Armco Metals Hldgs Inc (OTC:AMCO)

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On May 18, 2016 Armco Metals Holdings, Inc. received a notice from NYSE Regulation indicating that we are below certain of the continued listing standards of the NYSE MKT as set forth in Sections 134 and 1101 of the NYSE MKT Company Guide due to the delay in filing our Form 10-Q for the period ended March 31, 2016 (the "Form 10-Q") beyond the filing due date. In furtherance to the disclosure contained in our Current Report on Form 8-K filed on April 11, 2016, we expect to record an impairment of certain assets associated with our recycling operations. We are unable to complete our Form 10-K for the year ended December 31, 2015 (the "Form 10-K") until such time as we have completed the analysis and record of the impairment. And thus we are unable to complete our Form 10-Q until we have filed our Form 10-K. Currently, we are working diligently to conduct the analysis of the impairment of above-mentioned and complete the Form 10-K. We have submitted a compliance plan for late filing to NYSE Regulation which is under review of NYSE Regulation.

On May 25, 2016 we issued a press release announcing the receipt of the NYSE Regulation notice, a copy of which is filed as Exhibit 99.1 to this report.

In addition to the two notices received from NYSE Regulation described above, on May 24, 2016 we were advised by NYSE Regulation that as a result of the decline in our stock price it is likely we will receive an early warning notice from the exchange. We have been advised that the exchange typically sends a company an early warning letter when the stock has a 30-day trading average of around $0.20; however, the exchange also has a policy that provides discretion for the NYSE MKT to immediately suspend and delist the security if it trades below $0.06, as it would then view the stock price to be “abnormally low” and not suitable for trading. The 30-day trading average stock price of our common stock was $0.21 as of May 23, 2016 and $0.15 on an absolute basis. The early warning letter, if issued, is expected to provide us six months to take action to rectify the price issue. At the end of the six months, if the price has not improved, the exchange would consider our company below compliance. At that point, we would be provided an additional six months to cure the noncompliance and, if not cured, our common stock would be delisted from the NYSE MKT.

As a result of our failure to file our 10-K for the year ended December 31, 2015 as well as our 10-Q for the period ended March 31, 2016, we are not considered "current" in our reporting obligations under Federal securities laws.

Item 3.02 Unregistered Sales of Equity Securities.

As previously disclosed, Armco Metals Holdings, Inc. entered into an Agreement with Shanghai Wisdom & Wealth Investment & Management Co., Ltd.("Wisdom & Wealth"), pursuant to which, from time to time until the maturity date, Wisdom & Wealth may convert the $4,092,457 (the "Loan Balance") owed it by our wholly-owned subsidiary Armco (Lianyungang) Renewable Metals, Inc. into shares of our common stock at a conversion price equal to 85% of volume weighed average price (VWAP) for the common stock during the 10 trading days prior to the conversion date, with a floor conversion price of $0.20 per share. In furtherance to the disclosure contained in our Current Report on Form 8-K filed on February 4, 2016, Wisdom & Wealth has made below conversions.

On February 17, 2016 Wisdom & Wealth converted $100,000 of the Loan Balance into 435,730 shares of our common stock at a conversion price of $0.2295 per share.

On March 16, 2016 Wisdom & Wealth converted $140,000 of the Loan Balance into 457.516 shares of our common stock at a conversion price of $0.3060 per share.

On April 14, 2016 Wisdom & Wealth converted $100,000 of the Loan Balance into 490,196 shares of our common stock at a conversion price of $0.2040 per share.

On May 6, 2016 Wisdom & Wealth converted $100,000 of the Loan Balance into 500,000 shares of our common stock at a conversion price of $0.2000 per share.

Subsequent to each of above conversion, we had been advised that Wisdom & Wealth sold those shares to an unrelated third party in a private transaction. Wisdom & Wealth is an accredited investor and the issuances were exempt from registration under the Securities Act of 1933, as amended, in reliance on exemptions provided by Section 3(a)(9) of that act.

BEIJING, April 8, 2016 /PRNewswire/ -- Bona Film Group Limited ("Bona" or the "Company") (NASDAQ: BONA), a leading film distributor and vertically integrated film company in China, today announced the completion of its merger (the "merger") with Mountain Tiger Limited ("Merger Sub"), a wholly-owned subsidiary of Mountain Tiger International Limited ("Parent"), pursuant to the agreement and plan of merger (the "merger agreement") dated December 15, 2015 by and among Parent, Merger Sub and the Company. As a result of the merger, the Company ceased to be a public traded company and became a wholly-owned subsidiary of Parent.

Under the terms of the merger agreement, each of the Company's ordinary shares, par value US$0.0005 per share (each a "Share") issued and outstanding immediately prior to the effective time of the merger, has been cancelled in exchange for the right to receive $27.40 in cash per Share without interest, and, for the avoidance of doubt, each of the Company's American depositary shares (each an "ADS"), each two representing one Share, issued and outstanding immediately prior to the effective time of the merger, has been cancelled in exchange for the right to receive US$13.70 in cash per ADS without interest (less $0.05 per ADS cancellation fees), in each case, net of any applicable withholding taxes, other than (a) Shares (including Shares represented by ADSs) owned by Parent, Merger Sub or the Company (as treasury, if any), or by any direct or indirect wholly-owned subsidiary of Parent, Merger Sub or the Company, (b) Shares (including Shares represented by ADSs) reserved (but not yet allocated) by the Company for settlement upon exercise or vesting of any options (the "Options") or restricted share awards (the "Restricted Shares") of the Company issued under its share incentive plans, (c) Shares owned by shareholders who have validly exercised and have not effectively withdrawn or lost their dissenter rights under the Cayman Islands Companies Law (the "Dissenting Shares"), and (d) Shares (including Shares issuable under the Options, the Restricted Shares and Shares represented by ADSs) beneficially owned by the certain rollover shareholders (Shares described under (a) through (d) above are collectively referred to herein as the "Excluded Shares").

Shareholders of record as of the effective time of the merger who are entitled to the merger consideration will receive a letter of transmittal and instructions on how to surrender their share certificates in exchange for the merger consideration (net of any applicable withholding taxes). Shareholders should wait to receive the letter of transmittal before surrendering their share certificates. As soon as practicable after this announcement, Deutsche Bank Trust Company Americas (the "ADS Depositary") will call for the surrender of all ADSs (other than any ADS that represents Excluded Shares) for delivery of the merger consideration. Upon the surrender of ADSs, the ADS Depositary will pay to the surrendering holders US$13.70 per ADS surrendered in cash without interest (less $0.05 per ADS cancellation fees) and net of any applicable withholding taxes.

The Company also announced today that it has requested that trading of its ADSs on the NASDAQ Global Select Market ("NASDAQ") be suspended. The Company requested NASDAQ to file a notification on Form 25 with the Securities and Exchange Commission (the "SEC") to delist the Company's ADSs and deregister the Company's registered securities. The deregistration is expected to become effective within 90 days of the filing of Form 25 or such shorter period as may be determined by the SEC. The Company intends to suspend its reporting obligations under the Securities Exchange Act of 1934, as amended, by filing a Form 15 with the SEC in ten days. The Company's obligations to file with the SEC certain reports and forms, including Form 20-F and Form 6-K, will be suspended immediately as of the filing date of the Form 15 and will terminate once the deregistration becomes effective.

In connection with the merger, Barclays Bank PLC is serving as the financial advisor to the independent committee of the board of directors of the Company (the "Independent Committee"). Shearman & Sterling LLP is serving as the U.S. legal counsel to the Independent Committee and Maples and Calder is serving as the Cayman Islands legal counsel to the Independent Committee. Simpson Thacher & Bartlett LLP is the Company's U.S. legal counsel. Davis Polk & Wardwell is serving as legal counsel to Barclays Bank PLC.

CITIC Securities Co., Ltd. is serving as the financial advisor to (i) Mr. Dong Yu, the Chairman and Chief Executive Officer of the Company, and his controlled affiliates, (ii) Uranus Connection Limited, (iii) Alibaba Pictures Group Limited and its affiliated entity, (iv) Willow Investment Limited, an affiliate of Tencent, (v) Orrick Investments Limited, an affiliate of Fosun International Limited, (vi) Sequoia Capital China I, L.P. and its affiliated funds, (vii) SAIF Partners IV L.P. and (viii) All Gain Ventures Limited (collectively, the "Buyer Group"). Kirkland & Ellis is serving as the U.S. legal counsel to the Buyer Group. Conyers Dill & Pearman is serving as the Cayman Islands legal counsel to the Buyer Group.

Item 8.01 Other Events.

 
On March 23, 2016 Armco Metals Holdings, Inc. ("Armco") entered into a Stock Equity Transfer Agreement (the "Framework Agreement") with Jiangsu Yungang Investment & Development Co., Ltd.("Yungang"), an unrelated third party regarding the proposed terms and conditions for the sale of Armco's subsidiaries Armco (Lianyungang) Renewable Metals, Inc. and Armet (Lianyuang) Holdings, Inc. (collectively, the "Subsidiaries"). The Subsidiaries are engaged in the recycling of scrap metals and operate Armco's recycling facilities which represented approximately 46% of its consolidated revenues for the nine months ended September 30, 2015. In January of 2016, Armco was advised by the local PRC authorities that the recycling facilities would need to be relocated from the current location as a result of "visual pollution." Following the decline in revenues from this portion of Armco's business, the lenders on which it relies to provide working capital declined to extend some loans related to this portion of business. As a result of the foregoing, management of Armco has determined that the sale of the Subsidiaries is necessary to ensure that Armco can continue as a going concern.

According to the terms of the Framework Agreement, Yungang would acquire the Subsidiaries, including the assets and liabilities, at a price which will equal 70% of the net value of the two companies based on a professional third party's assessment report to be obtained. The closing of the transaction is subject to the receipt of the approval by Yungang from the Administrative Committee of the Lianyungang Economic Development Zone and the approval of Armco's Board of Directors. Once received, and assuming no other conditions precedent to closing are determined to be necessary, the closing will occur within three days of the receipt of the assessment report under the terms of a definitive agreement to be entered into by the parties. At closing, Armco will transfer the stock of the Subsidiaries to Yungang or its assignee and Yungang will tender the purchase price to Armco within 90 days thereafter.

The foregoing description of the terms and conditions of the Framework Agreement are qualified in their entirety by reference to the agreement and the English translation thereof which are filed as Exhibits 99.1 and 99.2, respectively, to this report.

The Board of Directors has not yet determined if it will approve the terms of the Framework Agreement, nor has Armco made any analysis as to the potential need for the approval of its stockholders to the transaction contemplated thereby. In addition, while it is likely Armco will record an impairment on the sale of the assets associated with the Subsidiaries and the recycling facility, no evaluation has been made as of this time as to the scope of the impairment nor have the costs with the exit from these operations been estimated.

Item 8.01          Other Events.

On March 2, 2016, the District Court in Clark County, Nevada entered a Preliminary Order involving that certain Stipulation and Order Regarding Parties’ Agreement to Settle and Further Settlement Procedures in that certain derivative action, Albert Perron, derivatively on behalf of China Armco Metals, Inc. v. China Armco Metals, Inc. and management of China Armco Metals, Inc., (Case No. A-13-679151-C). As contemplated by the Stipulation, the parties have agreed to certain governance measures encompassing the following: (i) the adoption and implementation of a variety of corporate governance measures relating to the underlying issues in the Action involving the Company’s practices and procedures concerning the issuance of equity awards and public disclosures; and (ii) Defendants’ payment of Plaintiff’s counsel’s attorneys’ fees and expenses in the amount of $100,000.

If approved by the Court, the settlement calls for plaintiffs (on behalf of themselves, all current Company stockholders and, derivatively, on behalf of the Company to release all released claims against the released persons, as defined in the Stipulation, brought or that could be brought derivatively or otherwise by or on behalf of the Company against any of the released persons (as defined in the Stipulation), that arise out of or are related in any way to (a) the subject matter of the derivative actions; or (b) the facts alleged or that could have been alleged in any complaint filed in the derivative actions.

The Stipulation was filed with Court on March 2, 2016. On March 2, 2016, the Court issued an Order Preliminarily Approving Derivative Settlement and Providing for Notice (“Preliminary Order”).

Pursuant to the Stipulation and the Preliminary Order, the Company is filing a copy of the Notice of Proposed Settlement of Derivative Action (the “Notice”) as Exhibit 99.1 to this Current Report on From 8-K. In addition, the Company will publish the Notice on the Company’s website (www.armcometals.com) on the page titled “Investors.”

The Court has scheduled a hearing for the consideration of final approval of the proposed settlement on April 21, 2016.

SAN MATEO, CA--(Marketwired - Mar 14, 2016) - Armco Metals Holdings, Inc. ("Armco Metals " or "the Company") (NYSE MKT: AMCO), a distributor of imported metal ores and a steel recycler in China, today announced that the first shareholders' meeting of Shanghai Meng Yi Network Technology Co., Ltd.("Meng Yi") was held on March 1, 2016 in Shanghai.

As disclosed previously, Meng Yi is the operating entity for the OTO (Online to Offline) platform established for steel scrap and other commodities trading businesses, which Armco Metals owned 34.3% interest and three other shareholders held 21.9% interest each. So far, Meng Yi has registered and created a website, www.ezhangyu.com, that is still under construction.

According to the resolution of the shareholder meeting, the ownership and capital structure of Meng Yi has been changed. Specifically, after the change, for a total share of 10 million par value determined at CNY 1 per share ("approximately $0.15 per share'), Armco Metals Shanghai subscribes 3 million shares and will own 30% interest, Mr. Kexuan Yao, CEO and Chairman of Armco Metals subscribes 1 million shares and will own 10% interest, and the other three non-affiliated shareholders subscribe 2 million, 2 million and 1 million shares and will own 20%, 20% and 10% interest, respectively. 1 million incentive shares plan was also set up and reserved for Meng Yi's management upon shareholder meeting. All the subscriptions will be contributed with cash at price CNY 1.11 ("approximately $0.17") per share.

The subscription contribution should be made before or on September 30, 2016. Mr. Kexuan Yao, Chairman & CEO of Armco metals, will serve as Chairman of Mengyi.

All the shareholders are given options with CNY 2($0.3) per share valid for three years, and board of directors are authorized to grant shares to the management by totally 1 million with CNY 0 per share, 1 million options with CNY 1.5 per share and 2 million options with CNY 3 per share, valid for three years and should be exercised before any investment from new investors or going public.

