----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

|  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------|

| Nevada                          |   | 41-2079252                           |
|---------------------------------|--------|--------------------------------------|
| (State or other Jurisdiction of |   | (I.R.S. Employer Identification No.) |
| Incorporation or Organization)  |   |                                 |

| Large accelerated filer   ̈ |   | Accelerated filer  x |   | Non-accelerated filer   ̈(Do not check if a smaller reporting company) |   | Smaller reporting company   ̈ |
|--------------------------------------|--------|---------------------------|--------|---------------------------------------------------------------------------------|--------|----------------------------------------|

----

|                                |                                                                                                                                            | Page   |
|-------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Part I.  FINANCIAL INFORMATION |                                                                                                                                            |
|                                |                                                                                                                                            |   |
| Item 1.                             | Financial Statements.                                                                                                                           | 3      |
|                                |                                                                                                                                            |   |
|                                | Consolidated Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010.                                                             | 3      |
|                                |                                                                                                                                            |   |
|                                | Consolidated Statements of Operation and Other Comprehensive Income (Loss) for the Three Months Ended March 31, 2011 and 2010 (Unaudited). | 4      |
|                                |                                                                                                                                            |   |
|                                | Consolidated Statements of Changes In Equity (Unaudited).                                                                                  | 5      |
|                                |                                                                                                                                            |   |
|                                | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010 (Unaudited).                                           | 6      |
|                                |                                                                                                                                            |   |
|                                | Notes to Consolidate Financial Statements (Unaudited).                                                                                     | 7      |
|                                |                                                                                                                                            |   |
| Item 2.                             | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                                                    | 39     |
|                                |                                                                                                                                            |   |
| Item 3.                             | Quantitative and Qualitative Disclosures About Market Risk.                                                                                     | 54     |
|                                |                                                                                                                                            |   |
| Item 4.                             | Controls and Procedures.                                                                                                                        | 54     |
|                                |                                                                                                                                            |   |
| Part II. OTHER INFORMATION          |                                                                                                                                            |
|                                |                                                                                                                                            |   |
| Item 1.                             | Legal Proceedings.                                                                                                                              | 55     |
|                                |                                                                                                                                            |   |
| Item 1A.                            | Risk Factors.                                                                                                                                   | 55     |
|                                |                                                                                                                                            |   |
| Item 2.                             | Unregistered Sales of Equity Securities and Use of Proceeds.                                                                                    | 55     |
|                                |                                                                                                                                            |   |
| Item 6.                             | Exhibits.                                                                                                                                       | 55     |
|                                |                                                                                                                                            |   |
| Signatures                          | 57                                                                                                                                              |

----

|                                                                                                                                                                                                       |   | March 31,   |      |   | December 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|-----------|--------|--------------|--------|
|                                                                                                                                                                                                       |   | 2011        |      |   | 2010         |   |
|                                                                                                                                                                                                       |   | (Unaudited) |      |   |         |   |
| ASSETS                                                                                                                                                                                                     |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |
| CURRENT ASSETS:                                                                                                                                                                                            |   |        |      |   |         |   |
| Cash                                                                                                                                                                                                       |   | $           | 89,310    |   |         | $      | 65,271 |   |
| Restricted cash                                                                                                                                                                                            |   |        | 202,976   |   |         |   | 197,797 |   |
| Notes receivable                                                                                                                                                                                           |   |        | 117,804   |   |         |   | 49,147 |   |
| Restricted notes receivable                                                                                                                                                                                |   |        | 322,814   |   |         |   | 240,298 |   |
| Accounts receivable, net                                                                                                                                                                                   |   |        | 24,947    |   |         |   | 17,591 |   |
| Other receivables, net                                                                                                                                                                                     |   |        | 8,853     |   |         |   | 11,150 |   |
| Other receivables - related parties                                                                                                                                                                        |   |        | 35,255    |   |         |   | 17,428 |   |
| Inventories                                                                                                                                                                                                |   |        | 521,066   |   |         |   | 475,879 |   |
| Advances on inventory purchase                                                                                                                                                                             |   |        | 32,129    |   |         |   | 24,577 |   |
| Advances on inventory purchase - related parties                                                                                                                                                           |   |        | 9,353     |   |         |   | 6,187 |   |
| Prepaid expense                                                                                                                                                                                            |   |        | 3,237     |   |         |   | 5,018 |   |
| Prepaid value added tax                                                                                                                                                                                    |   |        | 21,214    |   |         |   | 37,323 |   |
| Deferred tax assets                                                                                                                                                                                        |   |        | 6,304     |   |         |   | 6,925 |   |
| TOTAL CURRENT ASSETS                                                                                                                                                                                       |   |        | 1,395,262 |   |         |   | 1,154,591 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| PLANT AND EQUIPMENT, net                                                                                                                                                                                   |   |        | 607,195   |   |         |   | 602,612 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| OTHER ASSETS:                                                                                                                                                                                              |   |        |      |   |         |   |   |   |
| Advances on equipment purchase                                                                                                                                                                             |   |        | 15,137    |   |         |   | 14,898 |   |
| Investment in unconsolidated subsidiaries                                                                                                                                                                  |   |        | 19,172    |   |         |   | 17,456 |   |
| Long-term deferred expense                                                                                                                                                                                 |   |        | 1,377     |   |         |   | 1,439 |   |
| Intangible assets, net of accumulated amortization                                                                                                                                                         |   |        | 23,729    |   |         |   | 23,672 |   |
| TOTAL OTHER ASSETS                                                                                                                                                                                         |   |        | 59,415    |   |         |   | 57,465 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| TOTAL ASSETS                                                                                                                                                                                               |   | $           | 2,061,872 |   |         | $      | 1,814,668 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| LIABILITIES AND EQUITY                                                                                                                                                                                     |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| CURRENT LIABILITIES:                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| Short term notes payable                                                                                                                                                                                   |   | $           | 556,812   |   |         | $      | 480,152 |   |
| Accounts payable                                                                                                                                                                                           |   |        | 269,719   |   |         |   | 241,367 |   |
| Accounts payable - related parties                                                                                                                                                                         |   |        | 115,010   |   |         |   | 77,285 |   |
| Short term loans - bank                                                                                                                                                                                    |   |        | 311,020   |   |         |   | 285,198 |   |
| Short term loans - others                                                                                                                                                                                  |   |        | 81,502    |   |         |   | 89,765 |   |
| Short term loans - related parties                                                                                                                                                                         |   |        | 114,845   |   |         |   | 114,468 |   |
| Other payables and accrued liabilities                                                                                                                                                                     |   |        | 38,459    |   |         |   | 30,093 |   |
| Other payable - related parties                                                                                                                                                                            |   |        | 3,502     |   |         |   | 18,214 |   |
| Customer deposit                                                                                                                                                                                           |   |        | 291,481   |   |         |   | 187,495 |   |
| Customer deposit - related parties                                                                                                                                                                         |   |        | 67,029    |   |         |   | 60,760 |   |
| Deposit due to sales representatives                                                                                                                                                                       |   |        | 28,416    |   |         |   | 52,079 |   |
| Taxes payable                                                                                                                                                                                              |   |        | 4,932     |   |         |   | 2,316 |   |
| TOTAL CURRENT LIABILITIES                                                                                                                                                                                  |   |        | 1,882,727 |   |         |   | 1,639,192 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| DERIVATIVE LIABILITIES                                                                                                                                                                                     |   |        | 2,022     |   |         |   | 5,573 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| TOTAL LIABILITIES                                                                                                                                                                                          |   |        | 1,884,749 |   |         |   | 1,644,765 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| COMMITMENT AND CONTINGENCIES                                                                                                                                                                               |   |        |      |   |         |   |   |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| EQUITY:                                                                                                                                                                                                    |   |        |      |   |         |   |   |   |
| Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 shares issued and outstanding as of March 31, 2011 and December 31, 2010                                                        |   |        | 3         |   |         |   | 3 |   |
| Common Stock, $0.001 par value, 200,000,000 shares authorized, 55,080,467 and 54,839,733 issued, 54,366,807 and  54,522,973 outstanding as of March 31, 2011 and December 31, 2010, respectively |   |        | 55        |   |         |   | 55 |   |
| Treasury stock, $0.001 par value, 713,660 and 316,760 shares as of March 31, 2011 and December 31, 2010, respectively.                                                                                     |   |        | (1,998    | )      |         |   | (871 | ) |
| Paid-in-capital                                                                                                                                                                                            |   |        | 105,619   |   |         |   | 104,971 |   |
| Statutory reserves                                                                                                                                                                                         |   |        | 6,246     |   |         |   | 6,202 |   |
| Accumulated deficits                                                                                                                                                                                       |   |        | (21,482   | )      |         |   | (24,086 | ) |
| Accumulated other comprehensive income                                                                                                                                                                     |   |        | 14,295    |   |         |   | 12,712 |   |
| TOTAL SHAREHOLDER'S EQUITY                                                                                                                                                                                 |   |        | 102,738   |   |         |   | 98,986 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| NONCONTROLLING INTERESTS                                                                                                                                                                                   |   |        | 74,385    |   |         |   | 70,917 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| TOTAL EQUITY                                                                                                                                                                                               |   |        | 177,123   |   |         |   | 169,903 |   |
|                                                                                                                                                                                                       |   |        |      |   |         |   |   |   |
| TOTAL LIABILITIES AND EQUITY                                                                                                                                                                               |   | $           | 2,061,872 |   |         | $      | 1,814,668 |   |

