UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1

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

For the quarterly period ended June 30, 2012

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

For the transition period from ______to______.

BIRCH BRANCH, INC.

(Exact name of registrant as specified in Charter)

Colorado

333-126654

84-1124170

(State or other jurisdiction of

incorporation or organization)

(Commission File No.)

(IRS Employee
Identification No.)

c/o Henan Shuncheng Group Coal Coke Co., Ltd.

Henan Shuncheng Group Coal Coke Co., Ltd. (New Building), Cai Cun Road Intersection,

Anyang County, Henan Province, China 455141

(Address of Principal Executive Offices)

+86 372 323 7890

(Issuer Telephone number)

(Former Name or Former Address if Changed Since Last Report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ¨ No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of August 8, 2012: 32,047,222.

Explanatory Note

The purposes of this Amendment No. 1 to Birch Branch Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, filed with the Securities and Exchange Commission on August 14, 2012 (the “Form 10-Q”), are to 1) correct a typographical error as to the disclosure of total liability on page 2 of the Form 10-Q and revise total liability from $545,933.553 to $545,933,553, and 2) revise the disclosure of income (loss) before tax due to the PRC on page 18 of the Form 10-Q from $26,746,368 to $27,785,140 and total income (loss) before tax from $26,746,364 to $ 27,785,136. There are no other changes to the Form 10Q. This Amendment No. 1 to the Form 10-Q does not reflect subsequent events occurring after the original filing date of the Form 10-Q or modify or update in any way disclosures made in the Form 10-Q, as amended.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Birch Branch, Inc.

Consolidated Balance Sheets

As of June 30, 2012 and December 31, 2011

(Stated in US Dollars)

	6/30/2012		12/31/2011
	(Unaudited)		(Audited)
Assets
Current assets:
Cash	$	3,991,097	$	2,704,987
Restricted cash		165,136,404		142,168,060
Bank notes receivable		4,280,051		145,162
Trade receivables, net		34,958,447		15,822,298
Other receivables		9,978,039		7,514,142
Related party receivables		9,829,010		3,500,715
Inventories		33,472,936		50,042,822
Advances to suppliers and prepayments		74,745,332		66,450,939
Deposits		2,982,340		3,301,491
Total current assets		339,373,656		291,650,616

Non-current assets:
Property, plant and equipment, net		142,308,930		68,927,116
Construction in Progress		30,366,688		83,621,292
Intangible assets, net		825,524		870,903
Long-term investments		25,752,825		24,352,460
Total non-current assets		199,253,967		177,771,771

Total assets	$	538,627,623	$	469,422,387

Liabilities and Stockholders’ Equity

Liabilities

Current liabilities:
Bank notes payable	$	231,298,113	$	186,890,191
Short term bank loans		75,052,570		66,538,879
Accounts payable		98,957,591		68,841,304
Accrued liabilities		3,081,508		660,695
Taxes payable		15,898,875		12,199,742
Other payable		9,773,273		9,179,612
Long-term bank loans, current portion		6,324,211		3,142,331
Capital lease obligation, current portion		4,134,631		4,087,562
Customer deposits		19,812,313		8,202,109
Total current liabilities		464,333,085		359,742,425

Non-current liabilities:
Notes payable to related party		64,392,843		70,190,769
Forgivable loans		7,008,806		6,235,959
Long-term bank loans		-		3,142,332
Capital lease obligation, non-current portion		10,198,819		11,509,361
Total non-current liabilities		81,600,468		91,078,421
Total liabilities	$	545,933,553	$	450,820,846

The accompanying notes are an integral part of these consolidated financial statements

Birch Branch, Inc.

Consolidated Balance Sheets

As of Jun 30, 2012 and December 31, 2011

(Stated in US Dollars)

	6/30/2012			12/31/2011
	(Unaudited)			(Audited)
Stockholders’ Equity
Preferred stock, 50,000,000 shares authorized, $0 par value, 0 shares issued and outstanding	$	-		$	-
Common stock, 500,000,000 shares authorized, $0 par value, 32,047,222 and 32,047,222 shares issued and outstanding as of June 30, 2012 and December 31, 2011		6,963,403			6,963,403
Statutory reserve		234,683			234,683
Retained earnings		(21,410,453	)		6,369,358
Accumulated other comprehensive income		6,472,224			4,594,559
Non-controlling interest		434,213			439,538
Total stockholders’ equity		(7,305,930	)		18,601,541

Total liabilities and equity	$	538,627,623		$	469,422,387

The accompanying notes are an integral part of these consolidated financial statements

Birch Branch, Inc.

