omniture

General Steel Reports Results for the Third Quarter and First Nine Months of 2008

2008-11-14 19:24 1025

Company Achieves Year-Over-Year Top-Line Growth of 19.1% and 116.2% for the Third Quarter and First Nine Months of 2008, Respectively

BEIJING, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- General Steel Holdings, Inc. ("General Steel" or "the Company") (NYSE: GSI), one of China's leading non-state-owned producers of steel products and aggregators of domestic steel companies, today announced its financial results for the third quarter and nine months ended September 30, 2008.

Recent Operational Highlights:

-- October 2008 - Announced the completion of two blast furnaces at the

Longmen Joint Venture subsidiary, which are expected to require less

energy, manpower and coke, potentially reducing production costs.

-- September 2008 - Signed Letter of Intent for a joint venture with

Yantai Steel Pipe Co., Ltd. Including Yantai's existing production and

future operations, the joint venture anticipates annual capacity of

500,000 to 600,000 tons, producing primarily seamless steel pipe

related products which are expected to generate higher margins.

"We are pleased to have achieved record total revenues of $1.09 billion through the first nine months of 2008, despite a third quarter that proved to be very challenging for many industries in China," said Henry Yu, General Steel's chairman and chief executive officer. "Across the country, slowdowns in real estate and construction have decreased selling prices for steel in China. When selling prices are low, steel producers significantly cut or halt production until demand picks up and prices return to healthier levels. Despite this short-term set-back, the fundamentals of our business remain strong, and I'm confident in our ability to deliver long-term shareholder value."

Mr. Yu continued, "In our 20 year operating history, we have been through multiple readjustment periods for steel products and, as in the past, we will take the necessary steps to weather this storm. For example, we are currently working to shift some of our production capacity at our Longmen Joint Venture subsidiary to more efficient blast furnaces, and we are pushing suppliers to further lower input costs. We also adjusted production and inventory levels and are working to expand our product mix to increase margins. Furthermore, we are confident in the $586 billion stimulus plan just announced by the Chinese government. While the specific impact is not yet clear, the emphasis on rural infrastructure construction and expansion is bound to be positive for our company. Our ability to overcome adversity, however, ultimately stems from our experienced management team, which has over 50 years of cumulative experience in the steel industry. We will leverage this experience to protect our company, take advantage of industry opportunities that present themselves in new market conditions, and continue to focus on our long-time goal of becoming the largest and most profitable non-government-owned steel company in China."

Selected Financial Results for the Third Quarter and Nine Months Ended September 30, 2008

Total revenues in the third quarter of 2008 increased 19.1% to $411.5 million from $345.4 million in the third quarter of 2007. Total revenues for the nine months ended September 30, 2008 increased 116.2% to $1.09 billion from $504.2 million in the nine months ended September 30, 2007.

The significant year-over-year increase in total revenues for the nine month period was due to higher average selling prices compared to the year-ago period and the timing of the acquisitions of General Steel's subsidiaries including Baotou, Longmen Joint Venture and Maoming, which started operations on May 25, 2007, June 1, 2007 and June 25, 2008, respectively.

Cost of Sales

Total cost of sales for the third quarter of 2008 increased 30.8% to $417.9 million from $319.5 million in the third quarter of 2007. Total cost of sales for the nine months ended September 30, 2008 increased 126.4% to $1.06 billion from $468.5 million in the nine months ended September 30, 2007.

Cost of sales principally consists of the cost of raw materials, labor, utilities, manufacturing costs, manufacturing-related depreciation and other fixed costs. The increase in cost of sales was mostly attributable to the increase in the Company's primary raw material inputs, namely iron ore, coke, billets and hot-rolled steel coils, and the timing of the acquisitions of General Steel's subsidiaries including Baotou, Longmen Joint Venture and Maoming, which started operations on May 25, 2007, June 1, 2007 and June 25, 2008, respectively.

Gross Profit

Gross loss for the third quarter of 2008 was $6.3 million, decreasing from a gross profit of $25.9 million in the third quarter of 2007. Gross profit for the nine months ended September 30, 2008, was $29.5 million, decreasing from $35.7 million in the nine months ended September 30, 2007.

