FSIN presentation - Form 8-K filed on 2/20/2007:
Fushi International, Inc. Reports Third Quarter 2006 Results
For the quarter ended September 30, 2006, the Company reported revenue of $13.0 million as compared to $8.5 million during the third quarter last year, representing an increase of 52.0 percent.
Reported revenues are net of the VAT or (Value Added Tax) of approximately 17.0 percent. The increase in sales was primarily attributable to increases in average selling prices and sales volume growth, which improved 24.2 percent and 22.4 percent respectively versus the comparable quarter last year. Additionally, end user applications have increased significantly year-over-year from new markets such as electromagnet wire, winding wire, shielding wire, as well as distribution and coils. Total capacity utilization at the end of the third quarter was approximately seventy five percent. The Company sold a total of 2,227 tons of bimetallic products during the quarter, an increase of 22.4 percent from the third quarter of last year.
During the third quarter, the Company continued to diversify its revenue stream as its top five customers accounted for 30 percent of total sales with the largest representing approximately 7.0 percent as compared to the third quarter of last year where five customers accounted for 55.0 percent of sales and three accounted for more than 10.0 percent.
Fushi International Inc. is the largest China based manufacturer of bimetallic wire with a market share over 50% among domestic suppliers. The company is located in the city of Dalian, a major city in Northern China's Liaoning Province. For more information visit the Company's website at http://www.fushiinternational.com
Dalian Fushi was formed as “ Dalian Fushi Bimetallic Manufacturing Co. Ltd.” in January 2002. Its initial registered capital was RMB 8 million and it owned 20 auto and half-auto manufacturing lines. It is a private high tech company that has departments of research, manufacturing and sales. It is the biggest copper clad aluminum wires (“CCA”) and copper clad steel wires (“CCS”) manufacturer in China. The products are widely used in telephone and electrical power applications, large capacity communication networks, telephone conductor antenna cables, control signal cables, and other applications.
These bimetallic composite wire products are produced using Dalian Fushi’s patented “rolling bond welding” manufacturing technology, which was included as a research project under the National Torch Program of PRC. Their proprietary technology allows them to produce high quality products that deliver stable conductivity performance. They are recognized by the Dalian Municipal Government as a “new-and high-technology” enterprise and have been receiving governmental funding or subsidies for their operations and R&D activities. The mark “FUSHI” was awarded a “famous mark” award in Liaoning Province.
By offering high-quality products and services for years, Dalian Fushi has constructed a steady relationship with their clients. Currently, they control 55% of the Chinese market, and their products are purchased in international markets, including the U.S., German, Korea, France, Finland and Malaysia.
Dalian Fushi has an outstanding management group, an experienced engineering and technical team and an excellent marketing group. There are 180 workers of which 20% are technologists. Recently, Dalian Fushi began working with the professors of China Northeastern University to develop new devices and technologies to produce new products and to adapt to market requirements.
Overview of Dalian Fushi’s going public
As they expanded their operational scale, Dalian Fushi faced a problem of capital shortfall. After discussions with Redwood Capital, Inc., Dalian Fushi management decided to go to public in US capital markets. After the pre-listing audit was completed by an SEC authorized and PCOAB approved auditing firm, Dalian Fushi established a five-person consultant commission, which included the former ambassador in China, Mr. James Ralph Sasser, and four other former U.S. congressmen. Through thorough preparation and planning, Dalian Fushi was successful in raising capital by receiving investment capital through Chinamerica Fund, First Wilshine and other investors, with a total financing of USD $12 million.
The Parallel Technology is the shell company that was registered in Nevada, U.S., and listed on the OTCBB capital market of America. Its trading symbol was PLLK.
Dalian Fushi is performing very well in American equity market and the value of the company is increasing, as is the business itself. As a result, Dalian Fushi is expected to be the largest Asian CCA and CCS manufacturing and research company in 2008. Once the RTO was complete, Dalian Fushi trading symbol changed from PLLK to FSIN. The company’s plan is to apply to the American Stock Exchange, or AMEX, and will become listed on the AMEX no later than the end of 2006, with a concurrent secondary offering.
Dalian Fushi bimetallic manufacturing company became a public company by achieving a listing in the American capital markets. From the financial point of view, it raised money through private placement and satisfied its need for capital. At the same time, it opened a new international capital plan for the company, which is expected to fulfill the company’s future capital requirements. From the operations point of view, doing more business overseas, the Dalian Fushi brand has become internationally well-known, and this has helped to e the company’s international business.
Redwood Capital, Inc. assisted Dalian Fushi in the process of going public overseas. From preparation to go public, creating a strategic plan, financial restructuring, negotiating with agents, conducting road shows and finally completing the process of becoming a public company, Redwood Capital offered a full range of services as a invest banking advisor, including assistance in organizing, planning and managing the process.
As a professional invest banking company, Redwood Capital has in-house expertise and partners in China and the USA that have thorough understanding of the capital markets. It is highly skilled at investor introduction, M&A, financial restructure, securities law, road shows, etc.. All of this is in accordance with the principles of Redwood Capital – sincerity, diligence, creativity and efficiency.
