The following discussion should be read in conjunction with the information contained in our unaudited consolidated financial statements and the notes thereto appearing elsewhere herein and in conjunction with the Management's Discussion and Analysis set forth in our Annual Report on Form 10-K for the year ended December 31, 2009.

We are on a calendar year; as such the three month period ending March 31, is referred to as our "first quarter". The past year ended December 31, 2009 is referred to as "2009", the current year ending December 31, 2010 is referred to as "2010", and the coming year ending December 31, 2011 is referred to as "2011".

The unaudited interim financial statements furnished in this report reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2009 and notes thereto contained in the Company's Annual Report on Form 10-K filed with the SEC on March 31, 2010.

OVERVIEW OF OUR PERFORMANCE AND OPERATIONS

Our Business and Recent Developments

We import, sell and distribute to the metal refinery industry in the PRC a variety of metal ore which includes iron, chrome, nickel, copper and manganese ore as well as non-ferrous metals, and coal. We obtain these raw materials from global suppliers in Brazil, India, South America, Oman, Turkey, Nigeria, Indonesia, and the Philippines and distribute them in the PRC. We also recycle scrap metal to be used by steel mills in the production of recycled steel.

Domestic steel production in the PRC has rebounded in response to Chinese government incentives and investment in infrastructure and as signs of recovery from the global economic slowdown has allowed our customers to begin to ramp-up operations to pre-economic slowdown levels.

We believe scrap metal recycling will become a strong growth driver for our company as natural resources continue to be depleted and larger amounts of unprocessed scrap metal becomes available as a result of increases in consumer demand for products made from steel that eventually are recycled. We recently completed construction of a scrap metal recycling facility in the Banqiao Industrial Zone of Lianyungang Economic Development Zone in the Jiangsu province of the PRC in the first quarter of 2010. This facility is expected to recycle automobiles, machinery, building materials, dismantled ships and various other scrap metals. We will sell and distribute the recycled scrap metal to the metal refinery industry in the PRC utilizing our existing network of metal ore customers.

We have invested a total of approximately $25.6 million for acquiring land use rights, construction and equipment purchases for the first phase of our recently completed scrap metal recycling facility. These capital expenditures were derived from a portion of the net proceeds from our 2008 offering and debt and vendor financing. We began recycling operations at this facility in late March 2010 and anticipate that we will report meaningful revenues from its operations in the second quarter of 2010.

During the first quarter of 2010, we built on our significant achievements from the prior year in our continuing efforts to secure financing for our business. We maintain four bank facilities which provide for the issuance of commercial letters of credit in the aggregate amount of $44 million at March 31, 2010, $12 million of which were expired on April 21, 2010 and renewal negotiation is under way. After our common stock began trading on the NYSE Amex on February 10, 2010 under the ticker symbol "CNAM", investors exercised warrants to purchase 1,338,152 shares of our common stock at an exercise price of $5.00 per share resulting in proceeds to us of $6,690,760. Also, on April 14, 2010, Mr. Kexuan Yao, our chairman and chief executive officer exercised an option to purchase 1,000,000 shares of our common stock at an exercise price of $5.00 per share resulting in $5,000,000 proceeds to us.

Further, on April 20, 2010 we entered into a Securities Purchase Agreement with nine accredited and institutional investors for the sale of 1,538,464 shares of our common stock at an offering price of $6.50 per share resulting in net proceeds to us of $9,112,973. We believe that we are in a well-capitalized position to finance our continued expansion.

Our Performance

During the first quarter of 2010, our net revenues increased 60% over the same period in 2009 due to a recovering economy in China resulting in stronger demand for our products. Our gross profit margin decreased during the current period to 7% compared to 10% during the same period in 2009. Our performance during the trailing five quarters reveals the variable nature of our gross profit margins in our trading business as our gross profit margin as a percentage of net revenues began at 10% for the first quarter of 2009, increased to 18% for the second quarter of 2009, decreased to 4% for the third quarter of 2009, increased to 16% for the fourth quarter of 2009, and then decreased to 7% for the first quarter of 2010. These fluctuations are attributable to variations in market prices of the ore and metals we sell. Our net income decreased $1.9 million during the first quarter of 2010 due to a $2.0 million loss on change in fair value of our derivative liability associated with outstanding warrants to purchase our common stock combined with reduced gross margins and a $580,000 increase in operating expenses which were partially offset by a $963,000 forgiveness of account payable related to a vendor price adjustment. Our total assets at March 31, 2010 decreased $6.9 million or 12% compared to December 31, 2009, which was mainly due to receipt of accounts receivable that was used to pay down approximately $17 million in short term financing and invest in constructing our scrap metal recycling facility, offset by an increase in cash from our financings.