The year-over-year decrease in gross profit for the third quarter 2008 and nine month period was largely due to the economic slowdown in China's real estate and construction markets and in the overall domestic economy.

Gross margin for the third quarter of 2008 was -1.5%, compared to 7.5% in the third quarter of 2007. Gross margin for the nine months ended September 30, 2008 were 2.7%, compared to 7.1% in the year-ago period.

Gross margins in the third quarter and nine months ended September 30, 2008 were primarily affected by price erosion during the time between the signing of supply contracts and the fulfillment of the customer orders.

Operating Expenses

Selling, general and administrative expenses for the third quarter of 2008 increased 81.4% to $12.3 million from $6.8 million in the third quarter of 2007. Selling, general and administrative expenses for the nine months ended September 30, 2008 increased 176.2% to $28.4 million from $10.3 million in the year-ago period. Selling, general and administrative expenses were 3.0% and 2.6% of total revenues in the third quarter and nine months ended September 30, 2008, respectively.

A large portion of the increases in selling, general and administrative expenses for the third quarter of 2008 and nine months ended September 30, 2008 were attributable to the timing of General Steel's acquisitions, most notably the Maoming subsidiary, which did not exist in the third quarter of 2007.

Finance and interest expenses for the third quarter of 2008 increased 60.7% to $6.9 million from $4.3 million in the third quarter of 2007. Finance and interest expenses for the nine months ended September 30, 2008 increased 186.9% to $19.1 million from $6.7 million in the nine months ended September 30, 2007. The increase is primarily due to the make whole interest on the conversion of the convertible debt.

Net Income

Net income for the third quarter of 2008 increased 155.8% to $20.5 million from $8.0 million in the third quarter of 2007. Net loss for the nine months ended September 30, 2008 was $1.6 million, compared to net income of $10.4 million in the nine months ended September 30, 2007.

The increase in net income during the third quarter of 2008 was largely attributable to a gain of $29.9 million for the three months ended September 30, 2008 from a derivative instrument and $7.2 million from a debt waiver. There was neither a derivative instrument nor a debt waiver in the third quarter of 2007.

The derivative instrument gain is a non-operating, non-cash gain related to the convertible bond and related warrants issued in December 2007. Due to accounting rules, the derivative instrument value and associated gain or loss is linked to the stock price of General Steel Holdings, Inc. The gain or loss of this instrument has no impact on cash (no cash was paid out or received).

The decrease in net income for the nine months ended September 30, 2008 was mainly due to an economic slowdown and subsequent drop in average selling price in the third quarter of 2008.

Basic and diluted earnings per share were $0.57 in the third quarter of 2008. Basic and diluted losses per share were $0.05 in the nine months ended September 30, 2008.

The Company noted that it believes that operating net income, which is calculated as GAAP net earnings before the impact of a derivative gain or loss, is a better measurement of its operating performance. Operating net loss (non-GAAP) for the third quarter of 2008 was $6.2 million or $0.17 diluted loss per share, based on 35.7 million diluted shares. Non-GAAP net loss for the nine month ended September 30, 2008 was $1.4 million or $0.04 diluted loss per share, based on 35.7 million diluted shares.

Balance Sheet

As of September 30, 2008 General Steel had cash and restricted cash of $138.3 million, compared to $52.1 million as of December 31, 2007. Accounts receivable and accounts receivable -- related parties were $22.4 million as of September 30, 2008, compared to $11.8 million as of December 31, 2007.

Explanation of Non-Cash Derivative Expenses

Pursuant to SFAS 133 and EITF 00-19, the Company determined that both the warrants and the conversion option embedded in the Notes issued on December 13, 2007 met the definition of a derivative instrument and must be carried as a liability and marked to market each reporting period. As such, depending upon the price of the Company's common stock at the end of the quarter or year there could be an associated gain or loss which are non-cash in nature but will be recurring until such time as the Notes are either redeemed or converted and the warrants are exercised.

As of September 30, 2008, the balance of derivative liabilities was $18.0 million, which consisted of $5.6 million for the warrants and $12.4 million for the carrying value of the Convertible Notes.

