0001213900-11-004512.txt : 20110817 0001213900-11-004512.hdr.sgml : 20110817 20110817151201 ACCESSION NUMBER: 0001213900-11-004512 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20110815 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20110817 DATE AS OF CHANGE: 20110817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: China Carbon Graphite Group, Inc. CENTRAL INDEX KEY: 0001284450 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 980550699 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-114564 FILM NUMBER: 111042410 BUSINESS ADDRESS: STREET 1: C/O XINGHE XINGYONG CARBON CO., LTD. STREET 2: 787 XICHENG WAI, CHENGGUANTOWN CITY: XINGHE COUNTY, INNER MONGOLIA, STATE: F4 ZIP: 00000 BUSINESS PHONE: (415) 389-1625 MAIL ADDRESS: STREET 1: C/O XINGHE XINGYONG CARBON CO., LTD. STREET 2: 787 XICHENG WAI, CHENGGUANTOWN CITY: XINGHE COUNTY, INNER MONGOLIA, STATE: F4 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: CHINA CARBON GRAPHITE GROUP, INC. DATE OF NAME CHANGE: 20080213 FORMER COMPANY: FORMER CONFORMED NAME: ACHIEVERS MAGAZINE INC DATE OF NAME CHANGE: 20040322 8-K 1 f8k081511_chinacarbon.htm FORM 8K f8k081511_chinacarbon.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
 
FORM 8-K
 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of report (Date of earliest event reported)   August 15, 2011
 
China Carbon Graphite Group, Inc.
(Exact Name of Registrant as Specified in Charter)
 
Nevada
 
333-114564
 
98-0550699
(State or other jurisdiction of incorporation)
 
(Commission file number)
 
(I.R.S. employer
identification no.)
 
   
c/o Xinghe Xingyong Carbon Co., Ltd.
787 Xicheng Wai
Chengguantown
Xinghe County
Inner Mongolia, China
(Address of Principal Executive Offices)
(Zip Code)
 
(+86) 474-7209723
(Registrant’s telephone number, including area code)
   

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

 
 
Item 2.02 Results of Operations and Financial Conditions
 
On August 15, 2011, China Carbon Graphite Group, Inc. issued a press release announcing financial results for the quarter ended June 30, 2011.  A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.
 
(d)           Exhibits.

99.1        China Carbon Graphite Group, Inc. Press Release, dated August 15, 2011.

 
 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
CHINA CARBON GRAPHITE GROUP, INC.
     
Date:  August 17, 2011
By:
/s/ Donghai Yu                                                                          
   
Donghai Yu
    Chief Executive Officer, President and Director
    (Principal Executive Officer)
EX-99.1 2 f8k081511ex99i_chinacarbon.htm CHINA CARBON GRAPHITE GROUP, INC. PRESS RELEASE f8k081511ex99i_chinacarbon.htm
Exhibit 99.1
China Carbon Graphite Group Releases Second Quarter 2011 Results
 
NEW YORK, August 15, 2011 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. (OTCBB:CHGI - News) ("China Carbon" or the "Company"), the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation's top manufacturers of carbon and graphite products, today announced its financial results for the second quarter ended June 30, 2011.

Second Quarter 2011 Financial Highlights:

•  
Revenue increased 274%, from $3.2 million in Q2 2010 to $12.1 million in Q2 2011
•  
EBIDTA improved 11%, from $1.8 million in Q2 2010 to $2.0 million in Q2 2011
•  
Gross profit rose 1,070%, from $0.2 million in Q2 2010 to $2.7 million in Q2 2011
•  
Gross profit rate increased 214%, from 7% in Q2 2010 to 22% in Q2 2011
  
Net income grew 22%, from $0.7 million in Q2 2010 to $0.9 million in Q2 2011
  
Adjusted net income rose 279%, from $0.68 million adjusted net loss in Q2 2010 to $1.2 million in Q2 2011
 
Summarized Second Quarter 2011 Results:
 