----

|                                                                        |   | 2011   |         |   | 2010   |   |
|-----------------------------------------------------------------------------|--------|--------|--------------|--------|--------|--------|
| SALES                                                                       |   | $      | 501,479      |   |   | $      | 317,628 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| SALES - RELATED PARTIES                                                     |   |   | 208,985      |   |   |   | 135,395 |   |
| TOTAL SALES                                                                 |   |   | 710,464      |   |   |   | 453,023 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| COST OF GOODS SOLD                                                          |   |   | 481,487      |   |   |   | 317,576 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| COST OF GOODS SOLD - RELATED PARTIES                                        |   |   | 200,653      |   |   |   | 129,714 |   |
| TOTAL COST OF GOODS SOLD                                                    |   |   | 682,140      |   |   |   | 447,290 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| GROSS PROFIT                                                                |   |   | 28,324       |   |   |   | 5,733 |   |
|                                                                        |   |   |    |   |   |   |   |   |
| SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES                     |   |   | 14,501       |   |   |   | 12,141 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| INCOME (LOSS) FROM OPERATIONS                                               |   |   | 13,823       |   |   |   | (6,408 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                                      |   |   |         |   |   |   |   |   |
| Interest income                                                             |   |   | 1,063        |   |   |   | 1,120 |   |
| Finance/interest expense                                                    |   |   | (14,119      | )      |   |   | (10,963 | ) |
| Change in fair value of derivative liabilities                              |   |   | 3,552        |   |   |   | 3,939 |   |
| Loss on disposal of fixed assets                                            |   |   | (397         | )      |   |   | - |   |
| Income from equity investments                                              |   |   | 1,655        |   |   |   | 1,682 |   |
| Foreign currency transaction gain                                           |   |   | 619          |   |   |   | - |   |
| Other non-operating income (expense), net                                   |   |   | 306          |   |   |   | (4 | ) |
| Total other expense, net                                                    |   |   | (7,321       | )      |   |   | (4,226 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST |   |   | 6,502        |   |   |   | (10,634 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| PROVISION FOR INCOME TAXES                                                  |   |   |         |   |   |   |   |   |
| Current                                                                     |   |   | 750          |   |   |   | 621 |   |
| Deferred                                                                    |   |   | (77          | )      |   |   | (2,588 | ) |
| Total provision (benefit) for income taxes                                  |   |   | 673          |   |   |   | (1,967 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| NET INCOME (LOSS) BEFORE NONCONTROLLING INTEREST                            |   |   | 5,829        |   |   |   | (8,667 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| Less: Net income (loss) attributable to noncontrolling interest             |   |   | 3,225        |   |   |   | (3,160 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST                      |   |   | 2,604        |   |   |   | (5,507 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| OTHER COMPREHENSIVE INCOME (LOSS)                                           |   |   |         |   |   |   |   |   |
| Foreign currency translation adjustments                                    |   |   | 1,583        |   |   |   | (299 | ) |
| Comprehensive income attributable to noncontrolling interest                |   |   | 243          |   |   |   | 165 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| COMPREHENSIVE INCOME (LOSS)                                                 |   | $      | 4,430        |   |   | $      | (5,641 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF SHARES                                           |   |   |         |   |   |   |   |   |
| Basic & Diluted                                                         |   |   | 54,839,733   |   |   |   | 51,652,843 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| EARNINGS (LOSS) PER SHARE                                                   |   |   |         |   |   |   |   |   |
| Basic & Diluted                                                         |   | $      | 0.05         |   |   | $      | (0.11 | ) |

----

|                                                    |   | Preferred stock |      | Common stock |   | Treasury stock |   |           |       | Retained earnings / Accumulated deficits |   | Accumulated other |   |    |    |      |   |
|--------------------------------------------------------------|--------|----------------------|-----------|-------------------|--------|---------------------|--------|----------------|------------|--------------------------------------------------------------|--------|------------------------|--------|---------|---------|-----------|--------|
|                                                         |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   | Paid-in |    | Statutory |   |   |   | comprehensive |   | Noncontrolling |   |   |   |
|                                                         |   | Shares               |      | Par value    |   | Shares              |   | Par value |       | Shares                                                       |   | Value                  |   | capital |    | reserves  |   | Unrestricted |   | income |   | interest |   | Totals |   |
|                                                         |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |
| BALANCE, December 31, 2009                                   |   |                 | 3,092,899 |              | $      | 3                   |   |           | 51,618,595 |                                                         | $      | 52                     |   |    | -       |      |   | - |   | $ | 95,589 |   | $ | 6,162 |   | $ | (16,411 | ) | $ | 8,336 |   | $ | 72,598 |   | $ | 166,329 |   |
|                                                         |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to controlling interest                |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   | (5,507 | ) |   |   |   |   |   |   |   | (5,507 | ) |
| Net loss attributable to noncontrolling interest             |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (3,160 | ) |   | (3,160 | ) |
| Distribution of dividend to noncontrolling shareholders      |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,045 | ) |   | (1,045 | ) |
| Noncontrolling interest acquired                             |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,270 | ) |   | (1,270 | ) |
| Common stock issued for compensation                         |   |                 |      |              |   |                |   |           | 237,100    |                                                         |   | 0.24                   |   |    |    |      |   |   |   |   | 927 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 927 |   |
| Common stock transferred by CEO for compensation, $6.91      |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   | 69 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 69 |   |
| Foreign currency translation adjustments                     |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   | (299 | ) |   | 165 |   |   | (134 | ) |
|                                                         |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE, March 31, 2010 (Unaudited)                          |   |                 | 3,092,899 |              |   | 3                   |   |           | 51,855,695 |                                                         |   | 52                     |   |    | -       |      |   | - |   |   | 96,585 |   |   | 6,162 |   |   | (21,918 | ) |   | 8,037 |   |   | 67,288 |   |   | 156,209 |   |
|                                                         |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to controlling interest                |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   | (2,168 | ) |   |   |   |   |   |   |   | (2,168 | ) |
| Net loss attributable to noncontrolling interest             |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3,348 |   |   | 3,348 |   |
| Distribution of dividend to noncontrolling shareholders      |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2,889 | ) |   | (2,889 | ) |
| Noncontrolling interest acquired                             |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   | - |   |
| Registered capital received from noncontrolling shareholders |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,182 |   |   | 1,182 |   |
| Adjustment to special reserve                                |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   | 40 |   |   |   |   |   |   |   |   | 354 |   |   | 394 |   |
| Common stock issued for compensation                         |   |                 |      |              |   |                |   |           | 496,200    |                                                         |   | 0.50                   |   |    |    |      |   |   |   |   | 1,274 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,275 |   |
| Common stock issued for repayment of debt                    |   |                 |      |              |   |                |   |           | 928,163    |                                                         |   | 0.93                   |   |    |    |      |   |   |   |   | 2,403 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,404 |   |
| Common stock transferred by CEO for compensation             |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   | 207 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 207 |   |
| Notes converted to common stock                              |   |                 |      |              |   |                |   |           | 1,208,791  |                                                         |   | 1.21                   |   |    |    |      |   |   |   |   | 3,544 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3,545 |   |
| Make whole shares issued on notes conversion                 |   |                 |      |              |   |                |   |           | 271,507    |                                                         |   | 0.27                   |   |    |    |      |   |   |   |   | 741 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 741 |   |
| Common stock issued for accrued interest on notes            |   |                 |      |              |   |                |   |           | 79,377     |                                                         |   | 0.08                   |   |    |    |      |   |   |   |   | 217 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 217 |   |
| Treasury stock purchased                                     |   |                 |      |              |   |                |   |           | (316,760   | )                                                            |   | (0.32                  | )      |    | 316,760 |      |   | (871 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (871 | ) |
| Foreign currency translation adjustments                     |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   | 4,675 |   |   | 1,634 |   |   | 6,309 |   |
|                                                         |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE, December 31, 2010                                   |   |                 | 3,092,899 |              | $      | 3                   |   |           | 54,522,973 |                                                         | $      | 55                     |   |    | 316,760 |      | $      | (871 | ) | $ | 104,971 |   | $ | 6,202 |   | $ | (24,086 | ) | $ | 12,712 |   | $ | 70,917 |   | $ | 169,903 |   |
|                                                         |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to controlling interest              |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   | 2,604 |   |   |   |   |   |   |   |   | 2,604 |   |
| Net income attributable to noncontrolling interest           |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3,225 |   |   | 3,225 |   |
| Common stock issued for compensation                         |   |                 |      |              |   |                |   |           | 240,734    |                                                         |   | 0.24                   |   |    |    |      |   |   |   |   | 579 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 579 |   |
| Common stock transferred by CEO for compensation             |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   | 69 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 69 |   |
| Treasury stock purchased                                     |   |                 |      |              |   |                |   |           | (396,900   | )                                                            |   | (0.40                  | )      |    | 396,900 |      |   | (1,127 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,127 | ) |
| Adjustment to special reserve                                |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   | 44 |   |   |   |   |   |   |   |   |   |   |   | 44 |   |
| Foreign currency translation adjustments                     |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,583 |   |   | 243 |   |   | 1,826 |   |
|                                                         |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
|                                                         |   |                 |      |              |   |                |   |           |       |                                                         |   |                   |   |    |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE, March 31, 2011 (Unaudited)                          |   |                 | 3,092,899 |              | $      | 3                   |   |           | 54,366,807 |                                                         | $      | 55                     |   |    | 713,660 |      | $      | (1,998 | ) | $ | 105,619 |   | $ | 6,246 |   | $ | (21,482 | ) | $ | 14,295 |   | $ | 74,385 |   | $ | 177,123 |    |