Conference Call

General Steel management will hold an earnings conference call at 8:00 a.m. U.S. Eastern Time on November 14, 2008 (9:00 p.m. Beijing/Hong Kong Time on November 14, 2008). Management will discuss results and highlights from the quarter and answer questions. The dial-in number and passcode for the conference call are as follows:

U.S. Toll Free: +1-800-860-2442

Passcode: General Steel Holdings

The conference call will be broadcast live over the Internet and can be accessed by clicking the following link: http://www.videonewswire.com/event.asp?id=53047

Additionally, an archived Web cast of this call will be available on the Investor Relations section of the General Steel's website at

http://www.gshi-steel.com .

About General Steel Holdings, Inc.

General Steel Holdings, Inc., (NYSE: GSI), headquartered in Beijing, China, operates a diverse portfolio of Chinese steel companies. With 4.8 million tons aggregate production capacity, its companies serve various industries and produce a variety of steel products including rebar, hot-rolled carbon and silicon sheet, high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality. For more information, please visit to http://www.gshi-steel.com .

Information Regarding Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Such forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks or uncertainties. Actual results may vary materially from those expressed or implied by the statements herein. For factors that could cause actual results to vary, perhaps materially, from these forward-looking statements, please refer to the Company's Form 10-K, filed with the Securities and Exchange Commission, and other subsequent filings. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2008 AND DECEMBER 31, 2007

ASSETS

September 30, December 31,

2008 2007

(Unaudited)

CURRENT ASSETS:

Cash $17,986,618 $43,713,346

Restricted cash 120,322,295 8,391,873

Accounts receivable, net of

allowance for doubtful

accounts of $295,896

and $148,224 as of

September 30, 2008 and

December 31, 2007,

respectively 22,341,668 11,225,678

Accounts receivable -

related parties 107,642 565,631

Notes receivable 27,872,010 4,216,678

Notes receivable -

restricted -- 12,514,659

Short term loan receivable

- related parties -- 1,233,900

Other receivables 4,513,675 1,280,853

Other receivables - related

parties 806,758 1,913,448

Dividend receivable 628,762 --

Inventories 123,139,732 77,928,925

Advances on inventory

purchases 43,928,543 58,170,474

Advances on inventory

purchases - related

parties 8,119,284 9,944,012

Short-term investment

Prepaid expenses - current 2,693,685 1,109,222

Prepaid expenses related

party - current

Deferred tax assets 2,151,690 399,751

374,612,362 232,608,450

PLANT AND EQUIPMENT, net 448,769,013 218,263,367

OTHER ASSETS:

Advances on equipment

purchases 59,717 742,061

Investment in

unconsolidated

subsidiaries 9,903,047 822,600

Prepaid expenses - non

currentepaid expenses -

non current 529,959 506,880

Prepaid expenses related

party - non currentepaid

expenses related party -

non current 256,025 142,467

Intangible assets, net of

accumulated amortization 24,671,865 21,756,709

Note issuance cost 4,234,103 3,564,546

Total other assets 39,654,716 27,535,263

Total assets $863,036,091 $478,407,080

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable $170,701,885 $102,241,708

Accounts payable - related

parties 16,387,937 14,302,738

Short term loans - bank 82,705,042 93,019,608

Short term loans - others 62,093,562 19,156,070

Short term loans - related

parties 3,394,160 7,317,027

Short term notes payable 185,654,700 15,163,260

Other payables 4,269,694 3,343,684

Other payable - related

parties 4,883,327 2,126,383

Accrued liabilities 8,783,955 5,248,863

Customer deposits 123,483,928 37,872,698

Customer deposits - related

parties 1,851,308 9,211,736

Deposits due to sales

representatives 2,516,360 3,068,298

Taxes payable 23,468,246 27,576,240

Investment payable 7,022,400 6,580,800

Distribution payable to

minority shareholder 5,211,577 2,820,803

Total current

liabilities 702,428,081 349,049,916

NOTES PAYABLE, net of debt

discount of $27,035,121

and $34,559,584 as of

September 30, 2007 and

December 31, 2007,

respectively 6,214,879 5,440,416

DERIVATIVE LIABILITIES 17,954,559 28,483,308

Total liabilities 726,597,519 382,973,640

MINORITY INTEREST 61,328,058 42,044,266

SHAREHOLDERS' EQUITY:

Preferred stock, $0.001 par

value, 50,000,000 shares

authorized, 3,092,899

shares issued and outstanding 3,093 3,093

Common Stock, $0.001 par

value, 200,000,000 shares

authorized, 35,916,283 and

34,634,765 shares issued and

outstanding as of September 30,

2008 and December 31, 2007,

respectively 35,916 34,635

Paid-in-capital 36,303,329 23,429,153

Retained earnings 20,419,735 22,686,590

Statutory reserves 4,280,688 3,632,325

Contribution receivable (959,700) (959,700)

Accumulated other

comprehensive income 15,027,453 4,563,078

Total shareholders'

equity 75,110,514 53,389,174

Total liabilities

and shareholder's

equity $863,036,091 $478,407,080

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME

(LOSS)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(UNAUDITED)

Three months ended Nine months ended

September 30, September 30,

2008 2007 2008 2007

REVENUES -

RELATED PARTIES

REVENUES $325,911,063 $345,384,337 $781,918,147 $504,247,052

REVENUES -

RELATED PARTIES 85,609,768 -- 308,197,619 --

TOTAL

REVENUES 411,520,831 345,384,337 1,090,115,766 504,247,052

COST OF SALES 335,945,348 319,494,586 762,394,709 468,510,928

COST OF SALES -

RELATED PARTIES 81,923,077 -- 298,217,731 --

TOTAL COST OF

SALES 417,868,425 319,494,586 1,060,612,440 468,510,928

GROSS PROFIT (6,347,594) 25,889,751 29,503,326 35,736,124

SELLING, GENERAL

AND

ADMINISTRATIVE

EXPENSES 12,327,687 6,795,307 28,363,729 10,269,918

INCOME FROM

OPERATIONS (18,675,281) 19,094,444 1,139,597 25,466,206

OTHER EXPENSE

(INCOME), NET

Interest income (646,330) (762,143) (2,103,747) (851,608)

Interest/finance

expense 6,872,475 4,276,092 19,148,850 6,673,942

Change in

fair value

of

derivative

liabilities (29,884,899) -- (4,769,030) --

Gain from

debt

extinguishment (7,168,500) -- (7,168,500) --

Other non-

operating

(income)

expense, net (899,401) (597,181) (1,918,543) (1,443,748)

Total

other

(income)

expense,

net (31,726,655) 2,916,768 3,189,030 4,378,586

INCOME (LOSS)

BEFORE PROVISION

FOR INCOME TAXES

AND MINORITY

INTEREST 13,051,374 16,177,676 (2,049,433) 21,087,620

PROVISION FOR

INCOME TAXES

Current (812,532) 2,025,389 1,146,714 3,359,271

Deferred (1,271,269) -- (1,693,902) --

Total

provision

for

income

taxes (2,083,801) 2,025,389 (547,188) 3,359,271

NET INCOME (LOSS)

BEFORE MINORITY

INTEREST 15,135,175 14,152,287 (1,502,245) 17,728,349

LESS MINORITY

INTEREST (5,329,099) 6,151,792 116,247 7,359,688

NET INCOME (LOSS) 20,464,274 8,000,495 (1,618,492) 10,368,661

OTHER

COMPREHENSIVE

INCOME:

Foreign

currency

translation

adjustments (198,267) 374,568 10,464,375 1,196,827

COMPREHENSIVE

INCOME $20,266,007 $8,375,063 $8,845,883 $11,565,488

WEIGHTED AVERAGE

NUMBER OF SHARES

Basic 35,687,891 32,343,332 35,157,579 31,704,912

Diluted 35,687,891 32,343,332 35,157,579 31,704,912

EARNING PER SHARE

Basic $0.573 $0.247 $(0.046) $0.327

Diluted $0.573 $0.247 $(0.046) $0.327

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(UNAUDITED)

2008 2007

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income $(1,618,492) $10,368,661

Adjustments to reconcile net income

(loss) to cash provided by (used in)

operating activities:

Minority interest 116,247 7,359,688

Depreciation 14,746,357 5,491,604

Amortization 695,672 429,662

Bad debt allowance 19,038 --

(Gain) Loss from debt extinguishment (7,168,500) --

(Gain) Loss on disposal of equipment 12,839 (4,013)

