Hongli Clean Energy Technologie (NASDAQ:CETC)

HONGLI CLEAN ENERGY TECHNOLOGIES CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

 
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

On March 25, 2016, Henan Pingdingshan Hongli Coal & Coking Co., Ltd. (“Hongli”), which is a variable interest entity of the Registrant, and Hongli’s branch, Baofeng Coking Factory of Henan Pingdingshan Hongli Coal & Coking Co., Ltd. (“Baofeng Coking”), entered into an Assets and Business Transfer Agreement (“Agreement”) with Pingdingshan Hongfeng Coal Wash Co., Ltd. (“Hongfeng”), an unrelated party.

According to the terms of the Agreement, Hongli and Baofeng Coking shall transfer to Hongfeng assets and business with an aggregate book value of RMB 327,307,039.76 at a price of RMB 15,843,534.32. The assets and business transferred include assets in Baofeng Coking, Underground Coal Gasification project, 100% of the equity interest of Baofeng Hongchang Coal Co., Ltd. and Baofeng Shuangrui Coal Mining Co., Ltd., 60% of the equity interest of Baofeng Xingsheng Coal Mining Co., Ltd., 100% of the equity interest of Henan Zhonghong Energy Investment Co., Ltd., and 100% of the equity interest of Baofeng Hongrun Coal Chemical Co., Ltd.

All the interests and risks of the assets and equity interests were transferred to Hongfeng on March 25, 2016. Half of the payment, RMB 7,921,767.16, shall be made to the Registrant within 6 months after March 25, 2016. The remainder of the purchase price shall be made after the titles to such assets and equity interests are registered with the appropriate authorities.

As of the date of filing of this report, the Registrant has not received any of the payment aforesaid.

The Registrant will provide an English translation of the Agreement when it is available.

 ITEM 8.01 OTHER EVENTS

As we disclosed in the Quarterly Report on Form 10-Q for the period ended September 30, 2015 filed with the SEC on November 13, 2015, the Registrant filed a complaint on May 26, 2015 against Henan Province Coal Seam Gas Development and Utilization Co., Ltd. (“Henan Coal Seam Gas”) with the Intermediate People’s Court in Zhengzhou City (“Court”) demanding that Henan Coal Seam Gas return funds of RMB 30,000,000 (approximately $4,712,584 at the exchange rate at the time the complaint was filed) to the Company, with interest of RMB 8,592,326.04, plus interest from May 27, 2015 to the actual repayment date. On December 23, 2015, the Court issued a judgment that Henan Coal Seam Gas shall repay RMB 19,800,000 to the Registrant and undertake RMB 154,942 of the case fee while the Registrant shall undertake RMB 79,820 of case fee. The judgment payable hereunder will belong to the Registrant and rights to such payment have not been transferred to Hongfeng under the Agreement.

ITEM 3.01 NOTICE OF DELISTING OR FAILURE TO SATISFY A CONTINUED LISTING RULE OR STANDARD; TRANSFER OR LISTING.

 
On April 4, 2016, The NASDAQ Stock Market (“NASDAQ”) granted Hongli Clean Energy Technologies Corp. (the “Company”) an additional 180 calendar days, or until September 26, 2016, to regain compliance with the $1.00 per share minimum required for continued listing on The NASDAQ Capital Market pursuant to NASDAQ Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Rule”).

As previously reported, on September 29, 2015, the Company received a notification letter (the “Notice”) from NASDAQ advising the Company that for 30 consecutive business days preceding the date of the Notice, the bid price of the Company’s common stock had closed below the $1.00 per share minimum required for continued listing on The NASDAQ Capital Market pursuant to the Minimum Bid Price Rule. The Company was provided 180 calendar days, or until March 28, 2016, to regain compliance with the Minimum Bid Price Rule. The Company was unable to regain compliance with the Minimum Bid Price Rule by March 28, 2016. The NASDAQ determination to grant the second compliance period was based on the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on The NASDAQ Capital Market, with the exception of the bid price requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

To regain compliance, the bid price of the Company’s common stock must close at or above $1.00 per share for a minimum of ten consecutive business days at any time during the second 180-day compliance period. The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider implementing available options, including effecting a reverse stock split. There can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Rule or maintain compliance with the other listing requirements necessary for the Company to maintain the listing of its common stock on The NASDAQ Capital Market.

The Notice has no effect on the listing of the Company’s common stock at this time and the Company’s common stock will continue to trade on The NASDAQ Capital Market under the symbol “CETC.”

Second Quarter 2015 Financial Results:

• Revenue of syngas was $4,520,206 for the quarter ended December 31, 2015 with sales volume of 46,832,764 cubic meters and an average selling price per cubic meter of $0.1, which revenue accounted for 84% of our total revenue, highlighting the company’s transformation from a coke and coal producer to clean energy producer.
• Net loss for the quarter ended December 31, 2015 was $48,689,412, or ($2.03) per diluted share, compared to net profit of $3,981,858, or $0.17 per diluted share, for the same period of fiscal year 2015.

The Company’s CEO, Mr. Jianhua Lv, said “The past quarter is a truly revolutionary quarter for CETC as we made an important strategic decision to fully discontinue our low margin coal and coking business. Now 84% of our revenue comes from our flagship product—syngas—with overall gross profit achieving 40.69%. Though the macroeconomic conditions in China remain challenging, we believe our strategy of focusing on developing clean energy products with our robust innovation capabilities will bring unprecedented growth to the Company in near future.”

PINGDINGSHAN, China, Nov. 24, 2015 (GLOBE NEWSWIRE) -- Hongli Clean Energy Technologies Corp. (NASDAQ:CETC) ("Hongli" or the "Company"), a vertically integrated producer of clean energy products located in Henan Province, today announced that it has discontinued its coking business by terminating the coke producing agreement with Pingdingshan Hongfengxuanmei Coking and Chemical Company on November 20, 2015. The coke inventory will be used for producing syngas. The management has fully considered the risk and expected the coke demand will continue to slide due to the soft steel industry in China. 

In the meanwhile, CETC will be more laser-focused on developing, manufacturing and commercializing its clean tech energy products by leveraging its existing technologies and infrastructure. The Company�s first clean tech product, �Syngas� has gained its market reputation with its price sustained at RMB 0.67 per cubic meter while natural gas price reduced to RMB 0.7 per cubic meter. 

As previously announced, CETC will employ the Pressure Swing Adsorption ("PSA") process to separate hydrogen from syngas. The hydrogen will be purified, including quality in excess of 99.96% purity, a production quantity of 12,000 cubic meters per hour, an anticipated market price of RMB 1.35 per cubic meter, cost of RMB 0.85 per cubic meter, and gross profit of 40.7%. The product can be broadly used as a raw material in hydrogen fuel cell and petrochemical synthesis industry, and transported through tankers reaching a distance as far as 500 kilometers. Additionally, the Company will employ the Cryogenic Separation Technology to separate clean energy such as ING. 

The Company�s introductory UCG project is currently under the testing phase and the syngas generated from this project will also be applied with aforementioned technologies to further increase the value. As we continue focusing on technological innovation, we will become a well-respected clean tech energy company. 

First Quarter Financial Financial Results: 

• Revenue of syngas was $3.5 million for the quarter ended September 30, 2015 with sales volume of 35.8 million cubic meters and an average selling price per cubic meter of $0.10, which revenue accounted for 55.0% of the Company�s total revenue.
• Net income for the quarter ended September 30, 2015 was $1.7 million, or $0.07 per diluted share, compared to net loss of ($2.6) million, or ($0.12) per diluted share, for the same period of last fiscal year. The swing from loss to earnings per share represents a positive 158% change.

Fourth Quarter 2015 Financial Results:

• Revenue decreased by 1.0% to $8.5 million for the three months ended June 30, 2015 (4QFY2015), with syngas sales offsetting decreases in sales volume and the average selling prices of coke and coal products.
• Net loss for 4QFY2015 was ($7.9) million, or ($0.33) per diluted share, compared to net loss of ($0.8) million, or ($0.04) per diluted share, for the same period of last fiscal year. The decrease in net income was mainly related to one-time charges of $8.4 million for bad debt and $2.3 million for asset impairment.

Mr. Jianhua Lv, Chairman and CEO of Hongli commented, "Fiscal year 2015 was a transitional year for Hongli as our first coke gasification facility (the �Stage I Facility�) started to generate meaningful revenue following the completion of its construction in September 2014, paving the way for Hongli�s transformation from a producer of coal and coke products to a vertically-integrated producer of clean energy products, including washed coal, �medium� or mid-coal and coal slurries, coke, coke powder, coal tar and crude benzol, syngas and electricity. This is particularly significant for Hongli given the unpredictable nature of our coal business due to the ongoing mining moratorium and the weak outlook for our coke business in wake of China�s �new normal� of slower growth and Chinese steelmakers� continuing battle of overcapacity, inventory glut, and weak prices.�

Mr. Lv continued, �We ended the fiscal year on a strong note with the new syngas business contributing 27.3% of total revenue and gross margin reaching the highest level in recent years, which we believe indicates that our new strategy is starting to bear fruit. Looking ahead, as we continue to ramp up our coke gasification facility and push forward our underground coal gasification (�UCG�) initiative, Hongli is well positioned for success in years to come, in our view.�

PINGDINGSHAN, China, Sept. 30, 2015 (GLOBE NEWSWIRE) -- Hongli Clean Energy Technologies Corp. (NASDAQ:CETC) ("Hongli" or the "Company"), a vertically integrated producer of clean energy products located in Henan Province, today announced that on September 29, 2015 the Company received a letter from the NASDAQ Stock Market stating that for the previous 30 consecutive business days, the closing bid price of the Company's stock was below the minimum bid price of $1.00 per share for continued listing on the NASDAQ Capital Market pursuant to NASDAQ Marketplace Rule 5550(a)(2) (the "Minimum Bid Price Rule"). The NASDAQ letter has no immediate effect on the listing of the Company's shares.

In accordance with NASDAQ Marketplace Rule 5810(c)(3)(A), the Company has been provided with a period of 180 calendar days, or until March 28, 2016, to regain compliance with the Minimum Bid Price Rule. If at any time during this 180-day period the closing bid price of the Company's Common Shares is at least $1.00 for a minimum of ten consecutive days, NASDAQ will provide written confirmation of compliance and the matter will be closed.

The Company intends to evaluate available options to resolve the deficiency and regain compliance with the Minimum Bid Price Rule.

PINGDINGSHAN, China, Aug. 12, 2015 (GLOBE NEWSWIRE) -- Hongli Clean Energy Technologies Corp. (NASDAQ:CETC) ("Hongli" or the "Company"), a vertically integrated producer of clean energy products located in Henan Province, today announced that it has agreed in principle to lease a facility for syngas production (the "Facility") for 10 years for an annual payment of RMB10.1 million (approximately US$1.6 million) from Zhengzhou Coal Industry (Group) Co., Ltd. ("ZMJT"), a large-scale state-owned coal and electric energy company. The Company intends to use cash generated from operations and/or bank loans to meet the lease payment requirement. The Company is also in early discussions with ZMJT for potential joint venture arrangements in the future that would allow the Company to further integrate along the "coal � coking � syngas production � chemical industry" value chain.

Located in Linying County, Henan Province, the Facility is currently owned and operated by Yingqing Chemical Industry Co., Ltd., a subsidiary of ZMJT, and is expected to provide the Company with additional production capacity of: 1) 100,000 cubic meters per hour (m³/h) of syngas; 2) 12,000 m³/h of hydrogen; 3) 16,000 metric tons per year (MT/y) of carbon dioxide; 4) 12,000 MT/y of ammonium bicarbonate; 5) 100,000 MT/y of methanol; 6) 180,000 MT/y of ammonia; and 7) 24,000 MT/y of formaldehyde, as well as 8) 12,000 kwh of electricity generated from waste heat.

Mr. Jianhua Lv, Chairman and Chief Executive Officer of Hongli, commented, "We are thrilled to have the opportunity to cooperate and collaborate with a leading state owned enterprise of ZMJT's scale and caliber. We view this as just the beginning of a mutually beneficial relationship between the two parties, and we expect broader cooperation between two parties, such as the formation of a potential joint venture to explore a domestic exchange listing. We believe this cooperation will help our efforts to transform Hongli from a traditional coal and coke company into a leader in the gasification and clean energy industry."

Mr. Lv continued, "The Facility, located just approximately 78 kilometers from the Company's coking facility, will also allow us to consume up to 75% of our coke output internally, significantly reducing the margin squeeze on our coke products by steel manufacturers who have been struggling due to industry-wide supply-demand imbalance and plunging steel prices in recent years. The expansion plans for our syngas facilities in Shilong District, Pingdingshan City have been delayed because the current gas pipeline network extends only 10 kilometers from our existing syngas facilities. The Yingqing Facility, with its ability to liquefy and compress syngas for ease of storage and transportation, will allow us to break this geographical barrier, paving the way for a replicable business model for future growth."

The Company and ZMJT are currently negotiating the definitive agreement for the lease, and the Company makes no promises on whether and when such a definitive agreement will be reached. Moreover, the project will be under the supervision of the local Linying County government, and require satisfaction of customary closing conditions. The Company will provide timely updates on progress.

PINGDINGSHAN, China, July 27, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, today announced that the effective date for the previously announced change of the Company's name to "Hongli Clean Energy Technologies Corp." will be July 28, 2015. The Company's common stock will begin trading on NASDAQ under its new name and the new trading symbol "CETC" effective as of the market open on July 28, 2015.

The Company's common stock has been assigned a new CUSIP number of 438586109 in connection with the name change. Outstanding stock certificates will not be affected by the name change and will not need to be exchanged.

All stock trading, filings and market-related information will be reported under the new corporate name and trading symbol.

PINGDINGSHAN, China, July 13, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, today released preliminary guidance on certain aspects of its Q4 financial results. The company reported that it was able to reduce its overall cost of goods sold (COGS) by approximately 10% in Q4 as compared with Q3, and was able to reduce syngas COGS by approximately 15% from Q3 to Q4. The selling price for the company' syngas remained stable quarter to quarter, resulting in the company's gross profit in Q4 increasing by approximately 27% over Q3. Please note that the estimates described herein have not yet been audited and may be subject to change.

PINGDINGSHAN, China, July 2, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, announced that, at its Annual Meeting of Shareholders held on June 30, 2015, a majority of the shares of common stock present at the meeting in person or by proxy voted in favor of amending and restating the company's Articles of Incorporation to change the name of the company to "Hongli Clean Energy Technologies Corp." The Company's name change will become effective upon filing with the Florida Secretary of State.

According to SCOK's CEO Mr. Jianhua Lv, "We have, by way of an intensive five year process, implemented and executed on the required technology upgrades to successfully grow the Company from a traditional coal and coking company into a profitable producer of clean-burning syngas. As an active participant in China's clean energy initiative, with two operational aboveground syngas facilities and one of the country's first technology demonstrations of underground coal gasification (UCG) featuring carbon capture, we believe 'Hongli Clean Energy Technologies Corp.' better reflects the company's actual focus on clean energy achieved through innovative technology. Our company will continue to emphasize "green and sustainable energy" as the basis for all of our research and development. I thank all our shareholders for their support."