----

|                                                                                                     |   | Three months ended March 31, |     |
|----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|----------|
|                                                                                                     |   | 2011                                             |     |   | 2010 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                    |   |                                             |     |   |   |   |
| Net income (loss) attributable to controlling interest                                                   |   | $                                                | 2,604    |   |   | $ | (5,507 | ) |
| Net income (loss) attributable to noncontrolling interest                                                |   |                                             | 3,225    |   |   |   | (3,160 | ) |
| Consolidated net income (loss)                                                                           |   |                                             | 5,829    |   |   |   | (8,667 | ) |
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: |   |                                             |     |   |   |   |   |   |
| Depreciation and amortization                                                                            |   |                                             | 8,922    |   |   |   | 9,586 |   |
| Bad debt recovery (allowance)                                                                            |   |                                             | 5        |   |   |   | (94 | ) |
| Inventory written-off                                                                                    |   |                                             | 1,947    |   |   |   | - |   |
| Loss on disposal of equipment                                                                            |   |                                             | 397      |   |   |   | - |   |
| Stock issued for services and compensation                                                               |   |                                             | 647      |   |   |   | 996 |   |
| Amortization of deferred note issuance cost and discount on convertible notes                            |   |                                             | -        |   |   |   | 68 |   |
| Change in fair value of derivative instrument                                                            |   |                                             | (3,552   | ) |   |   | (3,939 | ) |
| Income from investment                                                                                   |   |                                             | (1,655   | ) |   |   | (1,682 | ) |
| Deferred tax assets                                                                                      |   |                                             | 693      |   |   |   | (2,484 | ) |
| Changes in operating assets and liabilities                                                              |   |                                             |     |   |   |   |   |   |
| Notes receivable                                                                                         |   |                                             | (68,315  | ) |   |   | 4,760 |   |
| Accounts receivable                                                                                      |   |                                             | (7,269   | ) |   |   | (13,556 | ) |
| Accounts receivable - related parties                                                                    |   |                                             | -        |   |   |   | (4,750 | ) |
| Other receivables                                                                                        |   |                                             | 3,686    |   |   |   | 256 |   |
| Other receivables - related parties                                                                      |   |                                             | (15,701  | ) |   |   | (389 | ) |
| Inventories                                                                                              |   |                                             | (43,694  | ) |   |   | (36,689 | ) |
| Advances on inventory purchases                                                                          |   |                                             | (7,451   | ) |   |   | (5,945 | ) |
| Advances on inventory purchases - related parties                                                        |   |                                             | (3,137   | ) |   |   | (44,257 | ) |
| Accounts payable                                                                                         |   |                                             | 27,484   |   |   |   | 1,556 |   |
| Accounts payable - related parties                                                                       |   |                                             | 37,367   |   |   |   | 8,699 |   |
| Other payables and accrued liabilities                                                                   |   |                                             | 8,246    |   |   |   | (3,502 | )  |
| Other payables - related parties                                                                         |   |                                             | (14,732  | ) |   |   | 17,291 |   |
| Customer deposits                                                                                        |   |                                             | 103,096  |   |   |   | 14,521 |   |
| Customer deposits - related parties                                                                      |   |                                             | 3,028    |   |   |   | 36,280 |   |
| Taxes payable                                                                                            |   |                                             | 18,791   |   |   |   | 9,978 |   |
| Net cash provided by (used in) operating activities                                                      |   |                                             | 54,632   |   |   |   | (21,963 | ) |
|                                                                                                     |   |                                             |     |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                                    |   |                                             |     |   |   |   |   |   |
| Payments made for treasury stock acquired                                                                |   |                                             | (1,128   | ) |   |   | - |   |
| Dividend receivable                                                                                      |   |                                             | -        |   |   |   | (1,554 | ) |
| Deposits due to sales representatives                                                                    |   |                                             | (23,771  | ) |   |   | 16,894 |   |
| Cash proceeds from sales of equipment                                                                    |   |                                             | 328      |   |   |   | - |   |
| Advance on equipment purchases                                                                           |   |                                             | (190     | ) |   |   | (4,664 | ) |
| Equipments purchase and intangible assets                                                                |   |                                             | (10,912  | ) |   |   | (6,816 | ) |
| Net cash (used in) provided by investing activities                                                      |   |                                             | (35,673  | ) |   |   | 3,860 |   |
|                                                                                                     |   |                                             |     |   |   |   |   |   |
| CASH FLOWS FINANCING ACTIVITIES:                                                                         |   |                                             |     |   |   |   |   |   |
| Restricted cash                                                                                          |   |                                             | (4,516   | ) |   |   | (34,660 | ) |
| Notes receivable - restricted                                                                            |   |                                             | (81,509  | ) |   |   | (24,216 | ) |
| Borrowings on short term loans - bank                                                                    |   |                                             | 85,312   |   |   |   | 95,015 |   |
| Payments on short term loans - bank                                                                      |   |                                             | (60,495  | ) |   |   | (69,336 | ) |
| Borrowings on short term loan - others                                                                   |   |                                             | 36,128   |   |   |   | 27,945 |   |
| Payments on short term loans - others                                                                    |   |                                             | (44,664  | ) |   |   | (24,954 | ) |
| Payments on short term loans - related parties                                                           |   |                                             | -        |   |   |   | (11,747 | ) |
| Borrowings on short term notes payable                                                                   |   |                                             | 243,985  |   |   |   | 251,725 |   |
| Payments on short term notes payable                                                                     |   |                                             | (169,105 | ) |   |   | (182,369 | ) |
| Net cash provided by financing activities                                                                |   |                                             | 5,136    |   |   |   | 27,403 |   |
|                                                                                                     |   |                                             |     |   |   |   |   |   |
| EFFECTS OF EXCHANGE RATE CHANGE IN CASH                                                                  |   |                                             | (56      | ) |   |   | (386 | ) |
|                                                                                                     |   |                                             |     |   |   |   |   |   |
| INCREASE IN CASH                                                                                         |   |                                             | 24,039   |   |   |   | 8,914 |   |
|                                                                                                     |   |                                             |     |   |   |   |   |   |
| CASH, beginning of period                                                                                |   |                                             | 65,271   |   |   |   | 82,118 |   |
|                                                                                                     |   |                                             |     |   |   |   |   |   |
| CASH, end of period                                                                                      |   | $                                                | 89,310   |   |   | $ | 91,032 |   |
|                                                                                                     |   |                                             |     |   |   |   |   |   |
| Non-cash transactions of investing and financing activities:                                             |   |                                             |     |   |   |   |   |   |
| Share issuance for debt settlement                                                                       |   | $                                                | -        |   |   | $ | 82,118 |   |

----

| Subsidiary                                                                          |   | Percentageof Ownership |   |
|-------------------------------------------------------------------------------------|--------|-----------------------------|--------|
| General Steel Investment Co., Ltd.                                                  |   | British Virgin Islands      |   |   | 100.0 | % |
| General Steel (China) Co., Ltd. (“General Steel (China)”)               |   | PRC                         |   |   | 100.0 | % |
| Baotou Steel – General Steel Special Steel Pipe Joint Venture Co., Ltd.  |   | PRC                         |   |   | 80.0 | % |
| Yangpu Shengtong Investment Co., Ltd.                                               |   | PRC                         |   |   | 99.1 | % |
| Qiu Steel Investment Co., Ltd. (“Qiu Steel”)                            |   | PRC                         |   |   | 98.7 | % |
| Longmen Joint Venture                                                               |   | PRC                         |   |   | 60.0 | % |
| Maoming Hengda Steel Company, Ltd. (“Maoming Hengda”)                   |   | PRC                         |   |   | 99.0 | % |
| Tianwu General Steel Material Trading Co., Ltd (“Tianwu Joint Venture”) |   | PRC                         |   |   | 60.0 | % |

----

----

----

|   | · | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. |
|--------|--------|-------------------------------------------------------------------------------------------------|

| (in thousands)                |   | Carrying Valueas of March 31,2011 |   |   | Fair Value Measurements at March 31, 2011Using Fair Value Hierarchy |   |
|------------------------------------|--------|-------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------|--------|
|                               |   |                                                  |   |   | Level 1                                                                                                     |   |   | Level 2 |   |   | Level 3 |   |
| Derivative liabilities (Unaudited) |   | $                                                     | 2,022  |   |                                                                                                             |   |   |   |   | $ | 2,022 |   |   |   |   |   |

----

----

| Buildings and Improvements |   | 10-40 Years |
|----------------------------|--------|-------------|
| Machinery                  |   | 10-30 Years |
| Other equipment            |   | 5 Years     |
| Transportation Equipment   |   | 5 Years     |

----

| Entity                |   | Original Cost  |   | Expires on |
|-----------------------|--------|---------------------|--------|-----------------|
|             |   | (in thousands) |   |            |
| General Steel (China) |   | $                   | 3,599  |            | 2050 & 2053 |
| Longmen Joint Venture |   | $                   | 22,546 |            | 2048 & 2052 |
| Maoming Hengda        |   | $                   | 2,317  |            | 2054 |

----

| Unconsolidated subsidiary                       |   | Year acquired |   | Amount invested(In thousands) |   |   | % owned |   |
|------------------------------------------------------|--------|--------------------|--------|-----------------------------------------|--------|--------|--------------|--------|
| Shaanxi Daxigou Mining Co., Ltd                      |   | 2004               |   | $                                       | 5,510  |   |         |   | 22.0 |   |
| Shaanxi Xinglong Thermoelectric Co., Ltd             |   | 2004 - 2007        |   |                                    | 9,487  |   |         |   | 20.7 |   |
| Huashan Metallurgical Equipment Co.,  Ltd. |   | 2003               |   |                                    | 2,935  |   |         |   | 25.0 |   |
| Shaanxi Longgang Group Xian Steel Co., Ltd           |   | 2005               |   |                                    | -      |   |         |   | 10.0 |   |
| Xian Delong Powder Engineering Materials Co., Ltd.   |   | 2006               |   |                                    | 1,240  |   |         |   | 27.0 |   |
| Total (Unaudited)                                    |   |               |   | $                                       | 19,172 |   |         |   |   |   |

----

----

----

|                                  |   | March 31, 2011            |   |   | December 31,2010 |   |
|---------------------------------------|--------|---------------------------|--------|--------|------------------|--------|
|                                  |   | (in thousands)(Unaudited) |   |   | (in thousands)   |   |
| Accounts receivable                   |   | $                         | 25,206 |   |             | $      | 17,887 |   |
| Less: allowance for doubtful accounts |   |                      | (259   | )      |             |   | (296 | ) |
| Net accounts receivable               |   | $                         | 24,947 |   |             | $      | 17,591 |   |

|              |    | March 31, 2011       |    |    | December 31, 2010 |    |
|------------------------|--------------|--------------------------------|--------------|--------------|-----------------------------|--------------|
|              |    | (in thousands)(Unaudited) |    |    | (in thousands)         |    |
| Beginning balance |         | $                              | 296          |         |                        | $            | 490 |   |
| Charge to expense      |         |                           | 12           |         |                        |         | 174 |   |
| Less Write-off         |         |                           | (49)         |         |                        |         | (386) |   |
| Exchange rate effect   |         |                           | -            |         |                        |         | 18 |   |
| Ending balance         |         | $                              | 259          |         |                        | $            | 296 |   |