 
     Q2 2011
     Q2 2010
CHANGE
 
Revenue
$12.15 million
$3.25 million
+274%
 
EBIDTA*
$2.0 million
$1.8 million
+11%
 
Gross profit
$2.69 million
$0.23 million
+1,070%
 
Net Income
$0.88 million
$0.72 million
+22%
 
Adjusted Net Income (loss)
$1.2 million
($0.68) million
+ 279%
 
Earning Per Share (Diluted) **
$0.04
$0.04
0
 
Adjusted Earning (loss) Per share (Diluted)
$0.05
($0.03)
+ 266%
 
 
* Please see the accompanying Non-GAAP EBITDA and Adjusted Net Income (loss) measurements below the “Business Outlook Section.”
**Earnings per diluted share of $0.04 on 23.2 million shares. For the second quarter of 2010, the Company reported fully diluted earnings per share of $0.04 on 22.1 million shares.

“We are very pleased with our second quarter results,” said China Carbon’s CEO Donghai Yu. “Solid growth in our core businesses, fine and high purity graphite products, along with our capacity expansion drove 274 percent revenue growth from the second quarter of 2010 to the second quarter of 2011. This past quarter, we continued to see in China increased demand for coupled with a lack of supply of fine and high purity graphite products. As a result of these circumstances, these products maintained higher margins than graphite electrodes. Moreover, due to the soaring demand of high purity graphite in China’s emerging solar and mold industries, the average unit price of high purity graphite products rose 98 percent in the second quarter of 2011 compared to the same period last year.”
 
 
1

 
 
Due to these conditions, we continued our strategy of adjusting our product mix to meet current market demand. By boosting our supply of fine and high purity graphite products, and raising the price of our high purity graphite, we were able to realize considerable growth in our higher margin business. Our sales of high purity graphite alone reached approximately $9.4 million in the second quarter of 2011, which is a $9 million or 231 percent increase when compared to our sales of these products during the same period in 2010. We are very confident about our future as we expect the heightened demand for our higher margin products to extend through 2011, and we intend to continue to invest aggressively in our higher margin businesses in upcoming quarters to further improve profits.
 
2011 Second Quarter Financial Results
 
Revenue

During the three months ended June 30, 2011, we had sales of $12,145,024 as compared to sales of $3,248,351 for the three months ended June 30, 2010, an increase of $8,896,673, or approximately 273.9%. Our revenue was generated mainly from sales of graphite electrodes, fine grain graphite, high purity graphite, and semi-processed graphite products. Sales increase was mainly attributable to a significant increase in the demand of our products during the three months ended June 30, 2011 resulting from the market recovery, new customer developments, and change of product mix to include more high purity graphite products which average unit price increased 98% in the three months ended June 30, 2011 compared to the same period last year. The fast development of manufacturing of solar and mold products increased the demand of our products as raw material. Increased production capacity and increased unit prices also contributed to the increase of total sales. The increased unit price of high purity graphite is due to a large demand for such products in the market. We also had a decrease in the demand of high purity graphite in 2010. Since then, the company has been successful to improve its product mix to achieve higher profit by increasing sales of fine grain graphite and high purity graphite products which generate a better margin.

Cost of Sales & Gross Profit

During the three months ended June 30, 2011, our cost of sales was $9,456,762, as compared to $3,019,732 during the three months ended June 30, 2010, an increase of $6,437,030, or 213.2%. The increase in cost of sales was directly associated with the increase in sales. Our gross margin increased from 7.0% for the three months ended June 30, 2010 to 22.1% for the three months ended June 30, 2011. The increase reflects the variance in production mix, as the percentage of our sales of high purity graphite products, a higher margin product compared to graphite electrodes, increased significantly. Fine grain graphite products decreased its margin due to the market demand shifts more to purity graphite electrodes during the three months ended June 30, 2011. The increased sales and increased margin of high purity graphite products offset the margin and unit price of fine grain graphite products.

 
2

 
 
Net Income

Our net income for the three months ended June 30, 2011 was $882,303, as compared to net income of $720,640 for the three months ended June 30, 2010, an increase of $161,663, or 22.4%. Our 2010 net income benefited significantly from change in fair value warrants, so we experienced more real growth in net income this year.