"As e-commerce has been developing quickly in China and China government is encouraging and promoting the application of internet technology in traditional business, management is pleased with the progress of our OTO platform building which is the application and implementation of e-commerce strategy in our business. Currently, and in the short term, it provides a match and complements our business; for the long term. Creating the OTO platform is an important strategic development which could lead the business transition for the Company from solely selling steel scrap products in traditional methods to providing services through the online platform. Mengyi is setting the rules, matchmaking transactions and acting as intermediary between the suppliers and the customers. Products exchanging on the OTO platform including iron ore, coal, steel scrap and steel products etc." Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "Low financing capacity and slow capital turnover are major industry deficiencies and difficult quality control hinder the development of the industry. The OTO platform integrates strategic positioning supplying, distributing, financing and commodities exchange which covers all steel industrial chain, by which achieving conversion from the vertical value chain of self mode to the platform service mode. Once the platform grows to certain scale, we believe the greater sales revenue and profit for our steel and trading business could be expected."

Item 3.02          Unregistered Sales of Equity Securities.

As previously disclosed, Armco Metals Holdings, Inc. entered into an Agreement with Shanghai Wisdom & Wealth Investment & Management Co., Ltd., an entity organized under the laws of the People's Republic of China ("Wisdom & Wealth"), pursuant to which, from time to time until the maturity date, Wisdom & Wealth may convert the $4,092,457 (the "Loan Balance") owed it by Armco (Lianyungang) Renewable Metals, Inc., an entity organized under the laws of the People's Republic of China and our wholly-owned subsidiary, into shares of our common stock at a conversion price equal to 85% of volume weighed average price (VWAP) for the common stock during the 10 trading days prior to the conversion date, with a floor conversion price of $0.20 per share. On December 24, 2015, we entered into a First Amendment of the Agreement with Wisdom & Wealth (the "First Amendment") which modified certain terms of the Agreement which included, (i) extending the maturity date of the Loan Balance was extended for an additional year to December 31, 2016, (ii) capping the maximum number of shares of our common stock which may be issued upon the conversion of the Loan Balance at 20,462,285 shares, which represented approximately 250% of our outstanding common stock on the date of the First Amendment, and (iii) limiting the number of shares of our common stock issuable to Wisdom & Wealth and its affiliates upon any conversion to an amount which would not result in Wisdom & Wealth and/or its affiliates being the beneifical owner of more than 4.99% of our common stock at the time of the conversion, among other terms.

On January 7, 2016 Wisdom & Wealth converted $150,000 of the Loan Balance into 392,147 shares of our common stock at a conversion price of $0.3825 per share. Subsequent to such conversion, we have been advised that Wisdom & Wealth sold those shares to an unrelated third party in a private transaction.

Thereafter, on January 28, 2016 Wisdom & Wealth converted $130,000 of the Loan Balance into 413,335 shares of our common stock at a conversion price of $0.3145 per share.

Wisdom & Wealth is an accredited investor and the issuances were exempt from registration under the Securities Act of 1933, as amended, in reliance on exemptions provided by Section 3(a)(9) of that act.

Item 1.01          Entry into a Material Definitive Agreement.

As previously disclosed, Armco Metals Holdings, Inc. entered into an Agreement with Shanghai Wisdom & Wealth Investment & Management Co., Ltd., an entity organized under the laws of the People's Republic of China ("Wisdom & Wealth"), pursuant to which, from time to time until the maturity date, Wisdom & Wealth may convert the $4,092,457 (the "Loan Balance") owed it by Armco (Lianyungang) Renewable Metals, Inc., an entity organized under the laws of the People's Republic of China and our wholly-owned subsidiary ("Renewable Metals"), into shares of our common stock at a conversion price equal to 85% of volume weighed average price (VWAP) for the common stock during the 10 trading days prior to the conversion date, with a floor conversion price of $0.20 per share. The ability of Wisdom & Wealth to convert any of the Loan Balance was subject to the satisfaction of certain conditions precedent including (i) the approval by our stockholders of the issuance of in excess of 19.99% of our common stock upon the conversion of the Loan Balance, and (ii) the approval of the listing of the additional shares of common stock to be issued upon any conversion by NYSE Regulation, Inc. (collectively, the "Conversion Conditions"). On December 14, 2015, the Conversion Conditions were satisfied.

On December 24, 2015, we entered into a First Amendment of the Agreement with Wisdom & Wealth (the "First Amendment") which modified certain terms of the Agreement including:

● the maturity date of the Loan Balance was extended for an additional year to December 31, 2016;

● the maximum number of shares of our common stock which may be issued upon the conversion of the Loan Balance is 20,462,285 shares, which represents approximately 250% of our outstanding common stock. Any portion of the Loan Balance which remains outstanding after the issuance of this maximum number of shares of our common stock is payable by Renewable Metals in cash;

● the number of shares of our common stock issuable to Wisdom & Wealth and its affiliates upon any conversion may not result in Wisdom & Wealth and/or its affiliates being the beneifical owner of more than 4.99% of our common stock at the time of the conversion;

● the ability of Wisdom & Wealth to make any public resales of the shares of common stock received upon a conversion during any 30-day period is limited to 1% of our outstanding common stock; and

● any transferees of shares of our common stock received upon a conversion to third parties which are not affiliates of Wisdom & Wealth are subject to certain terms of the Agreement.

The foregoing summary of the First Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of First Amendment which is filed as Exhibit 10.34 to this report and incorporated herein by reference.

SAN MATEO, CA--(Marketwired - Dec 2, 2015) - Armco Metals Holdings, Inc. ("Armco Metals " or the "Company") (NYSE MKT: AMCO), a distributor of imported metal ores, wood, and barley, and a steel recycler in China, today announced that on November 30, 2015 the Company terminated the operation of its subsidiary Henan Armco & Metawise Trading Co., Ltd. ("Henan Armco") and merged its subsidiary Armco (Lianyungang) Renewable Metals, Inc. ("Renewable Metals") with subsidiary Armco (Lianyungang) Holdings, Inc. ("Lianyungang Armco") on November 30, 2015.

The purpose of the corporate restructure is to reduce operating costs, increase efficiency of working capital usage, and improve the effectiveness of the Company's overall operation and management. The business of Henan Armco has been transitioned to Company's subsidiary Armco Metals (Shanghai) Holding, Ltd. ("Shanghai Armco"), while Renewable Metals' personnel and business are being consolidated into Lianyungang Armco. With the corporate restructure, the Company decreases its wholly-owned operating subsidiaries in China to three entities from the prior five entities while keeping its business model and scale intact.

Commenting on the restructure, Kexuan Yao, Chairman and CEO of Armco Metals, stated, "Armco Metals has witnessed and experienced the significant changes in the industry and market and is on the endeavor to make business transition in response to the market changes and emerging business opportunities. The corporate restructure is also one of our efforts and steps of executing our business transition which will enable us to better reposition and adapt to our platform business strategy development, in additional to the enhancement of the synergy, efficiency and effectiveness of the Company's overall operation and management."

Armco Metals Enters Plant and Equipment Disassembling Service Business

SAN MATEO, CA--(Marketwired - Nov 23, 2015) - Armco Metals Holdings, Inc. ("Armco Metals " or "the Company") (NYSE MKT: AMCO), a distributor of imported metal ores, wood, and barley, and a steel recycler in China, today announced that its Armco Metals (Lianyungang) Holding, Ltd. subsidiary ("Armco Metals Lianyungang") entered into a contract with Lianyungang Chaoyang Construction & Development Co. Ltd. ("Chaoyang") on Nov. 19, 2015. According to the contract, Armco Metals Lianyungang would provide the service to disassemble three plant buildings built with steel framework, occupying an area of 15 thousand square meters, as well as all the equipment and facilities inside the buildings and the cleaning up.

Under the terms of the contract, Armco Metals Lianyungang would acquire the ownership of all the materials and scraps, including metal materials and non-metal materials, disassembled from the three buildings and pay CNY 4.88 million (approximately $0.76 million) to Chaoyang. The net revenue and gross profit generated from the sales of the materials is expected to be approximately $1.3 million and $0.35 million, respectively, with a gross margin of 27%, which is also the value realized from the dissembling service provided. Compared to current market price, the cost of the materials we would acquire from the disassembling services is estimated to be 20%-30% lower than market price. The contract for the disassembling starts from Nov. 19, 2015 and ends on Jan. 19, 2016.

Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "This is the first time Armco Metals Lianyungang is providing disassembling service and entering this business line, and it is a milestone for the company's platform strategy development which the company is on the endeavor to make business transition from solely selling products to providing various services in additional to selling products. We are also proud of our credentials, reputation and capacity we have achieved in the past, which only the highly qualified recycler can be selected for providing this kind of disassembling service. Taking the advantage of our state-of-the-art facilities and Chinese government's tax-refund policy only applied to qualified and eligible recyclers, we are furthering the implementation of platform strategy in all and every operation of our business to develop services-oriented business, and we are pleased to enter the disassembling service business that will expose us to tremendous similar services business opportunities in this market and become a new source of our revenue and income. Management deems this is a great progress we made toward our goal of our business transition and will continue to work in the direction."

Third Quarter 2015 Financial Results

• For the third quarter of 2015 ended September 30, 2015, net revenue was $48.5 million, a 51% increase compared to net revenue of $32.2 million recorded in the third quarter of 2014.
• Net income of $0.4 million, or $0.05 per basic and diluted share vs. last years same quarter of $0.87

In reviewing the financial performance for the third quarter of 2015, Mr. Kexuan Yao, Chairman and CEO of Armco Metals, remarked that, "In the third quarter of 2015 we were able to make positive gross profit on both recycling and trading business despite a continued weak environment in our end markets. While the market is expected to remain weak, management believe that the implementation of our 'platform strategy' sales model in this business is the right strategy for the company, where we can work with our customers more closely, lower our market risks by sharing them with our customers and increase our sales with less or without additional working capital. As an endeavor to the strategy, as disclosed before, we are creating an OTO platform for scrap recycling business which could lead the business transition for the company from solely selling steel scrap products in traditional methods to providing both services and products in the steel scrap business through the online platform. Once the platform grows to certain scale, we believe the greater sales revenue and profit for our steel scrap business could be expected."

Item 1.01          Entry into a Material Definitive Agreement.

As previously disclosed in the filings by Armco Metals Holdings, Inc. with the Securities and Exchange Commission, the property, plant and equipment and land use rights of Armco (Lianyungang) Renewable Metals, Inc., an entity organized under the laws of the People's Republic of China and our wholly-owned subsidiary ("Renewable Metals"), were partial collateral for bank loans of RMB50,000,000 (approximately $8,135,373) with the Bank of China Lianyungang Branch. On December 25, 2014, China Orient Asset Management Corporation, an organization authorized by the People’s Bank of China to dispose of bad assets from banks, primarily from the Bank of China, transferred the loan to Lianyungang Chao Yang Construction Development Co., Ltd., an entity organized under the laws of the People's Republic of China ("Lianyungang Chao Yang") and the related collateral was released as of December 31, 2014.On March 6, 2015, Lianyungang Chao Yang agreed to waive 50% of the loan (RMB25,000,000, or approximately $4,060,617), thereby reducing the principal balance to RMB25,000,000 (approximately $4,075,205, accounting for the change in the foreign currency translation of RMB to U.S. dollars) (the "Loan"). In connection therewith, we recognized a one-time gain on forgiveness of debt of $4,081,366. Lianyungang Chao Yang also modified additional terms of the Loan, which included an obligation to make minimum repayments of not less than RMB5,000,000 in April 2015 and thereafter of not less than RMB2,500,000 per month until the maturity date of the Loan on December 31, 2015. At June 30, 2015 we owed $4,092,457 under the Loan (the "Loan Balance"). We have not made the scheduled repayments. On September 7, 2015 we entered into a Guaranty for the benefit of Lianyungang Chao Yang pursuant to which we guaranteed the repayment of the Loan by Renewable Metals.

On September 7, 2015, Lianyungang Chao Yang entered into a Debt Purchase Agreement with Shanghai Wisdom & Wealth Investment & Management Co., Ltd., an entity organized under the laws of the People's Republic of China ("Wisdom & Wealth") pursuant to which Wisdom & Wealth purchased the Loan from Lianyungang Chao Yang and the Guaranty was transferred to Wisdom & Wealth in connection with its acquisition of the Loan.

Thereafter, on September 8,2015 we entered into an Agreement with Wisdom & Wealth pursuant to which, from time to time until the maturity date, Wisdom & Wealth may convert the Loan Balance into shares of our common stock at a conversion price equal to 85% of volume weighed average price (VWAP) for the common stock during the 10 trading days prior to the conversion date, with a floor conversion price of $0.20 per share. The interest which will accruing under the Loan will be repaid by us in cash and is not eligible for conversion into shares of our common stock.

Based upon an estimated conversion price of $0.425 per share on September 8, 2015, if Wisdom & Wealth were to convert all of the Loan Balance it would result in the issuance by us of 9,629,310 shares of our common stock, representing 118% of our currently issued and outstanding shares of common stock and 54% of our common stock giving effect to the issuance. If the Loan Balance was to be converted at the floor conversion price of $0.20 per share, it would result in the issuance by us of 20,462,285 shares of our common stock representing 250% of our currently issued and outstanding common stock and 71% giving effect to the issuance. However, as the conversion price is tied to the market price of our common stock, we cannot presently estimate the ultimate number of shares of our common stock which may be issued upon the conversion of the Loan Balance once it becomes convertible. The conversion of the Loan Balance into shares of our common stock could result in a change of control of our company. Under the terms of the Agreement, Wisdom & Wealth agreed not to exercise any control over our company or otherwise attempt to influence our management and to vote any shares of our common stock it may own on the same proportion as our other stockholders on all matters submitted to a vote of our stockholders.

Second Quarter of 2015 Financial Results 

Net revenue was $36.9 million, a 12% increase compared to net revenue of $32.9 million recorded in the second quarter of 2014.

Net loss of $(7.6) million or $(1.18) per basic and diluted share on 6.5 million weighted average shares outstanding. This compared to net loss of $(0.8) million or $(0.15) per basic and diluted share on 5.1 million weighted average shares outstanding in the same period of 2014.

Item 3.02 Unregistered Sales of Equity Securities.