----

|         |    | March 31,2011             |    |    | December 31,2010 |    |
|-------------------|--------------|--------------------------------|--------------|--------------|-----------------------|--------------|
|         |    | (in thousands)(Unaudited) |    |    | (in thousands)   |    |
| Supplies          |    | $                              | 17,181       |         |                  | $            | 13,733 |   |
| Raw materials     |         |                           | 294,232      |         |                  |         | 381,178 |   |
| Finished goods    |         |                           | 209,653      |         |                  |         | 80,968 |   |
| Total inventories |         | $                              | 521,066      |         |                  | $            | 475,879 |   |

|                          |   | March 31, 2011            |      |   | December 31, 2010 |   |
|------------------------------------|--------|---------------------------|-----------|--------|-------------------|--------|
|                               |   | (in thousands)(Unaudited) |      |   | (in thousands)    |   |
| Buildings and improvements         |   | $                         | 118,166   |   |              | $      | 116,294 |   |
| Machinery                          |   |                      | 504,602   |   |              |   | 502,958 |   |
| Transportation and other equipment |   |                      | 14,478    |   |              |   | 13,253 |   |
| Construction in progress           |   |                      | 74,623    |   |              |   | 65,749 |   |
| Subtotal                           |   |                      | 711,869   |   |              |   | 698,254 |   |
| Less accumulated depreciation      |   |                      | (104,674) |   |              |   | (95,642) |   |
| Total                              |   | $                         | 607,195   |   |              | $      | 602,612 |   |

----

| Construction in progress               |   | Value        |   | Estimatedcompletion |               | Estimatedadditional cost |
|----------------------------------------|--------|--------------|--------|---------------------|--------------------|--------------------------|
|  description                      |   | In thousands |   |  date          |               |  In thousands       |
| Employee cafeteria                     |   | $            | 4,412  |                | July 2011          |                     | 845 |
| Steel rebar & wire production line |   |         | 53,041 |                | June 2011          |                     | 3,669 |
| Transformation of slag processing      |   |         | 1,282  |                | September, 2011    |                     | 7,888 |
| 3# Tailings                            |   |         | 1,629  |                | August 2012        |                     |   1,872 |
| Sintering machine transformation       |   |         | 583    |                | By the end of 2011 |                     | 141 |
| Others                                 |   |         | 13,676 |                | By the end of 2012 |                     | 4,033 |
| Total (Unaudited)                      |   |         | 74,623 |                |               |                     | 18,448 |

|                                      |   | March 31, 2011            |    |   | December 31, 2010 |   |
|------------------------------------------------|--------|---------------------------|---------|--------|-------------------|--------|
|                                           |   | (in thousands)(Unaudited) |    |   | (in thousands)    |   |
| Land use rights                                |   | $                         | 28,817  |   |              | $      | 28, 462 |   |
| Software                                       |   |                      | 609     |   |              |   | 660 |   |
| Subtotal                                       |   |                      | 29,426  |   |              |   | 29,122 |   |
|                                           |   |                      |    |   |              |   |   |   |
| Accumulated amortization                       |   |                      | (5,697) |   |              |   | (5,450 | ) |
|     Intangible assets, net |   | $                         | 23,729  |   |              | $      | 23,672 |   |

----

|  Years ended |   | EstimatedAmortization Expense |   |   | Gross carryingAmount |   |
|-------------------|--------|-------------------------------|--------|--------|----------------------|--------|
|              |   | (in thousands)(Unaudited)     |   |   | (in thousands)       |   |
| March 31, 2012    |   | $                             | 912    |   |                 | $      | 22,817 |   |
| March 31, 2013    |   |                          | 912    |   |                 |   | 21,905 |   |
| March 31, 2014    |   |                          | 912    |   |                 |   | 20,993 |   |
| March 31, 2015    |   |                          | 912    |   |                 |   | 20,081 |   |
| March 31, 2016    |   |                          | 912    |   |                 |   | 19,169 |   |
| Thereafter        |   |                          | 19,169 |   |                 |   | - |   |
| Total             |   | $                             | 23,729 |   |                 |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | March 31, 2011            |         |   | December 31, 2010 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | (in thousands)(Unaudited) |         |   | (in thousands)    |   |
| General Steel (China): Notes payable from banks in China, due various dates from April to August 2011. Restricted cash required of $17.8 million and $11.7 million as of March 31, 2011 and December 31, 2010, respectively; guaranteed by third parties.                                                                                                                                                                                                                                                     |   | $                         | 29,874       |   |              | $      | 21,541 |   |
| Longmen Joint Venture: Notes payable from banks in China, due various dates from April to November 2011. $152.7 million restricted cash and $219.0 million notes receivable are secured for notes payable as of March 31, 2011, and comparatively $150.7 million restricted cash and $159.3 million notes receivable are secured for notes payable as of December 31, 2010, respectively; some notes are further guaranteed by third parties while others are secured by equipments and land use rights. |   |                      | 516,284      |   |              |   | 447,992 |   |
| Bao Tou: Notes payable from banks in China, due date in April 2011, restricted cash of $5.3 million and $5.3 million as of March 31, 2011 and December 31, 2010, respectively; pledged by buildings.                                                                                                                                                                                                                                                                                                          |   |                      | 10,654  |   |              |   | 10,619  |   |
| Total short-term notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                         | 556,812      |   |              | $      | 480,152 |   |

|                                                                                                                                                                                                                                                                                                         |   | March 31, 2011            |    |   | December 31, 2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|---------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                         |   | (in thousands)(Unaudited) |    |   | (in thousands)    |   |
| General Steel (China): Loans from banks in China, due various dates from April 2011 to March 2012. Weighted average interest rate 6.1% per annum; some are guaranteed by third parties while others are secured by equipment and inventory.                                                                  |   | $                         | 24,300  |   |              | $      | 24,220 |   |
| Longmen Joint Venture: Loans from banks in China, due various dates from April 2011 to March 2012. Weighted average interest rate 5.4% per annum; some are guaranteed by third parties, restricted cash or notes receivables while others are secured by equipment, buildings, land use right and inventory. |   |                      | 287,341 |   |              |   | 260,978 |   |
| Total short-term loans - bank                                                                                                                                                                                                                                                                                |   | $                         | 311,641 |   |              | $      | 285,198 |   |

----

|                                                                                                                                                                                   |   | March 31, 2011            |   |   | December 31, 2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|--------|-------------------|--------|
|                                                                                                                                                                                   |   | (in thousands)(Unaudited) |   |   | (in thousands)    |   |
| Longmen Joint Venture: Loans from various unrelated companies and individuals, due various dates from April 2011 to November 2012, and weighted average interest rates 6.2% per annum. |   | $                         | 70,910 |   |              | $      | 75,380 |   |
| Maoming Hengda: Loans from one unrelated parties, due on demand, none interest bearing.                                                                                                |   |                      | 10,592 |   |              |   | 14,385 |   |
| Total short-term loans – others                                                                                                                                                  |   | $                         | 81,502 |   |              | $      | 89,765 |   |

|                                                                                                    |   | March 31, 2011            |    |   | December 31,2010 |   |
|---------------------------------------------------------------------------------------------------------|--------|---------------------------|---------|--------|------------------|--------|
|                                                                                                    |   | (in thousands)(Unaudited) |    |   | (in thousands)   |   |
| Longmen Joint Venture: Loans from Shaanxi Steel Group, due on demand and interest rates 5.3% per annum. |   | $                         | 114,845 |   |             | $      | 114,468 |   |
| Total short-term loans - related parties                                                                |   | $                         | 114,845 |   |             | $      | 114,468 |   |

----

| Outstanding As of December 31, 2010          |   |   | 6,678,649 |   |
|----------------------------------------------|--------|--------|-----------|--------|
| Granted                                      |   |   | -         |   |
| Forfeited                                    |   |   | -         |   |
| Exercised                                    |   |   | -         |   |
| Outstanding As of March 31, 2011 (Unaudited) |   |   | 6,678,649 |   |

| Outstanding Warrants |   |   | Exercisable Warrants |      |
|---------------------------|--------|--------|---------------------------|-----------|
| Exercise Price       |   | Number |                      |      | AverageRemainingContractual Life |   |   | AverageExercise Price |   |   | Number |   |   | AverageRemainingContractualLife |   |
| $                         | 5.00   |   |                      | 6,678,649 |   |   |   | 1.8 |   |   | $ | 5.00 |   |   |   | 6,678,649 |   |   |   | 1.8 |   |

----

| Loss on disposal of equipment systems                |   | $      | 11,466 |   |
|------------------------------------------------------|--------|--------|--------|--------|
| Trial production cost through September 30, 2010     |   |   | 2,423  |   |
| Salary and benefit of employees                      |   |   | 3,471  |   |
| Materials consumed and shipping expense              |   |   | 4,150  |   |
| Relocation fee paid on behalf of Shaanxi Steel Group |   |   | 1,746  |   |
| Land rental fee                                      |   |   | 836    |   |
| Others                                               |   |   | 40     |   |
| Total cost and fee incurred                          |   | $      | 24,132 |   |
|                                                 |   |   |   |   |
| Total compensation for fees incurred                 |   | $      | 25,008 |   |
| Net compensation for services                        |   | $      | 876    |   |
|                                                 |   |   |   |   |
| Compensation for loss of lower productive efficiency |   | $      | 27,092 |   |

----

|                                       |   | March 31, 2011 |   |   | March 31, 2010 |   |
|--------------------------------------------|--------|----------------|--------|--------|----------------|--------|
|  (In thousands)                       |   | (Unaudited)    |   |   |           |   |
| Current                                    |   | $              | 750    |   |           | $      | 621 |   |
| Deferred                                   |   |           | (77    | )      |           |   | (2,588 | ) |
| Total provision (benefit) for income taxes |   | $              | 673    |   |           | $      | (1,967 | ) |

|                                                                                               |   | March 31, 2011            |   |   | December 31, 2010 |   |
|----------------------------------------------------------------------------------------------------|--------|---------------------------|--------|--------|-------------------|--------|
|                                                                                               |   | (in thousands)(Unaudited) |   |   | (in thousands)    |   |
| Beginning balance                                                                                  |   | $                         | 6,925  |   |              | $      | 3,341 |   |
| (Tax assets realized) net operating loss carry forward for other subsidiaries                      |   |                      | (1,128 | )      |              |   | 2,343 |   |
| Effective tax rate                                                                                 |   |                      | 25     | %      |              |   | 25 | % |
| Deferred tax asset                                                                                 |   | $                         | (282   | )      |              | $      | 586 |   |
| Longmen Joint Venture and some subsidiaries, (tax asset realized) net operating loss carry-forward |   |                      | (2,420 | )      |              |   | 20,539 |   |
| Effective tax rate                                                                                 |   |                      | 15     | %      |              |   | 15 | % |
| Deferred tax asset                                                                                 |   | $                         | (363   | )      |              | $      | 3,081 |   |
| Exchange difference                                                                                |   |                      | 24     |   |              |   | (82 | ) |
| Totals                                                                                             |   | $                         | 6,304  |   |              | $      | 6,925 |   |