Liquidity & Capital Resources

China Carbon had a cash and cash equivalent position totaling $4.1 million at the end second quarter of 2011 compared to $0.3 million at the end of the fourth quarter of 2010, an increase of $3.8 million or 1,270 percent.

Recent Updates

In July 2011, China Carbon completed the installations at its new facility, which includes baking and dipping plants, with the expectation that it will become fully operational by September 2011. Testing at the baking plant has already been completed and the Company anticipates that testing at the dipping plant will be finished by September 2011 with operations beginning shortly thereafter. Once the facility is completely up and running, China Carbon believes that its new facility will have an annual production capacity of 30,000 tons, which would double the Company’s current annual production capacity. Through its expansion efforts, China Carbon is looking to better position itself to meet the growing demand the Company is seeing for its higher margin products.

Business Outlook

“Right now, we plan to have our new facility specialize in the manufacturing of higher margin products, like large size, ultra high power graphite electrodes, and high purity and fine gain graphite products,” remarked Mr. Yu. “China’s emerging aerospace, defense, automotive and clean tech end industries present the greatest demand for all types of graphite, specifically the forms of graphite we are planning to produce at our new facility. Moreover, we anticipate considerable growth in China’s electric arc furnace steel production, which we believe will contribute to increased demand for large size, ultra high graphite electrodes. Accordingly, we are working hard to become the first company in China to produce 800 mm diameter ultra high power graphite electrodes. Through our product development and capacity expansion efforts, we are striving to enhance our production of higher margin products so we can gain further leverage in China’s graphite sector.”
 
 
3

 
 
About China Carbon Graphite Group, Inc.

China Carbon Graphite Group, through its affiliate, Xingyong Carbon Co., Ltd., manufactures graphite and carbon based products in China. The company is the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation's top overall producers of carbon and graphite products. Fine grain graphite is widely used in smelting for colored metals and rare earth metal smelting as well as the manufacture of molds. High purity graphite is used in metallurgy, mechanical industry, aviation, electronic, atomic energy, chemical industry, food industry and a variety of other fields. In September 2007, the Company was approved and designated by the Ministry of Science & Technology as a "National Hi-tech Enterprise," a distinction which the Company still holds. Of the more than 400 carbon graphite producers in China, China Carbon is the only non-state-owned company to receive this honor. For more information, please visit www.chinacarboninc.com.

Safe Harbor Statement

This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary companies. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors set forth in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q.

Investor Contact:
Mr. Kevin Fickle, President
NUWA Group, LLC.
Tel: +1-925-330-8315
Email: kevin@nuwagroup.com

Company Contact:
Mr. Donghai Yu
China Carbon Graphite Group, Inc.
Tel: +1-626-589-6525
Email: ir@chinacarboninc.com
 
 
4

 
 
China Carbon Graphite Group, Inc.and subsidiaries
 
Consolidated Balance Sheets
 
             
   
June 30,
2011
   
December 31,
2010
 
ASSETS
 
   
(Unaudited)
       