In accordance with the terms and conditions of that certain Agreement dated April 27, 2015 between Armco Metals Holdings, Inc. and Shanghai Heqi Investment Center (Limited Partner) ("Heqi") related to the possible conversion by Heqi of $1,200,000 we owe Heqi, on June 26, 2015 Heqi converted $330,000 of principal and $2,418 of accrued interested into 355,359 shares of our common stock based upon a conversion price of $0.935 per share. Under the terms of the Agreement, Heqi may convert the obligation into shares of our common stock at a conversion price equal to 85% of volume weighed average price (VWAP) for the common stock during the 10 trading days prior to the conversion date. Heqi is not entitled to convert any portion of the obligation if, at the time of conversion, the number of shares to be issued to Heqi would result in Heqi and/or its affiliates being the beneficial owner of more than 4.99% of our outstanding shares of common stock.

With this latest conversion, Heqi has now converted a total of $940,000 of the obligation, together with accrued interest of $9,048 into an aggregate of 971,183 shares of our common stock at an average conversion price of $0.977 per share. Under the terms of the Agreement the maximum number of shares of our common stock which we may issue upon possible conversions by Heqi of the obligation is 1,224,154 shares, and any amount which is not available for conversion, if any, at maturity must be satisfied by us in cash. Following these conversions, we owe Heqi $260,000 which is due on July 20, 2015.

SAN MATEO, Calif., June 29, 2015 (GLOBE NEWSWIRE) -- Armco Metals Holdings, Inc. ("Armco Metals Holdings" or "the Company") (NYSE MKT:AMCO), a distributor of imported metal ores and a steel recycler in China, today announced that its Armco (Lianyungang) Renewable Metals, Inc. subsidiary ("Armco Renewable Metals") will benefit substantially from the new incentive policy that renewable resources industry is set for value-added tax ("VAT") rebate effective on July 1, 2015, ranging from 30% to 100% depending upon the commodity, among which rebate for ferrous scrap is 30%, according to a statement from Ministry of Finance of P.R.C on Thursday, June 25, 2015.

The VAT rebate policy was once implemented in year 2009 and 2010 but ceased in year 2011 due to consideration for industry rectification and environmental protection. The policy effective on July 1, 2015 mainly applies to qualified processing recyclers rather than upstream scattered collectors and downstream steel mill. Armco Renewable Metals received approval for operation according to the "Standards of Entering the Scrap Steel Processing Industry" in the middle of 2014 and has been certified as a Demonstration Base for Steel Scrap Processing and Distribution by the China Steel Scrap Industrial Associations in early 2013, and thus is qualified for the favorable policy.

Armco Metals Holdings will benefit directly and substantially from the new VAT rebate policy. Effective on July 1, 2015, the Company's main products ferrous scrap and waste plastics will have a 30% and 50% of VAT rebate, respectively. The Company's revenue from selling ferrous scrap and waste plastics in the first quarter of 2015 amounted $15 million.

"It is a long-expected policy for the Company and our shareholders, tax rebate means a cut in costs , an expected approximately 5% or so raise in gross profit per metric ton for the related products for us, an encourage to steel scrap utilization for steel mill and support for qualified players in the industry." Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "In addition, China is likely to expand a pilot reform to replace business tax with value-added tax (VAT) to the construction and real estate sectors in year 2015 according to the media reports. Given that more effective control on management and authentication for VAT than business tax, we believe we will gain more competitive power in a more regulated and fair competition market environment."

Item 1.01 Entry into a Material Definitive Agreement.
 
Item 3.02 Unregistered Sales of Equity Securities.
 

 
From time to time Mr. Kexuan Yao, the Chairman and Chief Executive Officer of Armco Metals Holdings, Inc., has lent us funds for working capital purposes. These advances, which totaled $976,366 at June 9, 2015, were unsecured, non-interest bearing and due on demand. On June 9, 2015 we entered into a Loan Agreement with Mr. Yao memorializing this obligation and the Audit Committee of our Board of Directors approved the conversion of this obligation into shares of our common stock at a conversion price of $1.50 per share. We expect that Mr. Yao will convert the entire amount of the obligation into an aggregate of 650,910 shares of our common stock in full satisfaction of this obligation immediately following the approval of the Listing of Additional Shares by NYSE Regulation, Inc. The issuance to Mr. Yao, an accredited investor, will be exempt from registration under the Securities Act of 1933, as amended, in reliance on an exemption provided by Section 3(a)(9) of that act. Following this expected issuance, Mr. Yao will own approximately 24.69% of our outstanding common stock.

Item 1.01 Entry into a Material Definitive Agreement.
 

Previously, in July 2013 Armco (Lianyungang) Renewable Metals, Inc. ("Renewable Metals"), a wholly owned subsidiary of Armco Metals Holdings, Inc., borrowed $3,500,000 from Fremery Holdings, Ltd. ("Fremery") pursuant to the term of a Loan Contract (the “Note”). The Note, which we have guaranteed, matures on July 20, 2015. On April 24, 2015 Fremery sold $1,200,000 of the Note (the "Purchased Debt") to Shanghai Heqi Investment Center (Limited Partner) ("Heqi") pursuant to the terms of an agreement between those two unrelated entities.

On April 27, 2015 we entered into an Agreement with Heqi pursuant to which, from time to time, Heqi may convert the Purchased Debt into shares of our common stock at a conversion price equal to 85% of volume weighed average price (VWAP) for the common stock during the 10 trading days prior to the conversion date. Heqi is not entitled to convert any portion of the Purchased Debt if, at the time of conversion, the number of shares to be issued to Heqi would result in Heqi and/or its affiliates being the beneficial owner of more than 4.99% of our outstanding shares of common stock. Under the terms of the Agreement the maximum number of shares of our common stock which we may issue upon possible conversions by Heqi of the Purchased Debt is 1,224,154 shares, and any amount of the Purchased Debt which is not available for conversion, if any, at maturity must be satisfied by us in cash.

SAN MATEO, Calif., April 27, 2015 (GLOBE NEWSWIRE) -- Armco Metals Holdings, Inc. ("Armco Metals Holdings") (NYSE MKT:AMCO), a distributor of imported metal ores and a steel recycler in China, today announced that its subsidiaries will possibly benefit from the recent export tariff changes by China government, which export tariffs of 94 commodities closely related with the iron and steel industry will be adjusted starting from May 2015, according to the announcement from the Ministry of Finance of China on April 23, 2015. Iron and steel granules and powders, tungsten, and molybdenum will be exempt from export tariffs, and wrought aluminum products will have a zero tax rate. Export tariffs on 90 commodities in the list will be eliminated and the other four commodities will receive a tax reduction. Export tariffs before the adjustment range up to 25% depending upon the commodity.

During 2014, in response to the excess production capacity in the industry and constantly declining price of iron ore, we significantly reduced our import-based trading business by 57% as compared to 2013, and increased our trading business of exporting metal products. We believe that the elimination and reduction on the export tariff for the commodities may provide us with additional opportunities to grow our trading business.

The iron and steel industry in China are confronted with excess production capacity for several years and squeeze on bank lending, the elimination and reduction on the export tariff for the commodities would relieve the stress on the whole industry undoubtedly and ease the shortage of our working capital in especial besides the trading opportunities bring about. We would take advantage of the favorable policies and work for a turn to better.

Fourth Quarter of 2014 Financial Results

• Net revenue decreased 26% to $49.2 million due to a significant decrease in sales in our trading business which totaled $9.0 million as compared to $41.1 million in the same period in 2013.
• Net income of $1.4 million or $ 0.29 per diluted share in the fourth quarter of 2014 compared to net loss of ($0.4) million in the fourth quarter of 2013, or $(0.10) per diluted share.

In reviewing the financial performance for the quarter and year ended 2014, Mr. Kexuan Yao, Chairman and CEO of China Armco, was pleased that the company was able to turn around and post profits during this past year. Mr. Yao remarked that, "2014 was a milestone for the company as we achieved first positive annual financial result since our recycling facility putting into operation. While we suffered the effects of rapidly declining prices and weaken market demand, we were able to manage risk and make profits in 2014 by constantly improving operation efficiency, adjusting product line and developing business model in responding to market change. The recycling business continued to be our largest source of revenue and we continue to believe the metal recycling business will continue to be the major growth driver for our company."

Mr. Yao further stated that "We intend to further our improvements in cost control, developing and streamlining our supply chain, and the establishment of long term strategic partnership with key clients. As we position the company for a cyclical recovery in the steel industry we will continue our efforts to obtain additional qualifications and licenses to increase our business, and build our brand in the industry. We have driven gross margin improvement significantly in a very challenging environment while improving operation efficiently and reducing costs significantly. We believe this will serve as a springboard for significant financial improvement when our end markets improve."

Business Outlook

Our financial performance during 2014 showed substantially higher gross margin in comparison to 2013 as a result of a significant improvement in our recycling operations which we sorted out and produced high value of non ferrous scraps from the raw materials of scraps acquired at lower cost. Looking at 2015, management believes China's steel demand is expected to grow at a slower pace while China's crude steel output growth expect to fall in 2015 and domestic steel prices are estimated to remain at cyclically low levels based on the view that the domestic steel production overcapacity and global oversupply of iron ore would continue to exist in 2015. In the middle and long term, we believe that the low income housing construction, ongoing urbanization and increasing domestic consumption in China will continue to support the growth of the steel industry. In additional, recently China's proposal of building the Silk Road economic belt, aims to better connect the Asian and European markets, would be a mitigation for current excess capacity by assisting with massive infrastructure projects. In the long run, we also expect our recycling business to benefit substantially from the measures and policies to be implemented gradually by the Chinese government according to its 12th Five Year Plan (2011-2015). Under this plan, China intends to restructure its iron and steel industry to be more energy efficient and have increased environmental protection by adopting and developing the most advanced technology in the world. According to China Association of Metal scrap utilization (CAMU), year 2015 to 2020 would be a Climax of automatic and vessels recycling, with the rapid accumulation of the steel scrap and the requirement for energy conservation and emission reduction, extensive use of recycled steel would be foreseeable.

In our trading business we significantly decreased metal ore trading activities in responding to the high volatility and substantial decline in metal ore prices in 2014. The imported iron ore price and other metal ore prices has been declining significantly due to global oversupply and weaken domestic demand in China. We anticipate the price of iron ore may stay at its current low level in 2015 for the reasons described. While we continued to maintain our business relationship with worldwide suppliers and stabilize our supply capacity for metal ore products and believe that our effort to build our supply capacity will benefit us in the long term and strengthen our market position in the industry in the PRC, we have developed and added new products in our trading business product line, such as certain steel products and wood products. We will continue to develop new products to diversify our trading business to reduce volatility and improve profitability. 

In our recycling business we achieved strong growth both in sales and gross margin despite weak market for steep scrap in 2014 as described above. Looking forward, in the long-term, we believe the country's ongoing urbanization process and the implementation of building the Silk Road economic belt will increase new steel demand and eventually drive the steel scrap market during the 13th Five-Year-Plan period. We intend to devote a significant amount of our resources towards the improvement of our operations and if appropriate, its expansion. At the same time, we will continue to pursue our strategy to create a local network of raw material suppliers for our recycling facility and expand our oversea supply channels. In addition, we will continue to develop platform model in recycling business to obtain more customers and business opportunities under the model in the coming years.

Item 8.01          Other Events.

As disclosed in our previously filed Current Reports on Form 8-K as filed on November 3, 2014 and January 20, 2015, Armco Metals Holdings, Inc. (the “Company”) was served with a lawsuit filed in Superior Court in the County of San Mateo, California styled Progressive Environmental Services, Inc. vs. Metawise Group, Inc., Draco Resources, Inc., Metamining, Inc., Songqiang Chen and Armco Metals Holdings, Inc. We subsequently filed a motion to dismiss our company from the action which was granted by the Bankruptcy Court on January 12, 2015. Thereafter, we filed a motion to obtain a judgment against the plaintiff based on the Court’s Order granting our motion to dismiss. On January 30, 2015, the Court, however, denied our request to obtain such judgment and the matter is now closed.

Item 8.01  Other Events.

As disclosed in our Current Report on Form 8-K as filed on November 3, 2014, Armco Metals Holdings, Inc. (the “Company”) was served with a lawsuit filed in Superior Court in the County of San Mateo, California styled Progressive Environmental Services, Inc. vs. Metawise Group, Inc., Draco Resources, Inc., Metamining, Inc., Songqiang Chen and Armco Metals Holdings, Inc. The complaint arose out of our proposed acquisition of a 31.37% interest in Draco Resources, Inc. ("Draco"). On November 13, 2014 Draco filed for bankruptcy protection and this proceeding was transferred to the United States Bankruptcy Court for the Northern District of California under Bankruptcy Case No. 14-31652DM. We subsequently filed a motion to dismiss our company from the action which was granted by the Bankruptcy Court on January 12, 2015.

• Net revenue was $32.2 million, a 57% increase compared to net revenue of $20.5 million recorded in the third quarter of 2013.
• Net income of $4.8 million, or $0.09 per basic and diluted share on 55.0 million and 55.3 million weighted average basic and diluted shares outstanding respectively. This compared to a net loss of ($3.5) million or ($0.14) per basic and diluted share on 24.7 million weighted average shares outstanding in the same period of 2013.

Item 8.01. Other Events.

On October 26th , 2014, Armco Metals Holdings, Inc. (the “Company”) was served with a lawsuit filed in Superior Court in the County of San Mateo, California (Progressive Environmental Services, Inc. vs. Metawise Group, Inc., Draco Resources, Inc., Metamining, Inc., Songquiang Chen and Armco Metals Holdings, Inc.). The complaint alleges various causes of actions against the parties other than the Company and with respect to the Company seeks declaratory relief as well as a temporary and permanent injunction to preclude the Company from acquiring a 31.37% interest in Draco from Metawise at the Company’s forthcoming annual meeting scheduled to be held on November 17, 2014. The Company and its counsel will evaluate the Complaint and confer with the other parties, and will likely defer the approval of the share acquisition and the election of Mr. Chen to its Board of Directors at least pending resolution of the preliminary court proceedings.

Item 1.01     Entry into a Material Definitive Agreement.
 