Share Status as of September 30, 2006:
The following was taken from Fushi's 10-K as of December 31, 2005:
Change In Control
On December 13, 2005, Dalian Fushi purchased the 20,000,000 shares of our pre-reverse stock-split common stock owned by Glenn A. Little, representing 50.96% issued and outstanding shares of our common stock, under a stock purchase agreement dated as November 8, 2005, as amended. (See 10-K for details.)
The Share Exchange Agreement and the Issuance of Series A Convertible Preferred Stock
On December 13, 2005, we entered into and consummated a share exchange agreement with the 14 holders of all of the outstanding capital stock of DPI. The stockholders of DPI were Dalian Fushi Enterprise Group Co. Ltd., Yue Mathus Yang, Xishan Yang, Chunyan Xu, Kuhns Brothers, John Kuhns, Mary Fellows, John Starr, Jay Gutterman, Kelly Chow, Redwood Capital, Inc., Chris Bickel, Sam Shoen and Paul Kuhns.
We refer to the former stockholders of DPI in this report as the "DPI Stockholders."
Of the DPI Stockholders, Dalian Fushi Enterprise Group Co., Ltd., or Fushi Group, Yue Mathus Yang, Xishan Yang and Chunyan Xu also are shareholders of Dalian Fushi, and owned approximately 95.12% of the outstanding capital stock of DPI. We refer to the shareholders of Dalian Fushi in this report as the "Dalian Fushi Shareholders." Kuhns Brothers received its shares of DPI common stock for services rendered in connection with the reorganization of Dalian Fushi's business.
Under the share exchange agreement, we issued an aggregate of 784,575.16 shares of our Series A convertible preferred stock in exchange for the 15,560 shares of common stock of DPI held by the DPI Stockholders, representing all of the outstanding capital stock of DPI. Each share of series A convertible preferred stock is automatically convertible into 4,838.86 shares of common stock before giving effect to the reverse stock-split, or approximately 19.73 shares of common stock after giving effect to the reverse stock-split. As a result of the reverse stock-split, which was effectuated on January 30, 2006, the series A convertible preferred stock have converted into an aggregate of 15,475,595 shares of common stock, representing approximately 77.85% of our total outstanding common stock.
As a result of the consummation of the share exchange agreement, DPI is now our wholly-owned subsidiary.
Overview of Our Business
On December 28, 2005, we completed the transactions contemplated by the Restructuring Agreements, and Dalian DPI commenced operating the business conducted previously by Dalian Fushi. This section discusses our business, which is the former business of Dalian Fushi.
We are engaged, through our indirectly wholly-owned operating subsidiary Dalian DPI in the manufacture and sale of bimetallic composite wire products, principally copper clad aluminum wires ("CCA") and copper clad steel wires ("CCS"). CCA combines the conductivity and corrosion resistance of copper with the light weight and relatively low cost of aluminum. It is a cost effective substitute for single copper wire in a wide variety of applications such as coaxial cable for cable television (CATV), signal transmission lines for telecommunication networks, distribution lines for electricity, wire components for electronic instruments and devices. Similarly, CCS combines the properties of copper with the strengths of steel and is used where strengths higher than copper are required, such as power system grounding lines, electricity distribution lines, conductor lines of electrified railroad tracks, and patch cords in electronic components.
Our bimetallic composite wire products are produced using our patented and proprietary "rolling bond welding" manufacturing technology, which was included as a research project under the National Torch Program of PRC. Our proprietary technology allows us to produce high quality products that deliver stable conductivity performance. We maintain an internal Research and Development Department to improve our current product features and develop new devices and technologies to produce new products that will optimize the performance and structure of bimetallic composite materials. Because of our research and development ("R&D") initiatives, we are recognized by the Dalian Municipal Government as a "new- and high-technology" enterprise and have been receiving governmental funding or subsidies for our operations and R&D activities.
We use "FUSHI" as the tradename for all of our composite wire products. Due to our emphasis on quality control and the high quality of our products, our CCA products were awarded a "famous products" award in Liaoning Province and our mark "FUSHI" was awarded a "famous mark" award in Liaoning Province.
Dalian Fushi achieved profitability in 2002, shortly after inception in 2001. Since 2002, Dalian Fushi has experienced consistent growth. Net sales increased from $15.66 million in 2004 to $33.71 million in 2005. The majority of sales are made to finished cable manufacturers, which is a growing market for our products.
We believe we are currently the largest domestic manufacturer and supplier of bimetallic composite products in the PRC. Our largest customers include the PRC operations of Andrew Corporation of the U.S., one of the largest communication cable manufacturers in the world.
Directors and Executive Officers of Dalian Fushi
Li Fu -- Chairman of Board and President -- 40
Mr. Li Fu was appointed our Chairman and President on December 13, 2005. Mr. Fu is a founder of Dalian Fushi and has been the Executive Director of Dalian Fushi since he founded the company in 2001. Prior to founding Dalian Fushi and focusing his time on Dalian Fushi's management and operations, Mr. Fu had founded and managed Dalian Fushi Enterprise Group Co., Ltd., a holding company owning various subsidiaries in the hotel, process control instrumentation, international trade, automobile maintenance and education businesses. Mr. Fu graduated from PLA University of Science and Technology with a degree in Engineering.