Third Fiscal 2015 Financial Results

• Revenue for the third quarter was 10,860,134 vs. last years same quarter of $ 10,993,882.
• Net income of $2,989,851 ($0.12 per share) increased 283%, compared to net income of $781,065 ($0.04 per share) in Q3 2014

"We are excited by the rapid ramp-up and success of our syngas program during a time when there has been a nationwide softening of demand for both coal and coking products," said SinoCoking CEO Mr. Jianhua Lv. "We will continue to expand our business from coal and coke products to clean-burning energy products; and, with continued improvements in our operation technology and expansion of production capacity, we expect syngas to contribute a progressively higher proportion of future revenue."

Mr. Lv said the company's second aboveground facility in Henan Province has completed construction and is expected to double total syngas output to approximately 50,000 cubic meters per hour by the end of the current quarter.

With current and projected production schedules for both facilities, Mr. Lv estimated that at $0.10 per cubic meter, total syngas output in calendar 2015 should range between 272.6 million and 344.89 million cubic meters and, on that basis, would contribute between $27.26 million  $34.49 million to SinoCoking's total revenue during that period. He noted that revenue contribution month-to-month may vary from company estimates due to the influence of certain operational and market factors.

Of the $45.11 million in current maturities of long-term loans recorded at the close of Q3 2015, about $29.41 million is due on October 2, 2015 and $12.74 million is due on April 2, 2016. According to Mr. Lv, "We intend to negotiate with the lender, Bairui Trust, to further extend the maturity dates of these outstanding loans by an additional two to three years, and to repay the loans through our operational cash flow. However, we cannot guarantee success in such negotiations and we will continue to explore additional options for financing our growth."

INGSHAN, China, April 6, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc.(Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, today confirmed that its second aboveground facility for the production of syngas has been completed on schedule and will begin testing and calibration of systems on April 10. Located at the site of the company's first commercial syngas production facility in Pingdingshan, this second facility is expected to start deliveries to customers in May and reach full capacity of 25,000 cubic meters of syngas per hour by the end of June 2015.

The company noted that these two facilities, with a combined output of 50,000 cubic meters per hour, would rank among China's largest syngas aboveground production sites, in addition to being the only one that combines coking and producing syngas in parallel. Additionally, they are among the first aboveground syngas facilities in China that can recycle carbon dioxide output to produce usable chemical compounds.

Based on the current selling price of $0.10 per cubic meter for syngas, the gross revenue generated per day by both aboveground facilities operating at full capacity would be about $120,000 USD.

SinoCoking also said that its Underground Coal Gasification (UCG) project, originally scheduled for completion by March 30, 2015, will be completed soon and ready to begin testing on April 15. This short delay, according to the company, was not caused by any technology issues, but rather by a slowdown in worker activities occurring during the Chinese New Year break. At full capacity, expected to be achieved by June 30, 2015, the UCG facility will add 60,000 cubic meters per hour to SinoCoking's total syngas output and generate close to $144,000 USD in daily gross revenue.

Gross profit margin on syngas production is expected to be around 40% for the aboveground facilities, and 30% for the UCG facility. The lower UCG project profit margin results from higher production costs than for the aboveground project.

"With the successful launch of our UCG facility," said SinoCoking Chairman and CEO Mr. Jianhua Lv, "we will achieve a major milestone for the company. As part of the national initiative to produce and utilize clean energy like syngas as an alternative to burning coal, SinoCoking is demonstrating that it can be done profitably and on a large scale. We hope our success will lead to an expansion of this technology geographically to benefit other coal producing regions both within China and abroad."

PINGDINGSHAN, China, March 16, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, today announced that its Underground Coal Gasification (UCG) technology has been upgraded and will be applied to Henan Hongchang Coal mine with 50% capital saving. Compared to the first phase UCG Technology Demonstration project (announced on January 21, 2015), the second phase UCG project (approved on January 29, 2015) not only enjoys similar government benefits, but has the following four advantages: (1) The second phase will be built at the site of the company's Hongchang mine with its existing coal facilities, which results in saving of about 50 percent in capital investment. (2) The blended process will be applied to the second phase, and it will produce coal and syngas simultaneously. This is different from the first phase of UCG, which processes utilizing non-well technology to produce only syngas. (3) The blended technology is so far the most efficient technology to exploit the underground coal resources. (4) The blended technology may be applied to other mines in Henan province. The company will launch the second phase of the UCG project through its wholly-owned subsidiary, Baofeng Hongchang Coal Co., Ltd., with existing coal operations in Baofeng County.

The company said this second phase of the UCG project is scheduled to begin construction in April 2015 and will be operational within four months. At peak capacity, Baofeng Hongchang Coal is expected to achieve syngas-related coal production of 12,000 tons/month and syngas production of 120,000 cubic meters/hour.

As previously announced, the first phase of SinoCoking's UCG program, which is expected to be completed later this month, had qualified as a State Scientific Demonstration project in January 2015. Like the first phase, the second phase of UCG project in Baofeng County will be entitled to receive a series of benefits and financial support from the government, including 30% reimbursement of total capital investment, 25% refunds for taxes paid to local and state tax authorities, and access to coal for gasification purposes in Baofeng County's 37 square kilometers of coal reserves.

SinoCoking management's long-term UCG plan is to apply the blended UCG technology to SCOK'S other mines over the next 2 years. SCOK also plans to introduce its blended UCG technology to other companies' mines in Henan province in the future with total syngas production capacity of 21 million cubic meters per hour from a full industrial scale.

After visiting SCOK's operations in mid-January of this year, the Executive Vice Mayor of Pingdingshan, Zhe Li, has asked relevant government officers to "fully support SinoCoking's UCG program and help ensure that construction is completed smoothly and on a timely basis."

"Our second phase UCG project is the first project in Henan province to build a UCG facility that produces UCG syngas in an existing operational coal mine. Implementing the second phase of the UCG demonstration project in Baofeng County," said SinoCoking's CEO Mr. Jianhua Lv, "furthers our corporate mission and increases our ability to produce clean burning syngas from coal. It represents a major milestone in SCOK's transition from a traditional coal and coking business into a progressive green company that can make a significant contribution toward creating a healthier environment."

PINGDINGSHAN, China, March 2, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, today announced it has signed an agreement to provide hydrogen, a byproduct from the production of syngas, to Henan Province-based Shenma Industry Co Ltd (Shanghai Exchange:600810). Hydrogen production is scheduled to begin later this year and will be generated at a facility located alongside SinoCoking's aboveground syngas facilities.

The company said it will employ the Pressure Swing Adsorption ("PSA") process to separate hydrogen from syngas. The hydrogen will be purified by SinoCoking to meet Shenma's requirements, including quality in excess of 99.96% purity, a production quantity of 12,000 cubic meters per hour, and an anticipated market price of RMB 1.5 per cubic meter.

SinoCoking expects the new facility for the hydrogen project to be completed in October 2015 at a cost of approximately $11 million, with about $6.5 million of that amount to be financed through a credit line from the Pingdingshan Rural Credit Union. Based on current market prices for hydrogen, management estimates that SCOK will recover its construction costs within the initial nine months of operation.

SinoCoking had previously announced that current production of 25,000 cubic meters of syngas per hour at its aboveground facility is expected to double shortly with the addition of a second facility at the same site. Together, output from these facilities will produce the initial 12,000 cubic meters per hour of hydrogen. However, the company added that its longer-term plan is to produce hydrogen "on a much larger scale" from its Underground Coal Gasification ("UCG") syngas project currently under development and scheduled to begin operations, along with the second aboveground facility, by the end of March 2015. The testing period for the underground facility should be completed during the month of April.

SinoCoking said it expects that hydrogen to be produced at its aboveground and underground syngas facilities will be utilized in hydrogen fuel cells and supplied to regional hydrogen refueling stations supported by the Chinese government through its China 2014-2020 Energy Development Plan.

"We are excited that the hydrogen generated from our burgeoning syngas program can be used by industrial customers like Shenma Industry Co Ltd," said SinoCoking Chairman and CEO Mr. Jianhua Lv. "With the success of our current technology-driven projects, SinoCoking will accelerate its transition from a traditional coal and coking company to a major source of clean energy and key supporter of China's clean energy initiatives."

Shenma's Chairman Mr. Wang Liang also commented, "We look forward to a long-term relationship with SinoCoking, as it will provide our company with a local and reliable supply of high-quality hydrogen. Our increased use of hydrogen as an alternative to fossil fuels will continue to benefit our customers and help reduce environmental pollution."

• Revenue of $12,677,319 compared to income from operations of $1,540,556 on revenue of $13,208,253 in the like year-ago quarter.
• Due primarily to a noncash gain of $5,452,865 recorded for the change in fair value on revaluation of its warrant liability, the company reported fiscal Q2 2015 net income of $3,981,858, or $.17 per share, versus a net loss of $106,658, or $(.01) per share, for the same year-ago period.

"This has been a highly constructive quarter," said SinoCoking CEO Mr. Jianhua Lv. "The rapid and successful launch of our aboveground syngas facility has demonstrated SinoCoking's ability to redefine itself as a producer of clean energy products. With this transition into the clean energy space, we are creating new revenue and profit centers that we expect to improve the company's financial results going forward, and at the same time mitigate negative impact on operations related to softness in the traditional coal and coking businesses."

Now under construction at the site of SinoCoking's first aboveground facility, which currently produces 25,000 cubic meters of syngas per hour, is a second facility with a similar capacity target. When completed and operating at full capacity � expected toward the end of March 2015 - the two facilities' combined syngas output of 50,000 cubic meters per hour is expected to rank among the highest syngas production for any coking plant in China. Additionally, the company believes these first two facilities are the only ones in China that, to date, combine coking and syngas in parallel.

SinoCoking also said that completion of the first phase of its underground coal gasification facility, expected later this month, should enable the company to produce an additional 60,000 cubic meters of syngas per hour, and that the ultimate goal is to expand output of that facility's capacity to 880,000 cubic meters of syngas per hour by the end of fiscal year 2018.

Previously, during construction of the first aboveground facility last summer, Mr. Lv had estimated gross profit margin on syngas sales of between 45 and 50 percent based on a price of $0.139 per cubic meter. Since the company began selling syngas in October 2014, the actual gross profit margin has been 40.6 percent based on an average price of $.10 per cubic meter. "Even though the actual price and gross profit are below what we had anticipated initially, the gross profit margin from syngas revenue is significantly higher than that of any other current SinoCoking product. We do not expect the $.10 price per cubic meter to change for the near future as we continue to achieve higher and higher levels of production."

PINGDINGSHAN, China, Jan. 21, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, today announced that the Henan Pingdingshan Shilong District Science and Technology Bureau has approved the company's Underground Coal Gasification (UCG) program as a Technology Demonstration project for its scientific innovation. As a qualified State Scientific Demonstration project, SCOK's UCG program will be entitled to receive a series of benefits and financial support from the government, including 30% reimbursement of total capital investment, 25% refunds for taxes paid to local and state tax authorities, and access to coal for gasification purposes in Shilong District's 27 square kilometers of coal reserves.

Sinocoking had announced previously that construction of the first phase of the UCG program, expected to be completed in March 2015, will produce 60,000 cubic meters/hour of clean syngas, and up to 21 million cubic meters/hour when the full industrial-scale project is completed.

The company's UCG drilling program began on October 19, 2014 and reached its first coal reserve on October 28. The coal seam is 96 meters below the ground with a depth of eight meters. The coal has proven to be high quality coking coal, which is well-suited to UCG gasification. The company plans to continue to drill and test additional coal seams.

Sinocoking's CEO Mr. Jianhua Lv stated, "This UCG demonstration project, the first in Henan Province, will help drive UCG development in China and will be instrumental in SCOK's transformation from a coal and coke producer to an innovative and abundant supplier of clean energy."

PINGDINGSHAN, China, Jan. 15, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, today issued an update for investors regarding the company's syngas production.

Mr. Jianhua Lv, the company's CEO, reported today that gas deliveries through pipelines to 5 customers have totaled over 40 million cubic meters since production began on October 18, 2014. Moreover, the company estimates that deliveries from December 15 through January 15 totaled approximately 17.7 million cubic meters.

Maximum production in this phase one of what is eventually expected to grow to four phases is 25,000 cubic meters per hour. For a thirty day period, full capacity therefore is approximately 18 million cubic meters of syngas. Mr. Lv said, "We expected to be at 100% of capacity after two months of testing, and we can now say that in this latest 30 day period we have produced at 98% of capacity." He added, " I am very pleased to announce this on the same day that we have approved the plan for our Compression and Blending Technology facility and will begin construction on it shortly. We are making strides to become an important producer of green, clean energy products."

PINGDINGSHAN, China, Jan. 12, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (SCOK), a vertically integrated producer of clean energy products located in Henan Province, today announced it had entered into a three-party venture with Fangda Special Steel Technology Co. Ltd, China's largest automotive steel spring manufacturer, and with Henan Shenhuo Group, one of the six largest state-owned coal mining companies in Henan Province, whereby Fangda will provide SCOK with Letters of Guarantee on a monthly basis, issued to Henan Shenhuo, to guarantee payment for a minimum of 300,000 tons of coking coal in 2015.

Under terms of the multi-party agreement, SinoCoking will purchase clean, high-quality coking coal from Shenhuo at prices six percent below market. By providing the Letters of Guarantee, Fangda secures through SinoCoking its current supply needs for coking products, with SinoCoking expecting Fangda's supply requirements to increase up to 6 million tons over the next three years. Fangda will purchase a minimum of 240,000 of finished coke in 2015.

"We are delighted by this significant business development by which we and our primary coke supplier and major coke customer all benefit," said SinoCoking Chairman and CEO, Mr. Jianhua Lv. "These agreements will insure an uninterrupted supply of coking coal from Shenhuo Group and guaranteed sales to Fangda. At the same time it provides a mechanism that reduces SCOK's cash needs for purchasing raw materials and frees up more of our working capital and credit to invest in the build-out and expansion of our syngas production facilities."

Mr. Lv also noted that Shenhuo's production facility is located only 65 km from the company's Baofeng factory, and he expects this close proximity - relative to the locations of current suppliers - will generate additional savings due to lower transportation costs. "Combining better pricing on coal with this transportation benefit, we expect the cost of sales in our coking division to decrease by about 10 percent."

"Our three party cooperation with Shenhuo and SinoCoking," added Chen Wen, Purchasing Director of Fangda Group, "will provide us with high quality coke products on a consistent basis. It will ensure that Fangda's steel products continuously meet their production targets and quality standards, and at the same time will improve each partner's overall competitiveness."

PINGDINGSHAN, China, Jan. 7, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, today issued an update for investors regarding the company's Underground Coal Gasification (UCG) project. According to the company's Chairman and CEO, Mr. Jianhua Lv, the project is on schedule and expected to start producing syngas in March 2015.

At a meeting with Dr. Wenjun Li of the coal-based Clean Energy Test Center in North China Institute of Science and Technology, Mr. Lv reported that the drilling of five out of six exploration wells for the first phase of the project has been completed. The construction process will begin shortly following the drilling of the sixth exploration well. When fully functioning, UCG phase one will have the capacity to produce 60,000 m3/h of syngas.

SCOK has posted an animated video explaining Underground Coal Gasification on its website, www.scokchina.com.   

The UCG project is being guided by Dr. Wenjun Li's R&D team. Dr. Li and SCOK co-own the patented technology rights and SCOK has exclusive rights to use the technology within Henan province.