----

|                                                                          |   | March 31, 2011 |   |   | March 31, 2010 |   |
|-------------------------------------------------------------------------------|--------|----------------|--------|--------|----------------|--------|
|                                                                          |   | (Unaudited)    |   |   | (Unaudited)    |   |
| U.S. Statutory rates                                                          |   |           | 34.0   | %      |           |   | 34.0 | % |
| Foreign income not recognized in the US                                       |   |           | (34.0  | )%     |           |   | (34.0 | )% |
| China income taxes                                                            |   |           | 25.0   | %      |           |   | 25.0 | % |
| Tax effect of income not taxable for tax purposes (1)                         |   |           | (13.0  | )%     |           |   | 0.6 | % |
| Effect of different tax rate of subsidiaries operating in other jurisdictions |   |           | 1.9    | %      |           |   | (9.7 | )% |
| Total provision for income taxes                                              |   |           | 13.9   | %      |           |   | 16.0 | % |

| (1) | This represents derivative expenses (income) and stock compensation expenses incurred by the Company that are not deductible/taxable in the PRC for the three months ended March 31, 2011 and 2010. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                 |   | March 31, 2011            |   |   | December 31, 2010 |   |
|----------------------|--------|---------------------------|--------|--------|-------------------|--------|
|                 |   | (in thousands)(Unaudited) |   |   | (in thousands)    |   |
| VAT taxes payable    |   | $                         | 2,423  |   |              | $      | - |   |
| Income taxes payable |   |                      | 475    |   |              |   | 840 |   |
| Misc taxes           |   |                      | 2,034  |   |              |   | 1,476 |   |
| Totals               |   | $                         | 4,932  |   |              | $      | 2,316 |   |

| (in thousands except per share data)                                   |   | March 31, 2010 |       |   | March 31, 2010 |   |
|------------------------------------------------------------------------|--------|----------------|------------|--------|---------------------|--------|
|                                                                   |   | (Unaudited)    |       |   | (Unaudited)         |   |
| Income attributable to holders of common shares                        |   | $              | 2,604      |   |                | $      | (5,507 | ) |
| Basic and diluted weighted average number of common shares outstanding |   |           | 54,839,733 |   |                |   | 51,652,843 |   |
| Earnings (Loss) per share                                         |   |           |       |   |                |   |   |   |
| Basic & diluted                                                    |   | $              | 0.05       |   |                | $      | (0.11 | ) |

----

| Year ended March 31, |   | Amount         |   |
|----------------------|--------|----------------|--------|
|                 |   | (in thousands) |   |
| 2012                 |   | $              | 2,301  |   |
| Thereafter           |   |           | -      |   |
| Total                |   | $              | 2,301  |   |

----

| Name of related parties                                                               |   | Relationship                                                           |   | March 31,2011             |    |   | March 31,2010  |   |
|---------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|---------------------------|---------|--------|----------------|--------|
|                                                                                  |   |                                                                   |   | (in thousands)(Unaudited) |    |   | (in thousands) |   |
| Shaanxi Longmen (Group) Co, Ltd and its subsidiaries (“Long Steel Group”) |   | Noncontrolling shareholder of Longmen Joint Venture                    |   | $                         | 144,173 |   |           | $      | 104,453 |   |
| Tianjin Hengying Trading Co., Ltd                                                     |   | Common control under CEO                                               |   |                      | 25,486  |   |           |   | 9,850 |   |
| Tianjin Dazhan Industry Co, Ltd                                                       |   | Common control under CEO                                               |   |                      | 20,261  |   |           |   |   |   |
| Hancheng Haiyan Coking                                                                |   | Investee of Long Steel Group                                           |   |                      | 11,393  |   |           |   | 10,325 |   |
| General Qiugang steel tube  Co, Ltd                                         |   | Common control under CEO                                               |   |                      | 7,150   |   |           |   |   |   |
| Shaanxi Steel Group                                                                   |   | Majority shareholder of Long Steel Group                               |   |                      | 521     |   |           |   |   |   |
| Beijing Daishang Trade Co., Ltd.                                                      |   | Noncontrolling shareholder of Longmen Joint Venture’s subsidiary |   |                      |    |   |           |   | 2,405 |   |
| Tianjin Daqiuzhuang Steel Plates Co., Ltd.                                            |   | Common control under CEO                                               |   |                      | -       |   |           |   | 8,312 |   |
| Others                                                                                |   |                                                                   |   |                      | 1       |   |           |   | 50 |   |
| Total                                                                                 |   |                                                                   |   | $                         | 208,985 |   |           | $      | 135,395 |   |

| Name of related parties          |   |  Relationship                                                     |   | March 31, 2011            |    |   | March 31, 2010 |   |
|----------------------------------|--------|------------------------------------------------------------------------|--------|---------------------------|---------|--------|----------------|--------|
|                             |   |                                                                   |   | (in thousands)(Unaudited) |    |   | (in thousands) |   |
| Long Steel Group                 |   | Noncontrolling shareholder of Longmen Joint Venture                    |   | $                         | 194,361 |   |           | $      | 107,925 |   |
| Hengying and Dazhan              |   | Common control under CEO                                               |   |                      | -       |   |           |   | 4,827 |   |
| Jingma Jiaohua                   |   | Investee of Longmen Joint Venture’s subsidiary (unconsolidated)  |   |                      | 4,689   |   |           |   | 3,472 |   |
| Hancheng Haiyan Coking           |   | Investee of Long Steel Group                                           |   |                      | 100,036 |   |           |   | 52,058 |   |
| Beijing Daishang Trade Co., Ltd. |   | Noncontrolling shareholder of Longmen Joint Venture’s subsidiary |   |                      | -       |   |           |   | 1,011 |   |
| Others                           |   |                                                                   |   |                      | 23      |   |           |   | 31 |   |
| Total                            |   |                                                                   |   | $                         | 299,109 |   |           | $      | 169,324 |   |

----

| a.  | Other receivables - related parties: |
|----------|--------------------------------------|

| Name of related parties                    |   |  Relationship                                  |   | March 31, 2011            |   |   | December 31, 2010 |   |
|--------------------------------------------|--------|-----------------------------------------------------|--------|---------------------------|--------|--------|-------------------|--------|
|                                       |   |                                                |   | (in thousands)(Unaudited) |   |   | (in thousands)    |   |
| Long Steel Group                           |   | Noncontrolling shareholder of Longmen Joint Venture |   | $                         | -      |   |              | $      | 993 |   |
| Shaanxi Steel Group                        |   | Majority shareholder of Long Steel Group            |   |                      | 27,109 |   |              |   | 8,899 |   |
| Mao Ming Sheng Zhe                         |   | Common control under CEO                            |   |                      | 5,874  |   |              |   | 6,141 |   |
| Tianjin Daqiuzhuang Steel Plates Co., Ltd. |   | Common control under CEO                            |   |                      | 1,848  |   |              |   | 1,078 |   |
| Tianjin Dazhan Industry Co, Ltd            |   | Common control under CEO                            |   |                      |   |   |              |   | - |   |
| Others                                     |   |                                                |   |                      | 424    |   |              |   | 317 |   |
| Total                                      |   |                                                |   | $                         | 35,255 |   |              | $      | 17,428 |   |

| b. | Advances on inventory purchases – related parties: |
|----|----------------------------------------------------------|

| Name of related parties      |   | Relationship             |   | March 31, 2011            |   |   | December 31, 2010 |   |
|------------------------------|--------|--------------------------|--------|---------------------------|--------|--------|-------------------|--------|
|                         |   |                     |   | (in thousands)(Unaudited) |   |   | (in thousands)    |   |
| Tianjin General Qiugang Pipe |   | Common control under CEO |   | $                         | 9,353  |   |              | $      | 6,187 |   |
| Total                        |   |                     |   | $                         | 9,353  |   |              | $      | 6,187 |   |

----

| c. | Accounts payable - related parties: |
|----|-------------------------------------|

| Name of related parties           |   | Relationship                                                           |   | March 31, 2011            |    |   | December 31, 2010 |   |
|-----------------------------------|--------|------------------------------------------------------------------------|--------|---------------------------|---------|--------|-------------------|--------|
|                              |   |                                                                   |   | (in thousands)(Unaudited) |    |   | (in thousands)    |   |
| Tianjin Hengying Trading Co., Ltd |   | Common control under CEO                                               |   | $                         | 13,332  |   |              | $      | 17,264 |   |
| Tianjin Dazhan Industry Co., Ltd  |   | Common control under CEO                                               |   |                      | 11,790  |   |              |   |  2,309 |   |
| Hancheng Haiyan Coking            |   | Noncontrolling shareholder of Long Steel Group                         |   |                      | 45,916  |   |              |   |  25,708 |   |
| Henan Xinmi Kanghua               |   | Noncontrolling shareholder of Longmen Joint Venture’s subsidiary |   |                      | -       |   |              |   |  880 |   |
| Jingma Jiaohua                    |   | Investee of Longmen Joint Venture’s subsidiary (unconsolidated)  |   |                      | -       |   |              |   |  1,579 |   |
| Long Steel Group                  |   | Noncontrolling shareholder of Longmen Joint Venture                    |   |                      | 40,520  |   |              |   |  28,329 |   |
| Beijing Daishang Trading Co., Ltd |   | Noncontrolling shareholder of Longmen Joint Venture’s subsidiary |   |                      | 2,385   |   |              |   |  1,101 |   |
| Others                            |   |                                                                   |   |                      | 1,067   |   |              |   | 115 |   |
| Total                             |   |                                                                   |   | $                         | 115,010 |   |              | $      | 77,285 |   |

| d.  | Short-term loans - related parties: |
|----------|-------------------------------------|

| Name of related parties          |   |  Relationship                       |   | March 31, 2011            |    |   | December 31, 2010 |    |
|----------------------------------|--------|------------------------------------------|--------|---------------------------|---------|--------|-------------------|---------|
|                             |   |                                     |   | (in thousands)(Unaudited) |    |   | (in thousands)    |    |
| Shaanxi Steel & Iron Company |   | Majority shareholder of Long Steel Group |   | $                    | 114,485 |   |              | $  | 114,468 |   |
| Total                            |   |                                     |   | $                         | 114,845 |   |              | $       | 114,468 |   |

| e. | Other payables – related parties |
|----|----------------------------------------|

| Name of related parties |   |  Relationship                |   | March 31, 2011 |   |   | December 31, 2010 |   |
|----------------------------------------|--------|-----------------------------------|--------|--------------------------|--------|--------|-----------------------------|--------|
|                              |   |                         |   | (in thousands)      |   |   | (in thousands)         |   |
|                                   |   |                              |   | (Unaudited)              |   |   |                        |   |
| Tianjin Hengying Trading Co, Ltd       |   | Common control under CEO          |   | $                        | -      |   |                        | $      | 10,168 |   |
| Yangpu Capital Automobile              |   | Common control under CEO          |   |                     | 1,355  |   |                        |   | 1,350 |   |
| Tianjin General Qiugang Pipe           |   | Common control under CEO          |   |                     | -      |   |                        |   | 4,547 |   |
| Wenchun Han                            |   | Director of General Steel (China) |   |                     | 2,131  |   |                        |   | 2,124 |   |
| Others                                 |   |                              |   |                     | 16     |   |                        |   | 25 |   |
| Total                                  |   |                              |   | $                        | 3,502  |   |                        | $      | 18,214 |   |