As previously disclosed, on April 15, 2014, as amended on May 7, 2014, Armco Metals Holdings, Inc. entered into a Share Exchange Agreement with Draco Resources Inc. (“Draco”), Draco’s parent company Metawise Group Inc. (“Metawise”) and the Metawise shareholders pursuant to which we initially agreed acquire 100% of the outstanding capital stock of Draco from Metawise in exchange for 12,750,000 shares (giving proforma effect to a 1:10 reverse stock split of our outstanding common stock) and a warrant to purchase an additional 3,000,000 shares (post-split) of our common stock. At closing we agreed to issue an aggregate of 1,200,000 shares (post-split) of our common stock to two entities as a finders fee. On August 25, 2014 we entered into Amendment No. 2 to the Share Exchange Agreement with Draco, Metawise and Metawise’s shareholders. Under the terms of Amendment No. 2, we agreed to acquire 40% of the outstanding capital stock of Draco from Metawise in exchange solely for 51,000,000 shares of our common stock and the compensation payable to the two finders at closing is now 4,800,000 shares of our common stock. On September 22, 2014 we entered into Amendment No. 3 to the Share Exchange Agreement with Draco, Metawise and Metawise’s shareholders under which we have further modified the terms of the transaction to reduce the percentage of Draco we are seeking to acquire to 31.37% of the outstanding capital stock of Draco from Metawise in exchange solely for 40,000,000 shares of our common stock. At closing, these shares will represent approximately 39.95% of our current outstanding shares of common stock.

SAN MATEO, CA--(Marketwired - Sep 22, 2014) -  Armco Metals Holdings, Inc. ("Armco Metals Holdings") (NYSE MKT: AMCO), a distributor of imported metal ores and a steel recycler in China, today announced that its Armco Metals International, Inc. subsidiary ("Armco International") enters into an agreement with a Chile supplier for woodchips purchase on September 8, 2014.

Under the terms of the agreement, Armco International would purchase a trial shipment of Eucalyptus Nitens wood chips from the supplier with an amount of approximately 50,000 Green Metric Tons ("GMT") (�10%) in October 2014 and an one year total importation of 550,000 to 600,000 GMT if the trial shipment is successful. Based on the current market price in China, the market value for 600,000 GMT woodchip is approximately $63,000,000 and we estimate and aim to realize 10% gross margin on potential sales of the product. Armco International's trading business team have been working diligently to add this new product to our trading business line. Capitalizing on over a decade experience and expertise in international trading business and product sourcing, with plenty of bank trading facility, our team has conducted extensive market and industry research and feasibility study, including but not limit, international vendor and product sourcing, shipping and logistic analysis, financing facility arrangement, and customer identification and network.

China is the world's biggest producer of paper and paperboard, however, with the lack of sufficient quantity of high quality domestic wood fiber supply, new pulp mills in China are looking to expand importation of wood chips from plantation-rich countries to meet their growing needs. China's area of eucalyptus plantations doubled between 2006 and 2012, but still will not be sufficient to meet demands due to problems with frost, and may also have problems with pests and disease due to very narrow genetic base. With the growing domestic pulp production, importation of woodchips by China surges during the past few years and the country has been the world's largest importer of hardwood chips since the second quarter of 2013.

Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "While keep confident in our metal ore trading and recycling business, management has been making efforts to diversify our product line and develop new profitable products into our business line. With the proven ability and expertise of our team in international trading and sourcing, we have the unique advantage to expand our business scope and carry new product which offers mitigated risks and high return potential. We will capitalize on our formidable business development team to develop the new product and expand into non metal ore business that offer high growth potential, as well as higher profit margins. We look forward to providing more updates on the developments and anticipate unlocking considerable value for our shareholders."

Item 1.01     Entry into a Material Definitive Agreement.

 
As previously disclosed, on April 15, 2014, as amended on May 7, 2014, Armco Metals Holdings, Inc. entered into a Share Exchange Agreement with Draco Resources Inc. (“Draco”), Draco’s parent company Metawise Group Inc. (“Metawise”) and the Metawise shareholders pursuant to which we initially agreed acquire 100% of the outstanding capital stock of Draco from Metawise in exchange for 12,750,000 shares (giving proforma effect to a 1:10 reverse stock split of our outstanding common stock) and a warrant to purchase an additional 3,000,000 shares (post-split) of our common stock. At closing we agreed to issue an aggregate of 1,200,000 shares (post-split) of our common stock to two entities as a finders fee.

On August 25, 2014 we entered into Amendment No. 2 to the Share Exchange Agreement with Draco, Metawise and Metawise’s shareholders. Under the terms of Amendment No. 2, we have agreed to acquire 40% of the outstanding capital stock of Draco from Metawise in exchange solely for 51,000,000 shares of our common stock and the compensation payable to the two finders at closing is now 4,800,000 shares of our common stock. The terms of the transaction no longer contemplate a reverse stock split of our common stock pre-closing, nor the issuance of a warrant as partial consideration. At closing, these shares will represent approximately 50.2% of our current outstanding shares of common stock.

A condition precedent to the closing of the acquisition of Draco is the continued listing of our common stock on the NYSE MKT. Under the original structure, we were required to obtain prior stockholder consent for the closing of the Draco acquisition under Section 712 NYSE MKT Company Guide as the issuance of shares of our common stock would have been in excess of 20% of our outstanding common stock, as well as under Section 713 as the issuance of the shares would have resulted in a change of control of our company and the Draco acquisition would have been treated as a reverse merger. Based upon our informal discussions with the exchange, we do not believe that the exchange would continue the listing of our common stock following the acquisition of Draco based upon the original terms of the transaction and, accordingly, we restructured the transaction. While we will still be required to obtain stockholder approval for the issuance of the shares of our common stock to the Metawise shareholders in order to comply with Section 712 of the NYSE MKT Company Guide, we do not believe the restructured transaction will be accounted for as a reverse acquisition. There are no assurances, however, that NYSE MKT will not still view the restructured transaction as a change of control of our company and that it will consent to the continued listing of our common stock.

• Net revenue was $32.9 million, a 19% increase compared to net revenue of $27.7 million recorded in the second quarter of 2013.
• Net loss of $(0.8) million or $(0.01) per basic and diluted share on 50.8 million weighted average shares outstanding inclusive of a $1.6 million increase in interest expense associated with the conversion of convertible notes. This compared to net income of $0.9 million or $0.04 per basic and diluted share on 24.0 million weighted average shares outstanding in the same period of 2013.

In reviewing the financial performance for the second quarter of 2014, Mr. Kexuan Yao, Chairman and CEO of Armco Metals, remarked that, "In the second quarter of 2014 we experienced a strong rebound in sales from our metal recycling business. We believe the implementation of our "platform strategy" sales model in this business, where we work with our customers more closely, lower our market risks by sharing them with our customers has helped us increase our sales with less or without additional working capital. We are encouraged by our return to generating income from both our market segments and will look to build on this improvement from the first quarter in the second half of 2014."

NEW YORK, NY--(Marketwired - Jul 8, 2014) - Armco Metals Holdings, Inc. ("Armco Metals Holdings") (NYSE MKT: AMCO), a distributor of imported metal ores and a steel recycler in China, today announced that its Armco (Lianyungang) Renewable Metals, Inc. subsidiary ("Renewable Metals") was included in a list of companies having received approval for operation according to the "Standards of Entering the Scrap Steel Processing Industry" published by China's Ministry of Industry and Information Technology published on June 16, 2014.

On Sep 28, 2012, the Ministry of Industry and Information Technology of the People's Republic of China announced the "Standards of Entering the Scrap Steel Processing Industry". These Standards includes policies regarding corporate layout, construction requirements, scale, technology and equipment, product quality, energy consumption and resource utilization, environmental protection, training of personnel, production safety, occupational health, social responsibility, supervision and management. Armco began working on altering its operations to meet these standards and on March 2013, Renewable Metals was awarded the "Model Scrap Processing and Distribution Center" from qualified Chinese scrap Application Association. In 2014, Renewable Metals received the authorization of entering into the industry from China's Ministry of Industry and Information Technology of the People's Republic of China. The inclusion on the published list now completes that process.

Armco Metals Holdings sees this as an important milestone for Renewable Metals in that it is one of a small group of companies that can operate within the new policy guidelines. As the government continues to strengthen its policies regarding efficiencies and environmental responsibilities, enterprises that are operating in accordance with these Standards will have a relevant advantage. This policy shift toward environmental responsibility should also help promote the use of scrap metal as a viable alternative to steel producers in China who rely much more heavily on iron ore in their production. Scrap steel usage in the Chinese steel industry is only about 8%, or about one-seventh of the scrap steel usage in the U.S. and Europe.

Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "We continue to see progress at our Renewable Metals subsidiary as we work to position our Company for the future. Our efforts have resulted in this important inclusion in the list of approved operators that we believe will pay big dividends down the road as the Government looks to increase industrial efficiency while reducing pollution. China's scrap industry has been slow to develop due to many producers opting to use less costly and more pollutive production methods. As the government implements these new initiatives, we see steel producers moving to models that more closely resemble that of the U.S. and Europe which should lead to significant need for scrap steel produced by the small circle of companies who are approved by the government to operate in this industry."

SAN MATEO, CA--(Marketwired - Jun 4, 2014) - Armco Metals Holdings, Inc. ("Armco Metals Holdings") (NYSE MKT: AMCO), a distributor of imported metal ores and a steel recycler in China, today announced that its Armco (Lianyungang) Renewable Metals, Inc. subsidiary ("Renewable Metals") has received a restricted materials import approval from the Environmental Management of Solid Waste in China. 

The approval gives Renewable Metals the ability to import an annual total of 20,000 metric tons of materials including but not limited to steel-based scrap, copper-based scrap, and aluminum-based scrap. Renewable Metals had undertaken a number of measures over the past few years to improve its operations in order to meet the necessary environmental regulations to obtain this governmental approval. Armco Metals Holdings sees this approval as a significant step forward for its business in that it can now import certain non-ferrous scrap metalswhich generally have significantly higher gross margins than basic scrap steel. When coupled with its recently announced $15 million credit approval letter, the Armco Metals Holdings now has an expanded access to capital to help scale import operations in these higher margin materials.

Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "China's demand for non-ferrous scrap metal has significantly outpaced domestic resources for many years forcing Chinese companies to seek international sources for supply of these materials. Also, beginning in 2013, the China General Administration of Customs has significantly tightened inspection standards on the import of scrap metals in an effort to insure more fair business practices in the regulation of import supply. This approval demonstrates that we have complied with the standards necessary to operate this expanded business and we intend to work diligently to build our operations in what we believe will be a very lucrative business for our Company in the years to come."

ARMCO METALS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Management Discussion and Analysis

Net Revenues

Net revenues for the first quarter of 2014 decreased 31% compared to the same period in 2013, primarily due to a decrease of $7.6 million in the sales of scrap metals and a decrease of $1.2 million in the sales of manganese ore, partially offset by an increase of $1.2 million in the sales of billet and an increase of $0.2 million in the sales of chrome ore. During the quarter, our recycling business and trading business generated revenue of $2.6 million and $7.3 million, accounting for 26% and 74% of our total revenue, respectively.

Net Income (Loss)

Net income (loss) of ($3.62 million) for the first quarter of 2014 and the loss increased by $2.53 million, compared to net loss of ($1.09 million) for the same period in 2013, primarily due to a significant decrease of $1.8 million in gross profit, an increase of $0.6 million in operating expense and an increase of $0.12 million in other expense during the first quarter.

Item 1.01        Entry Into A Material Agreement.

On April 15, 2014, Armco Metals Holdings, Inc.(the "Company""we" "us" "our") entered into a Share Exchange Agreement (the “Agreement”) with Draco Resources, Inc., a California corporation ("Draco Resources") and its shareholders (the “Draco Resources Shareholders”). Draco Resources is a California-based corporation engaged in the exploration, mining, and trading of iron ore and minerals.

Pursuant to the terms of the Agreement between the parties, we plan to acquire 100% of the issued and outstanding capital stock of Draco Resources in exchange for the Company's common stock valued at $51,615,000 based on the closing market price of our common stock on the exchange prior to the date of the Agreement (the "Purchase Price") and a Series C stock purchase warrant. The parties made customary representations and warranties and agreed to customary covenants in the Agreement. Upon the completion of the acquisition, the number of shares which Draco Resources Shareholders will receive from us represents approximately 74.64% of the issued and outstanding common stock of the Company. The closing of the acquisition is subject to approvals by the shareholders, the New York Stock Exchange and any applicable governmental regulatory agencies.

Draco Resources engages in the exploration, mining, and trading of iron ore and other mineral resources. Currently, Draco Resources owns exclusive rights of management, operational and distribution and sale of approximately five millions of iron ore fine in the state of Alabama. Draco Resources started its first shipment of a vessel at 55,000 metric tons in March 2014 while it plans to ship out 1 to 3 vessels per month (55,000 metric tons to 165,000 tons per month) for the next four years to complete the sale and shipment of approximately 5 million tons of iron ore fine in Alabama to China. Based on the appraisal value from "Appraisal Report of 5,000,000 Metric Tons of Dry Iron Ore Fine" prepared by Global Valuation, an international commercial real estate appraisal and consulting company, the subject 5,000,000 metric tons of dry iron ore fine has a prospective present value FOB Mobile, Alabama, USA as of October 15, 2013 of $132,600,000 (the "Appraisal Value"). Therefore, the Purchase Price for this acquisition is approximately 38.93% of the Appraisal Value.

SAN MATEO, CA--(Marketwired - Apr 16, 2014) - Armco Metals Holdings, Inc. ("Armco Metals") (NYSE MKT: AMCO), a distributor of imported metal ores and a steel recycler, today announced that it entered into a stock purchase agreement to acquire 100% of Draco Resources, Inc. ("Draco Resources"), a California-based corporation engaged in the exploration, mining, and trading of iron ore and minerals, via a stock exchange valued at approximately $46 million at the closing price of Armco Metals as of April 15, 2014. The closing of the acquisition is subject to completion of due diligence, approval from shareholders, approval for continued listing by the New York Stock Exchange, and approval by any applicable governmental regulatory agency. Upon successful completion of the acquisition, Draco shareholders will own approximately 72.8% of the total outstanding shares of the combined companies.

Draco Resources is engaged in the exploration, mining, and trading of iron ore and other mineral resources. Currently, Draco Resources owns exclusive rights of management, operation, distribution and sale of approximately five million metric tons of iron ore fine in the state of Alabama. Draco Resources commenced its first shipment of 55,000 metric tons on a vessel bound for China in March 2014 and plans to ship out 1 to 3 vessels of that same size to China on a monthly basis or a total of 55,000 to 165,000 metric tons per month over the course of the next four years or until such time as the total 5 million metric ton shipment is completed. Draco Resources expects to generate gross profit of approximately $20 to $30 per metric ton based on the current spot price of iron ore, CFR China.