With 10,000 m3/h gas output per unit, or 60,000 m3/h for the six planned units in phase one, SCOK's UCG project will require an investment of $3 million USD per unit, or a total of $18 million. The expected cost of production of syngas will be $0.02/m3, and the current sales price in the market is $0.10/m3. The syngas produced - a combination of carbon monoxide and hydrogen which will be used for power generation and for producing compressed natural gas (CNG), liquid natural gas (LNG) and various chemicals - is expected to add significantly to SCOK's gross profit and bottom line. The gas compressed through SCOK's proprietary Compression and Blending Technology (CBT) will allow for storage and shipping in containers by rail or truck.

As announced previously, CBT-related sales to customers throughout the region will be handled by a sales office to be opened in Linying, which is 120 km from Pingdingshan.

"It is truly exciting to see both the above and below ground syngas facilities moving forward, and now with the addition of the CBT feature to help expand our customer base," concluded Mr. Lv. "We remain focused on providing clean energy solutions to promote a healthier environment for China."

PINGDINGSHAN, China, Jan. 6, 2015 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically integrated producer of clean energy products located in Henan Province, today announced it will begin to apply the company's proprietary gas compression and blending technology (CBT) to current syngas operations and to syngas to be produced by the company's underground coal gasification (UCG) technology, with a goal of full implementation of the program by the end of April 2015.

This CBT facility, located in Pingdingshan City, China, will reach an eventual capacity of processing syngas into 35,000 cubic meters of compressed syngas per hour and allow SCOK's gas to be delivered by tankers to more diverse locations in the region. The final product will meet the national 4t (current estimated cost of $0.23/m3, current market sale price of $0.42/m3) and 6t (current estimated cost of $0.30/m3, current market sale price of $0.53/m3) compressed natural gas (CNG) standards. This project is expected to increase coking syngas project gross profits by 27%.

At a conference hosted by the company on December 31, 2014, SCOK CEO Mr. Jianhua Lv reviewed his plans for the introduction of the syngas compression and blending technology with many distinguished guests, including Dr. Wenjun Li of Coal-based Clean Energy Test Center in North China Institute of Science and Technology, the management group of Zhengzhou Coal Industry and Electronic Power Co., and government officers from Linying City.

Mr. Lv said that, based upon successful completion of the CBT facility, the company will consider applying and/or licensing its compression and blending capabilities to syngas production facilities in other parts of China.

Mr. Lv also said that SCOK plans to open a sales office in Linying - located 120 km from Pingdingshan - to market its products to customers in those areas currently without pipeline access to the company's syngas output. "When both above and below ground facilities are functioning at full capacity, with the compression and blending features in place, SCOK will be making a significant contribution to servicing the region's energy needs. We believe our success locally can position the company to expand that contribution, over time, throughout Henan Province."

As a clean-burning fuel, syngas is increasingly utilized as a clean-energy alternative to burning coal. Comprised primarily of hydrogen and carbon monoxide, syngas can also be used to produce a wide range of industrial products such as fertilizers, solvents, liquid natural gas (LNG), CNG, and assorted synthetic materials. The company believes its new aboveground facility is the only one in China that combines coking and syngas in parallel.

PINGDINGSHAN, China, Dec. 4, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically-integrated producer of clean energy products located in Henan Province, today announced that it had begun construction of its second aboveground facility for the conversion of carbon dioxide into clean-burning syngas. Located at the site of the company's recently completed syngas production facility in Pingdingshan, this second facility is expected to double total syngas output to 50,000 cubic meters per hour from the current 25,000 cubic meters per hour.

Notwithstanding delays attributable to poor weather conditions during the winter months, SinoCoking expects construction of the second facility to be completed by the end of March 2015.

Based on the current price of $0.139 per cubic meter for syngas, the gross revenue generated per day by both aboveground facilities operating at full capacity would be approximately $165,000 USD. Gross profit margin is expected to be between 45% and 50%.

"Doubling syngas output at the Pingdingshan aboveground site is only half the story," said SinoCoking Chairman and CEO Mr. Jianhua Lv. "While the 25,000 cubic meters per hour being produced today is delivered to customers through pipelines, this new facility expansion will produce gas that can be stored in tanks and sold to customers as Compressed Natural Gas (CNG), thus giving us greater flexibility in terms of storage and delivery. We will be able to materially expand our customer base both by number and by geography."

Mr. Lv noted that the company's CNG technology has been jointly developed over the past 5 years by SinoCoking and the Process Engineering Institute of China Academy of Sciences. "When implemented," he added, "it is our understanding that it will be the first of its kind in China."

As a clean-burning fuel, syngas is increasingly utilized as a clean-energy alternative to burning coal. Comprised primarily of hydrogen and carbon monoxide, syngas can also be used to produce a wide range of industrial products such as fertilizers, solvents, LNG, CNG, and assorted synthetic materials.

The company believes it is one of China's first aboveground syngas facilities that can recycle carbon dioxide output to produce usable chemical compounds, in addition to being the only one in China that combines coking and producing syngas in parallel.

PINGDINGSHAN, China, Nov. 25, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a producer of clean energy products located in Henan Province, today announced that its aboveground facility for the conversion of carbon dioxide into clean-burning syngas has achieved its initial production target of 25,000 cubic meters per hour and is currently transporting syngas to three customers and agents in and around its facility in Pingdingshan.

Based on the current price of $0.139 per cubic meter for syngas, the gross revenue generated per day by the aboveground facility is approximately $83,280. Gross profit margin is expected to be between 45% and 50%.

SCOK's initial customers are Zhongshi Energy Co. Ltd., Henan Zhonghong Coal Chemical Industry Co., Ltd. and Baofeng County Bourui Technology Co., Ltd.

"We are pleased with the timely and successful start-up of what we believe is one of China's first aboveground syngas facilities that can recycle carbon dioxide output to produce usable chemical compounds," said SinoCoking Chairman and CEO Mr. Jianhua Lv. "As a result, SCOK now offers a clean energy alternative to both industrial and individual customers in our area, We are now preparing to start the next phase of construction at the facility that will further expand our capacity, and we expect to produce an additional 25,000 cubic meters per hour by the end of the first quarter of 2015."

Mr. Lv further noted that while, initially, gas produced at the facility is directly transferred to customers via pipelines, the company is now working on introducing gas compression and refining technology into the syngas production process so that the end product can be stored in tanks and sold to customers as Compressed Natural Gas (CNG). As a clean-burning fuel, syngas is increasingly utilized as a clean-energy alternative to burning coal. Comprised primarily of hydrogen and carbon monoxide, syngas can also be used to produce a wide range of industrial products such as fertilizers, solvents, Liquid Natural Gas (LNG), CNG, and assorted synthetic materials.

According to the company, the new facility is one of the few in China that can produce 25,000 cubic meters of syngas per hour. Moreover, the company believes its new aboveground facility is the only one in China that combines coking and syngas.

• Income from operations of $1,359,383 on revenue of $13,573,836 compared to income from operations of $2,452,846 on revenue of $17,475,970 for the same period a year ago.
• Net loss in the 2015 first fiscal quarter of $2,553,257, or $(.12) per share, compared to net income of $1,160,884, or $.05 per share, in the corresponding period in 2014.

Nevertheless, said SinoCoking CEO Mr. Jianhua Lv, the three months ended September 30, 2014 was "an immensely successful period" for the company. During this span, he noted, SinoCoking not only raised over $14 million via an equity offering, but also achieved the double milestone of completing basic construction on its aboveground syngas production facility in Pingdingshan as well as signing an exclusive agreement to construct one of the world's few underground syngas facilities featuring carbon capture and storage technology.

The aboveground facility, which began operation on October 18, is designed to produce 25,000 cubic meters of syngas per hour, with the potential to increase to 50,000 cubic meters of syngas per hour. The underground facility, which commenced construction on October 27 and is scheduled to open in March 2015, is expected to generate 60,000 cubic meters of syngas per hour while sequestering its produced carbon dioxide deep underground.

Based upon current market conditions, the combined gross profit from the two facilities operating at full capacity is projected at $40 to $60 million per year, said Mr. Lv.

"With our Pingdingshan facility now sending syngas to customers across Henan Province, and construction on our underground syngas facility proceeding rapidly, we believe SinoCoking has truly turned the corner toward redefining itself as a producer of clean energy products," added the CEO.

"As our commercialization of these products progresses, we firmly anticipate seeing an improved top and bottom line performance going forward."

PINGDINGSHAN, China, Oct. 27, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), an emerging producer of clean energy products located in Henan Province, today announced that it had commenced construction of its underground coal gasification (UCG) facility for the production of clean-burning syngas.

Located in Pingdingshan, the UCG facility will be the first in China to incorporate carbon capture and store (CCS) technology, a process that sequesters resulting carbon dioxide gas deep underground for decades.

When completed in March of next year, the SinoCoking facility is expected to produce 60,000 cubic meters of syngas per hour.

Both the UCG and CCS technologies to be utilized at the facility are jointly owned by SinoCoking's two technology partners -- the Institute of Process Engineering of the Chinese Academy of Sciences and the North China Institute of Science and Technology -- both of which have designated SCOK as their exclusive agent to commercialize both processes.

Construction at the underground facility will be co-directed by Dr. Wenjun Li of the North China Institute of Science and Technology, and the senior technical operations staff of SinoCoking including the company's chief executive officer, Mr. Jianhua Lv.

"Today marks yet another key date in the history of our company," commented Mr. Lv. "After many years of research, planning and testing, we have at last embarked on our journey to become the first company in China � and one of the few in the world � to commercialize both UCG and CCS technologies in a single industrial venture.

"This project, we believe, will not only help reduce our nation's reliance on the burning of coal for energy," he said. "It will also be designed to avoid the damaging groundwater contamination often associated with previous UCG projects."

The result, he said, would be, "a UCG facility representing among the leading technological and environmental achievements in China."

Today's announcement follows one on October 20 stating that the company had commenced producing and shipping syngas at its aboveground syngas facility in Pingdingshan. At full capacity that facility is scheduled to produce 25,000 cubic meters of syngas per hour, and may, pending application of a gas compression technology, reach a capacity of 50,000 cubic meters of syngas per hour by the first quarter of next year.

PINGDINGSHAN, China, Oct. 20, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a producer of clean energy products located in Henan Province, today announced that as of the morning of October 18 China time its aboveground facility for the conversion of carbon dioxide into clean-burning syngas had begun operations and was producing and transporting syngas to customers in and around Pingdingshan.

The facility is currently operating at approximately 60 percent of capacity, said the company, and over the next 20 days will ramp up to its full capacity of 25,000 cubic meters of syngas per hour.

"After years of planning and months of construction, we have now moved forward into the commercial phase of our clean energy business plan," said Chairman and CEO Mr. Jianhua Lv. "Through this plan, we are committed to becoming a leading supplier of clean energy to a wide range of industrial and residential customers in Henan Province."

To help accelerate the company's progress, the CEO said SinoCoking is in discussions regarding possible application of a gas compression technology that would allow the new facility to double its output of syngas to 50,000 cubic meters per hour.

The technology, he said, could possibly be implemented by the first quarter of next year.

Syngas, a clean-burning fuel, is increasingly utilized as a clean-energy alternative to burning coal. Comprised primarily of hydrogen and carbon monoxide, syngas can also be used to produce a range of widely-used industrial products such as fertilizers, solvents and assorted synthetic materials.

Gross profit margin on syngas sales at the new SinoCoking facility is expected to be between 45% and 50%, said Mr. Lv.

The CEO added that SinoCoking's other syngas project, an underground coal gasification and carbon capture and storage facility designed to produce 60,000 cubic meters of syngas by March of next year, was expected to commence initial construction by the end of this month.

ITEM 8.01 OTHER EVENTS

 
On October 7, 2014, Jianhua Lv, the Chairman and Chief Executive Officer of the SinoCoking Coal & Coke Chemical Industries, Inc. (the “Registrant”), exercised his option to purchase acquire 100% of the outstanding shares of Honour Express Limited, a British Virgin Islands company (“Honour Express”), which directly owns 6,694,091 shares of the Registrant’s common stock. Mr. Lv previously beneficially owned such shares of Honour Express, and his October 7, 2014 acquisition changes Mr. Lv’s beneficial ownership of such shares into direct ownership of Honour Express. On July 6, 2009, Mr. Lv and Mr. Shaohua Tan, a Singapore citizen, the owner of 100% of the shares of Honour Express at such time, entered into a Call Option Agreement (“Incentive Option Agreement”). To provide incentives to Mr. Lv in connection with the development of the business of the Registrant’s predecessor, Top Favour Limited, a British Virgin Islands company (“Top Favour”), the Incentive Option Agreement provided that Mr. Lv would be granted the option to receive 100% shares of Honour Express, subject to vesting and certain other contingencies as set forth in the Incentive Option Agreement.

Under the Incentive Option Agreement, Mr. Lv agreed to serve as CEO and Chairman of Top Favour or its successor for not less than a 5 year period; and in anticipation of Mr. Lv’s contributions to Top Favour, its successor and its subsidiaries, if such companies met certain revenue thresholds, Mr. Lv would have the right and option to acquire all the shares of Honor Express at nominal price (the “Option”).

On October 7, 2014, based on the achievement of the revenue thresholds set forth in the Incentive Option Agreement, Mr. Lv exercised the Option and received 100% of the outstanding shares of Honour Express. As a result, Mr. Lv became the sole shareholder of Honour Express. Given the Option and rights in Honour Express prior to exercise, the exercise of the Option neither increases nor decreases Mr. Lv’s previously disclosed beneficial interest in an aggregate of 7,948,168 shares of the Registrant’s common stock, including both personally held shares and shares held by Honour Express.

PINGDINGSHAN, China, Oct. 8, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), an emerging producer of clean energy products located in Henan Province, today announced new developments in the construction and financing of its underground facility for the production of clean-burning syngas.

First, SinoCoking confirmed that the initial phase of construction on the project will commence this month and, when completed in March of next year, produce 60,000 cubic meters of syngas per hour. At this facility, to be constructed near the company's four mines in Henan Province, SinoCoking will employ the patented underground coal gasification (UCG) and carbon capture and storage (CCS) processes developed and jointly owned by its two technology partners � the Institute of Process Engineering of the Chinese Academy of Sciences and the North China Institute of Science and Technology � both of which on September 9 granted SCOK the exclusive right to commercialize both processes.

According to Dr. Wenjun Li of the North China Institute of Science and Technology, this underground facility will be the first in China to deploy both UCG and CCS technologies together in a commercial venture. Dr. Li, who has spent the last 11 years developing and testing these processes in mines deep underground and who authored many of the UCG patents, said he believed that the combination of both technologies would constitute "a leading scientific and environmental achievement" and permit China to "significantly accelerate" the pace at which it combats "destructive atmospheric pollution and global warming effects."

In the UCG phase of the process, said Dr. Li, two wells will be drilled into the mine's coal seam, with one well being used for injection of agents to ignite and gasify the coal in the seam, and the other well used to bring the resulting gases to the surface. These gases include carbon monoxide, hydrogen, methane, carbon dioxide and steam, the latter two of which are subsequently removed, leaving a syngas of carbon monoxide, hydrogen and methane usable as a clean-burning fuel or as an intermediary product that may be converted to fertilizers, solvents and assorted synthetic materials.

During the CCS phase of the process, he said, the removed carbon dioxide and steam are re-injected deep underground, where they further stimulate the coal gasification process and remain stored for decades, unable to contribute to global warming or atmospheric pollution.

