Florida
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001-33694
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13-3876100
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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CHINA DIRECT INDUSTRIES, INC.
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||
Date: February 14, 2012
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By:
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/s/ Hernan Grant Welch
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Hernan Grant Welch,
Executive Vice President and Chief Financial Officer
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||
December 31, 2011
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September 30, 2011
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|||||||
ASSETS
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(Unaudited)
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|||||||
Current Assets:
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||||||||
Cash and cash equivalents
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$
|
6,092,506
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$
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12,563,126
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||||
Marketable securities available for sale (Note 4)
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11,418,140
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8,292,837
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||||||
Marketable securities available for sale-related parties (Note 4)
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212,238
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542,386
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||||||
Accounts and notes receivables, net of allowance of $266,508 and $276,069, respectively (Note 5)
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22,297,006
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20,428,217
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||||||
Accounts, loans and other receivables, and prepaid expenses - related parties (Note 10)
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11,566,473
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9,598,583
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||||||
Inventories, net (Note 6)
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12,271,818
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9,625,774
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||||||
Prepaid expenses and other current assets, net (Note 7)
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16,648,414
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14,389,065
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||||||
Restricted cash, current
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1,644,404
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1,547,159
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||||||
Total current assets
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82,150,999
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76,987,147
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||||||
Property, plant and equipment, net (Note 8)
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36,320,715
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36,873,988
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||||||
Intangible assets
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153,271
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163,447
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||||||
Property use rights, net
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2,235,665
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2,252,445
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||||||
Other long-term assets
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289,690
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58,192
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||||||
Total assets
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$
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121,150,340
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$
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116,335,219
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||||
LIABILITIES AND EQUITY
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||||||||
Current Liabilities:
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||||||||
Loans payable-short term (Note 9)
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$
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2,846,515
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$
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2,657,091
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||||
Accounts payable and accrued expenses
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15,527,101
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15,468,902
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||||||
Accounts and other payables-related parties (Note10)
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4,108,852
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4,590,045
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||||||
Advances from customers and deferred revenue
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2,097,811
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3,821,208
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||||||
Other liabilities
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4,859,190
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4,315,858
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||||||
Taxes payable
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543,512
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1,349,611
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||||||
Total current liabilities
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29,982,981
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32,202,715
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||||||
Long-term liabilities
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32,501
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107,231
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||||||
Total Liabilities
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30,015,482
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32,309,946
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||||||
TOTAL EQUITY
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||||||||
Series A Convertible Preferred Stock: $.0001 par value, stated value $1,000 per share; 10,000,000 authorized, 1,006 shares outstanding at December 31 and September 30, 2011. (Note 11)
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1,006,250
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1,006,250
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||||||
Common Stock: $.0001 par value; 1,000,000,000 authorized; 40,652,582 and 40,353,828 issued and outstanding as of December 31 and September 30, 2011, respectively (Note 11)
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4,065
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4,035
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||||||
Additional paid-in capital
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75,729,218
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75,279,087
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||||||
Accumulated other comprehensive income
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3,799,562
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128,943
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||||||
Accumulated deficit
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(5,000,604
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)
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(8,111,323
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)
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||||
Total China Direct Industries, Inc. stockholders' equity
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75,538,491
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68,306,992
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||||||
Noncontrolling interests (Note 12)
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15,596,367
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15,718,281
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||||||
Total equity
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91,134,858
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84,025,273
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||||||
Total liabilities and equity
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$
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121,150,340
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$
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116,335,219
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Three months ended
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||||||||
December 31, 2011
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December 31, 2010
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|||||||
Revenues
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$
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36,364,466
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$
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45,762,889
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||||
Revenues-related parties
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547,431
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6,713
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||||||
Total revenues
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36,911,897
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45,769,602
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||||||
Cost of revenues
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31,314,543
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39,238,556
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||||||
Gross profit
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5,597,354
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6,531,046
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||||||
Operating (expenses) income:
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||||||||
Selling, general, and administrative
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(3,420,273
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)
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(3,602,281
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)
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||||
Other operating income
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-
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374,980
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||||||
Total operating expenses
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(3,420,273
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)
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(3,227,301
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)
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||||
Operating income
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2,177,081
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3,303,745
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||||||
Other income (expenses):
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||||||||
Other income
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483,710
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171,519
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||||||
Interest income (expense)
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59,009
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(7,747
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)
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|||||
Realized gain (loss) on available-for-sale securities
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14,256
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(118,412
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)
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|||||
Total other income
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556,975
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45,360
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||||||
Income before income taxes
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2,734,056
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3,349,105
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||||||
Income tax benefit
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7,456
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73,284
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||||||
Net income
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2,741,512
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3,422,389
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||||||
Net loss attributable to noncontrolling interests
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389,192
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43,447
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||||||
Net income attributable to China Direct Industries