Commenting on the stock purchase agreement, Kexuan Yao, Chairman and CEO of Armco Metals, stated, "We are very excited about this acquisition for our company as we believe it will enable strong, rapid growth over the next four years. Draco has the plan in place to generate substantial cash flow for Armco Metals on a monthly basis which in turn will enable us to use that cash flow to further expand our own mineral trading business as well as our metal recycling operations. Management believes the combined companies will significantly improve overall shareholder value for years to come."

Item 3.02          Unregistered Sales of Equity Securities.

Between April 8, 2014 and April 8, 2014 the holders of an aggregate of $5,554,467 principal amount of our convertible notes issued in January 2014 and February 2014 converted the principal and accrued unpaid interest due under those notes into an aggregate of 17,521,978 shares of our common stock. The issuances were exempt from registration under the Securities Act of 1933, as amended, in reliance on exemptions provided by Section 3(a)(9) of that act.

ARMCO METALS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Management Discussion and Analysis

Net Revenues

Net revenues in 2013 increased by $22.2 million to $128.7 million compared to 2012, primarily due to an approximately $20.3 million increase in the sale of stainless steel, $14.5 million increase in the sale of nickel plate, $12.2 million increase in the sale of chromium, $5.0 million increase in the sale of manganese, $2.7 million increase in the sale of scrap steel, $1.3 million increase in the sale of billet, and $0.7 million in the sale of titanium. The increases were partially offset by decreases in iron ore sales of $34.7 million. Our recycling business and trading business generated net revenues of approximately $64.9 million and $63.8 million in 2013, respectively, increased by 5% and 42%, respectively, compared to 2012.

The increases in trading business sales are mainly attributable to the increase in the sale of stainless steel, nickel, and chrome, of which the two former products are new products we carry in 2013. To manage market risk, we significantly decreased our iron ore trading business activities in 2013 which offsets increase in sales of other products in our trading business. Our net revenue from recycling business had a moderately increase of 5% compared to 2012. The type of products we buy and sell are subject to change and are dependent upon availability and the demands of our customers.

Net income (loss)

Our net loss in 2013 was $4.1 million, compared to net loss of $2.6 million in 2012, the increase in loss primarily due to the decrease in gross profit of $5.2 million as a result of the significant decline in gross margin, partially offset by a decrease in total operating expenses of $1.7 million, a decrease in total other expenses of $1.6 million, and a decrease in income tax expenses of $0.31 million.

Item 5.07          Submission of Matters to a Vote of Security Holders.

On March 27, 2014 Armco Metals Holdings, Inc. held a special meeting of its stockholders in accordance with a definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on February 18, 2014. At the meeting, the two proposals presented to our stockholders were:

● to approve the full conversion of the convertible notes into shares of common stock as set forth in Proposal 1 of the proxy statement for the special meeting, and

● the approval of a 1:10 reverse stock split of the common stock as set forth in Proposal 2 of the proxy statement for the special meeting.

The final results of the voting on each matter submitted to the stockholders at the special meeting are set forth below.

The Board of Directors has not yet determined the effective date for the reverse stock split. Once the determination is made, we will issue a press release and file a Current Report on Form 8-K announcing the effective date of the reverse stock split, our new CUSIP number following the split and instructions to our stockholders regarding the handling of stock certificates representing pre-split shares.

SAN MATEO, CA--(Marketwired - Mar 5, 2014) - Armco Metals Holdings, Inc. ("Armco Metals Holdings") (NYSE MKT: AMCO), a U.S. based company that engages in the import, sale, and distribution of metal ore and non-ferrous metals in the People's Republic of China, recycles scrap metals used by steel mills in the production of recycled steel and provides sourcing and pricing services for various metals to its network of customers, today announced that its Armco (Lianyungang) Renewable Metals, Inc. subsidiary ("Renewable Metals") has entered into a steel scrap supply agreement with Mitsui & Co. (Shanghai) Ltd. ("Mitsui Shanghai"), a wholly owned subsidiary of Mitsui & Co., Ltd., ("Mitsui & Co.") whose business covers energy, machinery, chemicals, food, textile, logistics, finance, and more on a global scale. 

Under the terms of the agreement, Renewable Metals will serve as Mitsui Shanghai's vendor for sourcing, processing and supplying scrap metals with various specifications and standards. Mistui Shanghai has also agreed to advance payment for the joint purchase of raw materials and complete final purchase of the steel scrap upon completion of processing services. This newly applied purchasing business model for Renewable Metals is designed to better enforce its supply agreements with customers and lower business risk.

As a subsidiary of one of the largest general trading companies in Japan, Mitsui Shanghai has estimated purchase plans for approximately 15,000 to 20,000 metric tons of steel scrap on a monthly basis. In addition to the potential for significant recurring revenue, the advance purchase terms of this agreement will help to substantially improve cash flow for funding Armco Metals Holdings' daily operations and future expansion plans. Armco Metals Holdings sees this relationship with Mitsui Shanghai having further expansion opportunity for the company into Japan and other potential markets throughout the world due to Mitsui & Co.'s global industrial distribution footprint.

Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "We look forward to a successful partnership with Mitsui & Co. as we expand our steel scrap distribution channels to Japan. We appreciate this opportunity to establish a long term business relationship with one of the largest general trading companies in the world, and we intend to work diligently to support Mitsui & Co. in their efforts to help us achieve significant sales growth in fiscal 2014 and beyond."

Amendment No. 1

to the

Form S-1

CALCULATION OF REGISTRATION FEE

Amendment No. 1

to the

Form S-1

CALCULATION OF REGISTRATION FEE

Between May 2013 and September 2013 Henan Armco & Metawise Trading Co. Ltd., a subsidiary of Armco Metals Holdings, Inc., borrowed an aggregate of RMB 19,700,000 (approximately $3.26 million) from four lenders who are not our affiliates, three of whom were non-U.S. persons and the fourth was an accredited investor, under the terms of loan contracts. These loans matured between May 2013 and December 2013. Our subsidiary used the funds for working capital.

On January 13, 2013 we and our subsidiary entered into Note Exchange Agreements with each of these lenders pursuant to which we exchanged the loan contracts for 8% convertible notes in the aggregate amount of RMB 15,100,000 (approximately $2.5 million) which represented the remaining principal balance due under the loan contracts. The lenders waived any accrued but unpaid interest due prior to this exchange.

The convertible notes, which bear interest at the rate of 8% per annum, mature nine months from the date of issuance and, providing the stockholder approval described below has been received, are convertible at any time at the option of the holder into shares of our common stock at a conversion price of $0.317 per share. Interest is payable at maturity or conversion, and we have the right to prepay the notes at any time without penalty to us.

Our common stock is listed on the NYSE MKT and, under the rules of the exchange, we are required to obtain the prior consent of our stockholders to the issuance of the shares of our common stock upon the conversion of the notes. Under the terms of the Note Exchange Agreement and convertible notes, we agreed to use our best efforts to hold a special meeting of our stockholders as soon as practicable for the purpose of obtaining the consent of the holders of a majority of our issued and outstanding common stock to the conversion terms and conditions of the convertible notes. Until such time, if ever, that we receive this stockholder consent, the convertible notes are not convertible into our equity. If we should fail to receive the required stockholder consent prior to the maturity date of the notes, those notes will be due and payable in cash in accordance to their terms without penalty to us.

The terms and conditions of the Note Exchange Agreement and 8% convertible notes are identical, other than the principal amount of the notes. The foregoing description of the terms and conditions of the Note Exchange Agreement and 8% convertible notes are qualified in their entirety by reference to forms of these documents which are filed as Exhibits 10.34 and 4.6, respectively, to this report.

Item 4.01           Changes in Registrant's Certifying Accountant.

On December 27, 2013, Armco Metals Holdings, Inc. (the "Company") informed its independent registered public accounting firm Li and Company, PC that the Company was terminating the client-auditor relationship, effective immediately. On December 27, 2013 the Company engaged MaloneBailey LLP ("MB") as the Company's independent registered public accounting firm. Li and Company, PC had served as the Company's independent registered public accounting firm since May 2008 and reported on the Company's consolidated financial statements for the years ended December 31, 2012 and 2011. The dismissal of Li and Company, PC and engagement of MB was approved by the Audit Committee of the Board of Directors of the Company on December 27, 2013.

Neither the report of Li and Company, PC dated March 29, 2013 on our consolidated balance sheets as of December 31, 2012 and 2011 and the related consolidated statements of operations and comprehensive income, change in stockholders' equity and cash flows for the years ended December 31, 2012 and 2011 nor the report of Li and Company, PC dated March 30, 2012 on our consolidated balance sheets as of December 31, 2011 and 2010 and the related consolidated statements of operations and comprehensive income, change in stockholders' equity and cash flows for the years ended December 31, 2011 and 2010 contained an adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles. During our two most recent fiscal years and the subsequent interim period preceding our decision to dismiss Li and Company, PC we had no disagreements with the firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure which disagreement if not resolved to the satisfaction of Li and Company, PC would have caused it to make reference to the subject matter of the disagreement in connection with its report.

During our two most recent fiscal years and the subsequent interim period prior to retaining MB (1) neither we nor anyone on our behalf consulted MB regarding (a) either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements or (b) any matter that was the subject of a disagreement or a reportable event as set forth in Item 304(a)(1)(iv) and (v), respectively, of Regulation S-K, and (2) MB did not provide us with a written report or oral advice that they concluded was an important factor considered by us in reaching a decision as to accounting, auditing or financial reporting issue.

We provided Li and Company, PC with a copy of this Current Report on Form 8-K prior to its filing with the Securities and Exchange Commission, and requested that the firm furnish us with a letter addressed to the Securities and Exchange Commission stating whether they agree with the statements made in this Current Report on Form 8-K, and if not, stating the aspects with which they do not agree. A copy of the letter provided by Li and Company, PC is filed as Exhibit 16.1 to this Current Report on Form 8-K.

SAN MATEO, Calif., May 29, 2013 /PRNewswire/ -- China Armco Metals, Inc. (NYSE MKT: CNAM) ("China Armco" or the "Company"), a distributor of imported metal ore and a metal recycler with a state-of-the-art scrap metal recycling facility in China, today announced that Armco (Lianyungang) Renewable Metals, Inc., the Company's wholly owned subsidiary, was rated as AAA grade in credit rating by China Association of Metal Scrap Utilization.

The AAA rating was awarded and announced during the 6th International Symposium on China Metal Recycling. The Symposium was hosted by China Iron and Steel Association and China Association of Metal Scrap Utilization in Chongqing, a city in southwest China, from May 19, 2013 to May 22, 2013.  The credit rating was initiated by the Chinese Ministry of Commerce and the Chinese State-owned Assets Supervision and Administration Commission, organized by the China Association of Metal Scrap Utilization, and conducted by an independent rating agency. The credit rating was rated based on various factors, including the Company's basic product quality, operation management capabilities, and social credit.  The AAA rating is the highest level in the credit rating system. Mr. Weigang Zhao , director of China Armco and executive vice general manager of Armco (Lianyungang) Renewable Metals, Inc., was also elected as director of the Symposium. Companies and industry associations from worldwide, including China, U.S., Korea, and Japan attended the event and discussed the issues pertaining to Chinese metal recycling developments and policies. 

"We are very pleased to receive the AAA rating from the China Association of Metal Scrap Utilization during the Symposium. This recognition is very important to us while we are building our brand in the industry and market which will help us to improve and strengthen our supply chain, customer base and bank credit facilities," said Mr. Kexuan Yao, Chairman and CEO of China Armco. "During the Symposium, based on messages from the officers from China steel industry associations, the industry expects to receive more policy support from the Chinese government with government emphasis on energy saving and environmental protection. We believe that with the support of Chinese government industry guidance and policy support, our recycling business has substantial potential and tremendous opportunity to grow in the long term."

SAN MATEO, Calif., May 22, 2013 /PRNewswire/ -- China Armco Metals, Inc. (NYSE MKT: CNAM) ("China Armco" or the "Company"), a distributor of imported metal ore and a metal recycler with a state-of-the-art scrap metal recycling facility in China, today announced that Armco (Lianyungang) Renewable Metals, Inc., the Company's wholly owned subsidiary, has signed a long-term sales contract with CNBM International Corporation, a subsidiary of a Hongkong Stock Exchange listed (HKEx, stock code 3323) and state-owned Chinese building material company, China National Building Materials Group Corporation. According to the contract, Armco (Lianyungang) will provide CNBM International monthly supplies of scrap metals and waste plastics for the next three years starting May 15, 2013.

Under the contract, the Company will supply approximately 15,000 MT (subject to 20% up-or-down adjustment) of scrap metals of various types and waste plastics to CNBM International every month from May 15, 2013 to May 14, 2016. The contract calls for a separate single sale agreement to be formed prior to each monthly supply, and CNBM shall make full payment for each supply at the time of such single sale agreement. With the prepayment arrangement under a pre-selling model, China Armco could increase its recycling production and sales significantly without additional working capital. This contract will increase the Company's recycled scrap metals sales, and is also expected to improve the Company's profit margin as a result of a lowered idle capacity cost accompanying the increased production.

"We are pleased to establish the business cooperation with CNBM International Corporation. This 3-years contract is a very important part of our efforts to build a pre-selling model for recycled scrap metals, which is expected to provide us with a relatively consistent and stable sales performance. In addition, with a higher output at our recycling facility, we expect to see an improved profit margin as a result of the lowered idle capacity cost. We are hoping to explore more business cooperation opportunities with CNBM International in the future. We believe that, with our brand building initiates, we will be able to continue to expand our client base," commented Mr. Kexuan Yao, Chairman and CEO of China Armco.

First Quarter of 2013 Financial Results

• Net revenue decreased to $14.3 million compared to $49.3 million for the same period of 2012.
• Gross profit for the first quarter of 2013 decreased 56% to $0.64 million, compared to $1.46 million in the first quarter of 2012 mainly due to the decline in trading business.
• Net loss for the first quarter of 2013 was $1.09 million, or $0.05 loss per diluted share, compared to net loss $1.66 million or $0.10 per share for the same period last year.