The entire UCG/CCS process, said Dr. Li, is especially formulated to prevent the toxic groundwater contamination that has often resulted from competing technologies. This advance, he said, will be made possible by use of a patented drilling technology, specialized gasification agents, and automated systems that monitor and control the temperature of the gases traveling through the wells.

SinoCoking plans to fund the project's initial $18 million cost with approximately $6 million coming from operating cash flow, $6 million anticipated from bank loans, and $6 million from proceeds of the company's recent $14.3 million equity offering.

Each step of the project construction will be co-supervised by Dr. Li and the technical operations team of SinoCoking. This construction process will form the basis of a model that may be applied at future UCG/CCS sites, he said.

"SinoCoking was the ideal partner for us on this project," said Dr. Li. "First, the company has a very strong coal production infrastructure in place, ensuring a huge supply of coal to produce syngas on an ongoing basis. Second, Henan Province, where SinoCoking's four mines are located, has many large industries that are in need of syngas and form a natural customer base.

"Third, the Henan Province Government, as well as governments of the district and county, are very supportive of SinoCoking's commitment to this project, and we look forward to cooperating with them to make the project a success."

SinoCoking chief executive Mr. Jianhua Lv added, "After years of research by Dr. Li and some of the finest minds in China, our team is proud and excited to step into the forefront of UCG/CCS technology. With our two Institute partners we stand ready to advance our nation's efforts to reduce its reliance on the burning of coal for energy and to create a cleaner and healthier environment for all our citizens."

The CEO said that subsequent phases of SinoCoking's UCG/CCS project, estimated to cost $280 million and produce as much as 880,000 cubic meters of syngas per hour, will be funded by a combination of operating cash flow, bank loans and, possibly, an equity raise.

Mr. Lv said that SinoCoking would soon issue an update on the opening of the company's aboveground syngas facility in Pingdingshan, due to begin operations this month.

PINGDINGSHAN, China, Sept. 29, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically-integrated coal and coke processor, today announced that, for the fiscal year ended June 30, 2014, the company had net income of $990,582, or $0.05 per share, on revenue of $50,267,693, compared to net income of $1,047,693, or $0.05 per share, on revenue of $66,686,301 for the prior fiscal year ended June 30, 2013. Basic and diluted weighted average number of shares of common stock for both fiscal 2014 and 2013 was 21,121,372.

The decrease in revenue in fiscal 2014 compared to last year was the result of a slowdown in sales of most of the company's coal products, including raw coal, coal slurries, mid-coal, coke powder, and washed coal. This slowdown was caused by Chinese government policies aimed at reducing pollution and softness in the construction markets, which in turn affected demand for steel and its constituent coal. As a result, in fiscal 2014, the company's coal products contributed only 13 percent of overall SinoCoking revenue, compared to 41 percent in fiscal 2013.

These decreases were offset in part by increased demand for the company's coke products, such as finished coke, coke powder, coal tar, and crude benzol, which sell primarily to specialty steel industries including automotive, military and other non-construction industries. As a result of this increase in demand, coke products contributed 87 percent of total SinoCoking revenue in fiscal 2014 as compared to 59 percent in fiscal 2013.

In addition, due to strong increases in gross profit margin for the company's coke products, SinoCoking's overall gross profit margin in fiscal 2014 increased to 18 percent from 12 percent in fiscal 2013. This, in turn, helped the company to produce a fiscal 2014 net profit roughly comparable to that of fiscal 2013, despite a decrease in revenue of 25 percent.

SinoCoking's most prominent accomplishment, however, during fiscal 2014 was the decision to transform the company into a producer of clean-burning synthetic gas (syngas) products. This transition began in May 2014, when the company commenced plans to build to build a coke gasification facility for the conversion of carbon dioxide into syngas. This facility, which is expected to commence production by the middle of October, will have an output capacity of 25,000 cubic meters of syngas per hour.

Furthering its transition plans, in August 2014, SinoCoking announced it had signed an exclusive agreement with two prominent state institutes to build an underground coal gasification facility that will convert the coal at four SinoCoking underground mines into syngas while sequestering the resulting carbon dioxide and other greenhouse gases underground. The first phase of the project is expected to be completed in March 2015 and yield a syngas output of 60,000 cubic meters per hour.

Looking forward, SinoCoking chief executive Mr. Jianhua Lv said that he expects the company's two syngas projects, once running at full capacity, will produce "substantial revenue and gross profit."

He said the company would soon issue an update on construction and financing developments at both facilities.

PINGDINGSHAN, China, Sept. 24, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically-integrated coal and coke processor, today announced that it has closed a securities purchase agreement with two institutional investors for the sale of 2,818,845 common shares in a registered offering at the price of $5.10 per common share.

Gross proceeds from the offering were approximately $14.3 million.

After payment of expenses, SinoCoking received approximately $13.1 million in net proceeds.

In addition, SinoCoking issued to the investors Series A warrants to purchase an aggregate of 1,409,423 common shares and Series B warrants to purchase an aggregate of 1,644,737 common shares. If fully exercised, SinoCoking would receive aggregate gross proceeds from the warrants of approximately $18.9 million.

The company intends to use the net proceeds from this offering for working capital and other general corporate purposes.

ITEM 8.01 OTHER EVENTS

On September 24, 2014, SinoCoking Coal & Coke Chemical Industries, Inc. (the “Registrant”) issued a press release announcing the initial closing of a previously announced securities purchase agreement (the “Securities Purchase Agreement”) with two institutional investors for the sale of 2,818,845 common shares in a registered offering at the price of $5.10 per common share. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated by reference herein.

Gross proceeds from the offering were approximately $14.3 million. After payment of expenses, the Registrant received approximately $13.1 million in net proceeds. In addition, the Registrant issued to the investors Series A warrants to purchase an aggregate of 1,409,423 common shares and Series B warrants to purchase an aggregate of 1,644,737 common shares. If fully exercised, the Company would receive aggregate gross proceeds from the warrants of approximately $18.9 million. The company intends to use the net proceeds from this offering for working capital and other general corporate purposes.

PINGDINGSHAN, China, Sept. 18, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (SCOK) ("SinoCoking" or the "Company"), a vertically-integrated coal and coke processor, today announced that it entered into a securities purchase agreement (the "Securities Purchase Agreement") with two institutional investors in connection with an offering (the "Offering") pursuant to which the Company agreed to sell to investors 2,818,845 shares to be issued on the initial closing of the Offering (the "Initial Offering") at a price of $5.10 per common share. The Initial Offering includes Series A warrants to purchase an aggregate of 1,409,423 shares of common stock and Series B warrants, which are not exercisable for the first six months, may become exercisable only to the extent the Company does not have an effective registration statement available for shares underlying such warrants, and, in any event, expire after certain registration conditions are satisfied, to purchase an aggregate of 1,644,737 shares of common stock. The Company expects the Initial Offering of approximately $14.3 million in gross proceeds will close on or before September 23, 2014.

Under the Purchase Agreement, the investors will also have an option to purchase up to $10 million of additional shares and warrants at a price of $6.08 per unit of securities for a period beginning six months and one day from the date the Initial Offering closes and ending ten months from the date the Initial Offering closes (subject to extension in certain circumstances as described in the Purchase Agreement) (the "Option Period").

The Series A warrants will be exercisable immediately as of the date of issuance at an exercise price of $6.38 per common share and expire four years from the date of issuance. The Series C warrants will be exercisable immediately as of the date of issuance at an exercise price of $6.08 per common share and expire four years from the date of issuance.

The Series B warrants will be exercisable at an exercise price of $6.08 per share at any time during the Offering Period only if the Company's shelf registration statement on Form S-3 (File No. 333-178325) as filed with the Securities and Exchange Commission is not effective or is not otherwise available for the issuance of the shares issuable during the Option Period or any prospectus contained therein is not available for use (a "Registration Failure"). The Series B warrants expire on the date ten months from the date the Initial Offering closes if no Registration Failure has occurred prior thereto or, if a Registration Failure does occur prior to such date, on the fourth anniversary of such Registration Failure.

Gross proceeds of the offering of common shares in the Initial Offering, before deducting placement agent fees and other estimated offering expenses payable by the Company, are expected to be approximately $14.3 million. The net proceeds from this offering will be used for working capital and other general corporate purposes.

FT Global Capital, Inc. served as the exclusive placement agent for the offering.

A shelf registration statement relating to these securities has been filed with and declared effective by the Securities and Exchange Commission. A prospectus supplement related to the offering will be filed with the Securities and Exchange Commission. This press release does not constitute an offer to sell or the solicitation of an offer to buy, and these securities cannot be sold in any state in which this offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Any offer will be made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement.

PINGDINGSHAN, China, Sept. 18, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (SCOK) ("SinoCoking" or the "Company"), a vertically-integrated coal and coke processor, today announced that it entered into a securities purchase agreement (the "Securities Purchase Agreement") with two institutional investors in connection with an offering (the "Offering") pursuant to which the Company agreed to sell to investors 2,818,845 shares to be issued on the initial closing of the Offering (the "Initial Offering") at a price of $5.10 per common share. The Initial Offering includes Series A warrants to purchase an aggregate of 1,409,423 shares of common stock and Series B warrants, which are not exercisable for the first six months, may become exercisable only to the extent the Company does not have an effective registration statement available for shares underlying such warrants, and, in any event, expire after certain registration conditions are satisfied, to purchase an aggregate of 1,644,737 shares of common stock. The Company expects the Initial Offering of approximately $14.3 million in gross proceeds will close on or before September 23, 2014.

Under the Purchase Agreement, the investors will also have an option to purchase up to $10 million of additional shares and warrants at a price of $6.08 per unit of securities for a period beginning six months and one day from the date the Initial Offering closes and ending ten months from the date the Initial Offering closes (subject to extension in certain circumstances as described in the Purchase Agreement) (the "Option Period").

The Series A warrants will be exercisable immediately as of the date of issuance at an exercise price of $6.38 per common share and expire four years from the date of issuance. The Series C warrants will be exercisable immediately as of the date of issuance at an exercise price of $6.08 per common share and expire four years from the date of issuance.

The Series B warrants will be exercisable at an exercise price of $6.08 per share at any time during the Offering Period only if the Company's shelf registration statement on Form S-3 (File No. 333-178325) as filed with the Securities and Exchange Commission is not effective or is not otherwise available for the issuance of the shares issuable during the Option Period or any prospectus contained therein is not available for use (a "Registration Failure"). The Series B warrants expire on the date ten months from the date the Initial Offering closes if no Registration Failure has occurred prior thereto or, if a Registration Failure does occur prior to such date, on the fourth anniversary of such Registration Failure.

Gross proceeds of the offering of common shares in the Initial Offering, before deducting placement agent fees and other estimated offering expenses payable by the Company, are expected to be approximately $14.3 million. The net proceeds from this offering will be used for working capital and other general corporate purposes.

FT Global Capital, Inc. served as the exclusive placement agent for the offering.

A shelf registration statement relating to these securities has been filed with and declared effective by the Securities and Exchange Commission. A prospectus supplement related to the offering will be filed with the Securities and Exchange Commission. This press release does not constitute an offer to sell or the solicitation of an offer to buy, and these securities cannot be sold in any state in which this offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Any offer will be made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement.

PINGDINGSHAN, China, Sept. 16, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically-integrated coal and coke processor, today said that the local government of Pingdingshan has agreed to provide the company with an extensive gas pipeline distribution network and gas storage system as well as a land allotment of over 7.5 square miles of high-quality coal, all of which will support the development and continuing operations of SCOK's recently announced $300 million underground mine coal-to-syngas conversion project.

Additionally, the government of Pingdingshan may issue "significant" financial grants to SinoCoking after assessing the project's initial performance.

The gas pipeline network and storage system will connect each of SinoCoking's four mines in Henan Province with most of its major population and industrial centers. The 7.5 square miles of high-quality coal will be used by SinoCoking to refine its underground coal-to-syngas technology before commencing sales of syngas in February of next year.

The gas will be sold to local power, chemical and transportation companies as well as households requiring electricity in Henan Province, said the company.

Today's news follows SinoCoking's announcement on September 9 that it had signed an exclusive agreement with the Institute of Process Engineering of the Chinese Academy of Sciences and the North China Institute of Science and Technology to convert the 21 million tons of coal at four SinoCoking mines into syngas, a clean burning fuel, while sequestering unwanted carbon dioxide and other greenhouse gases underground.

Mr. Wang Xichang, the Pingdingshan Government District Director overseeing the underground syngas project, said, "We are proud to provide SinoCoking Coal and Coke Chemical Industries with the infrastructure and raw materials vital in implementing this great clean energy technology. The cost-effective production and distribution of vast quantities of clean-burning syngas, while safely sequestering harmful greenhouse gases deep underground, is an achievement that will have enormous health, environmental and economic benefits."

SinoCoking Chairman and CEO Mr. Jianhua Lv added, "We are of course deeply gratified to receive such powerful government support for this vital endeavor. As a result, we now have assurance that all the syngas we produce at our underground facilities will be adequately stored and transported by pipeline to the furthest reaches of Henan Province."

Henan, located in central China, is the nation's fifth largest provincial economy.

At its completion, the project is expected to have an output capacity, subject to market demand, of 880,000 cubic meters of syngas per hour.

PINGDINGSHAN, China, Sept. 9, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), a vertically-integrated coal and coke processor, today said it has signed an exclusive agreement with both the Institute of Process Engineering of the Chinese Academy of Sciences and the North China Institute of Science and Technology to refine and implement a technology that will be used, beginning next month, to convert the 21 million tons of coal at four SinoCoking underground mines into syngas, a clean burning fuel.

The technology will accomplish this conversion without releasing meaningful levels of carbon dioxide or other greenhouse gases above ground, said SinoCoking.

Located in Henan Province, these mines have been shut down for three years due to Chinese government-mandated mine consolidation guidelines. Now, however, these properties can be reactivated and their resources utilized in an environmentally friendly manner, said the company.

The first phase of the project, which will cost approximately $18 million and be funded primarily from SinoCoking's cash reserves, is expected to be completed in February 2015 and yield a combined syngas output of 60,000 cubic meters per hour. This output will produce incremental gross profit in 2015 of from $30 to $45 million, said SinoCoking.

Subsequent phases of the project, expected to be completed by the end of 2016, will cost about $280 million and will be funded primarily from bank loans and company-issued debt. At completion, the project is expected to have an output capacity, subject to market demand, of 880,000 cubic meters of syngas per hour.

Customers for this syngas will be comprised primarily of local power, chemical and transportation companies as well as households requiring electricity in Henan Province, said SinoCoking.

"We are thrilled and honored to be working with the Institute of Process Engineering and North China Institute of Science and Technology on this vital project," said SinoCoking Chairman and CEO Mr. Jianhua Lv. "The production of this vast new quantity of syngas � a clean burning fuel � while preventing the escape of carbon dioxide and other greenhouse gases, is, we believe, a major technological accomplishment.

"Combined with the opening, next month, of our above ground syngas facility in Pingdingshan, this new project further establishes our company as one of China's leading producers of clean energy products."

Mr. Lv said that SinoCoking would announce additional details on the construction and financing of the underground facility "in the near future."

PINGDINGSHAN, China, Aug. 28, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK) ("the Company" or "SinoCoking"), a vertically-integrated coal and coke processor, today said that its gross profit from sales of synthetic gas (syngas) produced at the Company's new clean coal facility in Pingdingshan will be from $10 to $15 million in 2015.

This estimate, said the company, is based upon sales of syngas at an average price of about $0.12 per cubic meter, with 24x7 production and gross margins of approximately 40 percent.