We have long term borrowings of $10.2 million, with current maturities of such borrowings of $2.2 million related to investment in our scrap metal recycling facility. Accrued expenses and other current liabilities as well as accounts payable increased $1.3 million while inventories decreased $458,000 and accounts payable and accrued expenses increased $1.9 million at March 31, 2009 from December 31, 2009 due to timing differences between our receipt of product, shipment to our customers, and payment to our vendors.

Our Outlook

Our performance during the first quarter of 2010 showed increased sales with a lower gross margin in comparison to the same period in 2009. We continue to witness a rebound in stronger demand for our products and increases in our revenue which we believe is evidence of a continuing global economic recovery and increased domestic economic activity in the PRC stemming from government domestic economic stimulus programs.

Metal Ore Trading. The metals markets have witnessed a rebound in pricing since the first quarter of 2009 and we expect this upward trend to continue in line with increased demand. While we achieved a 60% increase in net revenues during the first quarter of 2010 compared to the same period in 2009, we have historically experienced increased trading volumes during the last three quarters of the calendar year compared to the first quarter. We generated only 6% and 18% of total annual net revenues during the first quarter of 2009 and 2008, respectively. In addition, in March 2010 we entered into a contract to purchase 749,000 metric tons of Brazilian manganese ore over the next 16 months which could result in sales of up to $180 million over the contract period based on current market prices for manganese ore of this type.

We have seen high demand for manganese ore as the steel industry in the PRC has continued to rebound in 2010. This demand has created a significant market for manganese ore which is used in the production of iron-manganese alloys used in the steel industry and the production of non-ferrous alloys with aluminum, magnesium, copper, nickel and zinc. In the production of steel, the presence of the manganese is essential for sulfur control, and, in special steels, for the control of carbon and phosphorus.

Scrap Metal Recycling. We expect to begin limited production of the first phase of our recycling facility in Lianyungang in May 2010 and begin shipping processed scrap metal in June 2010 as we ramp up production over the next 10 months. We entered into a scrap metal sales contract in March 2010 with a China steel producer to sell 23,000 tons of a mixture of scrap metal, crushed aggregates, charging materials and heavy scrap. This contract calls for delivery of these materials over a 10 month period which we expect to fulfill with our expected production in June 2010. Subsequent orders are expected to follow upon our receipt of a monthly order from the buyer with pricing and terms determined on the 25th of each month to calculate the following month's unit price per ton. We expect revenues of over $100 million from this contract.

Due to efforts to improve our performance and operate more efficiently, we now see our company in the position to capitalize on trading opportunities as a global economic recovery emerges and we begin production of processed scrap metal at our recycling facility. As demand increases for metal ore and scrap metal, we are faced with challenges in securing new and reliable sources of the products we resell and process.

RESULTS OF OPERATIONS

The table below summarizes the consolidated operating results for the three
months ended March 31, 2010 and 2009. The percentages represent each line item
as an approximate percentage of net revenues unless otherwise noted.

                              For the Three Months Ended March 31,
                                2010                           2009                 $ Change        % Change
Net revenues        $    8,576,570                    $ 5,357,858                 $  3,218,712             60 %
Cost of goods
sold                     8,017,651                %     4,847,235             %      3,170,416             65 %
Gross profit               558,919                %       510,623             %         48,296              9 %

Total operating
expenses                   913,577                %       333,934             %        579,643            174 %
Operating income         (354,658)                %       176,689             %      (531,347)           -301 %

Net Revenues

Net revenues of $8.6 million in the first quarter of 2010 increased $3.2 million compared to the same period in 2009 primarily due to a $3.3 million increase in net revenues from the sales of iron ore and a $3.1 million increase in net revenues from chromium, partially offset by a decrease in sales of manganese of $3.4 million. The products we buy and sell are subject to change and are dependent upon availability of supply and the demands of our customers.