Mr. Kexuan Yao, Chairman and CEO of China Armco stated, "Although the China steel industry had a turnaround from losses to profits for the first quarter, the total profit posted a downward trend with record-high output over the first three months of 2013 suggesting that the sector remained weak due to fiercer competition amid industrial overcapacity. Our trading business was adversely affected by the market resulting in sharp declines on net revenues and gross margins during the quarter. However, our revenue and gross margin in our recycling business continued to grow steady; the quantities of scrap metals processed and sold from our recycling facility in the first quarter continued to increase compared to the first quarter of 2012. We believe our solid and sound foundation in the industry, our strong relationship with our customers and suppliers around the world, and the strategy we have developed will enable us to overcome various challenges and fully leverage our operating model to generate incremental revenue and profitability, especially, recently in the second quarter we have started to increase our production of recycled nonferrous metal scraps which is expected to further improve our recycling business profitability."

Business Updates

Our trading business decreased to approximately $5.4 million in net revenues during the first quarter of 2013 compared to $41.3 million in the same period in 2012. In the first quarter of 2013, to manage market risks, we significantly decreased new purchase of metal ore and locked sales orders for our ore inventories of $3.57 million to be delivered in second quarter. We continued to firm our business relationship with worldwide suppliers and stabilize our supply capacity. We believe our effort to build our supply capacity will benefit us in the long term and strengthen our market position in the industry in the PRC. Moreover, we continued to develop our new "Commodity Financing" model and expect to make some major progress in this year which we have obtained support from several large banks.

SAN MATEO, CA--(Marketwire - Sep 24, 2012) - China Armco Metals, Inc. (NYSE MKT: CNAM) ("China Armco" or the "Company"), a distributor of imported metal ore and metal recycler with a new state-of-the-art scrap metal recycling facility in China, today announced that Armco (Lianyungang) Renewable Metals, Inc., the Company's wholly owned subsidiary, has delivered a new order for scrap steel to a client in China. The order calls for the delivery of total 30,000 metric tons of various scrap steels with an aggregate contract value of approximately of $11.7 million. The order was delivered by September 21, 2012.

In addition, the Company has secured new orders for its distribution business with existing customers to supply a total volume of 30,000 tons of chrome ore originating from Brazil, with an aggregate value of approximately $5.85 million.

"We are pleased to receive the new orders in both of our business segments when the industry is weak and the economy growth slows down in China," said Mr. Kexuan Yao, Chairman and CEO of China Armco. "With the policy of stabilization of scrap steel and ore prices and new infrastructure investment recently approved by the Chinese government, we are now beginning to see measured progress. We believe the market is recovering from its bottom and feel that we are well-positioned to capture a share of an increasing market that is expected to improve our profitability."

SAN MATEO, CA--(Marketwire - Sep 17, 2012) - China Armco Metals, Inc. (NYSE MKT: CNAM) ("China Armco" or the "Company"), a distributor of imported metal ore and metal recycler with a new state-of-the-art scrap metal recycling facility in China, today announced its new financing facility from Deutsche Bank.

China Armco has signed a financing mandate letter with Deutsche Bank. The new financing facility is custom-tailored for China Armco's new "Commodity Financing" model which enables the Company to provide financing service for its clients and liquidate the ore inventories stockpiled at the ports.

We expect that the "Commodity Financing" model, a unique innovation in China's metal industry, will significantly increase the growth potential of the Company. Commenting on this meaningful achievement, Kexuan Yao, Chairman and CEO of China Armco, stated that, "It is a milestone in China Armco's business innovation and development. We believe that the 'Commodity Financing' model will build mutual benefits for the banks, our clients and us."

China Armco is also negotiating with two other banks for financing facilities regarding this new business model.

SAN MATEO, Calif., Feb. 17, 2012 /PRNewswire/ -- China Armco Metals, Inc. (NYSE Amex: CNAM) ("China Armco" or the "Company"), a distributor of imported metal ore and metal recycler with a new state-of-the-art scrap metal recycling facility in China, today provided an update on its trading business.

By February 17, 2012, China Armco had completed the shipment of 160,000 metric tons of iron ore. The shipment of iron purchased from Brazil with a purchase contract value of approximately $17 million has already been sold to our customers in PRC upon favorable terms, representing an auspicious start for 2012. Commenting on this order, Kexuan Yao, Chairman and CEO of China Armco, stated "Capitalizing on our more than 10 years of successful experience working with more than 150 customers in China, our ability to assist our business partners in achieving their goals and satisfying their needs is founded securely upon our distribution channels and growing reputation of excellence in service and reliability."

SAN MATEO, Calif., Jan. 5, 2012 /PRNewswire/ -- China Armco Metals, Inc. (AMEX: CNAM) ("China Armco" or the "Company"), a distributor of imported metal ore and metal recycler with a new state of the art scrap metal recycling facility in China, today provided an update on its trading business.

By December 31, 2011, China Armco had secured and shipped three orders to deliver chrome ore to trading firms serving iron and steel producers in China. The orders included a combined volume of 24,000 tons with an aggregate value of approximately $3.89 million. 2 additional shipments of a combined volume of 8,000 tons with an aggregate value of approximately $1.72 million are to be delivered by the end of the first quarter of 2012.

Commenting on the company's performance, Mr. Kexuan Yao, Chairman and CEO of China Armco stated "While China's economy is experiencing many challenges in a variety of sectors, we are working hard to adjust our operations and to reallocate our resources in response to this changing environment. As a result of our management team's efforts, we are pleased to be seeing a steady progress in our trading business. With iron ore price stabilizing to a certain degree in the fourth quarter of 2011, we are cautiously optimistic about the strengthening of our businesses as China's economic conditions improve and its monetary policies are relaxed. Capitalizing on our more than 10 years of experience, our growing brand name excellence in the industry and strong relationships with over 150 customers in China, we remain well positioned to benefit from the long-term growth associated with the Chinese steel industry."

Second Quarter 2011 Results

• For the quarter ended June 30, 2011, net revenue advanced 82% to $31.0 million, led by a 251% increase in metal recycling sales to $22.1 million.
• Net loss for the second quarter of 2011 was $1.3 million, or $0.08 per diluted share, compared to a $0.2 million loss, or $0.02 per share, in the same period last year.

Business Updates

The scrap metal recycling business resumed normal operations in January 2011 after the provincial government eliminated power restrictions that were in effect from September to the end of December of 2010. In addition, sales increased substantially from the first six months of 2010 to approximately 62,000 MT in the first six months of 2011. The Company ended the quarter with 10,000 MTs of recycled scrap steel yet to be delivered. Management continues to believe that the secular shift to more environmentally friendly energy production materials and methods will drive the underlying demand for recycled steel.

In June 2011, the Company signed an operating agreement with Lianyungang Hebang Renewable Resources Co., Ltd., an unrelated third party, to lease storage and production capacity at Hebang's facilities located in Guanyun City, Jiangsu province. The agreement allows China Armco to secure and store raw materials at a reasonable cost while reducing the cost of transportation. Guanyun City is located approximately 60 miles (direction) from the Company's metal recycling facilities in Lianyungang.

SAN MATEO, Calif., June 7, 2011 (GLOBE NEWSWIRE) -- China Armco Metals, Inc. (NYSE Amex:CNAM) ("China Armco" or "the Company"), a distributor of imported metal ore and metal recycler with a new state of the art scrap metal recycling facility in China, today announced the preliminary unaudited operating results for the first two months of the second quarter of 2011.

In April and May of this year, China Armco sold 25,000 metric tons (MT) of recycled steel products to 3 customers. The Company has recognized approximately $14 million of net sales in its recycled steel business through the first two months of the second quarter. Approximately 80% of the tonnage sold in April and May were completed using pre-selling contracts.

In addition, the Company recorded $7.1 million of revenue in its metal ore trading business. Client activity remained solid, as reflected in the 41,000 MT of metal ores sold during the first two months of the second quarter.

"Our recycling business picked up from a seasonally slow first quarter," said Mr. Kexuan Yao, CEO and Chairman of China Armco. "We are seeing continued interest from customers to increase the amount of recycled metals purchased. So far this year, we have signed 2 new recycling customers who agreed to our pre-selling strategy. As we increase production and make further improvements in our operational efficiencies, we expect measured improvements in our profitability."

First Quarter Results:

• For the quarter ended March 31, 2011, compared to same period of 2010, net revenue rose 479% to $49.7 million due to strong trading revenues.

Mr. Kexuan Yao, Chairman and CEO of China Armco stated, "Our first quarter reflects the strength of a diversified business model and our ability to secure meaningful new customers which culminated into a return to profitability. We expect a ramp up in sales in both our metal trading and recycling businesses under a backdrop of robust steel production and demand across China. Developing strong relationships with strategic customers and suppliers such as Mineracao Usiminas S.A. ("MUSA"), will enable us to fully leverage our operating model to generate incremental revenue and profitability."

• Net income for the first quarter of 2011 was $0.6 million, or $0.04 per diluted share, compared to $0.1 million or $0.01 per share for the same period last year

Fourth Quarter Results:

• For the quarter ended December 31, 2010, net revenue decreased 29% to $24.5 million due to the Lianyungang provincial government imposing power restrictions starting in September 2010

"We made progress during 2010 despite unforeseen industry challenges," said Mr. Kexuan Yao, Chairman and CEO of China Armco. "We finished construction of our state-of-the-art metal recycling production facility and secured new iron ore trading customers. The relationships we are developing with key customers and suppliers worldwide provide a solid foundation in which to grow both of these businesses. As more steel mills in China increase their use of scrap metal to comply with the government's mandate to reduce harmful emissions, we are optimistic in capturing market share while ramping production volumes and associated operating profits."

• Net income for the fourth quarter of 2010 was a loss of $1.6 million, or $0.11 per diluted share, compared to $3.1 million or $0.31 per share for the same period last year.
• Diluted earnings per share was a $0.16 loss and $0.51 for the year ended December 31, 2010 and December 31, 2009, respectively.

Business Outlook

China Armco continues to make steady progress in both its metal trading and recycling businesses. In the fourth quarter of 2010, the Company secured and delivered two orders of iron ore with a combined volume of 42,000 metric tons and an aggregate value of $4.7 million. On March 17, 2011, the Company delivered its first shipment of 150,000 metric tons of iron value valued at $19.8 million from Mineracao Usinimas S.A. ("Usiminas"), one of the largest steel producers in Brazil. The strategic relationship with Usiminas provides China Armco with a significant potential growth conduit as it is the first company to help Usiminas to export its iron ore to China.

The metal recycling business resumed normal operations in January 2011 after the provincial government eliminated power restrictions that were in effect from September to December of 2010. In addition, it has added 6 new metal cutting machines since the beginning of 2011, bringing the total to 18. We expect these machines will allow the Company to reach its designed recycling capacity of one million metric tons per year.

Management began migrating its metal recycling customers to its pre-sold model starting in January 2011. Under this new sales strategy, customers pay China Armco approximately 100% of the total purchase price in advance by issuing a commercial bill from a related bank, thereby locking in a set volume and price. This allows the Company to use the proceeds to pay for raw materials, thereby reducing its working capital needs and providing enhanced visibility into future production volumes. 2 customers have transitioned to the pre-selling model so far, and the Company continues to actively solicit existing and new customers.

As of December 30, 2010, we had invested a total of approximately $33.9 million for the acquisition of land use rights, construction and equipment purchases for the Facility.  We expect to expand the production capacity at the Facility in the future and expect to build or acquire additional facilities in the future, depending on market conditions.  We have not set a timeframe for this expansion. 
 
We have not yet determined how we plan to finance this future expansion if we determine to proceed with it.  Unless we can obtain additional financing on terms we deem favorable to us, we will be unable to complete any such expansion or construct additional facilities in the future, and there can be no assurance that we will be successful in obtaining any such additional financing, or that such financing would be on terms deemed to be desirable to our management.  Moreover, in the event we do obtain such financing, there can be no assurance that such investment will result in enhanced operating performance or produce significant revenues and related profits in the future.

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

SAN MATEO, CA--(Marketwire - January 6, 2011) - January 6th - China Armco Metals, Inc. today announced it has received confirmation that local government imposed power restrictions for energy intensive industries and steel producers will be lifted in January 2011. With the announcement, the Company's scrap metal recycling business can return to full operations.

The central government imposed energy restrictions in at least 18 provinces beginning in September 2010 in an effort to meet the energy consumption and emissions targets set by the National 11th Five Year Plan (2006-2010), which significantly impacted output in the steel industry and the operations at China Armco. 

"We are pleased to receive news that the power rationing will be phased out," said Mr.Kexuan Yao, the Company's Chairman and Chief Executive Officer. "These restrictions temporarily affected our operations in the third and fourth quarters of 2010, and we are encouraged to be operating on a full time basis. We will now be able to rapidly accelerate our growth in this area of great potential."

China consumes over 500 million tons of steel annually and is the largest in the world. 100 million tons of scrap steel are utilized in this production per year and currently Chinese producers only meet 60% of this demand annually. The Company's recycling operations, which can process up to one million tons of metal scrap per year, is expected to contribute substantially to the company's revenues.

SAN MATEO, CA--(Marketwire - December 21, 2010) -  China Armco Metals, Inc. today announced it expects the Company to produce and sell approximately 25,500 tons of recycled steel with an aggregate value of approximately $12 million in the fourth quarter of 2010.

China Armco's fourth quarter orders to sell 25,500 tons of recycled steel are from 5 customers. The central government recently announced that the power rationing for energy intensive industries and steel producers will be phased out and the Company is optimistic about being able to be operating on a full time basis in the near term.

"We are encouraged by recent actions by the central government to relax the power restrictions," remarked Mr.Kexuan Yao, the Company's Chairman and Chief Executive Officer. "Recycled steel produced through our state-of-the-art production facility, which uses less electricity and emits less air pollution than steel produced through traditional iron ore processing, is poised to benefit from the central government's new policies. We are working diligently to secure additional scrap metal in order to service the pent up demand for recycled steel in China." 

Through November 30, 2010, China Armco has secured and shipped three orders to deliver iron ore to trading firms serving iron and steel producers in China. The orders include a combined volume of 112,000 tons with an aggregate value of approximately $17.1 million. "We are seeing a steady progress in our trading business," said Mr. Kexuan Yao, Chairman and CEO of China Armco.