Syngas is a clean-burning fuel that can also be used to produce fertilizers, solvents and assorted synthetic materials. At full capacity, SinoCoking's new facility is expected to produce 25,000 cubic meters of syngas per hour, among the highest outputs in China.

The facility, due to open next month, is also one of the few in China that will capture the considerable volume of carbon dioxide gas (CO2) emitted during the production of syngas. This CO2 will be converted to ammonium bicarbonate, a common farm fertilizer, and sold to various outlets in China, said the company.

"We are proud and excited to be so close to completing this new clean energy facility," said SinoCoking Chairman and CEO Mr. Jianhua Lv. "With its opening, we will make the leap from being a producer of coal and coke products to one of China's top producers of clean-burning fuel.

"This transition, we expect, will both assist our nation in battling its widespread and crippling pollution problems, as well as bring considerably greater value to our shares."

Pending shareholder approval, SinoCoking will be renamed Clean Synthetic Technologies Corp., a name chosen to reflect the Company's new emphasis on the production of clean energy products.

Item 4.01. Changes in Registrant’s Certifying Accountant.

 
Effective April 9, 2014, the registrant terminated Friedman LLP (“Friedman”) as its independent auditors. This action was approved by the Audit Committee of the registrant’s Board of Directors (the “Board”), and ratified by the Board.

The reports of Friedman on the registrant’s financial statements as of June 30, 2013 and 2012 and for the years ended June 30, 2013 and 2012 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that the audit report of Friedman on the registrant’s financial statements for its fiscal year ending June 30, 2013 contained an explanatory paragraph which noted that the registrant had a working capital deficiency which raised substantial doubt about the registrant’s ability to continue as a going concern.

In connection with the audits of the registrant’s financial statements for the fiscal periods ended June 30, 2013 and 2012, and through April 9, 2014, there were: (i) no disagreements between the registrant and Friedman on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Friedman, would have caused Friedman to make reference to the subject matter of the disagreement in its reports on the registrant’s financial statements for such periods, and (ii) no reportable events within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

On April 9, 2014, the registrant engaged HHC, LLP (“HHC”) as its independent registered accounting firm. During its two most recent fiscal years ended June 30, 2013 and 2012, and the subsequent interim period through the engagement of HHC on April 9, 2014, the registrant did not consult with HHC on (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on the registrant’s financial statements, and HHC did not provide either a written report or oral advice to the registrant that was an important factor considered by the registrant in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) the subject of any disagreement, as defined in Item 304 (a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

The registrant provided Friedman a copy of the disclosures contained herein and requested that Friedman furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not Friedman agrees with its statements in this Item 4.01. A copy of the letter dated July 29, 2014, furnished by Friedman in response to such request, is filed as Exhibit 16 to this Form 8-K.

PINGDINGSHAN, CHINA--(Marketwired - Jul 15, 2014) - SinoCoking Coal and Coke Chemical Industries, Inc. (NASDAQ: SCOK) ("the Company" or "SinoCoking"), a vertically-integrated coal and coke processor, today said that the installation of all equipment and systems at the Company's green facility for the conversion of carbon dioxide into a clean-burning synthetic gas (syngas) has been completed, and that the 60-day testing and calibration phase -- the final phase prior to commencement of operations -- has begun.

Originally scheduled to last for one month, the installation of gas furnaces, electrical instrumentation, and material transporting, dust removal and cooling/purification systems was completed in only 23 days -- placing the facility on target to begin initial production of syngas in mid-September.

At full capacity, the facility is expected to produce 25,000 cubic meters of syngas per hour, among the highest outputs of any syngas plant in China.

As previously announced, gross profit margin on syngas sales is expected to be between 45 and 50 percent, significantly higher than any other current SinoCoking product.

"We are thrilled to be ahead of schedule on our construction progress," said SinoCoking Chairman and CEO Mr. Jianhua Lv. "Thanks to the efforts of our engineering contractor, Lin Yu Jian Group, our vision for this facility is rapidly coming to fruition."

Lin Yu Jian, a leading engineering contracting company based in Henan Province, has assigned over 160 workers to the project.

In the testing and calibration phase, said Mr. Lv, all of the facility's equipment and systems will be monitored to optimize their performance both individually and in tandem with other equipment and systems. This work, he said, will be performed by engineers and technology specialists with both Lin Yu Jian and SinoCoking, and will follow the strict guidelines applicable to syngas projects of this size. 

"Once this work is complete," said Mr. Lv, "we will be ready to enter the final phase, which is the trial production of syngas at our facility. We would expect to progress to full production of syngas in a reasonably short time."

Syngas, a clean-burning fuel, is increasingly utilized as a clean-energy alternative to burning coal. Comprised primarily of hydrogen and carbon monoxide, syngas can also be used to produce a range of widely-used industrial products such as fertilizers, solvents and assorted synthetic materials. 

"We look forward to completing this transition from a producer of coal and coke products to one of China's leading providers of clean-burning fuel," concluded Mr. Lv. "Considering the soaring energy demands, crippling pollution problems and massive greenhouse gas emissions facing our nation, I know of no greater goal than to help alleviate these conditions and begin restoring a cleaner and healthier environment to our people."

On July 14, SinoCoking announced that, subject to shareholder approval, it was renaming the company Clean Synthetic Technologies Corp. The name was chosen to accurately reflect the Company's new emphasis on the production of clean-burning energy products.

PROSPECTUS SUPPLEMENT NO. 3

(To Prospectus dated November 6, 2013)

SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC.

11,384,566 shares of Common Stock

This Prospectus Supplement No. 3 is required to be delivered by certain holders of the above-referenced shares or by their transferees, pledges, donees or their successors in connection with the offer and sale of the above-referenced shares.

This Prospectus Supplement No. 3 supplements the Prospectus dated November 6, 2013 (the “Prospectus”) of SinoCoking Coal and Coke Chemical Industries, Inc. (the “Company”), as supplemented by Prospectus Supplement No. 1 dated November 10, 2013 and Prospectus Supplement No. 2 dated February 25, 2014, with the following additions and changes:

 (1) Update, amend and supplement the Company’s Prospectus dated November 6, 2013 with information in the Company’s attached Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 as filed with the Securities and Exchange Commission on May 23, 2014.

SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES

CONDESED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

Management Discussion and Analysis

Revenue

For the three months ended March 31, 2014, revenue decreased by $2,910,069 or 20.93% as compared to the same period last year, mainly from significant decrease in sales of coal products.

94.31% of our three-month revenue came from coke products and 5.69% from coal products, as compared to 60.65% from coke products and 39.35% from coal products for the same period last year.

Net Income

Net income for the three months ended March 31, 2014, including change in fair value of warrants, was $740,191, as compared to $504,780 for the same period last year.

PINGDINGSHAN, China, May 7, 2014 /PRNewswire-FirstCall/ -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq: SCOK) (the "Company" or "SinoCoking"), a vertically-integrated coal and coke processor, today announced that Song Lv has been appointed the Company's Chief Financial Officer effective April 18, 2014.

Sam Wu has resigned as Chief Financial Officer to pursue other business opportunities. Mr. Wu will remain with SinoCoking in an advisory capacity until February 2015.

Song Lv has served as controller in the finance and accounting department of the Company since June 2010 and over the years he had increasing responsibilities which led to his new role as Chief Financial Officer. He brings two decades of financial and accounting experience in several industries, including mining, chemical and energy.

Previously he was Vice President and Chief Financial Officer at Xinhe Investment Co., Ltd, assistant to CEO at Canton Union Group, finance manager at Beijing Watchdata Intelligent Technology, Beijing North Fang Fuji Technology Group and China Finance Research Institute of Petroleum. He earned a bachelor's degree in accounting from Northeastern University.

Mr. Lv joins SinoCoking at the time when the Company has started construction to retrofit its existing coking facility to produce clean-burning syngas. When construction is complete, the Company will announce its gas distribution plans.

Song Lv commented, "I am very enthusiastic about my opportunity as CFO of SinoCoking at this moment when the Company is making the historic decision to become an environmentally friendly producer of fine organic chemicals and of clean gas in significant quantities. We know that China is on a track towards a cleaner environment and we plan to be the first private coking company in China to implement this type of plan. We've begun construction and believe we will be in production in the fourth quarter of calendar year 2014."

SinoCoking's Chairman and CEO, Mr. Jianhua Lv noted, "It was a pleasure working with Sam for these many years. I want to express my gratitude for his valuable contribution over the years and I am pleased that he will be available to assist the Company during the transition. I wish him the best in his future endeavors."

He added, "Our Board is confident that Song's strong financial background and his deep industry knowledge will be extremely valuable to our Company as we continue to implement our strategic initiatives to further improve our operating and financial efficiency and increase shareholder value."

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 (b) Departure of Officer

Effective April 18, 2014, Zan Wu resigned as the registrant’s Chief Financial Officer, Treasurer and Secretary.

 (c) Appointment of New Officer

 
Effective April 18, 2014, Song Lv was appointed as the registrant’s Chief Financial Officer, Treasurer and Secretary to replace Mr. Wu.

Mr. Song has served as controller in the finance and accounting department of Henan Province Pingdingshan Hongli Coal & Coke Co., Ltd. (“Hongli”) since June 2010. All of the registrant’s business operations are conducted through Hongli in the People’s Republic of China. From April 2007 to November 2010, Mr. Song was Chief Financial Officer of Xinhe Investment Co., Ltd. Mr. Song has a bachelor’s degree in accounting from Northeastern University.

There is no family relationship between Mr. Lv and any of the registrant’s current directors, executive officers or persons nominated or charged to become directors or executive officers, or those of the registrant’s subsidiary. There are no transactions between the registrant and Mr. Lv that would require disclosure under Item 404(a) of Regulation S-K.

In connection with his appointment, Mr. Lv entered into an employment agreement with the registrant dated as of April 18, 2014, pursuant to which Mr. Lv will serve as the Chief Financial Officer, Treasurer and Secretary commencing April 18, 2014, for annual compensation of $120,000, payable in quarterly installments. Mr. Lv is also entitled to expense reimbursement. During his employment, Mr. Lv is subject to certain restrictive covenants, including (i) prohibition against engaging in any work that competes with the registrant and its business and soliciting customers, potential customers and employees of the registrant, and (ii) requirement to maintain the registrant’s confidential information.

Mr. Lv’s employment agreement terminates upon his death or disability. If Mr. Lv is unable to perform his duties for 60 days during any 12-month period, the registrant may also terminate the employment agreement upon 30-day written notice. The registrant may also terminate the employment agreement for cause, upon notice if at any time Mr. Lv commits (a) fraudulent, unlawful or grossly negligent conduct in connection with his employment duties; (b) willfully misconduct; (c) willful and continued failure to perform his duties; (d) any felony or any crime involving moral turpitude; (e) violation of any material policy of the Registrant; or (f) any material breach of any written agreement with the registrant. Mr. Lv may terminate his employment agreement immediately upon written notice if the registrant breaches its agreement with Mr. Lv. Either party may also terminate the employment agreement at any time upon 30-day written notice.

Item 4.01. Changes in Registrant’s Certifying Accountant.

 
Effective April 9, 2014, the registrant terminated Friedman LLP (“Friedman”) as its independent auditors. This action was approved by the Audit Committee of the registrant’s Board of Directors (the “Board”), and ratified by the Board.

The reports of Friedman on the registrant’s financial statements as of June 30, 2013 and 2012 and for the years ended June 30, 2013 and 2012 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

In connection with the audits of the registrant’s financial statements for the fiscal periods ended June 30, 2013 and 2012, and through April 9, 2014, there were: (i) no disagreements between the registrant and Friedman on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Friedman, would have caused Friedman to make reference to the subject matter of the disagreement in its reports on the registrant’s financial statements for such periods, and (ii) no reportable events within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

On April 9, 2014, the registrant engaged HHC as its independent registered accounting firm. During its two most recent fiscal years ended June 30, 2013 and 2012, and the subsequent interim period through the engagement of HHC on April 9, 2014, the registrant did not consult with HHC on (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on the registrant’s financial statements, and HHC did not provide either a written report or oral advice to the registrant that was an important factor considered by the registrant in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) the subject of any disagreement, as defined in Item 304 (a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

The registrant provided Friedman a copy of the disclosures contained herein and requested that Friedman furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not Friedman agrees with its statements in this Item 4.01. A copy of the letter dated April 11, 2014, furnished by Friedman in response to such request, is filed as Exhibit 16 to this Form 8-K.

PROSPECTUS SUPPLEMENT NO. 2

(To Prospectus dated November 6, 2013)

SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC.

11,384,566 shares of Common Stock

This Prospectus Supplement No. 2 is required to be delivered by certain holders of the above-referenced shares or by their transferees, pledges, donees or their successors in connection with the offer and sale of the above-referenced shares.

This Prospectus Supplement No. 2 supplements the Prospectus dated November 6, 2013 (the “Prospectus”) of SinoCoking Coal and Coke Chemical Industries, Inc. (the “Company”), as supplemented by Prospectus Supplement No. 1 dated November 20, 2013, with the following additions and changes:

(1) Update, amend and supplement the Company’s Prospectus dated November 6, 2013 with information in the Company’s attached Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2013 as filed with the Securities and Exchange Commission on February 19, 2014.

The attached information modifies and supersedes, in part, the information in the Prospectus. Any information that is modified or superseded in the Prospectus or any amendment or supplement thereto, shall not be deemed to constitute a part of the Prospectus except as modified or superseded by this Prospectus Supplement No. 2.  This Prospectus Supplement No. 2 should be read in conjunction with the Prospectus.

Second Quarter 2014 Financial Results

• Total revenue decreased to $13.2 million, as compared to $21.2 million.
• Net loss was $0.1 million or $(0.01) per diluted share, as compared to net income of $0.8 million or $0.04 per diluted share.

SinoCoking's Chairman and CEO, Mr. Jianhua Lv, commented, "Our fiscal 2014 second quarter performance was mainly due to a significant decrease in sales of coal products, which reflected ongoing weak market demand, despite winter generally being a high coal consumption season."

Mr. Lv added, "Approximately 95% of our revenue came from coke products and only 5% from coal products, as compared to approximately 51% and 49%, respectively, in the same period of fiscal 2013. This reflects changes to our operating strategy in order to adapt to market conditions, as current coal demand remains very weak due to over capacity of crude steel. Thus, we temporarily stopped raw coal and washed coal trading. On the other hand, we have begun selling coke and coke powder to Fangda Special Steel Technology Co., Ltd. ("Fangda Steel"), one of China's best-known special steel manufacturers, and we expect sales to Fangda Steel to steadily rise."

Mr. Lv continued. "Although gross profit as compared to the same period of fiscal 2013 decreased by 30% to $2.1 million, gross margin increased to 15.6% as we stopped coal trading, which tends to be a low margin business."

PINGDINGSHAN, China, Dec. 9, 2013 /PRNewswire-FirstCall/ -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK) (the "Company" or "SinoCoking"), a vertically-integrated coal and coke processor, today announced that Henan Province Pingdingshan Hongli Coal & Coke Co., Ltd. ("Hongli"), a China-based coal and coke producer that the Company controls through contractual arrangements, has signed "tripartite" agreements as follows:

• A grade II coke and clean coke sales agreement with Fangda Special Steel Technology Co., Ltd. ("Fangda") (Shanghai A-share listed: 600507), China's largest automobile spring steel producer, for monthly supply of 6,000 metric tons of grade II coke and 3,000 metric tons of clean coke. Monthly supply is expected to gradually increase over time to fulfill larger requirements by Fangda. 
• A coking coal supply agreement with a wholly owned subsidiary of Henan Shenhuo Group ("Shenhuo") (China Shenzhen B-share listed: 000933), one of the six largest state-owned coal enterprises in Henan Province. Per the terms of the agreement, Shenhuo will supply Hongli with the coking coal necessary to manufacture the grade II coke and clean coke for Fangda. 