Cost of Goods Sold

Cost of goods sold includes the cost of the products we purchase from our vendors and shipping and handling costs on shipments from such vendors. Cost of goods sold of $8.0 million increased $3.2 million, a gross profit margin of 7%, in the first quarter compared to $4.8 million, a gross profit margin of 10%, in the same period in 2009. This margin decrease was primarily due to a change in sales mix during the quarter with 60% of sales coming from lower margin iron ore and 40% of sales coming from higher margin chromium. Our gross margin for chrome ore increased to 10% during the first quarter of 2010 from 8% during the same period of 2009 and our gross margin from iron ore decreased to 2% during the first quarter of 2010 from 18% during the same period of 2009.

Total Operating Expenses

Operating expenses of $914,000 in the first quarter of 2010 increased by $580,000, or 174% compared to the same period in 2009 due to an increase in both selling expenses and general and administrative expenses. Selling expenses include commissions, salaries, and travel for the sales agents. Selling expenses as a percentage of net revenues were 4% in the first quarter of 2010 as compared to 1% in the first quarter of 2009. Selling expenses increased in absolute dollars by $315,000 mainly due to $94,000 in higher commissions and salaries paid on increased sales and a larger sales staff, a net increase of $212,000 in port charges, quarantine and inspection expenses, and warehousing expenses.

General and administrative expenses include salaries, professional fees including legal and accounting fees, and office expenses. Our general and administrative costs increased by $264,000, or 86%, in the first quarter of 2010 as compared to the same period in 2009 primarily due to an increase of $110,000 in stock-based consulting fees granted to consultants for accounting and reporting consulting services, $60,000 in stock-based compensation granted to employees and directors, and a $40,000 increase in start-up expenses for our recycling operations. Both the stock-based consulting fees and stock-based compensation to employees and directors are non-cash expenses paid with shares of our common stock and will be recurring each quarter during this fiscal year. General and administrative expenses as a percentage of net revenues increased to 7% for the first quarter of 2010 as compared to at 6% for the same period in 2009 as a result of the increases.

Total Other (Income) Expense

Total other income of $554,000 in the first quarter of 2010 increased $433,000 over the comparable period in 2009 primarily due to a $957,000 gain related to a vendor price adjustment for goods purchased and resold during 2009. During 2009, we accepted a shipment of inferior quality goods and resold the shipment to our customer at a lower price. During the current quarter of 2010, we successfully negotiated a vendor price adjustment of $957,000 and recorded this as part of other income in the current quarter as the net revenues to which this cost would be appropriately matched occurred in a previous fiscal year precluding reduction of cost of goods sold in the current quarter. This gain was partially offset by a $322,000 non-cash loss from the change in fair value of a derivative liability related to outstanding stock purchase warrants at March 31, 2010 that are not considered indexed to our stock and are revalued at each reporting period. The fair value of the outstanding stock purchase warrants decreased to $572,000 at March 31, 2010 from $3.4 million at December 31, 2009 due to the excercise of 1,324,346 warrants at $5.00 per share, 167,740 warrants exercised on a cashless basis, and 1,031,715 warrants that no longer carry anti-dilution provisions and no longer require derivative liability accounting. Interest income increased during the first quarter of 2010 from the comparable period in 2009 as a result of higher cash balances. Interest expense also increased $67,000 as a result of increased borrowings of $10.2 million incurred in connection with construction and equipment purchases for our scrap metal recycling facility. These increases in expenses were partially offset by

Income Tax Expense

Income tax expense of $146,000 in the first quarter of 2010 increased by $146,000 compared to the same period in 2009 primarily due to an income tax accrual of $146,000 for income taxes on the operations of our Hong Kong subsidiary during 2010 using an effective tax rate of 16.5%.

Net Income (Loss)

Net income of $53,000 in the first quarter of 2010 decreased $244,000 compared to the same period in 2009 primarily due to a decrease in gross margin to 7% of net revenues in the current quarter, a $580,000 increase in operating expenses, partially offset by an increase in net revenues of $3.2 million and $963,000 gain from a vendor price adjustment in the current quarter..

Comprehensive Income (Loss)

During the first quarter of 2010 our comprehensive income amounted to $49,000. Comprehensive income (loss) consists of our net income and other comprehensive income, including foreign currency translation gain (loss). The functional currency of four of our subsidiaries operating in the PRC is the Chinese yuan or RMB. The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. As a result of these translations, we reported a foreign currency translation loss of $3,939 for the first quarter of 2010 and $26,445 for same period in 2009. These non-cash losses and gains had the effect of decreasing our reported comprehensive income in both periods.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate adequate amounts of cash to meet its cash needs.