Consolidated Statements of Operations

For the three months and six months ended June 30, 2012 and 2011

(Stated in US Dollars)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	124,421,166		$	107,899,146		$	200,666,826		$	187,932,441
Cost of revenues		122,241,886			101,111,277			203,944,779			172,571,056
Gross profit		2,179,280			6,787,869			(3,277,953	)		15,361,385

Operating expenses:
Sales and marketing		4,740,319			2,674,728			6,157,072			4,800,537
General and administrative		2,715,185			2,489,127			7,309,315			4,641,387
Total operating expenses		7,455,504			5,163,855			13,466,387			9,441,924

Income (loss) from operations		(5,276,224	)		1,624,014			(16,744,340	)		5,919,461

Other income (expenses):
Interest income		1,069,337			445,038			2,096,381			776,897
Interest expense		(6,154,606	)		(3,978,828	)		(13,837,291	)		(7,920,141	)
Other income		526,092			534,207			726,143			739,870
Other expenses		(11,459	)		(27,862	)		(26,029	)		(149,583	)
Total other income (expenses)		(4,570,636	)		(3,027,445	)		(11,040,796	)		(6,552,957	)

Income (loss) before provision for income taxes		(9,846,860	)		(1,403,431	)		(27,785,136	)		(633,496	)

Provision for (benefit from) income taxes		-			(204,265	)		-			-

Net income (loss)	$	(9,846,860	)	$	(1,199,166	)	$	(27,785,136	)	$	(633,496	)

Net income attributable to:
- Common stockholders		(9,844,267	)		(1,194,180	)		(27,779,811	)		(632,744	)
- Non-controlling interest		(2,593	)		(4,986	)		(5,325	)		(752	)

Other Comprehensive Income/(Loss)
Foreign currency translation adjustments		(14,046	)		821,411			1,877,665			965,495
Total Comprehensive Income/(Loss)	$	(9,860,906	)	$	(377,755	)	$	(25,907,471	)	$	331,999

Earnings per share
- Basic	$	(0.31	)	$	(0.04	)	$	(0.87	)	$	(0.02	)
- Diluted	$	(0.31	)	$	(0.04	)	$	(0.87	)	$	(0.02	)

Weighted average shares outstanding
- Basic		32,047,222			32,047,222			32,047,222			32,047,222
- Diluted		32,047,222			32,047,222			32,047,222			32,047,222

The accompanying notes are an integral part of these consolidated financial statements

Birch Branch, Inc.

Consolidated Statements of Stockholders’ Equity

As of June 30, 2012 and December 31, 2011

(Stated in US Dollars)

															Accumulated
												Non-			Other
	Common Stock				Registered		Statutory		Retained			controlling			Comprehensive		Total
	No. of Shares		Amount		Capital		Reserve		Earnings			Interest			Income		Equity
Balance at January 1, 2011 (Audited)		32,047,222	$	-	$	6,963,403	$	234,683	$	38,499,365		$	427,395		$	3,366,695	$	49,491,541
Apportionment of loss to non-controlling interest										(12,143	)		12,143					-
Net income for year ended December 31, 2011										(32,117,864	)							(32,117,864	)
Foreign currency translation gain																1,227,864		1,227,864
Balance at December 31, 2011 (Audited)		32,047,222	$	-	$	6,963,403	$	234,683	$	6,369,358		$	439,538		$	4,594,559	$	18,601,541
Apportionment of loss to non-controlling interest										5,325			(5,325	)				-
Net income for six months ended June 30, 2012										(27,785,136	)							(27,785,136	)
Foreign currency translation gain																1,877,665		1,877,665
Balance at June 30, 2011		32,047,222	$	-	$	6,963,403	$	234,683	$	(21,410,453	)	$	434,213		$	6,472,224	$	(7,305,930	)

Birch Branch, Inc.