As per the terms of these agreements, Hongli will be able to obtain coal from Shenhuo without using its working capital. Upon Hongli's delivery of coke products, Fangda will pay both Hongli and Shenhuo.

Shenhuo's coking coal production facilities are located 65 kilometers (approx. 40 miles) from Hongli's Baofeng plant. Due to such proximity, coal can be readily transported by trucks, and Hongli's purchase cost is expected to be substantially lower than coal purchased from suppliers outside of Henan. Additionally, Shenhuo's coking coal is a high-quality, high-bonding and high-yield coking coal with low ash and sulfur contents.

The Company estimates Fangda's current coke demand is more than 2 million metric tons annually, which is expected to increase to over 6 million metric tons annually in the near future. As such, the Company believes that its agreement with Fangda will generate steady revenue. The Company is seeking to sign similar supply agreements with other steel manufacturers to offset current soft market conditions.

SinoCoking's Chairman and CEO, Mr. Jianhua Lv noted, "Over the last several years, we have been exploring the availability of high quality coal resources, especially low-ash, low-sulfur and high-energy content coal. The agreement with Shenhuo will provide us with the desired coal to manufacture high-quality clean coke through coke sintering process at our Baofeng plant." 

Mr. Lv added, "By way of background, the Baofeng plant received approval to commence commercial production of our clean coke product in August 2013. Due to favorable reception from our customers who have used the product, we have been exploring strategic partnerships with large coal producers and steel enterprises in China to develop a hybrid vertical business model. We expect our "tripartite" arrangements with Shenhuo and Fangda to be the first of many other similar arrangements that we seek to build amongst the coal, coke and steel industries."

Mr. Lv concluded, "We remain committed to our goals and will continue to implement our ambitious business plan. During the last several quarters we have made tremendous efforts, which we believe should begin to yield results starting in fiscal 2014 second quarter."

First Quarter 2014 Financial Results

• Total revenue slightly decreased to $17.5 million, as compared to $17.6 million.
• Net income increased by 75.9% to $1.2 million or $0.05 per diluted share, as compared to $0.7 million or $0.03 per diluted share.

SinoCoking's Chairman and CEO, Mr. Jianhua Lv, commented, "The slight decrease in fiscal 2014 first quarter revenue was mainly due to decreased sales of coal products, offset by increased sales of coke products. Due to the ongoing mining moratorium, raw coal supply has been very limited and we continued to meet our coal requirements largely by purchasing coal, including from other provinces, at a higher cost driven by the supply shortage. We did not sell any raw coal and used all purchased coal (mainly washed coal) to manufacture coke and coke byproducts. While we currently anticipate the moratorium to end sometime in the first half of calendar 2014, there cannot be any assurance as to the exact timing. Demands for all other coal products were also soft, resulting in lower revenue from coal products overall.

"Our cost of revenue for the current fiscal first quarter decreased by 8.1%, mainly due to lower purchase price for washed coal used to manufacture coke and byproducts," continued Mr. Lv. "Lower cost of revenue resulted in substantially improved gross margin for the fiscal 2014 first quarter as compared to the same quarter of fiscal 2013. Additionally our selling, general and administrative expenses decreased by approximately 3.9% as compared to the same period of last year, due to lower consulting fees for the period."

Fiscal Year 2013 vs. 2012

• Total revenue decreased to $66.7 million, as compared to $78.9 million.
• Gross margin decreased to 12.3%, as compared to 19.2%.
• Income from operations decreased to $5.1 million, as compared to $12.0 million.
• Net income was $1.1 million or $0.05 per diluted share, as compared to $12.5 million or $0.59 per diluted share.

Discussing fiscal 2013 financial results, SinoCoking's Chairman and CEO, Mr. Jianhua Lv, noted, "The decrease in fiscal 2013 revenue was mainly due to decreased sales of coke, coal tar, raw coal, mid-coal, and washed coal, offset by increased sales of coal slurries as well as sales of coke powder and crude benzol, two new products that we introduced in fiscal 2013. Coke powder and crude benzol are byproducts of the coking process and have various industrial applications. Of note, we have been producing crude benzol at our leased Hongfeng plant since last April."

Mr. Lv continued, "In fiscal 2013, our revenue continued to suffer because of a very limited raw coal supply due to the ongoing mining moratorium, and we met our coal requirements largely by purchasing raw coal, including from other provinces, at a higher cost driven by the supply shortage. As a result, our overall production cost increased and gross margin decreased. We expect gross margin to remain depressed until the mining moratorium is lifted and we are able to resume operations at our coal mines. We currently anticipate the moratorium to end sometime in the first half of calendar 2014, although there cannot be any assurance as to the exact timing."

Recent business highlights:

Mr. Lv added, "In fiscal 2013 we took several steps to expand our current production capacity and product mix. Specifically:

• We upgraded technical capabilities at our Baofeng plant to reduce dependency on high-cost raw materials such as coking coal. The plant can now produce high quality coke and by-products using low cost raw coal, such as long flame coal. We also upgraded oven capabilities to improve their energy efficiency, capture additional by-products for refinement into high value-added chemical products, and conform to environmental requirements.
• We signed a leasing agreement to operate the Hongfeng plant for a period of one year. We are currently producing coke and coke byproducts such as crude benzol (since April) and purified coal gas (trial stage with commercial production to commence shortly), while additional byproducts such as sulfur and sulfur ammonia will be produced as we gradually increase production to full capacity.

In April 2013, we resumed construction of our new coking plant. Due to ongoing market conditions, however, we have once again slowed down construction, but plan to resume at full pace if and when the market improves."

Mr. Lv noted, "Additionally, to offset the weak demand for conventional coke, we plan to increase production of our clean coke product produced at the Baofeng plant and further expand our product offerings by recapturing additional coke by-products for refinement into high value-added chemical products. This strategy fits well with our business plan to focus on increasing our market share in China'scoal chemical industry which has been growing rapidly."

Mr. Lv. concluded, "We believe that SinoCoking is well positioned to take advantage of growth opportunities once the coke market recovers."

Third Quarter 2013 Financial Results

• Total revenue was $13.9 million, as compared to $16.8 million.
• Gross margin was 15.0%, as compared to 15.7%.
• Net income, including foreign currency transaction adjustment, was $1.2 million or $0.02 per diluted share, as compared to net income of $2.1 million or $0.07 per diluted share.

Mr. Lv added, "Over the last several quarters, we have seen a slight but steady improvement in coke demand, mainly from steel mills. Thus, since the beginning of fiscal 2013, we have taken steps to position SinoCoking to take advantage of market opportunities that may arise if demands for coal, coke and coke by-products recover in fiscal 2014. Such steps include:

Mr. Lv. concluded, "Due to the recent steps taken to increase production of coke and coke by-products, we expect our top and bottom lines to substantially improve in the final quarter of fiscal 2013 and in fiscal 2014. We currently have coke production capacity of 450,000 metric tons annually, including the 200,000 metric tons we are leasing. Once construction of our new facility is completed, our coking capacity will increase by approximately 1.2 million metric tons annually."

PINGDINGSHAN, China, May 1, 2013 /PRNewswire-FirstCall/ -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq: SCOK) (the "Company" or "SinoCoking"), a vertically-integrated coal and coke processor, today announced that trial production at its recently leased coke production facility began on April 24, 2013. As previously announced, the 200,000 metric ton facility is being leased by Henan Province Pingdingshan Hongli Coal & Coke Co., Ltd. ("Hongli") from Pingdingshan Hongfeng Coal Processing and Coking, Ltd., ("Hongfeng"), and is approximately 3 miles from Hongli's current coking facility and rail yard. Hongli (along with its subsidiaries) conducts all of the Company's business operations in China.

SinoCoking plans to improve both the efficiency of the coke ovens and the quality of the coke produced at this facility while gradually increasing production to full capacity. Coke by-products such as crude benzol, sulfur, sulfur ammonia and purified coal gas will be produced at the same time, thereby increasing the Company's product portfolio.

SinoCoking's Chairman and CEO, Mr. Jianhua Lv, noted, "Through operating the Hongfeng facility, we aim to gain and hone the skills needed to operate and manage its new type of coke ovens, which will be a valuable experience once our state-of-the-art coking facility is completed and becomes operational."

Mr. Lv added, "We have received approval from local authorities to increase that facility's designed annual production capacity from 900,000 metric tons to 1.2 million metric tons. Such increase, if implemented, would enable us to further expand our product offering by recapturing additional coke by-products for refinement into high value-added chemical products. This fits well with our business plan to focus on increasing our market share in China's coal chemical industry which has been growing rapidly."

Discussing recent developments in China, Mr. Lv concluded, "The recent steps taken by the central government to lift the one-year-old coal price control rule, coupled with record levels of coal imports, should give coal consumers more bargaining power when negotiating contracts with coal suppliers. Additionally, we believe that recent recovery of the steel and construction markets should positively affect coke and coke by-product prices going forward. We also believe that strategic decisions such as leasing the Hongfeng facility will put SinoCoking in a leadership position long into the future. We remain committed to implement our ambitious business plan to profitably grow our Company and in so doing, enhancing shareholder value."

Fiscal Year 2012 vs. 2011

• Total revenue increased by 6.2% to $78.9 million, as compared to $74.3 million.
• Gross margin decreased to 19.2%, as compared to 36.4%.
• Income from operations decreased to $12.0 million, as compared to $23.5 million.
• Net income, including foreign currency transaction adjustment, was $12.5 million or $0.59 per diluted share, as compared to $39.9 million or $1.90 per diluted share.

Mr. Lv continued, "Due to the ongoing mining moratorium, coal supplies in Henan Province remained limited as were production activities for all producers other than state-owned enterprises. Operations at our four coal mines remain halted as we continue to wait for clearance to resume operations. Thus far, no private coal mine operators have received clearance, and the timing as to when such clearance will be issued remains unknown."

Discussing coke manufacturing operations, Mr. Lv added, "Demand for coke remained soft for much of fiscal 2012. This was a result of the weak demand for steel, due to tighter governmental control of real estate and land development, as well as China's economic slowdown which negatively affected the country's heavy industries. However, we currently expect the market to recover in calendar year 2013."

Mr. Lv continued, "As a reaction to the weak coke market, we have slowed construction of our new state-of-the-art coking plant, located on a 460,000 square meter site adjacent to our current plant in Pingdingshan. Thus far, we have completed construction of the shallow foundation, an underground workshop and the furnace and chimney rack, and are in the process of installing the coal preparation, cooling, recycling, and auxiliary systems. We expect to ramp up construction once the coke market shows signs of improvement.

Mr. Lv. concluded, "We believe that SinoCoking is well positioned to take advantage of growth opportunities once the coke market recovers in 2013."

PINGDINGSHAN, China, September 14, 2012 /PRNewswire/ -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq: SCOK) (the "Company" or "SinoCoking"), a vertically-integrated coal and coke processor, announced today that Henan Province Pingdingshan Hongli Coal & Coke Co., Ltd. ("Hongli Coal & Coke") has signed a supply agreement with Datong Coal Mine Group, Inc. (Shanghai Stock Exchange: 601001) ("Datong Group") (website: http://english.dtcoalmine.com), a state-owned coal producer based in the province of Shanxi. Hongli Coal & Coke is a China-based coal and coke producer that the Company controls through contractual arrangements.

Per the terms of the agreement signed on September 6, 2012, Datong Group will supply Hongli Coal & Coke with up to 120,000 metric tons of thermal coal through the end of September. The coal will be transported by sea either from the Port of Qinghuangdao or the Port of Jingtang, both in Hebei Province. The Company believes that Datong Group is an ideal candidate for steady coal supply, and through this agreement, the Company is seeking to establish a long-term business relationship with Datong Group.

SinoCoking's Chairman and CEO, Mr. Jianhua Lv noted, "As previously announced, we have been exploring the availability of coal resources in northwest China in order to boost our access to raw coal and minimize the ongoing effect of the mining moratorium in Henan. Datong Group is one of China's largest coal producers and is well-known domestically and internationally for its low-ash, low-sulfur and high-energy content coal.

"Our business plan is to continue to diversify our product portfolio to take advantage of market conditions for coal and coke products. Due to our vertically integrated business model, we will continue to optimize our product mix, and we plan to use the purchased coal in one or more of the following ways:

• Resell it to power plants based in economically developed regions such as Beijing, Tianjin, Zhejiang, Shandong,Fujian, Jiangsu and Guangdong. The purchased thermal coal meets the coal blending requirements used by all major power plants in China and the market is broad;
• Process it and sell it as washed coal when market conditions are favorable; and/or
• Manufacture at our coking facility and sell it as metallurgical coke (used for steel manufacturing) or as chemical coke (used for synthesis gas production). Of note, due to China's inflation control policy, the soft demand for coke and coke by-products in China continues and we expect the market to recover in 2013 calendar year. As a result, we have completed the upgrade of our existing coking facility with a production capacity of 250,000 metric tons, and continue to make progress on the construction of our new 900,000 metric ton coking facility."

Mr. Lv concluded, "We remain committed to implement our ambitious business plan, having as a goal the increase of shareholder value. We will continue to explore additional opportunities by signing new agreements with coal producers in other provinces and we look forward to report our progress in the upcoming months."

Fiscal 2012 Third Quarter

• Revenue decreased by 15.4% to approximately $16.8 million from approximately $19.9 million.
  • Coal and coke products accounted for 48.2% and 51.8% of revenue, respectively, as compared to 55.2% and 44.8%, respectively in the same periods of last year.
  • Volume of coal products sold decreased by 42.5%, while volume of coke products sold increased by 2.7% from a year ago.
• Gross margin decreased to 15.7%, as compared to 36.4%.
• Income from operations decreased to $1.9 million from $6.3 million.
• Net income, including the foreign currency transaction adjustment, was $2.1 million or $0.07 per diluted share, as compared to $19.8 million or $0.81 per diluted share.

Discussing mining operations for the 2012 three and nine month periods, SinoCoking's Chairman and CEO, Mr. Jianhua Lv noted, "Coal supplies in Henan Province remained limited as were production activities for all producers due to the ongoing mining moratorium. Since the provincial-wide mining moratorium imposed in June 2010, our Hongchang mine has been operating at approximately 50% capacity, while operations at our other three coal mines (acquired in August 2011) were halted as these mines were waiting to receive clearance from local authorities to commence operations. As required by provincial guidelines, Hongchang mine also halted operations in early September 2011 to complete certain mine engineering work and safety upgrades, which were completed by the end of that month. However, due to an accident inNovember 2011 at one of the mines owned by Yima Coal Group, a state-owned enterprise and one of the six provincial level consolidators in Henan, all mid-scale mines in Henan province, including our four mines, were ordered to shut down their operations and undergo additional safety checks and inspections. Thus far, local authorities have not issued clearances to mines to resume operations and the timing as to when such clearances will be issued remains unknown."