Current Assets
           
Cash and cash equivalents
 
$
4,071,153
   
$
296,312
 
Restricted cash
   
6,559,280
     
-
 
Accounts receivable, net of allowance of $2,555,423
   
12,031,460
     
6,222,112
 
Notes receivable
   
294,600
     
460,856
 
Advance to suppliers
   
11,298,587
     
10,198,602
 
Inventories
   
31,119,839
     
26,432,217
 
Prepaid expenses
   
1,171,079
     
573,094
 
Other receivables
   
1,461,437
     
335,986
 
Total current assets
   
68,007,435
     
44,519,179
 
                 
Property And Equipment, Net
   
23,847,024
     
24,127,189
 
                 
Construction In Progress
   
12,954,130
     
10,265,888
 
                 
Land Use Rights, Net
   
10,609,782
     
10,496,930
 
Total Assets
 
$
115,418,371
   
$
89,409,186
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
                 
Current Liabilities
               
Accounts payable and accrued expenses
 
$
5,417,310
   
$
5,452,743
 
Advance from customers
   
3,917,563
     
1,060,147
 
Short term bank loan
   
39,139,100
     
33,298,150
 
Notes payable
   
10,519,600
     
-
 
Other payables
   
3,846,388
     
2,584,589
 
Dividends payable
   
15,114
     
32,996
 
Total current liabilities
   
62,855,075
     
42,428,625
 
                 
Amount Due To A Related Party
   
6,171,562
     
4,744,634
 
                 
Warrant Liabilities
   
5,422
     
73,121
 
Total Liabilities
   
69,032,059
     
47,246,380
 
                 
Stockholders' Equity
               
Convertible series A preferred stock, par value $0.001 per share,
               
authorized 20,000,000 shares, none issued and outstanding
               
at June 30, 2011 and December 31, 2010
   
-
     
-
 
Convertible series B preferred stock, par value $0.001 per share,
               
authorized 3,000,000 shares, issued and outstanding 472,160 and
               
1,225,000 shares at June 30, 2011 and December 31, 2010, respectively.
   
472
     
1,225
 
Common stock, par value $0.001 per share, authorized 100,000,000
         
shares, issued and outstanding 22,525,358 and 20,520,161 shares at
         
June 30, 2011 and December 31, 2010, respectively
   
22,525
     
20,521
 
Deferred consulting fee
   
-
     
(57,500
)
Additional paid-in capital
   
17,301,361
     
15,158,291
 
Accumulated other comprehensive income
   
7,165,862
     
6,344,414
 
Retained earnings
   
21,896,092
     
20,695,855
 
Total stockholders' equity
   
46,386,312
     
42,162,806
 
Total Liabilities and Stockholders' Equity
 
$
115,418,371
   
$
89,409,186
 
 
 
5

 
 
China Carbon Graphite Group, Inc and subsidiaries
 
Consolidated Statements of Income and Comprehensive Income
 
(Unaudited)
 
                         
   
Three months ended June 30,
   
Six months ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Sales
 
$
12,145,024
   
$
3,248,351
   
$
23,608,359
   
$
8,095,207
 
                                 
Cost of Goods Sold
   
9,456,762
     
3,019,732
     
18,340,023
     
6,842,398
 
Gross Profit
   
2,688,262
     
228,619
     
5,268,336
     
1,252,809
 
     
22
%
   
7
%
   
22
%
   
15
%
Operating Expenses
   
1,106,978
     
1,009,491
     
2,710,903
     
1,438,420
 
Selling expenses
   
57,312
     
21,704
     
107,175
     
46,697
 
General and administrative
   
1,049,666
     
987,787
     
2,603,728
     
1,391,723
 
Amortization
   
47,152
     
10,887
     
93,754
     
38,227
 
     
1,154,130
     
1,020,378
     
2,804,657
     
1,476,647
 
Operating Income (Loss) Before Other Income (Expense)
                               
and Income Tax Expense
   
1,534,132
     
(791,759
)
   
2,463,679
     
(223,838
)
                                 
Other Income (Expense)
                               
Interest expense
   
(693,274
)
   
(268,123
)
   
(1,406,804
)
   
(474,271
)
Interest income
   
-
     
-
     
-
     
-
 
Other expense
   
(765
)
   
(2,926
)
   
(766
)
   
(2,926
)
Other income
   
15,670
     
-
     
76,550
     
-
 
Change in fair value of warrants
   
26,540
     
1,783,448
     
82,692
     
563,018
 
     
(651,829
)
   
1,512,399
     
(1,248,328
)
   
85,821
 
                                 
Income (Loss) Before Income Tax Expense
   
882,303
     
720,640
     
1,215,351
     
(138,017
)
                                 
Income Tax Expense
   
-
     
-
     
-
     
-
 
                                 
Net Income (Loss)
 
$
882,303
   
$
720,640
   
$
1,215,351
   
$
(138,017
)
                                 