Consolidated Statements of Cash Flows

For the six months ended June 30, 2012 and 2011

(Stated in US Dollars)

	Six Months Ended June 30,
	2012			2011
Cash flows from operating activities:
Net loss	$	(27,785,136	)	$	(633,496	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		7,076,021			4,229,481
Bad debt expense		-			79,620

Change in assets and liabilities:
Increase in Trade receivables		(19,036,586	)		(1,926,474	)
Decrease/(Increase) in Inventories		16,884,785			(4,855,376	)
Increase in Prepayments and other receivables		(10,065,097	)		(25,778,631	)
Decrease/(Increase) in Related party receivables		612,017			(561,584	)
Increase in Accounts payable		28,706,225			23,107,098
Decrease in Other payables and current liabilities		18,133,509			(10,149,136	)
Net cash provided by (used in) operating activities		14,525,738			(16,488,498	)

Cash flows from investing activities:
Increase in restricted cash		(22,073,739	)		(54,882,726	)
Long-term investment in equities		(1,247,125	)		-
Acquisitions of property, plant and equipment		(10,596,516	)		(3,638,778	)
Increase in construction in progress		(14,383,931	)		(21,636,736	)
Increase in Bank notes receivable		(4,133,976	)		(744,049	)
Collection/(Advance) loans to individuals and companies		(227,762	)		-
Advance to related parties		(6,918,283	)		-
Net cash used in investing activities		(59,581,332	)		(80,902,289	)

Cash flows from financing activities:
Proceeds from borrowings from bank and others		40,316,843			29,617,521
Repayment of bank borrowings and others		(32,221,853	)		(24,137,708	)
Increase in bank notes payable		43,231,899			79,680,310
Repayment of capital lease obligation		(1,654,603	)		11,663,302
Proceeds from deposit for capital lease obligation		339,926			1,846,047
Proceeds from forgivable loans		733,607			-
Payment to related parties		(6,239,608	)		-
Net cash provided by financing activities		44,506,211			98,669,472

Net increase in cash		1,286,110			2,024,762

Effect of exchange rate changes		1,835,493			746,077

Cash at beginning of the period		2,704,987			9,213,760

Cash at end of the period	$	3,991,097		$	11,238,522

Supplemental disclosure of cash flow information:
Interest received	$	985,879		$	776,897
Interest paid		9,976,831			9,863,174

Non-Cash Investing and Financing Activities:
Addition of PPE transferred from CIP	$	69,382,559		$	-
Accounts Payable for constructions	$	976,872			$

The accompanying notes are an integral part of these consolidated financial statements

Birch Branch, Inc.

Notes to Unaudited Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

The Company and Principal Business Activities

Organizational History

Ultimate Holding Company

a.)

Birch Branch, Inc. (“BRBH”) was incorporated in the State of Colorado on September 29, 1989. BRBH was originally formed to pursue real estate development projects until December 16, 2006. Unless the context requires or is otherwise indicated, the term the “Company” includes BRBH and the following entities, after giving effect to the Share Exchange (as defined herein):

II.

Intermediary Holding Companies

a.)

Shun Cheng Holdings HongKong Limited (“Shun Cheng HK”) is an investment holding company that was incorporated in Hong Kong on December 18, 2009.

Shun Cheng HK does not have any operations. Its sole purpose is to act as an intermediary holding company.

b.)

On March 17, 2010, under the laws of the Henan Province, in the People’s Republic of China (“PRC”), Anyang Shuncheng Energy Technology Co., Ltd. (“Anyang WOFE”) was incorporated as a wholly-foreign owned entity. Anyang WOFE is wholly-owned by Shun Cheng HK.

Anyang WOFE does not conduct operations. All operations are conducted through the operating entities via a variable interest entity agreement detailed below.

III.

Operating Entities

All of the Company’s operations are located in the PRC, and are conducted through its operating entities detailed below:

a.) Henan Shuncheng Group Coal Coke Co., Ltd. (“SC Coke”) is a limited liability company organized in the PRC on August 27, 1997 as Anyang ShunCheng Washing Co., Ltd. In February 2005, the name was changed to Coal Coking Co., Ltd. In August 2007, the name was changed to the current name of Henan Shuncheng Group Coal Coke Co., Ltd. SC Coke has three shareholders: Wang Xinshun, Wang Xinming and Cheng Junsheng (collectively, the “SC Coke Shareholders”) owning 60%, 20% and 20% interests, respectively.