He continued, "Due to the inadequate raw coal supply in Henan province, and due to the halt of operations at our Hongchang mine, as of September 2011 we have met our coal requirements largely by: (a) using the raw coal and washed coal we had accumulated over the last few quarters in anticipation of the commencement of operations of new coking facility which is still under construction and (b) purchasing raw coal from other provinces, such as Gansu, Shanxi and Inner Mongolia. As a result of these purchases, for the three and nine month periods ended March 31, 2012, our cost of raw coal increased and our margins decreased. We don't expect a return to historical margins until the mining moratorium for mid-size coal producers in Henan province is lifted."

Mr. Lv added, "In the meantime, due to our vertically integrated business model, we have been able to continue to optimize our product mix and take advantage of market conditions for coal and coke products. Specifically, as compared to the 2011 third quarter and nine month periods:

GeoTeam® Note: Second quarter 2011 vs. 2010 Adjusted EPS was $0.07 vs. $0.22

PINGDINGSHAN, China – December 23, 2011 - SinoCoking Coal and Coke Chemical Industries, Inc. (NASDAQ: SCOK) (the "Company" or "SinoCoking"), a vertically-integrated coal and coke processor, today provided a business update relating to the construction of its new coking facility and coal mine production.

Mining Activities Due to an accident at one of the mines owned by Yima Coal Group, a state-owned enterprise and one of the six provincial level consolidators in Henan, all mid-scale mines are required to undergo mandatory safety checks and inspections by relevant authorities before receiving clearance to resume coal mining operations. This requirement applies to all SinoCoking mines, including Hongchang and Xingsheng coal mines which were previously awaiting governmental confirmation to resume operations. At present, the Company expects to receive clearance for its four coal mines in spring 2012.

SinoCoking’s Chairman and CEO, Jianhua Lv noted, “We are disappointed that factors beyond our control caused delays in the completion of the new coking facility and the resumption of coal mining operations at full capacity. We have a dedicated team of construction workers, technicians and engineers who are working around the clock to expedite the construction of the coking facility and we will continue to provide investors with updates until construction is completed. Additionally, we are working closely with authorities in hopes that the permits and clearance notices for our four mines can be expedited so that we can resume coal mining operations at full capacity as soon as possible.”

First Quarter 2012 Results

• Revenue increased by 70.3% to $22,151,334 from $13,008,462, due to an increase in all product categories in terms of both sales volumes and selling prices except for the slight decrease in the raw coal sales volume.
• Net income, including the change in fair value of warrants, was $8,308,713, or $0.39 per diluted share as compared to $15,481,998, or $0.73 per diluted share(1).
• Excluding the change of fair value of warrants, net income increased by 106.4% to $5,288,991, or $0.25 per diluted share as compared to $2,562,323, or $0.12 per diluted share

Dear Shareholders:

Fourth Quarter and Full Year 2011 Results

GeoTeam® Note: 2011 vs. 2010 Adjusted EPS

Full Year: $0.80 vs. $0.93

Fourth Quarter: $0.23 vs. $(0.02)

From Press Release:

inoCoking's Chairman and CEO, Mr. Jianhua LV noted, "In fiscal 2011, we continued to try to optimize our product mix to take advantage of favorable market opportunities. Our revenue from the sale of coke and coal products (other than raw coal) increased in response to market demands. However, raw coal sales volume declined due to the continuing supply shortage created by the provincial-wide mining moratorium in connection with the mine consolidation program. The coal supply situation is reflected in our product mix, with 53% of fiscal 2011 total revenue coming from coke products, as compared to 49% in fiscal 2010, and 47% from coal products in fiscal 2011 as compared to 51% in fiscal 2010.

"The market drivers that have been in effect for the past two years should continue to have a direct impact on our operations. These drivers are:

• The continuing impact of mine consolidation and mining moratorium in Henan on the availability of metallurgical coal in the region, and on the prices of coal and coke products;
• The acceleration of government-mandated closure of small-sized and less-efficient coking facilities; and
• The central government's continuing efforts to provide economic stimulus to maintain momentum and growth in domestic consumption."
  

He went on to say, "Our first initiative, the construction of a new state-of-the-art $60 million coking facility is scheduled to be completed by December 2011, with production to begin shortly thereafter. This new facility is adjacent to our current coking plant in Pingdingshan, and as of the end of August we completed construction of the shallow foundation, an underground workshop and the furnace and chimney rack, and are in the process of building furnaces and installing equipment and machineries. When completed, the new plant should have coke-producing capacity of up to 900,000 metric tons per year, as well as the ability to generate power for its own use and/or sale, and distill chemicals such as crude benzol, sulfur and ammonium sulfate from byproducts of the coking process. We also intend to produce purified coal gas at this plant to sell as a fuel source to local residents through the state-owned gas grid."

Mr. Lv added, "Additionally, we completed our acquisitions of 60% of the operators of Shuangrui and Xingsheng coal mines and 100% of the operator of Shunli coal mine in May 2011. Since then, Xingsheng coal mine, as well as our Hongchang coal mine, has received clearance to resume coal production, and we are currently preparing Shuangrui and Shunli coal mines to do the same."

Mr. Sam Wu, SinoCoking's Chief Financial Officer noted, "Historically, funding for our business activities has been mainly provided by cash flow from operations and short-term bank loan financing. However, our acquisitions and new coking plant have and are expected to require additional capital resources. We have access to an aggregate of approximately $55.7 million (RMB 360 million) under a medium-term loan, and the credit to issue approximately $14 million bank guaranteed notes under our Hongli and Hongchang affiliates, with the term of 50% cash deposit of the face value in advance. Net cash used in investing activities for fiscal 2011 was $65.2 million, including approximately $34.9 million in connection with acquisitions, approximately $3.6 million for site expansion of our new coking plant, and approximately $15.5 million towards equipment and machinery purchases for the new coking plant."

Concluding, Mr. Lv noted, "We remain committed to implement our ambitious business plan and continue to profitably grow our Company. We look forward to report our progress in the upcoming months."

PINGDINGSHAN, China, May 19, 2011 /PRNewswire-Asia/ -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK) (the "Company" or "SinoCoking"), a vertically-integrated coal and coke processor, today announced that effective May 17, 2011, the Audit Committee of its Board of Directors appointed Friedman LLP as the Company's new independent auditor, replacing the firm of Frazer Frost LLP.

Friedman LLP will audit the Company's consolidated balance sheet and the related consolidated statements of operations, shareholders' equity and comprehensive income, and cash flows for the year ending June 30, 2011.

The decision to change auditors was not the result of any disagreement between the Company and Frazer Frost LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

Third Quarter Results:

• Revenue increased by 30.3% to $19,872,461 from $15,247,494 due to higher prices of coke and coal products largely driven by the coal supply shortage, as well as increased coal tar and washed coal sales, although sales volumes of coke and raw coal decreased.
• Revenue from the sale of coal products increased by 66.8% to $11.1 million while total metric tons sold decreased by 3.7%.
• Revenue from the sale of coke products increased by 2.7% to $8.9 million while total metric tons sold decreased by 4.9%.
• Average selling prices for raw coal, coal tar and coke increased by 20.9%, 10.91% and 7.76%, respectively.
• Gross margin decreased to 36.4% as compared to 37.0%.
• Pre-tax income increased to $18,360,914, as compared to a loss of $35,592,355.
• Including the change in fair value of warrants, net income was $17,138,441, or $0.81 per diluted share, as compared to a net loss of $36,876,262, or $2.39 per share.
• Excluding the change in fair value of warrants, net income increased to $4,947,206, or $0.23 per diluted share as compared to $2,993,400, or $0.17 per diluted share

SinoCoking's Chairman and CEO, Mr. Jianhua Lv noted, "Our operating results for the third quarter were again impacted by the government's plan to consolidate small- and mid-sized coal mines and the related temporary moratorium of mining operations.   As this has been a massive undertaking and the deadline to complete the consolidation has been extended to the end of 2011, we believe that we, along with other consolidators, now have the time needed to work through governmental administrative procedures."

PINGDINGSHAN, China – March 31, 2011 - SinoCoking Coal and Coke Chemical Industries, Inc., today announced that the March 31, 2011 deadline initially set by the Henan Provincial Government to complete the consolidation of small- and mid-sized coal mines in that province has been extended to the end of 2011.  The new deadline gives consolidators, including the Company, the time needed to work through governmental administrative procedures and complete the consolidation process.

By way of background, a plan was initiated in late 2009 by the Henan Provincial Government to consolidate small- and mid-sized coal mines with annual production capacities of 150,000 to 300,000 metric tons.  The objectives of this consolidation are to upgrade existing operations, improve employee working conditions, upgrade safety standards, increase output, and protect the environment.

Rodman and Renshaw on SCOK                                                  2/22/2011

F2Q11 Review  

SinoCoking Coal and Coke Chemical Industries (“SinoCoking,” Ticker: SCOK, Market Perform) reported its F2Q11 financial results. Total revenue for the quarter was $16.7million, up 13.4% YoY, but below our estimate of $18.4 million. Operating income came in at $6.3 million, up 10.7% YoY, beating our estimate of $3.3 million. Non-GAAP net income for the quarter (excluding change in fair value of warrants) was $4.5 million, or $0.21 per diluted share, beating our respective estimates of $2.1 million and $0.10. As of December 31, 2010, the company had $32.6 million of cash and restricted cash.

F2Q11 Financial and Operation Highlights 

During the quarter, SinoCoking booked $9.5 million of revenue from its coke products, slightly higher than our expectation of $9.1 million. The performance of the coal products segment was a disappointment however. With an actual revenue figure of $7.2 million, it was clearly below our estimate of $9.3 million. The company cited a relative lack of coal supply from Zhengzhou Coal Group (due to overall industry coal shortage) as a major reason for this shortfall. That being said, the overall top line miss was more than compensated by the higher than expected gross profit of $7.1 million, above our estimate of $5.1 million. Actual gross margin, as a result, reached 42.5%, well above our expectation of 27.9%. Operating expenses also came in lower than expected. Selling expenses during the quarter were merely $71,447, less than half of our estimate of $0.2 million. G&A expenses came in at $0.7 million, also below our previous projection of $1.7 million. These were the major contributing factors to the much better than expected bottom line results. 

SinoCoking indicated that the construction of its new coking facility is moving ahead and, when completed, can bring the company’s total annual coking capacity to 1.1 million MT. It also announced that its cost estimate for the construction has been reduced by $10 million to $60 million. 

According to the company, on December 30, 2010, SinoCoking set up Henan Zhonghong Energy Investment Co., Ltd. (“Zhonghong”), a limited liability company for the purpose of engaging in coal mine acquisitions pursuant to a planned joint-venture with Henan Province Coal Seam Gas Development and Utilization Co. (“Henan Coal Seam Gas”), a state-owned enterprise. We believe the forming of Zhonghong was in anticipation of the government’s consolidation plan which requires smaller mining companies to reach one-million metric tons (MT) of aggregate annual production capacity threshold by the end of March 2011 in order to continue operation. In our opinion, through Zhonghong, SinoCoking could form joint-ventures with the larger state-owned enterprise that could bring in existing capacity well above the one-million MT threshold, thus enabling SinoCoking to satisfy the government consolidation requirement. That being said, the company, in its earnings press release and conference call, indicated that it planned to complete various coal mine acquisitions so it would reach the one-million MT capacity requirement on its own before March 31. We certainly hope this will become a reality.


Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

GeoTeam® note: EPS for the the December quarter was $0.21 after adding back change in fair value of warrants.(add back $0.54).

General. With coal production throughout Henan Province significantly affected by the ongoing consolidation initiative throughout the three and six months ended December 31, 2010, coal supply remained tight during these periods. Since the shutdown of mining operations in late June 2010 in connection with an industry-wide safety inspection prompted by the consolidation initiative, some mines (including our Hongchang Mines) were allowed to resume operations in late 2010, albeit at only 50% capacity. Coupled with the seasonal spike in heating demand, however, such limited resumption of coal production did not alleviate the coal supply situation, which we believe will continue until consolidation ends and coal outputs can resume at pre-consolidation levels.

Based on currently available information from the provincial government, the consolidation initiative that began in late 2009 is expected to conclude by the end of March 2011. Through Zhonghong Investment, we are currently exploring an opportunity to participate in the consolidation initiative under a joint-venture with Henan Coal Seam Gas and may ultimately carry out and complete our previously announced acquisitions under the framework of this joint-venture in lieu of proceeding on our own. As of the date of this report, however, no such decision has been made and the joint-venture has not been finalized.

Rodman & Renshaw on SCOK

F1Q11 results update 

SinoCoking Coal and Coke Chemical Industries (“SinoCoking”, Ticker: SCOK, Market Perform) announced its fiscal 1Q11 results that missed our revenue estimate but beat our bottom line projection. Revenue for the quarter was $13.0 million, below our estimate of $14.4 million. Gross profit was $4.6 million, well above our estimate of $2.2 million. Adjusted net income was $2.6 million, above our estimate of $0.7 million. This translates to non-GAAP EPS of $0.12 for the quarter, exceeding our expectation of $0.03. At the end of the quarter, SinoCoking had $6.2 million of cash and $27.5 million of restricted cash.

Operation update

The above-expectation bottom line performance was due in large part to the almost across-the-board increase in coal product prices during the quarter. A combination of factors that included an expected cold winter, the ongoing government coal industry consolidation that limited coal production output, and the fact that China has been entering a more inflationary environment in general, contributed to the coal price increase. We believe the trend of high coal product prices will continue in the foreseeable future. The company also increased its coke production during the quarter to meet increasing demand. The construction of its new 900K-capacity coking facility is ongoing and the target completion date is in March 2011. When completed, the new plant could generate $100-$110 million of annual revenue and $20-$25 million of net income. In July, SinoCoking announced two coal mine acquisitions with a combined annual production capacity of 300,000 MT. According to management, the company is in active discussions with 20 potential mining company targets. It currently plans to complete four more acquisitions before the end of March, and nine in total by the end of F2011. SinoCoking announced in September that it entered into a long term agreement with state-owned Zhengyun Coal to purchase up to 3 million MT of raw and washed coal per year. The agreement not only could secure sufficient coal for SinoCoking’s coking production, but also allowed the company to generate trading revenue using the purchased coal. We thus expect SinoCoking will start to generate trading revenue as early as in F2Q11.

Adjusting estimates and maintaining Market Perform rating 

In light of the quarterly report, we are adjusting our financial projections for SinoCoking. We now expect the company will report FY2011 revenue of $108.4 million, up 83.6% from FY2010, and gross profit of $35.1 million in FY2011, up 56.4% from FY2010. We estimate non-GAAP net income will reach $16.0 million in FY2011, translating to non-GAAP EPS of $0.75. We are maintaining our Market Perform rating on the shares of SinoCoking. We believe the company enjoys a very supportive market environment accentuated by significant increase in coal product prices, however we also acknowledge the near term uncertainty with regard to its coal mine moratorium and acquisition progress. We expect much greater clarity on the company’s business future by the end of next March as it represents the deadline for the company to reach the government mandate of 1 million-MT annual coal production capacity threshold. 

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

• SinoCoking's revenues decreased by $5,120,999 or 28.25%, in three months period ended September 30, 2010, with total revenues of $13,008,462 as compared to $18,129,461 for the same period ended September 30, 2009.

• Adjusted net income for the three-month period ended September 30, 2010 was $2.6 million compared with $6.5 million in the same period in 2009.

• Adjusted diluted EPS were $0.12 for the three months ended September 30, 2010, and $0.50 for the three months ended September 30, 2009.