Other Comprehensive Income
                               
Foreign currency translation gain
   
553,200
     
146,086
     
821,448
     
46,564
 
Total Comprehensive Income (loss)
 
$
1,435,503
   
$
866,726
   
$
2,036,799
   
$
(91,453
)
                                 
Share Data
                               
                                 
Basic earnings (loss) per share
 
$
0.04
   
$
0.04
   
$
0.05
   
$
(0.01
)
                                 
Diluted earnings (loss) per share
 
$
0.04
   
$
0.04
   
$
0.05
   
$
(0.01
)
                                 
                                 
Weighted average common shares outstanding, basic
   
22,350,263
     
20,068,117
     
21,993,435
     
19,281,103
 
                                 
                                 
Weighted average common shares outstanding diluted
   
23,194,542
     
20,068,117
     
22,671,285
     
19,281,103
 
 
 
6

 
 
China Carbon Graphite Group, Inc and subsidiaries
 
Consolidated Statements of Cash Flows
 
(Unaudited)
 
             
   
Six months ended June 30,
 
   
2011
   
2010
 
Cash flows from operating activities
           
Net Income (Loss)
 
$
1,215,351
   
$
(138,017
)
Adjustments to reconcile net cash provided by
               
operating activities
               
Depreciation and amortization
   
870,310
     
847,371
 
Stock compensation
   
623,450
     
384,700
 
Change in fair value of warrants
   
(82,692
)
   
(563,018
)
Change in operating assets and liabilities
               
Accounts receivable
   
(4,308,178
)
   
236,629
 
Notes receivable
   
173,556
     
247,815
 
Other receivables
   
(1,107,235
)
   
740,594
 
Advance to suppliers
   
(889,008
)
   
(5,582,909
)
Inventories
   
(4,121,825
)
   
(172,484
)
Prepaid expenses
   
226,703
     
3,577
 
Accounts payable and accrued liabilities
   
(141,785
)
   
5,870,586
 
Notes payable
   
10,410,800
     
7,315,567
 
Advance from customers
   
2,807,114
     
(161,026
)
Taxes payable
   
1,476,262
     
(187,000
)
Other payables
   
90,132
     
859,069
 
Net cash provided by operating activities
   
7,242,955
     
9,701,454
 
                 
Cash flows from investing activities
               
 Acquisition of property and equipment
   
(27,088
)
   
(2,926
)
 Acquisition of land use rights
   
-
     
(5,137,024
)
 Construction in progress
   
(2,459,521
)
   
8,751
 
Net cash used in investing activities
   
(2,486,609
)
   
(5,131,199
)
                 
Cash flows from financing activities
               
Proceeds from issuing common stock
   
-
     
166,400
 
Proceeds from issuing series B preferred stock
   
-
     
338,850
 
Proceeds from warrants exercise
   
371,714
     
-
 
Dividends paid for series B preferred stock
   
(32,996
)
   
(26,643
)
Increase of restricted cash
   
(6,491,440
)
   
-
 
Proceeds from short term loan
   
11,176,300
     
273,931
 
Payments from short term loan
   
(6,047,450
)
   
-
 
Net cash provided by (used in) financing activities
   
(1,023,872
)
   
752,538
 
                 
Effect of exchange rate fluctuation
   
42,368
     
27,621
 
                 
Net increase in cash
   
3,774,842
     
5,350,414
 
                 
Cash and cash equivalents at beginning of period
   
296,312
     
2,709,127
 
                 
Cash and cash equivalents at end of period
 
$
4,071,154
   
$
8,059,541
 
     
1
         
Supplemental disclosure of cash flow information
               
                 
 Interest paid
 
$
1,406,804
   
$
474,270
 
                 
Non-cash activities:
               
                 
Deemed preferred dividend reflected in paid-in capital
 
$
-
   
$
132,778
 
                 
Reclassfication of warrant liability with equity
 
$
14,993
   
$
158,910
 
                 
Issuance of common stock for consulting fee
 
$
1,787,600
   
$
384,700
 

7