At March 31, 2010 and December 31, 2009 we had cash and cash equivalents of $4.1 million and $0.7 million, respectively. At March 31, 2010 our working capital was $8.5 million as compared to $5.3 million at December 31, 2009.

Our principal future uses of funds are for working capital requirements, including purchases of metal ore and scrap metal, capital expenditures and debt service. We have historically financed our working capital needs primarily through sales of our common stock and warrants, internally generated funds and debt financing. We collect cash from our customers based on our sales to them and their respective payment terms.

We believe our working capital is sufficient for our operations for at least the next 12 months.

We have a RMB 70 million (equivalent to $10.2 million at December 31, 2009) line of credit facility ("Line of Credit") with the Bank of China that we entered into on September 3, 2009. The proceeds from the Line of Credit are designated for property, plant and equipment expenditures related to our scrap metal recycling facility and is secured by these assets in addition to our land use right on which this facility was constructed. The Line of Credit expires on September 3, 2012. As of March 31, 2010, we drew RMB 70 million (equivalent to U.S. $10.2 million) of the Line of Credit. Interest is paid quarterly with principal payments of RMB 15 million (equivalent to U.S. $2.2 million) due on May 15, 2010, RMB 30 million (equivalent to U.S. $4.4 million) due on August 25, 2011, and the remaining principal drawn up to RMB 25 million (equivalent to U.S. $3.7 million) due on August 25, 2012.

We have four bank facilities which provide for the issuance of commercial letters of credit in the aggregate amount of $44.0 million. The entire amount of these bank facilities were available at March 31, 2010. The following is a summary of each letter of credit facility.

Approximately 38% of our cash reserves at March 31, 2010, are held in the form of RMB held in bank accounts at financial institutions located in the PRC. Cash held in banks in the PRC is not insured. In 1996, the Chinese government introduced regulations which relaxed restrictions on the conversion of the RMB; however restrictions still remain, including, but not limited to, restrictions on foreign invested entities. Foreign invested entities may only buy, sell or remit foreign currencies after providing valid commercial documents at only those banks authorized to conduct foreign exchanges. Furthermore, the conversion of RMB for capital account items, including direct investments and loans, is subject to PRC government approval. Chinese entities are required to establish and maintain separate foreign exchange accounts for capital account items. We cannot be certain Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB, especially with respect to foreign exchange transactions. Accordingly, cash on deposit in banks in the PRC is not readily deployable by us for purposes outside of the PRC.

Our current assets at March 31, 2010 decreased 28% from December 31, 2009; this reflects decreases in current asset items including accounts receivable of $15.0 million, pledged deposits of $564,000, inventories of $458,000, and advances on purchases of $422,000. These decreases were partially offset by increases of $3.4 million in cash and $2.5 million in prepayment and other current assets.

Pledged deposits at March 31, 2010 of $215,000 represent deposits with financial institutions as collateral to letters of credit we provide to suppliers for the purchase of inventories. The amounts will be released to pay vendors upon acceptance of goods.

Our accounts receivable, net of allowance for doubtful accounts, decreased $15.0 million at March 31, 2010 from December 31, 2009 mainly due to collections of sales made near the end of the year.

Inventories decreased $458,000 at March 31, 2010 from December 31, 2009 mainly due to timing differences between our receipt of product and shipment to our customers. We hold inventory for short periods of time, in situations where our customer has not accepted the shipment or delays in shipment occur.

Advances on purchases decreased $422,000 at March 31, 2010 from December 31, 2009, and consisted of prepayments to vendors for merchandise and deposits on pending purchases. These advances on purchases are customary in our business and help us secure inventory below prevailing market prices, thereby providing us with a better opportunity to increase our gross profit margins.

Our prepayment and other current assets increased $2.5 million at March 31, 2010 compared to December 31, 2009 primarily due to prepayments and deposits for start-up costs and deposits related to our scrap metal recycling operation which began operations in the first quarter of 2010. The prepayments include a $1.5 million guarantee deposit to the recycling equipment vendor, $2.8 million in prepaid expenses related to the recycling facility, and $1.7 million in prepayments related to our trading business. This is an increase from prepaid expenses related to the recycling facility of $3.5 million at December 31, 2009.