Yue Yang -- General Manager -- 38
Mr. Yue Yang was appointed a director of our company on December 13, 2005. He has served as the General Manager of Dalian Fushi since November 2004. Mr. Yang is the founder of Forward Investment Co., Ltd and has served as its Chairman since 2000. Prior to that, Mr. Yang worked for Liaoning Province Economic & Trade Collaboration Enterprise Group as an Executive VP from 1994 to 1998 and the Export Department of Liaoning Province Chemicals Import & Export Corporation as a Business Manager from 1990 to 1994. Mr. Yang graduated from Shenyang Finance University with a Bachelor's Degree in International Trade.
Wenbing Chris Wang -- Chief Financial Officer -- 35
Mr. Wenbing Chris Wang has served as our Chief Financial Officer since December 13, 2005. Mr. Wang has served as Chief Financial Officer of Dalian Fushi since March 2005. Mr. Wang served as an Executive Vice President of Redwood Capital, Inc. from November 2004 to March 2005, with specific focus on providing strategic and financial advisory services to China based clients seeking access to the U.S. capital markets. Mr. Wang previously served as Assistant VP of Portfolio Management at China Century Investment Corporation from October 2002 to September 2004. Mr. Wang began his investment banking career at Credit Suisse First Boston (HK) Ltd in 2001. From 1999 to 2000, Mr. Wang worked for VCChina as Management Analyst. Fluent in both English and Chinese, Mr. Wang holds an MBA from Simon Business School of University of Rochester and is a Level III candidate of the Chartered Financial Analyst (CFA) Program.
Xishan Yang -- Chief Engineer and Exec. VP of R&D -- 68
Mr. Xishan Yang has served as the Executive Vice President of R & D and Chief Engineer of Dalian Fushi since its inception in 2001. Mr. Yang has more than 40 years of working experience in the communication electronics industry. He had held executive management positions with a number of electronic enterprises prior to joining our company. During his career, Mr. Yang has focused on the development, design, and processes of metallic and bimetallic cable production. He holds several patents for the design of the modified Cladding and Drawing processes for CCA and CCS production used by Dalian Fushi and has extensive experience in production management. Mr. Yang graduated from Harbin Industrial University with a graduate degree in engineering.
Chunyan Xu -- Supervisor Director -- 50
Ms. Chunyan Xu has served as the Supervisor Director of Dalian Fushi since 2001. She previously served as the Chief Accountant at the Dalian Personnel Bureau and served as a Finance Manager of a Chinese public company. Ms. Xu has many years of experience in industrial accounting, public company accounting and accounting management.
John D. Kuhns -- Secretary, Director -- 56
Mr. John D. Kuhns was appointed a director of our company on December 13, 2005. Mr. Kuhns has been a 45% shareholder, a director and chairman of Kuhns Brothers, Inc., a holding company founded in 1987 for its 100% subsidiary, Kuhns Bros. & Co., Inc., an investment banking firm specializing in providing financing for power technology ventures, and, more recently, manufacturing operations within the PRC. Additionally, Kuhns Brothers, Inc. owns 100% of Kuhns Brothers Securities Corporation, a broker dealer, registered with the SEC, in which Mr. Kuhns is the Chairman. Since March 2005, Mr. Kuhns has been a director and chairman of Deli Solar (USA), Inc., a U.S. reporting company with solar hot water heaters manufacturing operation in the PRC. Since 2002 Mr. Kuhns has been a director and chairman of Distributed Power, Inc., a public company that owns electric generating projects. Mr. Kuhns is also a director of China Sciences Conservational Power Limited, a company listed on the Hong Kong Stock Exchange. Neither of the foregoing Kuhns companies, nor Deli Solar (USA), Inc., Distributed Power, Inc. or China Sciences Conservational Power Limited are affiliated with the Company. Mr. Kuhns holds a bachelors degree in sociology and fine arts from Georgetown University, a master's degree in fine arts from the University of Chicago and an MBA degree from the Harvard Business School.
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Fushi Internation, Inc. Press Releases:
PR dated 11/15/2006 http://www.fushiinternational.com/InvestorRelations.aspx?p=PressReleases&Item=38
Fushi International, Inc., a low-cost, emerging Chinese manufacturer of bimetallic wire used in a variety of communication, transmission and other electrical products, today announced financial results for the third quarter ended September 30, 2006.
PR dated 11/6/2006 http://www.fushiinternational.com/InvestorRelations.aspx?p=PressReleases&Item=36
Fushi International, Inc. to Host Third Quarter Earnings Conference Call on November 15th at 8:30 AM EST
The conference call will take place at 8:30 a.m. EST. Interested participants should call 877-715-5318 when calling within the United States or 973-582-2852 when calling internationally.