"During the first quarter of fiscal 2011, we saw an increase in coke demand as well as in prices for almost all product categories", said Mr. Jianhua Lv, Chairman and Chief Executive Officer of SinoCoking. "We continue to feel the negative effects of the current provincial mining moratorium on our business but are focusing our efforts on areas of the business we can control. We are encouraged by the progress we are making on both the construction of our new 900,000 metric ton coking facility our previously announced acquisitions. Furthermore, we continue to see a healthy overall market demand for coal, coke, and related products across China, and are confident SinoCoking is in a very strong position to take advantage of these market conditions moving forward".

Starting in the second quarter of fiscal 2010, the Henan provincial government moved forward to consolidate all small-and-mid-sized coal mines with annual production capacity between 150,000 metric tons and 300,000 metric tons, and a moratorium on mining is imposed on these mines until such time when the consolidation process is completed. While the government's intention to improve mining efficiency and reduce accidents through consolidation is laudable, it has also significantly reduced available coal supply and drove up coal prices.

As the only non-state-owned coal company in Pindingshan to be granted consolidator status, SinoCoking remains in active discussions with 20 non-state-owned mining companies potentially representing 3 million metric tons of combined annual capacity. The Company presently intends to complete 4 acquisitions before March 31, 2011, and 9 in total by the end of fiscal 2011. Including the two acquisitions announced in July with a combined annual production capacity of 300,000 metric tons, SinoCoking will potentially have 550,000 metric tons of total mining capacity. The Company is making its best effort to reach the aggregated one million metric ton annual capacity threshold.

Fiscal Year 2011 Guidance:

Management expects the Company to generate $114.9 million in revenues and $16.8 million of net income in fiscal 2011, an increase of 94.8% and 12.8%, respectively, excluding the effect of changes in the fair market value of warrants.

This guidance assumes the new 900,000 metric ton coking facility to commence production in June 2011 and average 60% capacity utilization in the fourth quarter of fiscal 2011. It also assumes the Company closes additional mining acquisitions, adding at least 600,000 tons of annual capacity, and that all of its mines are allowed to resume full production by the end of March 2011. Market price assumptions are based upon current prices and are subject to change. There can be no guarantees that this pricing will be accurate and any variances will cause deviations in guidance.

    Fiscal Year 2011 Cash Flow Projections

    Cash and restricted cash: 6/30/10      $ 40.3 million
    Cap ex                                 $ 56.8 million
    Acquisitions                           $ 12.8 million
    Cash flows from operations             $ 17.0 million
    Bank lines of credit                   $ 42 million plus $29 million note

Rodman & renshaw on Sinocoking Coal & Coke

F4Q10 results update SinoCoking Coal and Coke Chemical Industries (“SinoCoking”, Ticker: SCOK, Market Perform) announced its fiscal 4Q10 results earlier today. Revenue was $10.9 million, somewhat higher than the company’s guidance of $10 million and our estimate of $10.2 million. Gross profit was $1.7 million, below our estimate of $3.8 million, mostly due to lower coke prices and higher costs for coal purchased from third parties. Adjusted net income was $0.6 million, well below the company’s late-August guidance of $2 million and our estimate of $2.1 million. This also translates to non-GAAP EPS of $0.03 for the quarter, below our expectation of $0.09. 

New FY2011 guidance SinoCoking also provided guidance for its fiscal year 2011. Management now expects the company will generate $114.9 million of revenue and $16.8 million of pro forma net income for the year, assuming the new 900,000-metric ton coking facility will commence production in June 2011 and average 60% capacity utilization in F4Q11. It also assumes the company would complete additional mining operations, adding at least 600,000 tons of annual capacity, and all the mines could resume full production by March 31, 2011. 

Operation update With regard to the moratorium on the production of its Baofeng mine, SinoCoking now indicates that it was shut down, together with all other mines with annual production capacities between 150,000 and 300,000 metric tons, due to Henan provincial authorities’ consolidation plan. Under the consolidation plan, mining companies need to reach one million metric tons of aggregate annual production capacity thresholds by the end of March 2011 in order to resume operations. Management has expressed optimism regarding its prospect of reaching such a goal. SinoCoking also announced in September that it signed a long term agreement with Zhenyun Coal Distribution Co. to purchase 3 million metric tons of raw and washed coal per year. The company can utilize this purchased coal for its processing, coking, and trading operations. 

Adjusting estimates and maintaining Market Perform rating In light of the new guidance, we are adjusting our financial projections for SinoCoking. We now expect the company will report FY2011 revenue of $126.3 million, up 113.9% from FY2010. Gross profit, in our model, will reach $33.8 in FY2011, up 50.7% from FY2010. We also estimate non-GAAP net income will reach $16.4 million, or $0.74 per diluted share in FY2011. We are maintaining our Market Perform rating on the shares of SinoCoking. While we believe the company remains a growth story when considering its coal mine acquisition strategy and its new coking capacity expansion, we acknowledge the near term uncertainty with regard to its coal mine moratorium and acquisitions. 

Risks include 1) the uncertainty regarding whether or when the current moratorium will be lifted; 2) dependence on cyclical coal and coke markets; 3) operations dependent on ability to continue acquiring or developing suitable coal mines; 4) uncertainty of capital availability; 5) operation risks inherent to coal mining; 6) safety incident risks; 7) extensive government regulation; and 8) customer concentration risks.

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Fiscal 2010 Results of Operations

• SinoCoking’s revenues increased by $7,631,498 or 14.85%, in fiscal 2010, with total revenues of $59,027,490 as compared to fiscal 2009 with total revenues of $51,395,992.

These increases were caused primarily by a strong increase in coal product sales revenue, offset by a moderate decrease in revenue from coke sales. Starting from the second quarter of fiscal 2010, the Henan province government started its consolidating process for all local private coal mines which included the temporary closure of coal mines so that safety inspections could take place. Such closures resulted in a decrease in the available coal supply in the market and prices for coal increased accordingly. In response, the Company started to increase its coal products sales in order to maintain its profitability. In the second half of the fourth quarter of fiscal 2010, the adverse impact of the Chinese government’s policy of slowing down the domestic economy began affecting the demand for our coke products, and thus the Company’s revenue from coke sales decreased. In the fiscal 2010, SinoCoking increased its coal product revenue by 52.63% as compared to the same period ending June 30, 2009. In the second half of the calendar year 2009, the market demand for coke products rebounded, and the market prices for coke also began to recover, peaking at $230 per ton in December 2009. Shortly after the end of 2009, local market prices for coke products began to moderate, fluctuating between $200 to $230 per ton. In response to these trends, in the first calendar quarter in 2010, the Company resumed coke production and sales, increasing production significantly though not to the levels achieved in the same period in 2009. However, in the fourth quarter of fiscal 2010, weak demand for coke affected the Company’s coke sales, and thus the contribution of coke sales to the Company’s total revenues was less than in fiscal 2009. However, the coke market, after June 30, 2010, subsequently recovered due to the decreased supply of coal material, and therefore both the demand and the price of coke increased. Management anticipates that this trend will continue, and the coke market will recover in the near future.

• Excluding non-cash expenses, adjusted net income of the fiscal 2010 and 2009 were approximately $15 million and $17 million, respectively, and resulted in $0.95 and $1.29 basic earnings per share, and $0.94 and $1.29 diluted earnings per share for the fiscal 2010 and 2009, respectively.

The decrease of our adjusted net income for fiscal 2010, as compared with the fiscal 2009, was primarily because of the approximately $1.4 million decrease in gross profit, $1.5 million expense related to reverse merger and equity financing expense incurred after the Company went to public, and a $1 million increase of the provision for income tax as stated above.

In the quarter ending December 31, 2009, the Company obtained a letter of intent from the Pingdingshan Rural Cooperative Bank, confirming the bank’s intention to loan the Company up to 300 million RMB (approximately USD $42 million), unsecured at an annual interest rate of 5.2% to finance the construction of its new coking facility. This letter of intent expired on June 30, 2010. In the first quarter of 2010, SinoCoking raised $44 million in gross proceeds from the sale of common stock and warrants.

SinoCoking’s management presently anticipates that its recent equity issuance, its access to credit, and cash flow from operations, together will provide sufficient capital resources to pursue and complete the construction of its new coking facility and proposed mine acquisitions. We intend to utilize existing cash, cash flow from operations and bank loans, to finance the cash portion of the consideration to be paid for our acquisitions. We may consider the issuance of additional equity securities in order to finance our mine acquisitions.

Courtesy of Rodman & Renshaw; More Color regarding the GeoTeam's breaking alert on SCOK @ $13.00 yesterday afternoon: (The stock closed the day at $11.62)

SinoCoking Coal and Coke Chemical Industries announced yesterday an operation ban on its coal mining operations by the government. This was due to couple mining incidents involving some privately-held mining companies in Pingdingshan, the city in which SincoCoking is also located.

Based on the information available to us, we are certain that the incidents did not involve SinoCoking. However, all coal mining operations in Pingdingshan have been shut down, including 100% of SinoCoking’s OFFICIAL mining activities. It is now anybody’s guess when the government will lift the ban. Based on our experience and estimate, we do not expect the ban will be lifted in any immediate future, such as a week or two. In fact, we will not be surprised if the ban lasts for more than 2-3 quarters. We also do not anticipate the company will generate any coal mining revenue during the entire period of the ban.

That being said, based on our information, not all the company’s UNOFFICIAL coal mining activities have stopped. SinoCoking has maintained and will continue to maintain some of its mining activities until it is told otherwise. While these unofficial mining operations cannot be reflected in revenue, we believe they could be used to support the company’s coking production, which is still ongoing. Regardless, we anticipate SinoCoking’s FY11 financial performance will fall dramatically short of our previous estimates.

Maintain Market Perform rating At this time, we choose to wait for greater details and clearer guidance from the company and the government before we can update our financial model. We are maintaining our Market Perform rating on the shares of SinoCoking.

Major risks include 1) dependence on cyclical coal and coke markets; 2) operations dependent on ability to continue acquiring or developing suitable coal mines; 3) uncertainty of capital availability; 4) operation risks inherent to coal mining; 5) safety incident risks; 6) extensive government regulation; and 7) customer concentration risks.

On August 10, 2010 Hongli Coal & Coke Co., Ltd. entered into two Equity Interests Transfer Agreements, both dated as of August 10, 2010:

• The first Agreement is entered into with Dongping Wu, Xiaoling Zhao and Dianqing Li who collectively own 100% of the equity interests of Baofeng Shuangrui Coal Co., Ltd. (“Shuangrui”), to acquire 60% of Shuangrui equity interests held by them (the “Shuangrui Equity Interests”).
  
• The second Agreement is entered into with Mingxun Du and Xingling Li who collectively own 100% of the equity interests of Baofeng Xingsheng Coal Co., Ltd. (“Xingsheng”), to acquire 60% of Xingsheng equity interests held by them (the “Xingsheng Equity Interests”).

Hongli operates the Registrant’s China-based coal and coke producing business, and is controlled by the Registrant through a series of contractual arrangements between Hongli and Pingdingshan Hongyuan Energy Science and Technology Development Co., Ltd., a wholly-owned subsidiary of the Registrant.

Some material terms of the Agreement for the Shuangrui Equity Interests are as follows:

   1. Hongli shall acquire the Shuangrui Equity Interests for consideration of 42 million Renminbi (“RMB”)

   2. If the total coal output of Shuangrui for the twelve-month period from the completion of the Modification Registration is less than 150,000 metric tons, then Hongli shall be entitled to an additional percentage of Shuangrui equity interests held by the Shuangrui Owners equal to 16.67% of the Shuangrui Equity Interests, or liquidated damages from the Shuangrui Owners equal to 16.67% of the Consideration if such equity interests cannot be timely transferred to Hongli.

   3. If the total coal reserves of Shuangrui Coal Mine as of the Effective Date is less than 2 million metric tons, as determined in accordance with the standards of the Securities Act Industry Guide 7, then Hongli shall be entitled to an additional percentage of Shuangrui equity interests held by the Shuangrui Owners equal to 16.67% of the Shuangrui Equity Interests, or liquidated damages from the Shuangrui Owners equal to 20% of the Consideration if such equity interests cannot be timely transferred to Hongli. If the total reserves of Shuangrui Coal Mine is less than 400,000 metric tons, then Hongli may cancel the Agreement and be reimbursed the full amount of Consideration paid through such time of cancellation.

The material terms of the Agreement with the Xingsheng Owners for the Xingsheng Equity Interests are identical to those of the Agreement for the Shuangrui Equity Interests as described above.

Sinocoking Coal shares have continued their strong momentum into this morning's trading session. Recall, we added the stock to our data base on February 10, 2009 at $4.30.  At near $20.00, SCOK now trades a P/E of 15 on June ending 2010 forecasted implied EPS of $1.26.  Investors should be aware that as SCOK enters 2011, it may require financing to achieve its aggressive expansion plans to expand capacity.

Now, i am curious if GeoBargains LLEN and SGZH will follow suit.

A short-term conclusion on SGZH is a little tough since the  company has little  IR and had, what appears to be, some temporary issues that negatively impacted its 2009 third quarter results. Still, the company trades at a P/E of 5 and a low price to book multiple.

LLEN trades at a P/E of 9 on April ending 2010 EPS guidance of $0.94  and is well into its expansion strategy.

^a Adjusted for a 25% tax rate.

Other  Chinese coal companies  include PUDA, YZC, CCOZF.

Share Update:

Post Merger Share Calculation:

     405,709: Pre reverse merger outstanding shares (After Reverse Split)
13,117,952: Shares of Common Stock issued in connection with merger.
 1,180,892: Private placement financing shares
    590,446: Warrant shares with an exercise price of $12.00

Updated GeoTeam® best effort calculation of total post reverse merger outstanding shares assuming full conversions: 15,294,999

2009 Proforma EPS: $1.11(June Fiscal Yr.)
Trailing 12 months EPS: $1.34
2010 Proforma EPS estimate: $1.26

Became public via a reverse merger on February 5th, 2010.

Company Details

• SinoCoking currently holds mining rights for approximately 2.5 million tons of coal from mines located in central China.
• SinoCoking began producing metallurgical coke in 2002, and since then has expanded its production to become an important supplier to regional steel producers in central China.
• Coke, which is an essential ingredient in steel-making, is manufactured in SinoCoking`s on-site facilities by heating selected coal with certain thermal and chemical properties at extremely high temperatures in an oxygen-free environment.
• For the year ending June 30, 2009, SinoCoking produced and sold 154,631 tons of coke, 55,360 tons of washed coal, and 72,923 tons of raw coal, and generated $51 million in revenue from sales consisting primarily of these products.
• During its 2009 fiscal year, SinoCoking had audited net income of approximately $17 million on a GAAP basis."
• Currently, the demand from our customers significantly exceeds our current production capacity, and we think that demand from Chinese industrial purchasers will continue to increase.

Post Merger Share Calculation:

• 405,709:Pre reverse merger outstanding shares (After Reverse Split)
• 13,117,952:Shares of Common Stock issued in connection  with merger. 

GeoTeam® best effort calculation of total post reverse merger outstanding shares assuming full conversions:  13,523,661

2009 Proforma EPS: $1.26

Note: The reverse merger agreement allows for The issuance of shares in connection with a financing which may consist of debt or equity or a combination of both, involving the issuance of the Company’s securities for $50 million to $75 million in gross proceeds.