"With iron prices stabilizing in recent months, steady industrial production growth in China, and the ending of current power conservation plans enacted by the government for the steel industry, we are cautiously optimistic about the recovery. Our diverse and stable supply of metal ores and non-ferrous metals from 10 international suppliers, our more than 10 years of experience and strong relationships with over 150 customers in China position us well to capitalize on the long term secular growth of the Chinese steel industry."

China Armco Metals, Inc. today announced that the Jiangsu Provincial Government has recently initiated additional rolling blackouts for the Lianyungang enterprise zone where its wholly owned subsidiary, Armet Renewable Resourced Co., Ltd., operates its metal recycling facility. As referenced in our September 10, 2010 press release, the power restrictions were initiated by the province to meet annual central government industrial energy usage targets. The energy usage targets are part of China's Eleventh Five Year Plan (2006-2010) which ends on December 31, 2010. While the facility will still have access to power when the restrictions are in place, it is unclear at this time as to the number of hours per day and days per week when power will be available and whether the restrictions will be in place for the remainder of 2010. Similar power restrictions have been implemented by at least 18 other provinces in China affecting numerous industries.

The energy restrictions will significantly reduce our recycling capabilities in the fourth quarter and has also impacted our distribution business. As steel manufacturers throughout China are also experiencing similar restrictions, we are seeing reduced demand in the markets for a number of ores and companies delaying purchase decisions. Due to the uncertainties as to the extent and duration of the current power disruptions, management cannot estimate its financial performance for the remainder of 2010 and is therefore withdrawing its financial guidance for the full year of 2010. On January 1, 2011 China's Twelfth Five Year Plan (2011-2015) will become effective eliminating the need for the current restrictions.

Commenting on the announcement, Mr. Kexuan Yao, CEO and Chairman of China Armco Metals, Inc., stated, "While the government's decision to restrict power will further the negative impact on our 2010 performance and we do not have sufficient clarity to assess the full impact in 2010, we do know that it will certainly end before the beginning of 2011. We believe there will be sufficient demand in 2011 for our scrap metal to enable us to quickly recover following this interruption and we intend to rapidly ramp up our production utilization rates in the coming quarters."

GeoTeam® September 2010 Rodman & Renshaw notes:

China Armco Metals (NYSE AMEX:CNAM)

• Recycling operations will be disrupted due to electricity restrictions. The restrictions could run up to 30 days (or even longer?). Product not produced in QIII won't be available for sale in QIV. Quarterly results may remain lumpy.
• Testing and adjustments played a part in the recent slow down in recycling shredder in past quarter.
• Slow down the in September will effect 3rd and 4th quarter
• The downgrade in guidance was worst case scenario
• Next 12 months should see significant impact from new facility
• Awaiting drilling results of Australian mine venture. Should be known by end of year.
• With respect to SAIC, SAT and SEC reporting, explained possible differences between US and Chinese GAAP, impact of VAT accrued and paid and intercompany transactions; but didn't know if there was a problem reconciling the filings or not. They understood this is an issue that has to be dealt with.
• 1.5 million warrants with exercise price of 5.00
• 1.5 million warrants with exercise price of 7.50

GeoInvesting Question

Please address the fact that, as referenced in the below excerpt from your filings, you require funds to complete recycling expansion. How are you going to pay for this?

"We need additional financing to fund expansion of our recycling facility and working capital for our metal ore business which we may not be able to obtain on acceptable terms. We need to raise additional capital to carry out our plans to expand the capacity of our recycling facility and increase the volume of our purchases of the metal ore we resell."

Company Response:

With regards to the financing, the company did a Guaranty Cooperation Agreement with a steel company to free up its balance sheet to help deal with receivable and trade financing credit lines. See June 17, 2010 8k

Recent transactions filed by Andrew Wardon:

113,600 shares between September 17 and September 21, 2010.

China Armco Metals announced that the Jiangsu Provincial Government has scheduled rolling blackouts in September for the Lianyungang enterprise zone where its wholly owned subsidiary, Armet Renewable Resourced Co., Ltd., operates its metal recycling facility.  The power restrictions are being initiated by the province to meet annual central government industrial energy usage targets.

The energy restrictions will significantly reduce our recycling capabilities in the fourth quarter which is expected to impact its revenue in 2010 by as much as $40 million.  This has caused management to revise its financial guidance for the full year of 2010 which is now expected to exceed $140 million with net income exceeding $8 million.
 
Commenting on the announcement, Mr. Kexuan Yao, CEO and Chairman of China Armco Metals, Inc., stated "While the government’s decision to restrict power will negatively impact our performance over the course of this month, we believe our recycling operations will quickly recover following this interruption as we ramp up our production utilization rates.  With current steel prices remaining favorable to our operations, we see a strong outlook for the quarters ahead after this short term interruption is behind us.”

Revenues for the second quarter of 2010 were $17.0 million compared to the $22.5 million recorded in the second quarter of 2009.

• In the second quarter we experienced a significant decline in metal ore sales as purchasers curtailed orders in light of these policies.

"Management sees these pressures easing in the coming quarters and has already seen a marked pickup in activity from customers.  The decrease in revenue is largely due to a sharp decline in customer demand midway through the second quarter of 2010 resulting from the Chinese government measures to restrain the real estate industry from overheating." 

• Net loss of ($248,000) for the second quarter of 2010 compared to a net income of $3.1 million recorded for the second quarter of 2009. This resulted in a loss per diluted share of ($0.02) as compared to earnings per diluted share of $0.31 in the second quarter of 2009.

"As a result, net The soft demand in the second quarter of 2010 coupled with a declining price environment caused severe pressure on the Company's gross margins resulting in gross profit margins declining to 1.2% in the second quarter of 2010 as compared to 18.3% in the second quarter of 2009."

"Additionally, there was a heavy concentration of sales of lower margin iron ore in the second quarter of 2010 compared to a large high margin shipment of chromium contributing substantially to gross margins in the second quarter of 2009."

Financial Forecast for Full Year of 2010

While performance in the second quarter of 2010 suffered from a number of macroeconomic factors, we have made significant strides in the launch of our metal recycling facility. Installation of equipment along with government approvals was completed in the second quarter of 2010 with some minor delays during our testing phase. However, we were able to deliver approximately 10,500 metric tons of finished product to end customers in the second quarter. Production will accelerate substantially in the third quarter and we are seeing a strong pickup in ore trading activity as well. Based on our current production and delivery schedules in metal recycling, coupled with current quoting activity in our trading operations, we anticipate a very strong performance for the remainder of 2010. The longer than anticipated testing phase in our metal recycling operations and soft second quarter has caused management to revise its financial guidance for 2010. Management now expects revenues for the full year of 2010 to exceed $180 million, with net income exceeding $10 million. Management expects its metal recycling operations to become the largest contributor to revenues, progressively accelerating in the second half of 2010.

Commenting on China Armco Metals' financial performance, Kexuan Yao, its CEO and Chairman, stated, "While the second quarter was particularly challenging, we have launched our recycling operations and see production accelerating. We have significantly strengthened our balance sheet and secured significant additional borrowing capacity, giving us a great deal more financial flexibility to rapidly grow our business. We intend to make every effort to maintain a high rate of production for the remainder of 2010. As we head into our traditionally stronger quarters we believe we are poised for a period of significant earnings growth and we intend to deliver on our aggressive plan for the benefit of our shareholders."

Please note: On July 6, 2010, the GeoTeam® removed all Chinese stocks that were on GeoBargains and GeoSpecial lists to respective Radar lists as we complete our "quality assessment."

***Very Important GeoTeam note. We have yet to verify if the Chinese filings for ChinaHybrid stocks we monitor match respective SEC filings. We are in the process of completing this task. Although we are not totally convinced that SAIC filings are an accurate represenation of financial statements the issue is impacting stock prices. Conservative investors may want to limit exposure or buy put options on stocks, that have this availability, as insurance against long positions, until we publish our findings. Odds are we will identify some promising companies that will fail this litmus test.

see relevant articles

Added to the GeoBargain list on August 18, 2009 @ $2.39

Catalyst: Valuation was compelling; Excitement over the company’s new recycling business.
Peak performance: Reached a high of $11.10 on March 5, 2010
Current Price: $3.26

Current road block: CNAM has yet to put together an impressive string of strong EPS quarters; Issued 2010 net income guidance with no EPS guidance; Down the road, dilution could hamper EPS growth; Capital intensive business, debt to equity ratio is 57.1% which may limit P/E expansion; Investors may have to endure a weak 2010 second quarter before business ramps up in the third quarter and fourth quarters;  Concerns that China's steel industry is faced with oversupply issues.

Of all the ChinaHybrids we monitor, CNAM had one of the wildest rides over the past year. The stock began its big run from the $2.00 area and catapulted to its high of $11.10 on March 5, 2010 as investors became enthused about the imminent launch of CNAM’s recycling venture and new contracts that could dramatically increase revenues. The recycling venture could also help smooth out the lumpy nature of its steel distribution business characterized by unpredictable order patterns from a few companies.

The stock has retraced almost all of gains amidst a weakened stock market and a recent dilutive capital raise completed at $6.50 per share. So what has CNAM done with some of the money thus far? It made an investment in an Australian iron ore exploration company, whose mine is believed to contain quality iron ore, instead of using the money to immediately grow its business. As far as we are concerned, CNAM has enough on its plate and should not embark on a somewhat risky investment that only may pay off in the future...especially when management justified its recent capital raise by claiming it needed to secure sources of supply to fill anticipated demand. Furthermore, the company has a history of reporting sporadic quarterly results.

We would like to gain a better grip on EPS growth which we are not sure will reach our 30% growth requirement on a quarterly basis, especially in the 2010 second quarter, as CNAM reported 2009 second quarter EPS of $0.33. However, based strictly on a P/E analysis CNAM would be considered cheap by most investors and substantial operational gains should start occurring in the 2010 third quarter. Also encouraging is that the fact that the CFO exercised out of the money warrants, maybe a sign of confidence. Investors should keep in mind that as the stock eclipses $5.00 and $7.50 they will have dilution from outstanding warrants to contend with. (see April 23, 2010 research note).

Aggressive long-term investors who are not concerned with quality issues may find CNAM a stock worth betting on with the potential for significant returns. Risk adverse investors may be more comfortable waiting to see how quality issues play out and perhaps paying higher prices before making a substantial investment.

Time line for liquidity needs is uncertain:

"We do not have any commitments for capital expenditures at March 31, 2010. As of March 31, 2010, since inception we have invested a total of $31.0 million for the acquisition of land use rights, construction and equipment purchases for the first phase of our scrap metal recycling facility. While we expect to expand the production capacity of our recycling facility, we have not set a time frame for this expansion. Also, we have not determined how we plan to finance this future expansion and unless we can obtain additional financing, we will be unable to complete construction of additional phases of our scrap steel recycling facility."

Also, consider that as of March 31, 2010 the balance sheet was not that pristine: 

• Current assets to current liabilities was weak at 1.45
• Debt to equity ratio was 37.7% (short-term and long-term debt)

This helps shed some light on why CNAM may have required its April financing deal.

Our intent over the short-term is to build a check list to assess the risk position of firms in the ChinaHybrid space. For the time being this will consist of the following: (this list is likely to grow substantially)

- Is the company's auditor ranked in the top 100?
- Is the auditor located in the U.S.A? If located in China the PCAOB (Public Company Oversight Board) may be denied access to investigate the practices of the auditing firm. Short sellers have been using this information as a tool to validate their opinions.
- Are the company's internal controls satisfactory?
- Are their any outstanding legal issues?
- Do the company's top ten customers represent less than 10% of revenues?
- Operating cash flow divided by current liabilities is greater than one. The higher the better. (we will use annualized cash flow run rate and eliminate non-cash charges from account liabilities ).
- Cash divided by Current Liabilities is greater than one. This is the most conservative liquidity ratio.
- Is the company buying back stock?

Commenting on China Armco Metals' financial performance, Kexuan Yao, its CEO and Chairman stated, "We are pleased with our performance in the first quarter. While it is traditionally our weakest quarter, we increased sales over 59% from the same period in 2009. We anticipate that as our recycling ramps up throughout the year and our distribution business builds on the favorable trends from the first quarter of 2010, we expect to see record performance for our company in the coming years. We are in the strongest financial position in our history and intend to put our capital to work to further fuel our growth."

As a result of a strong comparative performance in the first quarter of 2010 with continued strong demand in our distribution business coupled with the launch in the second quarter and anticipated ramp up in production at our newly operational scrap metal recycling facility, management is maintaining financial guidance with revenues for the full year of 2010 exceeding $220 million with net income exceeding $12.0 million. Management expects its metal recycling operations to become the largest contributor to revenues progressively accelerating in the second half of 2010.

At first glance, the GeoTeam® is not overly impressed with China Armco Metals private placement proposal announced on April 21, 2009. It appears that the deal, coupled with existing in the money warrants, could potentially increase the share count from 11.7 million to between 17.9 and 19.4 million.  The Company needs to provide more details on how it will overcome potential dilution. We would have preferred that the company maximize its share price through the execution of its current growth plan and obtain better pricing for a capital raise in the future. GeoBargain status will depend on the availability of further details. We are also unsure on where EPS for the 2010 first quarter will be. Seasonality and the volatility of its distribution are factors to consider. In the end the real story for CNAM is the growth expectation from its recycling business which should begin to play a factor soon.

This in another example of what we feel is some of the irresponsible fund raising activity taking place in the China Hybrid space and the one thing that could potentially derail P/E expansion that we began to see in this sector.  We will write more about this topic soon.

As the deal has yet to close, we would urge the company to reconsider its decision, unless it is in dire need for capital or has plans to pursue immediately accretive moves with the funds.

Disclosure: GeoTeam Long CNAM

Commenting on this financial performance for 2009, Kexuan Yao, China Armco's Chairman and CEO stated, "Our efforts to maintain business relationships and work with our customers in the uncertain period late in 2008 and 2009 coupled with our ability to secure necessary credit facilities, enabled us to thrive and expand as China recovered throughout 2009. Commodities sales and metal production continues to increase creating a very favorable environment for the future. We are excited to launch the operations of our scrap metal facility and believe we have laid the foundation for an extended period of expansion in both top and bottom line performance for the remainder of 2010 and beyond.