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$
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3,130,704
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$
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3,465,836
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||||
Deduct dividends on Series A Preferred Stock:
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||||||||
Preferred stock dividend
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(20,130
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)
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(20,130
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)
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||||
Net income attributable to common stockholders
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$
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3,110,574
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$
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3,445,706
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||||
COMPREHENSIVE INCOME:
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||||||||
Net income
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$
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2,741,512
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$
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3,422,389
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||||
Foreign currency translation adjustments
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514,983
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791,958
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||||||
Unrealized gains on available-for-sale securities
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3,208,566
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404,754
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||||||
Comprehensive income
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$
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6,465,061
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$
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4,619,101
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||||
Net loss attributable to noncontrolling interests
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389,192
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43,447
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||||||
Foreign currency translation adjustments - noncontrolling interests
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(52,931
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)
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(274,178
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)
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||||
Comprehensive income attributable to China Direct Industries
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$
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6,801,322
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$
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4,388,370
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||||
Preferred stock dividend
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(20,130
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)
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(20,130
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)
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||||
Comprehensive income attributable to common stockholders
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$
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6,781,192
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$
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4,368,240
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||||
Basic and diluted income per common share
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||||||||
Basic
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$
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0.08
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$
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0.11
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||||
Diluted
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$
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0.08
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$
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0.11
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||||
Basic weighted average common shares outstanding
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40,565,910
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31,818,874
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||||||
Diluted weighted average common shares outstanding
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41,126,275
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31,818,874
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Three Months Ended December 31,
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||||||||
(Dollars in thousands)
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2011
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2010
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||||||
NN Net income from operations
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$ | 2,742 | $ | 3,422 | ||||
Interest expense ( income), net
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(59 | ) | 8 | |||||
Income tax benefit
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(7 | ) | (73 | ) | ||||
Depreciation
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958 | 984 | ||||||
Amortization
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27 | 27 | ||||||
EBITDA from operations
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$ | 3,661 | $ | 4,368 | ||||
By Segment:
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||||||||
Magnesium
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$ | 39 | $ | 317 | ||||
Basic Materials
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(342 | ) | 210 | |||||
Consulting
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3,964 | 3,841 | ||||||
EBITDA from operations
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$ | 3,661 | $ | 4,368 |
•
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Fluctuations in the pricing and availability of magnesium and in levels of customer demand.
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•
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Changes in the prices of magnesium and magnesium-related products.
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•
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Our ability to implement our expansion plans for growing our business through increased magnesium production capacity and acquisitions and development of our industrial commodities business.
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•
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Fluctuations in the cost or availability of coke gas and coal.
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•
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Loss of orders from any of our major customers.
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•
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Impact of proposed acquisition of Golden Trust and Lingshi Magnesium and interest of our directors and executive officers in such transaction.
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•
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Our ability to effectively integrate our acquisitions and to manage our growth and our inability to fully realize any anticipated benefits of acquired business.
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•
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The value of the equity securities we accept as compensation is subject to adjustment which could result in losses to us in future periods.
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•
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Our need for additional financing which we may not be able to obtain on acceptable terms, the dilutive effect additional capital raising efforts in future periods may have on our current shareholders and the increased interest expense in future periods related to additional debt financing.
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•
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Our dependence on certain key personnel.
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•
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Difficulties we have in establishing adequate management, cash, legal and financial controls in the PRC.
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•
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Our ability to maintain an effective system of internal control over financial reporting.
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•
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The lack various legal protections in certain agreements to which we are a party and which are material to our operations which are customarily contained in similar contracts prepared in the United States.
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•
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Potential impact of PRC regulations on our intercompany loans.
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•
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Our ability to assure that related party transactions are fair to our company.
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•
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Yuwei Huang, our executive vice president – magnesium, director and an officer of several of our magnesium subsidiaries his daughter Lifei Huang and Kong Tung is also an owner and executive officer of several companies which directly compete with our magnesium business.
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•
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The impact of a loss of our land use rights.
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•
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Our ability to comply with the United States Foreign Corrupt Practices Act which could subject us to penalties and other adverse consequences.
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•
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Limits under the Investment Company Act of 1940 on the value of securities we can accept as payment for our business consulting services.
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•
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Our acquisition efforts in future periods may be dilutive to our then current shareholders.
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•
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The risks and hazards inherent in the mining industry on the operations of our basic materials segment.
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•
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Our inability to enforce our rights due to policies regarding the regulation of foreign investments in the PRC.
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•
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The impact of environmental and safety regulations, which may increase our compliance costs and reduce our overall profitability.
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•
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The effect of changes resulting from the political and economic policies of the Chinese government on our assets and operations located in the PRC.
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•
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The impact of Chinese economic reform policies.
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•
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The influence of the Chinese government over the manner in which our Chinese subsidiaries must conduct our business activities.
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•
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The impact on future inflation in the PRC on economic activity in the PRC.
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•
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The impact of any natural disasters and health epidemics in China.
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•
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The impact of labor laws in the PRC may adversely affect our results of operations.
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•
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The limitation on our ability to receive and use our revenues effectively as a result of restrictions on currency exchange in the PRC.
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||
•
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Fluctuations in the value of the RMB.
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||
•
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Delisting of our securities from trading by NASDAQ.
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||
•
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The market price for shares of our common stock has been and may continue to be highly volatile and subject to wide fluctuations.
|