Our current liabilities decreased $13.7 million at March 31, 2010 from December 31, 2009, which reflects repayment of loans payable of $17.0 million and payment of $1.0 million in value added taxes. These decreases were partially offset by increases in advances from stockholder of $1.8 million, accrued expenses and other current liabilities of $1.3 million, accounts payable of $642,000 and customer deposits of $468,000.

Loans payable decreased $17.0 million at March 31, 2010 compared to December 31, 2009 primarily due to a repayment of short-term borrowings under our letter of credit facilities in the fourth quarter of 2009 used to finance inventory purchases. We used collections of accounts receivable to repay these short-term borrowings.

Current maturities of long-term debt remained at $2.2 million at March 31, 2010 and December 31, 2009 due to a principal payments from of Bank of China line of credit of RMB 15 million (equivalent to U.S. $2,193,881) due on May 15, 2010. We plan to satisfy this obligation with cash held in our banks in China.

Value added taxes and other taxes payable decreased $1.0 million compared to December 31, 2009 due to timing of payments and offsets of our value added tax liability.

At March 31, 2010 we owed our Chairman and CEO, Mr. Kexuan Yao, $1.9 million for funds he advanced to us for working capital purposes a net increase of $1.8 million from December 31, 2009.

Customer deposits increased $468,000 at March 31, 2010 compared to December 31, 2009. This decrease is due to timing of customer orders and amounts that we require for deposits. We recognize customer deposits as revenue when the goods have been delivered and risk of loss has transferred to the customer either at the port of origin or port of destination based on the shipping terms we agree to with our customer.

Accrued expenses and other current liabilities increased $1.2 million at March 31, 2010 from December 31, 2009. Accrued expenses consist of accrued expenses and other payables related to shipping fees. These expenses are due to timing differences of shipments and payments of our payables as compared to 2009.

We do not have any commitments for capital expenditures at March 31, 2010. As of March 31, 2010, since inception we have invested a total of $31.0 million for the acquisition of land use rights, construction and equipment purchases for the first phase of our scrap metal recycling facility. While we expect to expand the production capacity of our recycling facility, we have not set a timeframe for this expansion. Also, we have not determined how we plan to finance this future expansion and unless we can obtain additional financing, we will be unable to complete construction of additional phases of our scrap steel recycling facility. There is no assurance, however, that we will be successful in obtaining the additional financing that we require for additional phases or that such financing may not be on terms deemed to be desirable to our management. Furthermore, in the event we are successful, there is no assurance that such investment will result in enhanced operating performance.

Statements of Cash Flows

Our cash increased $3.4 million during the first quarter of 2010 as compared to a decrease of $1.9 million during the comparable period in 2009. During the current quarter we were provided cash in the amount of $15.5 million from in operating activities and used cash of $5.0 million in investing activities and $7.1 million through financing activities. In comparable period in 2009 we were provided cash in the amount of $5.2 million in operating activities and used cash of $4.0 million in investing activities and $3.1 million through financing activities.

Net Cash Provided by (Used in) Operating Activities

In the first quarter of 2010, net cash provided by operating activities of $15.5 million was mainly comprised inflows related to a decrease in accounts receivable of $15.0 million, a decrease in inventory of $458,000, a decrease in advance of purchases of $422,000 and increases in accrued liabilities of $1.3 million, accounts payable of $641,000 and customer deposits of $468,000. These inflows were partially offset by cash used by an increase in prepayments and other current assets of $2.5 and decrease in taxes payable of $846,000.

In the comparable quarter of 2009 cash provided by operations of $5.2 million included a decrease in accounts receivables of $1.9 million, and increases in accounts payable of $5.3 million and advances on purchases of $352,000. These inflows were partially offset by an increase in inventory of $1.6 million and decrease in customer deposits of $521,000and taxes payable of $263,000.

Cash Used in Investing Activities

In the first quarter of 2010 cash used in investing activities of $5.0 million was due to purchases of property and equipment associated with our recycling facility construction of $5.5 million offset by and proceeds from release of pledged deposits of $564,000.

In the first quarter of 2009 cash used in investing activities of $4.0 million was mainly due to purchases of property, plant and equipment of $1.1 million and . . .