"We plan to amend our articles of incorporation to (i) change our name to Sutor Technology Group Limited, (ii) increase the number of our authorized shares of common stock from 100 million to 500 million and (iii) effect a 1-for-10 reverse split of common stock. Such amendment is expected to become effective in or about March 2007 and is hereinafter referred to as the “Amendment to the Articles.”"
"Series A Voting Convertible Preferred Stock
As of February 1, 2007, we have 155,122 shares of Series A Voting Convertible Preferred Stock issued and outstanding, which are owned by HFI, Heritage Management Consultants, Inc., Ye Zhong and Jingshi Cai. Each share of Series A Voting Convertible Preferred Stock is entitled to 98 votes and can be converted into 98 shares of our common stock. We expect that the 155,122 shares of Series A Voting Convertible Preferred Stock will be converted into 15,201,956 shares of our common stock and be reduced to 1,520,195.6 shares of common stock upon the effectiveness of a 1-for-10 reverse stock split which is expect to occur immediately following the Amendment of the Articles in or about March 2007. The issuance of preferred stock while providing desirable flexibility in connection with possible acquisitions and other corporate purposes could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a majority of our outstanding voting stock.
Series B Voting Convertible Preferred Stock
On February 1, 2007, in connection with the reverse acquisition of Sutor Steel Technology Co., Ltd., we issued 323,380.52 shares of our Series B Voting Convertible Preferred Stock to holders of capital stock of Sutor Steel Technology Co., Ltd. in exchange for all issued and outstanding share of capital stock of Sutor Steel Technology Co., Ltd. On February 1, 2007, we also completed a private placement pursuant to which we issued and sold to certain accredited investors 39,473.68 shares of our Series B Voting Convertible Preferred Stock for $12 million. As a result, on February 1, 2007, we have 362,854.20 shares of Series B Voting Convertible Preferred Stock issued and outstanding."
I do not think the Series B shares are convertible into common stock.
Sutor Steel as of Sept. 30, 2006 Total Current Assets 74,016,992
TOTAL ASSETS 119,597,559
Total Liabilities 61,662,816
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY 119,597,559 (retained earnings 29,734,125)
Gross Profit 15,937,754
Net Income 11,528,200
Diluted Earnings (Loss) per Common Share 0.36
Weighted-Average Diluted Common Shares outstanding 32,338,052
Comprehensive Income 12,968,346 (Net income plus foreign currency translation adjustment)
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