SC Coke is located in the Henan Province coal chemical industry cluster area in Anyang County, about 40 kilometers (approximately 25 miles) to the northwest of Anyang City. SC Coke is principally engaged in the processing of coal into coke, and related byproducts of cleaned coal, tar, crude benzene, and ammonium sulfate.

b.) Henan Shuncheng Group Longdu Trade Co., Ltd. (“Longdu”) is a limited liability company organized in the PRC on May 25, 2004. SC Coke holds an 86% interest in Longdu. The Company’s Chairman, Mr. Wang Xinshun, owns a 5% interest in Longdu.

Longdu is principally engaged in coal-washing and the production of refined coal, medium coal and coal slurry. The majority of Longdu’s coal is sent to the Company for further processing, while the remainder is sold to outside customers.

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

Variable Interest Entity Agreement

On March 19, 2010, Anyang WOFE entered into four contractual arrangements that for accounting purposes will be collectively known as the variable interest entity (“VIE”) agreement with the SC Coke Shareholders. The VIE agreement entitles Anyang WOFE to 100% of the future earnings and losses of both SC Coke, and its proportional 86% share of the earnings of Longdu. The Company filed with the Securities and Exchange Commission (“SEC”) a Current Report on Form 8-K on July 2, 2010 that included the documents comprising the VIE agreement as exhibits. The Company accounted for the VIE agreement, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810-10, by consolidating SC Coke and Longdu as operating entities (similar to a subsidiary) of both Anyang WOFE and the Company, because the Company: (1) has the authority to direct the operations of SC Coke and Longdu, (2) has the authority to provide financial support for SC Coke and Longdu, and (3) is primary beneficiary of the results of operations of SC Coke and Longdu. The significant terms of the VIE agreement are detailed for each of the contractual arrangements below:

Entrusted Management Agreement

Anyang WOFE has full and exclusive rights to manage SC Coke. These rights include, but are not limited to: appointment and dismissal of the members of the board of directors, hiring and termination of managerial and administrative personnel, and control over assets, which includes deployment and disposition thereof, and related cash flows generated by these assets.

Anyang WOFE is entitled to receive a quarterly management fee paid 45 days in arrears from the end of the quarter equivalent to SC Coke’s earnings before taxes for the quarter, subject to quarterly and annual adjustments.

Anyang WOFE is subject to operational risk and is obligated to settle debts on behalf of SC Coke, if SC Coke does not have sufficient funds to pay its debts itself.

II.

Exclusive Option Agreement

Anyang WOFE, or parties designated by Anyang WOFE, has been granted the irrevocable right to purchase all or part of the ownership interest of SC Coke from the SC Coke Shareholders for the minimum possible price permissible by PRC law. The option is exercisable only to the extent that such purchase does not violate any PRC law then in effect. The purchase right is exclusively granted to Anyang WOFE and is not transferable without the express written consent of the SC Coke Shareholders.

The SC Coke Shareholders cannot dispose, assign or mortgage SC Coke assets or operations without the express written consent of Anyang WOFE.

Unless unanimously terminated by all parties, the Exclusive Option Agreement remains in effect for SC Coke, the SC Coke Shareholders, and Anyang WOFE and their successors.

III.

Shareholders' Voting Proxy Agreement

The SC Coke Shareholders have irrevocably appointed the board of directors of Anyang WOFE as their proxy to vote on all matters that require the approval of the SC Coke Shareholders. These voting rights include, but are not limited to, the election of directors and the chairman of the board.

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

In the event that PRC regulations change (which regulations presently prohibit the transfer of SC Coke to Anyang WOFE), the SC Coke Shareholders may be exclusively permitted to transfer their ownership in SC Coke to Anyang WOFE; however, they are strictly prohibited from transferring their ownership in SC Coke to any other individuals or entities.

The SC Coke Shareholders have agreed to irrevocably and unconditionally indemnify the board of directors of Anyang WOFE from claims arising from the exercise of any of the powers conferred upon Anyang WOFE under the agreement.