Stock issued for services and

compensation 2,197,413 33,332

Interest expense accrued on mandatory

redeemable stock 2,629,701 114,726

Interest expense accrued on short

term loan to related parties -- 424,580

Amortization of deferred note

issuance cost 33,634 --

Amortization of discount on

convertible notes -- --

Change in fair value of derivative

instrument (4,769,030) --

Make whole shares interest expense on

notes conversion 2,310,312 --

Deferred tax assets (1,693,903) --

Changes in operating assets and

liabilities

Accounts receivable 41,524,834 8,679,486

Accounts receivable - related parties 25,765,034 (12,179,328)

Notes receivable (22,858,410) (7,984,262)

Other receivables (7,297,322) (1,428,924)

Other receivables - related parties 1,207,156 (456,000)

Dividend receivables -- --

Inventories (31,222,516) (7,110,388)

Advances on inventory purchases 22,843,097 (61,418,795)

Advances on inventory purchases -

related parties 2,442,105 (11,329,255)

Prepaid expense - current (1,373,246) (282,484)

Prepaid expense - current- related

parties (17,204) --

Prepaid expense - non current 45,632 --

Prepaid expense - non current -

related parties (101,914) --

Accounts payable 43,609,254 84,348,627

Accounts payable - related parties (55,827,778) 710,128

Other payables (3,037,525) 4,353,966

Other payable - related parties 2,641,961 (63,100,758)

Accrued liabilities 1,079,105 5,182,043

Dividends payable (463,548) --

Customer deposits 77,729,355 16,307,900

Customer deposits - related parties (7,818,786) --

Taxes payable (12,922,209) 10,887,436

Net cash provided by (used in)

operating activities 83,458,363 (10,602,368)

CASH FLOWS FROM INVESTING ACTIVITIES:

Cash acquired from subsidiary 2,767,004 680,132

Increase in investment payable -- 6,270,720

Advance on equipment purchases 717,477 (207,056)

Deposits due to sales representatives (742,657) (332,087)

Cash proceeds from sale of equipment 126,756 43,652

Purchase of equipment (145,800,109) (12,159,159)

Intangible assets purchases (233,490) --

Payment to original shareholders (7,092,000) --

(150,257,019) (5,703,798)

CASH FLOWS FINANCING ACTIVITIES:

Restricted cash (76,828,246) (1,633,346)

Borrowings from related parties -- 18,550,906

Notes receivable- restricted 13,086,993 --

Borrowings on short term loans - bank 58,486,358 52,924,877

Payments on short term loans - bank (76,145,055) (63,199,713)

Borrowings on short term loan -

others 59,267,608 5,225,600

Payments on short term loans - others (50,134,207) (1,437,040)

Borrowings on short term loans -

related parties 3,326,184 --

Payments on short term loans -

related parties (7,651,657) --

Borrowings on short term notes

payable 193,373,616 42,484,128

Payments on short term notes payable (78,079,302) (40,001,968)

Cash received on stock issuance -- 5,290,428

Cash received from shareholder -- 1,500,000

Cash contribution received from

minority shareholders -- 783,840

Cash received from warrants

conversion 700,000 --

Payment to minority shareholders (4,291,634)

Net cash provided by financing

activities 39,402,292 16,196,078

EFFECTS OF EXCHANGE RATE CHANGE IN

CASH 1,669,636 59,978

INCREASE (DECREASE) IN CASH (25,726,728) (50,110)

CASH, beginning of period 43,713,346 6,831,549

CASH, end of period $17,986,618 $6,781,439

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Preferred stock Common stock Paid-in