----

| f. | Customer deposit – related parties: |
|----|-------------------------------------------|

| Name of related parties          |   | Relationship                                        |   | March 31, 2011            |   |   | December 31, 2010 |   |
|----------------------------------|--------|-----------------------------------------------------|--------|---------------------------|--------|--------|-------------------|--------|
|                             |   |                                                |   | (in thousands)(Unaudited) |   |   | (in thousands)    |   |
| Tianjin Hengying Trading Co, Ltd |   | Common control under CEO                            |   | $                         | 1,205  |   |              | $      | - |   |
| Hancheng Haiyan Coking           |   | Investee of Long Steel Group                        |   |                      | -      |   |              |   | 5,568 |   |
| Long Steel Group                 |   | Noncontrolling shareholder of Longmen Joint Venture |   |                      | 64,521 |   |              |   | 53,512 |   |
| Beijing Shenhua Xinyuan          |   | Common control under CEO                            |   |                      | 1,303  |   |              |   | 1,299 |   |
| Others                           |   |                                                |   |                      | -      |   |              |   | 381 |   |
| Total                            |   |                                                |   | $                         | 67,029 |   |              | $      | 60,760 |   |

----

----

| Year ended,    |   | Amount         |   |
|----------------|--------|----------------|--------|
|           |   | (in thousands) |   |
| March 31, 2012 |   | $              | 274    |   |
| March 31, 2013 |   |           | 68     |   |
| Total          |   | $              | 342    |   |

| Years ended March 31, |   | Amount         |   |
|-----------------------|--------|----------------|--------|
|                  |   | (in thousands) |   |
| 2012                  |   | $              | 573    |   |
| Thereafter            |   |           | -      |   |
| Total                 |   | $              | 573    |   |

----

| Nature of guarantee                                 |   | Guarantee amount |    | Guaranty period |
|-----------------------------------------------------|--------|------------------|---------|-----------------|
| (In thousands)                                      |   | (Unaudited)      |    |            |
|                                                |   |             |    |            |
| Line of credit                                      |   |             | 62,435  |            | Various from May 2011 to September 2012 |
| Bank loans                                          |   |             | 15,755  |            | Various from May 2011 to August 2012 |
| Notes payable                                       |   |             | 4,566   |            | Various from May 2011 to August 2012 |
| Confirming storage                                  |   |             | 34,568  |            | Various from April 2011 to December 2011 |
| Financing by the rights of goods delivery in future |   |             | 913     |            | April 2011 |
| Total                                               |   | $                | 118,237 |            |   |

|                                             |   | For the three months ended March 31, |    |
|--------------------------------------------------|--------|--------------------------------------------------------------------|---------|
| Sales:                                           |   | 2011                                                               |    |   | 2010 |   |
| Longmen Joint Venture                            |   | $                                                                  | 709,306 |   |   | $ | 434,826 |   |
| Maoming Hengda                                   |   |                                                               | 544     |   |   |   | 3,874 |   |
| Baotou Steel Pipe Joint Venture                  |   |                                                               | 614     |   |   |   | 1,178 |   |
| General Steel (China) & Tianwu Joint Venture |   |                                                               | -       |   |   |   | 13,145 |   |
| Consolidated sales (Unaudited)                   |   | $                                                                  | 710,464 |   |   | $ | 453,023 |   |

----

| Gross profit                                     |   | 2011   |   |   | 2010   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Longmen Joint Venture                            |   | $      | 28,873 |   |   | $      | 6,013 |   |
| Maoming Hengda                                   |   |   | (422   | )      |   |   | (317 | ) |
| Baotou Steel                                     |   |   | (127   | )      |   |   | 32 |   |
| General Steel (China) & Tianwu Joint Venture |   |   | -      |   |   |   | 5 |   |
| Consolidated gross profit (Unaudited)            |   | $      | 28,324 |   |   | $      | 5,733 |   |

| Income from operations:                          |   | 2011   |   |   | 2010   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Longmen Joint Venture                            |   | $      | 14,388 |   |   | $      | (3,802 | ) |
| Maoming Hengda                                   |   |   | (892   | )      |   |   | (597 | ) |
| Baotou Steel                                     |   |   | (421   | )      |   |   | (317 | ) |
| General Steel (China) & Tianwu Joint Venture |   |   | (458   | )      |   |   | (239 | ) |
| Reconciling item (1)                             |   |   | 1,205  |   |   |   | (1,455 | ) |
| Consolidated income from operations (Unaudited)  |   | $      | 13,823 |   |   | $      | (6,408 | ) |

| Net income attributable to controlling interest                          |   | 2011   |   |   | 2010   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Longmen Joint Venture                                                    |   | $      | 2,450  |   |   | $      | (6,905 | ) |
| Maoming Hengda                                                           |   |   | (1,121 | )      |   |   | (246 | ) |
| Baotou Steel                                                             |   |   | (239   | )      |   |   | (553 | ) |
| General Steel (China) & Tianwu Joint Venture                         |   |   | (828   | )      |   |   | (281 | ) |
| Reconciling item (1)                                                     |   |   | 2,343  |   |   |   | 2,478 |   |
| Consolidated net income attributable to controlling interest (Unaudited) |   | $      | 2,604  |   |   | $      | (5,507 | ) |

----

| Depreciation and amortization:                         |   | 2011   |   |   | 2010   |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Longmen Joint Venture                                  |   | $      | 7,503  |   |   | $      | 7,830 |   |
| Maoming Hengda                                         |   |   | 590    |   |   |   | 929 |   |
| Baotou Steel                                           |   |   | 60     |   |   |   | 72 |   |
| General Steel (China) & Tianwu Joint Venture       |   |   | 769    |   |   |   | 755 |   |
| Consolidated depreciation and amortization (Unaudited) |   | $      | 8,922  |   |   | $      | 9,586 |   |

| Interest expenses:                               |   | 2011   |   |   | 2010   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Longmen Joint Venture                            |   | $      | 8,302  |   |   | $      | 3,710 |   |
| General Steel (China) & Tianwu Joint Venture |   |   | 321    |   |   |   | 346 |   |
| Consolidated interest expenses (Unaudited)       |   | $      | 8,623  |   |   | $      | 4,056 |   |

| Capital expenditures:                            |   | 2011   |   |   | 2010   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Longmen Joint Venture                            |   | $      | 10,662 |   |   | $      | 6,705 |   |
| Maoming Hengda                                   |   |   | 216    |   |   |   | 105 |   |
| Baotou Steel                                     |   |   | 23     |   |   |   | 5 |   |
| General Steel (China) & Tianwu Joint Venture |   |   | 8      |   |   |   | 2 |   |
| Reconciling item (1)                             |   |   | 3      |   |   |   | - |   |
| Consolidated captial expenditures (Unaudited)    |   | $      | 10,912 |   |   | $      | 6,816 |   |

|   | (1) | Reconciling amounts refer to the unallocated expenses of the Company, General Steel Investment Co., Ltd, Yangpu Shengtong Investment Co., Ltd and Qiu Steel for the three months ended March 31, 2011 and 2010, respectively. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| · | Sales revenue increased by 56.8% to $710.4 million, up from $453.0 million in first quarter of 2010. |
|--------|-----------------------------------------------------------------------------------------------------------|

| · | Sales volume totaled 1.2 million metric tons, an increase of 20% compared to 1.0 million metric tons in first quarter of 2010. |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

| · | Gross margin improved by 270 basis points, while gross profit increased to $28.3 million, an increase of $ 22.6 million compared to the first quarter of 2010, mainly due to the combined effect of the increases in sales volume, average selling price and production efficiencies. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Earnings Per Share continued to climb to $0.05, an increase of $0.16 from a loss of $(0.11) per share in the first quarter of 2010. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

| · | On April 29, 2011, we, along with our subsidiary Shaanxi Longmen Iron and Steel Co., Ltd. (“Longmen Joint Venture”), entered into a 20-year Cooperation Agreement with Shaanxi Iron and Steel Group Co., Ltd (“Shaanxi Steel Group”) and its parent company Shaanxi Coal and Chemical Industry Group Co., Ltd. (“Shaanxi Coal”). Under the terms of the agreement, Longmen Joint Venture will provide daily management of operations of new equipment constructed by Shaanxi Steel Group. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | In the above mentioned Cooperation Agreement, we also formed a strategic partnership with Shaanxi Coal, whereby Shaanxi Coal will provide raw materials at favorable pricing and financial support to our operation. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | As of May 9, 2011, the company had repurchased 979,481 shares of common stock in open market transactions at an average price of $2.65 per share pursuant to the repurchase program launched in December 2010. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Our two-pronged growth strategy of upgrading our existing operations and growing through merger and acquisition activities has continued to be successful; and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We are a direct beneficiary of the PRC economic stimulus infrastructure spending program and “Go-West” Initiative. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | General Steel (China) Co., Ltd. (“General Steel (China)”); |
|--------|--------|------------------------------------------------------------------------|

|   | · | Baotou Steel - General Steel Special Steel Pipe Joint Venture Company Limited (“Baotou Steel Pipe Joint Venture”); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | Shaanxi Longmen Iron and Steel Co., Ltd. (“Longmen Joint Venture”); |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | Maoming Hengda Steel Co., Ltd. (“Maoming Hengda”); and |
|--------|--------|--------------------------------------------------------------------|

|   | · | Tianwu General Steel Material Trading Co., Ltd.(“Tianwu Joint Venture”). |
|--------|--------|--------------------------------------------------------------------------------------|