IV.

Shares Pledge Agreement

The SC Coke Shareholders have pledged all of their ownership interests in SC Coke, including rights to PRC registered capital and dividends related to ownership in SC Coke, to guarantee their obligations under the Entrusted Management Agreement, the Exclusive Option Agreement and the Shareholders’ Voting Proxy Agreement.

Share Exchange Agreements

On June 28, 2010, BRBH closed a share exchange transaction (the “Share Exchange”) in which BRBH issued 30,233,750 common shares to the former shareholders of Shun Cheng HK in exchange for all of the issued and outstanding shares of Shun Cheng HK. In connection with the Share Exchange, certain shareholders of BRBH agreed to cancel 435,123 common shares and BRBH issued 540,472 common shares to financial consultants. Immediately prior to the closing of the Share Exchange there were 1,708,123 common shares outstanding. Upon completion of the Share Exchange and transactions contemplated by the Share Exchange agreement, there were 32,047,222 common shares outstanding. Immediately following the closing of the Share Exchange, the former shareholders of Shun Cheng HK and the original shareholders of BRBH own approximately 95% and approximately 5% of BRBH’s issued and outstanding common shares, respectively.

The Share Exchange has been accounted for as a recapitalization of Shun Cheng HK in which BRBH (the legal acquirer) is considered the accounting acquiree and Shun Cheng HK (the legal acquiree) is considered the accounting acquirer. As a result of the Share Exchange, BRBH is deemed to be a continuation of the business of Shun Cheng HK. Accordingly, the financial data included in the accompanying consolidated financial statements for all periods prior to June 28, 2010 is that of the accounting acquirer Shun Cheng HK. The historical stockholders’ equity of the accounting acquirer prior to the Share Exchange has been retroactively restated as if the Share Exchange occurred as of the beginning of the first period presented.

Summary of Significant Accounting Policies

Financial Statement Presentation

The financial statements are prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). The consolidated financial statements include the accounts of BRBH, Shun Cheng HK, Anyang WOFE, SC Coke, and Longdu. All intercompany transactions, such as sales, cost of sales, and balances due to/due from, investment in subsidiaries, and subsidiaries’ capitalization have been eliminated.

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

Non-controlling Interest

14% of the registered capital of Longdu is owned by parties other than SC Coke. The Company’s Chairman, Mr. Wang Xinshun, owns a 5% interest in Longdu, while other investors own the remaining 9% interest. Mr. Wang’s and the other investors’ share of capital, retained earnings, and income are separately disclosed on the Company’s balance sheet and statement of operations.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. Significant estimates and assumptions are used for, but not limited to: (1) allowance for trade receivables, (2) economic lives of property, plant and equipment, (3) asset impairments, and (4) contingency reserves. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on the Company’s operating results.

Foreign Currency Translation

The accompanying consolidated financial statements are presented in U.S. Dollars. The functional currency of the Company’s operating entities is the RMB, the official currency of the PRC. Capital accounts of the consolidated financial statements are translated into U.S. Dollars from RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated at the average exchange rates for the six months ended June 30, 2012 and 2011. Currency translation adjustment results from translation to U.S. Dollar for financial reporting purposes are recorded in other comprehensive income as a component of owners’ equity. A summary of the conversion rates for the periods presented is as follows:

	6/30/2012		12/31/2011		6/30/2011
Period/year end RMB: U.S. Dollar exchange rate		6.3249		6.3647		6.4640
Average RMB: U.S. Dollar exchange rate		6.3074		6.4735		6.5482

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into U.S. Dollars at the rates used in translation.

Comprehensive Income

The Company accounts for comprehensive income in accordance with the provisions of ASC topic 220, Comprehensive Income , which establishes standards for reporting comprehensive income or loss and its components in the financial statements. The accumulated other comprehensive income represents foreign currency translation adjustments.