Shares Par value Shares Par value capital

BALANCE, January 1,

2007 -- $-- $31,250,000 $31,250 $6,871,358

Net income

Preferred stock issued

for acquisition of

minority interest,

net of dividend

distribution to

Victory New 3,092,899 3,093 8,370,907

Common stock issued

for conversion of

redeemable stock,

$1.95/share 1,176,665 1,177 2,293,320

Common stock issued

for service,

$1.32/share 18,000 18 23,742

Conversion of

warrants, $2.50 2,120,000 2,120 5,297,880

Foreign currency

translation

adjustments

BALANCE, September 30,

2007, unaudited 3,092,899 $3,093 $34,564,665 $34,565 $22,857,207

Net income

Adjustment to

statutory reserve

Registered Capital to

be received from

Baotou Steel by

05/21/09

Common stock issued

for service, $1.32

Common stock issued

for acquisition net

of dividend

distribution to

Tianjin Victory New

Common stock issued

for compensation,

$8.16 70,100 70 571,946

Foreign currency

translation gain

BALANCE, December 31,

2007 3,092,899 $3,093 $34,634,765 $34,635 $23,429,153

Net loss

Adjustment to

statutory reserve

Common stock issued

for compensation,

$7.16 76,600 77 548,379

Common stock issued

for compensation,

$10.43 150,000 150 1,564,350

Common stock issued

for compensation,

$6.66 87,400 87 581,997

Common stock issued

for compensation,

$10.29 90,254 90 928,582

Common stock

transferred by CEO

for compensation,

$6.91 -- -- 138,200

Common stock issued at

$5/share 140,000 140 699,860

Notes converted to

common stock 541,299 541 6,102,691

Make whole shares

issued on notes

conversion 195,965 196 2,310,117

Foreign currency

translation

adjustments

BALANCE, September 30,

2008, unaudited 3,092,899 $3,093 $35,916,283 $35,916 $36,303,329

(Cont.)

Accumulated

Retained earnings other

comprehensive

Statutory Subscriptions income

reserves Unrestricted receivable Total

BALANCE, January

1, 2007 $1,107,010 $4,974,187 $-- 1,076,688 $14,060,493

--

Net income 10,368,661 10,368,661

Preferred stock

issued for

acquisition of

minority

interest , --

net of dividend

distribution to

Victory New (2,188,203) 6,185,797

Common stock

issued for

conversion of --

redeemable stock,

$1.95/share 2,294,497

Common stock

issued for

service,

$1.32/share 23,760

Conversion of

warrants, $2.50 5,300,000

Foreign currency

translation

adjustments 1,196,827 1,196,827

BALANCE,

September 30,

2007, unaudited $1,107,010 $13,154,645 $-- $2,273,515 $39,430,035

Net income 12,057,260 12,057,260

Adjustment to

statutory

reserve 2,525,315 (2,525,315) --

Registered

Capital to be

received from --

Baotou Steel by

05/21/09 (959,700) (959,700)

Common stock

issued for

service, $1.32 --

Common stock

issued for

acquisition net

of dividend --

distribution to

Tianjin Victory

New -- --

Common stock

issued for

compensation,

$8.16 572,016

Foreign currency

translation gain 2,289,563 2,289,563

--

BALANCE, December

31, 2007 $3,632,325 $22,686,590 $(959,700)$4,563,078 $53,389,174

Net loss (1,618,492) (1,618,492)

Adjustment to

statutory

reserve 648,363 (648,363) --

Common stock

issued for

compensation,

$7.16 548,456

Common stock

issued for

compensation,

$10.43 1,564,500

Common stock

issued for

compensation,

$6.66 582,084

Common stock

issued for

compensation,

$10.29 928,672

Common stock

transferred by

CEO for

compensation,

$6.91 138,200

Common stock

issued at

$5/share 700,000

Notes converted

to common stock 6,103,232

Make whole shares

issued on notes

conversion 2,310,313

Foreign currency

translation

adjustments 10,464,375 10,464,375

BALANCE,

September 30,

2008, unaudited $4,280,688 $20,419,735 $(959,700)$15,027,453 $75,110,514

For investor and media inquiries please contact:

In China:

Ms. Jing Ou-Yang

General Steel Holdings, Inc.

Tel: +86-10-5879-7346

Email: jing@gshi-steel.com

Mr. Justin Knapp

Ogilvy Financial, Beijing

Tel: +86-10-8520-6556

Email: justin.knapp@ogilvy.com

In the United States:

Ms. Jessica Barist Cohen

Ogilvy Financial, New York

Tel: +1-646-460-9989

Email: jessica.cohen@ogilvypr.com

Source: General Steel Holdings, Inc.
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