Source: Marketwire (March 31, 2010)

The Supply of Manganese Ore Has Potential of Generating Distribution Revenue of U.S. $180 Million Over Next 16 Months

Commenting on the contract, Mr. Kexuan Yao, CEO and Chairman of China Armco Metals, Inc., stated, "Securing this contract is a significant step forward for our company's metals distribution operation as we move through 2010. With the ability to sell this product into China under favorable terms we have significantly strengthened our overall supply capabilities. Upon successful delivery over the term of the contract, we are in a position to significantly boost our top and bottom line performance for the remainder of 2010 and well into 2011. We look forward to building on our relationships with this and other international suppliers in the coming months as we continue to see a strong environment for industrial metals in China."

Source: Marketwire (March 23, 2010)

GeoBargain CNAM reported third quarter results this morning. EPS results were not near as strong as expected.

Currently, China Armco derives all of its business by acting as the middle man between suppliers and buyers of steel.  The Company makes its profit on the “brokering margin” it makes when it resells to the buyers of steel products. In our article on November 20, 2009, we postulated that CNAM would report a nice quarter due to pre-announced order bookings for the third quarter and a stabilization in steel prices. As it turns out, sales did beat our expectations and steel prices did remain stable. Unfortunately, the companies “brokering margins” suffered. Apparently there was some give back in margins that were abnormally high associated with a surge in steel prices from the 2009 first to second quarter.  Also, CNAM's distribution business has the tendacy to be fueled by orders from a few customers, so it is possible that unfavorable pricing on a contract to one customer could affect margins. Results also took a hit from a one time tax adjustment that we view as a non-operating factor. 

The good news is the China Armco issued year end guidance that infers a very strong 4th quarter and offered bullish comments about 2010. Otherwise, a decision to keep CNAM as GeoBargain would have been a challenging decision. The stock may take a short-term hit, but it has always been a 2010 story, which is when its new recycling business will kick in.  This should give the Company a new source of revenue and diversify its customer base.

Management is witnessing strong sales momentum in the fourth quarter, traditionally the strongest quarter of its distribution business, and now anticipates:

• Full year 2009 revenue ranging between $90 million and $95 million
• Net income ranging between $4.5 million and $ 5 million.
• Management also anticipates that its metal recycling operation will be completed and tested sometimes in December of 2009 and ramp production starting in the first quarter fueling substantial growth in 2010.

This EPS guidance would imply fourth quarter EPS guidance of $0.19 to $0.24

Commenting on the company's financial performance, Kexuan Yao, CEO and Chairman of Armco Metals stated, "We are pleased with the top line performance we achieved in the first nine months of 2009. Our bottom line was adversely affected by two items which we do not anticipate will recur in the future. More importantly we see strong momentum in the fourth quarter coupling with the launch of our metal recycling business setting the stage for what we believe will be a very prosperous 2010. We are excited to enter this new business line and look forward to providing more information about these operations after they are launched in the near future."

Source: Marketwire (November 24, 2009)

China Armco Contract Momentum Fuels Optimism

In line with our common theme that clues can offer valuable insight into the future performance of a company, we have come across a few promising hints regarding China Armco Metals 2009 third quarter financials yet to be released.

Commenting on the contract, Mr. Kexuan Yao, CEO and Chairman of China Armco Metals, Inc., stated, "We are pleased to deliver larger sized orders to the steel industry as we look to build on the strong sales efforts we are making in the third quarter. We are carrying strong momentum into the busiest sales period of the year for our industry and remain very optimistic about our prospects for the remainder of this year and into 2010. We believe the environment for our customers remains strong and our anticipated metals recycling business launch places the company in a position to experience record performance in the coming years."

In its 2009 second quarter, China Armco reported EPS of $0.33 on sales of $22.5 million.  Thus, we are speculating that 2009 third quarter results will be at least as good as the 2009 second quarter.  

Keep in mind that there are two wild cards that could influence our assumption.  First costs may have been incurred in the third quarter due to the construction of the Company's new recycling facility. Second, although the revenue picture is strong, we do not have concrete information on the change in the price of steel from the 2009 second to third quarter, which varies by region and local demand. 

However there is information that indicates that the overall pricing trend as has at least stayed constant:

Source: www.indexmundi.com
Although iron ore prices have been lower in 2009 as compared to 2008, the general sentiment is that a continued increase in demand will eventually drive steel prices higher in upcoming quarters. While these trends may indicate the direction of raw material costs, China Armco's revenue ultimately depends on its ability to negotiate steel prices with its customers in any environment. Given the continued growth of steel demand in China, coupled with elevated iron ore prices over the longer term, China Armco stands to benefit from the economic recovery taking place domestically. Over the last 10 years, iron ore prices have trended to the upside, demonstrating that the long term pattern will continue in the same direction.
Source: www.indexmundi.com

In the coming months, China will be establishing its own index to price iron-ore, as explained in a recent Xinhua article outlining the need for a national metric for steel prices.

...China's Rizhao International Iron Ore Trade Center in Shandong province signals that the establishment of the country's first iron ore price index...

Jointly invested in by five local private companies pursuing bulk commodity transaction in Shandong, the center mainly provides electronic commerce services for iron ore suppliers and steelmakers. Its registered capital totals 20 million yuan ($2.93 million).

The trade center offers services including electronic transaction, information exchange, quality inspection, storage, transportation, insurance, and settlement for the two parties in iron ore trading, according to Wang Lei, head of the preparation team for this program.

"As the biggest iron ore importer, China has not set an iron ore price index to date. The iron ore trade center will promote orderly iron ore imports and standardize activities of trading parties, and gradually facilitate China to launch its own iron ore price index in the future..."

Data from China Customs shows that the country imported 443.7 million tons of iron ore in 2008, half of the world's overall iron ore exports volume over the year, and the imports in January-April period in 2009 hit 188 million tons.

(Xinhua, May 22, 2009)

China Armco's 2009 investor presentation documents the potential of the Company's metal recycling leg, Armet Renewable Resource Co., Ltd.

Source: China Armco

The GeoTeam is left to infer that current and future events are encouraging for China Armco, a company that is in the right industry at the right time.

Disclosure: Long CNAM

We are extremely pleased to have secured this $12 million credit facility. We see continued evidence that the Chinese economy is on the road to recovery and there has been an increasing demand for commodities coupled with a rising price environment. We believe this additional financial flexibility will enable us to opportunistically grow our distribution business and significantly improve our overall operating results.

Our sales efforts in the second quarter benefited from a strong rebound in several key metal markets. We believe this momentum will continue in the coming quarters and we intend to make every effort to improve our operating results further. We believe our expanded credit lines, coupled with the anticipated launch of our scrap metal recycling facility later this year places the company in the strongest financial position in its history and poised for an extended period of exceptional growth for the benefit of our shareholders.

• Price = $2.95
• Trailing GAAP EPS = $0.40
• Geo calculated Fully-Taxed Trailing non-GAAP EPS = $0.28
• Geo 2009 fully taxed EPS Estimate= $0.64 ^b
• P/E based on Fully-Taxed Trailing non-GAAP EPS = 10.54
• P/E based on Geo 2009 fully taxed EPS Estimate= 4.61

1. CNAM meets 9 out of 10 GeoBargain® Requirements
   
   

   	Requirement	Comments
   	Recent 52-week High (generally within 3 months)	Must Reach $7.00
   	30% EPS Growth Rate a	2nd Qtr. 2009 EPS increased 250% Full year 2009 Geo estimate implies an EPS growth rate of 125%
   	10% Revenue Growth	2nd Qtr. 2009 revenue increased 71.8%
   	Strong Balance Sheet	As of 2nd Qtr 2009
   YES	Positive Cash Flow	$ 17.1 Million as of 2nd Qtr. 2009
   YES	Debt to Equity Ratio less than 20%	0.0% (We still need to verify)
   NO	Current Ratio is at least 2:1	1.3:1
   	Return on Equity is at least 15%	6 Months Trailing 18.6%
   	Minimum Pre-tax Operating Margins of 8%	15% as of 2nd Qtr. 2009
   	Preferably Under 50 Million Shares	10.1 Million shares as of 2nd Qtr. 2009
   	High Insider Ownership (generally greater than 15%)	>15%
   	Limited Institutional Ownership (generally less than 20%)	<20%
   	P/E Divided by Growth Rate (PEG Ratio) is Less Than 1. a	0.063

   
   

2. Recently reported a substantial increase in revenues and net income for its 2009 second quarter.

   • Revenues increased 71.8% to $22.5 million
   • GAAP EPS increased 38% to $0.33
   • Geo calculated tax-adjusted non-GAAP EPS increased 250% to $0.21
   
   
3. China Armco should directly benefit from the China stimulus plan.  On July 16, 2009 China released figures stating that GDP growth for the 2009 second quarter came in at 7.9%, easily surpassing expectations and giving some indication that the government's quick and aggressive response to the global recession is taking hold. (Source: GeoTeam report, Capitalizing on China's Stimulus Plan - Part I)
   
   
4. Favorable industry trends as discussed in the China Armco's filings:
   
   
   • Steel- We believe that domestic steel production will continue to witness significant growth as China continues to grow. The steel industry is an important basic industry of the national economy of China, and plays a vital role in the recent industrialization efforts of the country. Production volume in China has more than doubled within the past five years. China’s share of the world's steel production continued to grow in 2008 representing 38% of the world's total crude steel production.
   • Recycling- The energy saved by recycling reduces the annual energy consumption of the industry by approximately 75%, which supports the government's energy conservation goals. The PRC identified the scrap metal recycling industry as a way to minimize the use of scarce natural resources and reduce energy consumption and emissions in the steel manufacturing industry.  In China, the scrap metal recycling industry is highly fragmented with no dominant player.
   
   
5. Comments suggest that China Armco Metals can continue to show dramatic growth in coming quarters.
   
   
   • We are extremely pleased to have secured this $12 million credit facility. We see continued evidence that the Chinese economy is on the road to recovery and there has been an increasing demand for commodities coupled with a rising price environment. We believe this additional financial flexibility will enable us to opportunistically grow our distribution business and significantly improve our overall operating results.
   • Our sales efforts in the second quarter benefited from a strong rebound in several key metal markets. We believe this momentum will continue in the coming quarters and we intend to make every effort to improve our operating results further. We believe our expanded credit lines, coupled with the anticipated launch of our scrap metal recycling facility later this year places the company in the strongest financial position in its history and poised for an extended period of exceptional growth for the benefit of our shareholders.

Short-Term Potential value based on fully taxed adjusted trailing non-GAAP EPS

P/E 25 * $0.28 = $7.00
P/E 20 * $0.28 = $5.60

Short-term Potential value based on 2009 fully taxed adjusted Geo non-GAAP EPS Estimate

P/E 15 * $0.64 = $9.60

^a CNAM is not paying a full U.S. tax rate. Therefore, all EPS numbers have been adjusted by the GeoTeam to reflect a tax rate of 36%.

^b The GeoTeam is still investigating the possibly of dilution due to outstanding warrants. It initially appears that this becomes an issue if the stock reaches $5.00 per share.

These scenarios are not intended to be investment advice, but are scenarios based on some commonly used investment guidelines. They are provided to aid investors in making their own investment decisions.

Valuation Scenarios

Added to Geo Bargain list on August 18, 2009. ($2.39). 

Data Inputs:

Fiscal Year Ends in December
2008 Tax-Adjusted non-GAAP EPS: $0.28

^a CNAM is not paying a full U.S. tax rate.  Therefore, all EPS numbers have been adjusted by the GeoTeam® to reflect a tax rate of 36%.

^b EPS numbers are non-GAAP.  Non-GAAP EPS Figures exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . For a more complete explanation of the company's definition of non-GAAP please refer to its financial press releases. The GeoTeam® non-GAAP figures may, from time to time,  differ from company supplied figures.

^c The GeoTeam® is still ivestigating the possibly of dilution due to outstanding warrants.  It initially appears that this becomes an issue if the stock reaches $5.00 per share.


Short-Term Valuation Scenarios

Peg Ratio Analysis - Common rule of thumb that PEG ratio should be less than 1.0

We are extremely pleased to have secured this $12 million credit facility. We see continued evidence that the Chinese economy is on the road to recovery and there has been an increasing demand for commodities coupled with a rising price environment. We believe this additional financial flexibility will enable us to opportunistically grow our distribution business and significantly improve our overall operating results.

China Armco Metals, Inc. is engaged in the sale and distribution of metal ore and non-ferrous metals throughout the PRC.

Please see the full release.

Commenting on this financial performance for 2008, Kexuan Yao, China Armco's Chairman and CEO, stated, "Commodities and metal production experienced a dramatic slowdown across all sectors which peaked in the fourth quarter of 2008. These declines impacted our ability to maintain and grow our revenues in that period. The costs of shipping ores as compared to the price of shipments increased dramatically, having a strong negative impact on operating margins, especially in the fourth quarter. Though we were not immune from this downturn and results were below our earlier expectations, we are encouraged by improvements in a number of metal prices in the first few months of 2009. We intend to work diligently to keep our cost structure low enough to weather this economic downturn and position the company for growth as metal markets rebound. We remain committed to entering a new market segment in steel recycling where there is a huge void in production capabilities and strong governmental support for the recycling metals industry in China."

The company did not provide 2009 financial guidance.

Source: Marketwire (March 26, 2009)

The Company now anticipates its full year net income for the year ended December 31, 2008 will range between $4.4 and $4.7 million. This revised guidance from the previous estimate of $6 million reflects lower than expected revenues due to a global economic slowdown which softened aggregate demand, and created an oversupply of ore in the market. Estimated fourth quarter 2008 net income is now estimated to be approximately $400,000 to $700,000. Based on 8.2 million shares outstanding, full year EPS estimates for 2008 are $0.54 to $0.57 per share.

Source: Marketwire (January 30, 2009)

"The company signed a Non-Binding Letter of Intent on May 22, 2008 to acquire 100 percent of Shanghai Armco & Metawise (HK) Limited ("Armco"), a privately held company based in Hong Kong, China. Armco imports, exports and distributes metal ores, and non-ferrous metal and is planning to expand its operations into the steel scrap metal recycling business.

Source: Marketwire (May 28, 2008)

The GeoTeam has verified that the reverse merger has been consummated.

Cox Distributing, Inc. (formerly trading under the symbol "COXD" on the OTC Bulletin Board) acquired 100 percent of Armco & Metawise (HK) Ltd, a privately held company based in Hong Kong and China, in June of 2008 through a share purchase agreement. Armco intends to expand its import and export activity within China as well as construct a steel recycling facility initially capable of recycling 1 million metric tons of scrap metal annually.

Source: Marketwire (July 16, 2008)