----

----

|                                     |   | General Steel (China) |   |   | Baotou Steel PipeJoint Venture |   | Longmen JointVenture  |   | MaomingHengda                   |   |
|------------------------------------------|--------|---------------------------------|--------|--------|-----------------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
| Annual Production Capacity (metric tons) |   |                            |   |   |                                          |   |                            |   |                            |   |
| Crude Steel                              |   | -                               |   |   | -                                             |   | 7 million                       |   | -                               |   |
| Processing                               |   | 400,000                         |   |   | 100,000                                       |   | 2.5 million                     |   | 400,000                         |   |
|                                     |   |                            |   |   |                                          |   |                            |   |                            |   |
| Main Products                            |   | Hot-rolled sheet                |   |   | Spiral-weld pipe                              |   | Rebar/High-speed wire           |   | Rebar                           |   |
|                                     |   |                            |   |   |                                          |   |                            |   |                            |   |
| Main Application                         |   | Light Agricultural vehicles     |   |   | Energy transport                              |   | Infrastructure and construction |   | Infrastructure and construction |   |

----

----

| Name of Major Supplier           |   | Raw MaterialPurchased |   | % of Total RawMaterialPurchased |   |   | Relationship withCompany |          |
|-------------------------------------------------|--------|----------------------------|--------|------------------------------------------------|--------|--------|-------------------------------|---------------|
| Long Steel Group                                |   | Iron Ore                   |   |                                           | 21.6   | %      |                          | Related Party |   |
| Shaanxi Haiyan Coal Chemical Industry Co., Ltd. |   | Coke                       |   |                                           | 19.2   | %      |                          | Related Party |   |
| Shaanxi Huanghe Material Co., Ltd.              |   | Coke                       |   |                                           | 10.5   | %      |                          | Others        |   |
| Shaanxi Hancheng Longhui Trading Co., Ltd.      |   | Coke                       |   |                                           | 6.3    | %      |                          | Others        |   |
| Shaanxi Yingde Gas Co, Ltd.                     |   | Gas                        |   |                                           | 3.7    | %      |                          | Others        |   |
|                                            |   | Total                      |   |                                           | 61.4   | %      |                          |          |   |

| Name of Major Supplier |   | Raw MaterialPurchased |   | % of Total RawMaterialPurchased |   |   | Relationship withCompany |   |
|---------------------------------------|--------|----------------------------|--------|------------------------------------------------|--------|--------|-------------------------------|--------|
| Baotou Gangshang Trading Co., Ltd.    |   | Steel coil                 |   |                                           | 80.7   | %      |                          | Others |   |
| Baotou Weifengda Trading Co., Ltd.    |   | Steel coil                 |   |                                           | 17.6   | %      |                          | Others |   |
|                                  |   | Total                      |   |                                           | 98.3   | %      |                          |   |   |

| Name of Major Supplier                   |   | Raw MaterialPurchased |   | % of Total RawMaterialPurchased |   |   | Relationship withCompany |   |
|---------------------------------------------------------|--------|----------------------------|--------|------------------------------------------------|--------|--------|-------------------------------|--------|
| Hunan Xiangtan Guoshun Electricity & Coal Co., Ltd. |   | Coal                       |   |                                           | 43.5   | %      |                          | Others |   |
| Maoming Zhengmao Develop Co., Ltd.                      |   | Heavy oil                  |   |                                           | 36.9   | %      |                          | Others |   |
|                                                    |   | Total                      |   |                                           | 80.4   | %      |                          |   |   |

----

| SALES                             |   | Three months ended |      |   |                     |   |    |        |   |
|-----------------------------------|--------|------------------------------|-----------|--------|--------------------------|--------|---------|-------------|--------|
|                              |   | March 31, 2011     |      |   | March 31, 2010 |   |    | Change      |   |   | Change |   |
| (in thousands, exceptmetric tons) |   | Volume                       |      |   | Sales                    |   |    | %           |   |   | Volume |   |   | Sales |   |   | % |   |   | Volume % |   |   | Sales % |   |
|                              |   | (Unaudited)                  |      |   |                     |   |    | (Unaudited) |   |   |   |   |   |   |   |   |   |   |
| Longmen Joint Venture             |   |                         | 1,169,314 |   |                     | $      | 709,306 |        |   |   | 99.8 | % |   |   | 909,731 |   |   | $ | 434,826 |   |   |   | 96.0 | % |   |   | 28.5 | % |   |   | 63.1 | % |
| Other                             |   |                         | 19,625    |   |                     | $      | 1,158   |        |   |   | 0.2 | % |   |   | 125,640 |   |   | $ | 18,197 |   |   |   | 4.0 | % |   |   | (84.4 | )% |   |   | (93.6 | )% |
| Total Sales of General Steel      |   |                         | 1,188,939 |   |                     |   | 710,464 |        |   |   | 100.0 | % |   |   | 1,035,371 |   |   |   | 453,023 |   |   |   | 100.0 | % |   |   | 14.8 | % |   |   | 56.8 | % |

|                                      |   | Three months ended |      |   |                     |   |
|-------------------------------------------|--------|------------------------------|-----------|--------|--------------------------|--------|
|                                      |   | March 31, 2011     |      |   | March 31, 2010 |   |   | Change |   |   | Change |   |
| (in thousands, exceptmetric tons)         |   | Volume                       |      |   | Cost                     |   |   | % |   |   | Volume |   |   | Cost |   |   | % |   |   | Volume % |   |   | Cost % |   |
|                                      |   | (Unaudited)                  |      |   |                     |   |   | (Unaudited) |   |   |   |   |   |   |   |   |   |   |
| Longmen Joint Venture                     |   |                         | 1,169,314 |   |                     | $      | 680,433 |   |   |   | 99.7 | % |   |   | 909,731 |   |   | $ | 428,814 |   |   |   | 95.9 | % |   |   | 28.5 | % |   |   | 58.7 | % |
| Other                                     |   |                         | 19,625    |   |                     | $      | 1,707 |   |   |   | 0.3 | % |   |   | 125,640 |   |   | $ | 18,476 |   |   |   | 4.1 | % |   |   | (84.4 | )% |   |   | (90.8 | )% |
| Total Cost of Goods Sold of General Steel |   |                         | 1,188,939 |   |                     |   | 682,140 |   |   |   | 100.0 | % |   |   | 1,035,371 |   |   |   | 447,290 |   |   |   | 100.0 | % |   |   | 14.8 | % |   |   | 52.5 | % |

|                                |   | Three months ended |      |   |                     |   |
|-------------------------------------|--------|------------------------------|-----------|--------|--------------------------|--------|
| (in thousands, except metrictons)   |   | March 31, 2011     |      |   | March 31, 2010 |   |   | Change % |   |
|                                |   | Volume                       |      |   | Gross Profit        |   |   | Margin% |   |   | Volume |   |   | Gross Profit |   |   | Margin % |   |   | GrossProfit |   |
|                                |   | (Unaudited)                  |      |   |                     |   |   | (Unaudited) |   |   |   |   |   |   |   |
| Longmen Joint Venture               |   |                         | 1,169,314 |   |                     | $      | 28,873 |   |   |   | 4.1 | % |   |   | 909,731 |   |   | $ | 6,012 |   |   |   | 1.4 | % |   |   | 380.3 | % |
| Other                               |   |                         | 19,625    |   |                     |   | (549 | ) |   |   | (47.4 | )% |   |   | 125,640 |   |   |   | (279 | ) |   |   | (1.5 | )% |   |   | 96.0 | % |
| Total Gross Profit of General Steel |   |                         | 1,188,939 |   |                     |   | 28,324 |   |   |   | 4.0 | % |   |   | 1,035,371 |   |   |   | 5,733 |   |   |   | 1.3 | % |   |   | 394.1 | % |

----

| (in thousands)                                |   | Three months ended |   |   |                     |   |
|----------------------------------------------------|--------|------------------------------|--------|--------|--------------------------|--------|
|                                               |   | March 31, 2011     |   |   | March 31, 2010 |   |   | Change % |   |
|                                               |   | (Unaudited)                  |   |   | (Unaudited)              |   |   |   |   |
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES       |   | $                            | 14,501 |   |                     | $      | 12,141 |   |   |   | 19.4 | % |
| SG&A EXPENSES AS A PERCENTAGE OF TOTAL REVENUE |   |                         | 2.0%   |   |                     |   | 2.7% |   |   |   |   |   |

| (in thousands)           |   | Three months ended |   |   |                     |   |
|-------------------------------|--------|------------------------------|--------|--------|--------------------------|--------|
|                          |   | March 31, 2011     |   |   | March 31, 2010 |   |   | Change % |   |
|                          |   | (Unaudited)                  |   |   | (Unaudited)              |   |   |   |   |
| INCOME (LOSS) FROM OPERATIONS |   | $                            | 13,823 |   |                     | $      | (6,408 | )  |   |   | (315.7) | % |

