645,949 | 11,621,907 | 5,552,387 |
Prepaid expenses | 30,000 | ' | ' | ' |
Investments in subsidiaries | 294,843,080 | 322,526,371 | ' | ' |
Total assets | 299,241,668 | 330,172,320 | ' | ' |
Current Liabilities | ' | ' | ' | ' |
Accrued liabilities and other payables | 113,000 | 105,000 | ' | ' |
Total liabilities | 113,000 | 105,000 | ' | ' |
Stockholders' Equity | ' | ' | ' | ' |
Common stock | 140,418,118 | 140,418,118 | ' | ' |
Additional paid-in capital | ' | 4,978,698 | ' | ' |
Treasury stock | -498,799 | -414,063 | ' | ' |
Retained earnings | 127,963,861 | 163,276,046 | ' | ' |
Accumulated comprehensive income | 31,245,488 | 21,808,521 | ' | ' |
Total stockholders' equity | 299,128,668 | 330,067,320 | ' | ' |
Total liabilities and stockholders' equity | $299,241,668 | $330,172,320 | ' | ' |
CONDENSED_PARENT_COMPANY_FINAN3
CONDENSED PARENT COMPANY FINANCIAL INFORMATION (Condensed Statement of Income) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Condensed Financial Statements, Captions [Line Items] | ' | ' | ' | ' | ' | ' | ' |
General and administrative expenses | ($3,757,658) | ($2,618,166) | ($2,532,275) | ($2,403,101) | ($11,311,200) | ($13,168,132) | ($10,707,418) |
Net income | -8,824,212 | -4,372,359 | -845,772 | -95,074 | -14,137,417 | 26,133,088 | 57,620,552 |
Parent Company [Member] | ' | ' | ' | ' | ' | ' | ' |
Condensed Financial Statements, Captions [Line Items] | ' | ' | ' | ' | ' | ' | ' |
General and administrative expenses | ' | ' | ' | ' | -3,203,515 | -2,419,836 | -9,439,791 |
Equity income of subsidiaries | ' | ' | ' | ' | -10,933,902 | 28,552,924 | 67,060,343 |
Net income | ' | ' | ' | ' | ($14,137,417) | $26,133,088 | $57,620,552 |
CONDENSED_PARENT_COMPANY_FINAN4
CONDENSED PARENT COMPANY FINANCIAL INFORMATION (Cash Flows) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Condensed Financial Statements, Captions [Line Items] | ' | ' | ' |
Net cash used in operating activities | $37,536,356 | ($2,101,972) | $56,248,127 |
Net cash used in investing activities | -34,705,466 | -56,573,299 | -55,611,450 |
Net cash (used in)/provided by financing activities | -447,643 | 38,937,141 | 118,761,977 |
Cash as of January 1 | 228,861,009 | 246,600,917 | 119,477,298 |
Cash as of December 31 | 237,060,422 | 228,861,009 | 246,600,917 |
Parent Company [Member] | ' | ' | ' |
Condensed Financial Statements, Captions [Line Items] | ' | ' | ' |
Net cash used in operating activities | -3,192,625 | -2,421,284 | -7,887,611 |
Net cash used in investing activities | ' | ' | -48,000,000 |
Net cash (used in)/provided by financing activities | -84,736 | -1,554,674 | 61,957,131 |
Cash as of January 1 | 7,645,949 | 11,621,907 | 5,552,387 |
Cash as of December 31 | $4,368,588 | $7,645,949 | $11,621,907 |
QUARTERLY_CONSOLIDATED_FINANCI2
QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Revenue: | ' | ' | ' | ' | ' | ' | ' |
Steel mill flat-rolled products | $46,211,805 | $30,927,996 | $43,078,588 | $45,610,707 | $165,829,096 | $265,486,082 | $341,778,295 |
Cost of revenue | -51,624,916 | -30,178,989 | -39,557,743 | -40,404,115 | -161,765,763 | -208,541,058 | -240,199,678 |
Gross Profit/(Loss) | -5,413,111 | 749,007 | 3,520,845 | 5,206,592 | 4,063,333 | 56,945,024 | 101,578,617 |
Operating expenses: | ' | ' | ' | ' | ' | ' | ' |
General and administrative expenses | -3,757,658 | -2,618,166 | -2,532,275 | -2,403,101 | -11,311,200 | -13,168,132 | -10,707,418 |
Selling and marketing expenses | -427,942 | -446,488 | -73,666 | -734,347 | -1,682,443 | -1,446,383 | -1,634,232 |
Total operating expenses | -4,185,600 | -3,064,654 | -2,605,941 | -3,137,448 | -12,993,643 | -14,614,515 | -18,041,650 |
Operating income/(loss) | -9,548,711 | -2,315,647 | 914,904 | 2,069,144 | -8,930,310 | 42,330,509 | 83,536,967 |
Other income (expense): | ' | ' | ' | ' | ' | ' | ' |
Interest income | 1,168,191 | 1,369,269 | 845,618 | 1,236,539 | 4,619,617 | 3,576,741 | 1,913,091 |
Interest expenses | -1,187,391 | -3,490,793 | -2,580,151 | -3,359,531 | -10,617,866 | -8,228,472 | -6,470,126 |
Sundry income | 794,168 | 36,500 | 3,423 | 98,598 | 932,689 | 351,483 | 602,247 |
Income before income taxes | -8,823,443 | -4,400,671 | -816,206 | 44,750 | -13,995,870 | 38,030,261 | 79,582,179 |
Income tax expense | -469 | 28,312 | -29,566 | -139,824 | -141,547 | -11,897,173 | -21,961,627 |
Net (loss)/income | ($8,824,212) | ($4,372,359) | ($845,772) | ($95,074) | ($14,137,417) | $26,133,088 | $57,620,552 |
Net income per share | ' | ' | ' | ' | ' | ' | ' |
-Basic | ($0.15) | ($0.07) | ($0.01) | ' | ($0.24) | $0.45 | $1.02 |
-Diluted | ($0.15) | ($0.07) | ($0.01) | ' | ($0.24) | $0.45 | $1.02 |
Weighted average common shares outstanding | ' | ' | ' | ' | ' | ' | ' |
- Basic | 59,522,910 | 59,522,910 | 59,556,396 | 59,561,899 | 59,540,872 | 58,543,076 | ' |
- Diluted | 59,522,910 | 59,522,910 | 59,556,396 | 59,561,899 | 59,540,872 | 58,543,076 | ' |