----

| (in thousands)                            |   | Three months ended |    |   |                     |   |
|------------------------------------------------|--------|------------------------------|---------|--------|--------------------------|--------|
|                                           |   | March 31, 2011     |    |   | March 31, 2010 |   |   | Change % |   |
|                                           |   | (Unaudited)                  |    |   | (Unaudited)              |   |   |   |   |
|                                           |   |                         |    |   |                     |   |   |   |   |
| Interest income                                |   | $                            | 1,063   |   |                     | $      | 1,120 |   |   |   | (5.1 | )% |
| Finance/Interest expense                       |   |                         | (14,119 | )      |                     |   | (10,963 | ) |   |   | 28.8 | % |
| Change in fair value of derivative liabilities |   |                         | 3,552   |   |                     |   | 3,939 |   |   |   | (9.8 | )% |
| Loss on disposal of fixed assets               |   |                         | (397    | )      |                     |   | - |   |   |   |   |   |
| Income from equity investment                  |   |                         | 1,655   |   |                     |   | 1,682 |   |   |   | (1.6 | )% |
| Foreign currency transaction gain              |   |                         | 619     |   |                     |   | - |   |   |   |   |   |
| Other non-operating income (expense), net      |   |                         | 306     |   |                     |   | (4 | ) |   |   | (7,738.2 | )% |
| Total other expenses, net                      |   | $                            | (7,321  | )      |                     | $      | (4,226 | ) |   |   | 73.2 | %  |

| (in thousands)                                    |   | Three months ended |   |   |               |   |
|--------------------------------------------------------|--------|------------------------------|--------|--------|--------------------|--------|
|                                                   |   | March 31, 2011     |   |   | March 31,2010 |   |   | Change % |   |
|                                                   |   | (Unaudited)                  |   |   | (Unaudited)        |   |   |   |   |
| NET INCOME (LOSS) BEFORE NONCONTROLLING  INTEREST |   | $                            | 5,829  |   |               |   | (8,667 | ) |   |   | (167.3 | )% |

| (in thousands)                                                 | Three months ended |   |                     |   |   |
|---------------------------------------------------------------------|------------------------------|--------|--------------------------|--------|--------|
|                                                                | March 31, 2011     |   | March 31, 2010 |   |   | Change % |   |
|                                                                | (Unaudited)                  |   | (Unaudited)              |   |   |   |   |
| NET INCOME (LOSS) BEFORE NONCONTROLLING INTEREST                    |                         | $      | 5,829                    |   |   | $ | (8,667 | ) |   |   | (167.3 | )% |
| LESS: Net Income (Loss) Attributable to the Noncontrolling Interest |                         |   | 3,225                    |   |   |   | (3,160 | ) |   |   | (202.1 | )% |
| NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST              |                         | $      | 2,604                    |   |   | $ | (5,507 | ) |   |   | (147.3 | )% |

----

| Earnings (Loss) per Share               |   | Three months ended |       |   |                     |   |
|--------------------------------------------------------|--------|------------------------------|------------|--------|--------------------------|--------|
| (in thousands, except per share data)             |   | March 31, 2011     |       |   | March 31, 2010 |   |   | Change % |   |
|                                                   |   | (Unaudited)                  |       |   | (Unaudited)              |   |   |   |   |
| NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST |   | $                            | 2,604      |   |                     | $      | (5,507 | ) |   |   | (147.3 | )%  |
|                                                   |   |                         |       |   |                     |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF SHARES                      |   |                         |       |   |                     |   |   |   |   |   |   |   |
| Basic                                                  |   |                         | 54,839,733 |   |                     |   | 51,652,843 |   |   |   | 6.2 | % |
| Diluted                                                |   |                         | 54,839,733 |   |                     |   | 51,652,843 |   |   |   | 6.2 | % |
|                                                   |   |                         |       |   |                     |   |   |   |   |   |   |   |
| EARNINGS (LOSS) PER SHARE                              |   |                         |       |   |                     |   |   |   |   |   |   |   |
| Basic                                                  |   | $                            | 0.05       |   |                     | $      | (0.11 | ) |   |   | (145.5 | )% |
| Diluted                                                |   | $                            | 0.05       |   |                     | $      | (0.11 | ) |   |   | (145.5 | )%   |

----

| Inventory           |   |                     |    |   |                        |   |
|---------------------|--------|--------------------------|---------|--------|-----------------------------|--------|
| (in thousands) |   | March 31, 2011 |    |   | December 31, 2010 |   |   | Change % |   |
|                |   | (Unaudited)              |    |   |                        |   |   |   |   |
| Supplies            |   | $                        | 17,181  |   |                        | $      | 13,733 |   |   |   | 25.1 | % |
| Raw materials       |   |                     | 294,232 |   |                        |   | 381,178 |   |   |   | (22.8 | ) % |
| Finished goods      |   |                     | 209,653 |   |                        |   | 80,968 |   |   |   | 158.9 | % |
|                |   |                     |    |   |                        |   |   |   |   |   |   |   |
| Total inventories   |   | $                        | 521,066 |   |                        | $      | 475,879 |   |   |   | 9.5 | % |

----

|   | · | Some non-cash items including net income, such as depreciation and amortization, bad debt recovery (allowance), inventory written-off, loss on disposal of equipment, stock issued for service and compensation, change in fair value of derivative instrument and income from investment and deferred tax assets, resulted in a cash inflow of $7.4 million. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Cash outflow resulting from the increase in notes receivable, accounts receivable, accounts receivable – related parties, other receivable-related parties, inventories, advances on inventory purchases, advances on inventory purchases – related parties, as well as a decrease in other payables-related parties, was $160.3 million, compared to an outflow of $78.8 million during the same period in 2010. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Cash inflow due to the decrease in other receivables, as well as the increase in accounts payable, accounts payable-related parties, other payables and accrued liabilities, customer deposits, customer deposits-related parties and taxes payable, totaled $201.7 million, compared to an inflow of $63.0 million during the same period in 2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                 |   | Payment due by period |      |
|---------------------------------------------------------------------------|--------|--------------------------------------|-----------|
|                                                                 |   |                                 |      |   | Less than |   |   |   |   |   |   |   |
| Contractual obligations                                         |   | Total                                |      |   | 1 year |   |   | 1-3 years |   |   | 4- 5 years |   |
|                                                                      |   | (in thousands)                  |      |
| Bank loans                                                                |   | $                                    | 311,020   |   |   | $ | 311,020 |   |   | $ | - |   |   | $ | - |   |
| Other loans                                                               |   |                                 | 196,347   |   |   |   | 196,347 |   |   |   | - |   |   |   | - |   |
| Notes payable                                                             |   |                                 | 556,812   |   |   |   | 556,812 |   |   |   | - |   |   |   | - |   |
| Deposits due to sales representatives                                     |   |                                 | 28,416    |   |   |   | 28,416 |   |   |   |   |   |   |   | - |   |
| Lease with Bao Gang Group                                                 |   |                                 | 342       |   |   |   | 274 |   |   |   | 68 |   |   |   | - |   |
| Construction obligations - Longmen Joint Venture and Maoming Hengda Steel |   |                                 | 6,054     |   |   |   | 6,054 |   |   |   | - |   |   |   | - |   |
| Total (Unaudited)                                                         |   | $                                    | 1,098,991 |   |   | $ | 1,098,923 |   |   | $ | 68 |   |   | $ | - |   |

----

|                                                |   | Guarantee         |    |                 |
|-----------------------------------------------------|--------|-------------------|---------|----------------------|
| Nature of                                      |   | amount            |    |            |
| guarantee                                           |   | In thousands |    | Guaranty period |
| Line of credit                                      |   | $                 | 62,435  |                 | Various from May 2011 to September 2012 |
| Bank Loans                                          |   |              | 15,755  |                 | Various from May 2011 to August 2012 |
| Notes payable                                       |   |              | 4,566   |                 | Various from May 2011 to August 2012 |
| Confirming Storage                                  |   |              | 34,568  |                 | Various from April 2011 to December 2011 |
| Financing by the rights of goods delivery in future |   |              | 913     |                 | April 2011 |
| Total (unaudited)                                   |   | $                 | 118,237 |                 |   |

----

----

----

| Period                                  |   | Total Numberof SharesPurchased |    |   | AveragePrice Paidper Share |   |   | Total Number ofShares Purchasedas Part of PubliclyAnnounced Plansor Programs |   |   | Maximum Number of Shares ThatMay Yet Be PurchasedUnder the Plans orPrograms |   |
|-----------------------------------------|--------|------------------------------------------|---------|--------|--------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------|--------|
|                                    |   |                                     |    |   |                                 |   |   |                                                                                                                 |   |   |                                                                                                                |   |
| January 1, 2011 - January 31, 2011 |   |                                     | 396,900 |   |                                 | $      | 2.84   |                                                                                                                 |   |   | 396,900                                                                                                             |   |   |   | 286,340 |   |
| February 1, 2011 - February 28, 2011    |   |                                     | -       |   |                                 | $      | -      |                                                                                                                 |   |   | -                                                                                                                   |   |   |   | - |   |
| March 1, 2011 - March 31, 2011     |   |                                     | -       |   |                                 | $      | -      |                                                                                                                 |   |   | -                                                                                                                   |   |   |   | - |   |
|                                    |   |                                     |    |   |                                 |   |   |                                                                                                                 |   |   |                                                                                                                |   |   |   |   |   |
| Total (unaudited)                       |   |                                     | 396,900 |   |                                 | $      | 2.84   |                                                                                                                 |   |   | 396,900                                                                                                             |   |   |   | 286,340 |   |

| 3.1  | Articles of Incorporation of General Steel Holdings, Inc. (included as Exhibit 3.1 to the Form SB-2 filed with the Commission on June 6, 2003 and incorporated herein by reference). |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Amendment to the Articles of Incorporation dated February 22, 2005 (included as Exhibit 3.2 to the Form 10-K filed March 16, 2010 and incorporated herein by reference). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | Amendment to the Articles of Incorporation dated November 14, 2007 (included as Exhibit 3.3 to the Form 10-K filed March 16, 2010 and incorporated herein by reference). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.4 | Bylaws of General Steel Holdings, Inc. (included as Exhibit 3.5 to the Form 10-K filed March 16, 2010 and incorporated herein by reference). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1 | Certification of the CEO (Principal Executive Officer) pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed herewith. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 31.2 | Certification of the CFO (Principal Financial Officer) pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed herewith. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification of the CEO (Principal Executive Officer) pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as filed herewith. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification of the CFO (Principal Financial Officer) pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as filed herewith. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|               | General Steel Holdings, Inc.         |
|--------------------|--------------------------------------|
|               |                                 |
| Date: May 10, 2011 | By: /s/ Zuosheng Yu                  |
|               | Zuosheng Yu                          |
|               | Chief Executive Officer and Chairman |
|               |                                 |
| Date: May 10, 2011 | By: /s/ John Chen                    |
|               | John Chen                            |
|               | Director and Chief Financial Officer |

----