Revenue Recognition

In accordance with ASC 605-10, the Company recognizes revenue upon receipt of an acceptance of goods document issued by its customers. Each customer enters into an annual master sales agreement with the Company which will indicate a total volume for the year, and an acceptable range of prices, given market fluctuations on a short term basis, for the Company’s coke and coal byproducts. Final determination of the price for coke is determined on individual purchase orders which lie in the aforementioned price range. The Company’s coke and coal byproducts are fully usable at the point of shipment. From a revenue recognition perspective, the Company believes that collectability of the revenue is reasonably assured at the time that customers acknowledge receipt and accept the Company’s product. The Company has not experienced any material return of products, and as such, it has not prepared allowances for returns.

Customer payments received prior to completion of the above criteria are recorded as a liability on the Company’s balance sheet as unearned revenue.

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

Trade Receivables

The Company’s trade receivables as of June 30, 2012 and December 31, 2011, as well as the activity in the Company’s allowance for bad debts for the six-month ended June 30, 2012 and the year ended December 31, 2011 are set forth below:

	6/30/2012		12/31/2011
Trade Receivables	$	39,229,881	$	20,093,732
Less: Allowance for Bad Debt		4,271,434		4,271,434
Trade Receivables, net		34,958,447		15,822,298

Allowance for Bad Debts
Beginning Balance		4,271,434		1,653,287
Provision for bad debts		-		2,618,147
Less: Allowance write back because of bad debt recovery		-		-
Ending Balance	$	4,271,434	$	4,271,434

Other Receivables

Other receivables as of June 30, 2012 and December 31, 2011 are detailed in the table below:

	6/30/2012		12/31/2011
Project safety deposit	$	7,905	$	110
Non-collateralized, non-interest bearing loans to individuals and companies receivable on demand		4,012,458		3,784,696
Others		5,957,676		3,729,336
	$	9,978,039	$	7,514,142

Inventories

The components of the Company’s inventories as of June 30, 2012 and December 31, 2011 are as follows:

	6/30/2012		12/31/2011
Raw materials	$	4,321,659	$	1,588,832
Work in process and semi-finished goods		7,130,174		19,162,264
Finished goods		22,021,103		29,291,726
Total inventories	$	33,472,936	$	50,042,822

Advances to Suppliers and Prepayments

The components of the Company’s advances to suppliers and prepayments as of June 30, 2012 and December 31, 2011 are as follows:

	6/30/2012		12/31/2011
Construction projects prepayments	$	-	$	-
Prepayments for raw materials in operations		74,745,332		66,336,798
Prepaid taxes		-		114,141
	$	74,745,332	$	66,450,939

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

Property, Plant and Equipment, net

The components of the Company’s plant and equipment are as follows:

			Accumulated
6/30/2012	At Cost		Depreciation		Net
Buildings and plant	$	35,820,788	$	5,700,997	$	30,119,791
Machinery and equipment		135,429,558		25,484,969		109,944,589
Electronic equipment		1,103,353		533,441		569,912
Vehicles		3,770,939		2,341,233		1,429,706
Wastewater treatment and environmental equipment		822,364		577,432		244,932
Total plant and equipment	$	176,947,002	$	34,638,072	$	142,308,930

			Accumulated
12/31/2011	At Cost		Depreciation		Net
Buildings and plant	$	35,576,186	$	4,820,117	$	30,756,069
Machinery and equipment		1,388,507		848,902		539,605
Electronic equipment		3,604,960		1,982,054		1,622,906
Vehicles		54,974,689		19,277,467		35,697,222
Wastewater treatment and environmental equipment		817,221		505,907		311,314
Total plant and equipment	$	96,361,563	$	27,434,447	$	68,927,116

Depreciation expenses related to plant and equipment were $ 7,025,020 and $ 4,180,356 for the six months ended June 30, 2012 and 2011, respectively.

Construction in Progress

The components of the Company’s construction in progress are as follows:

Description	6/30/2012		12/31/2011
Coking furnace	$	340,921	$	40,380,647
Office buildings		4,988,510		5,662,946
Plant and facilities		1,914,984		26,582,072
Sewage system		566,186		35,526
Deposits for construction projects		22,556,087		10,960,101
	$	30,366,688	$	83,621,292

Investments

The following tabulation presents SC Coke’s investment in non-controlled entities, which are not included in the consolidation:

Investment	Ownership			Type		6/30/2012
Anyang Rural Credit Cooperative - Tongye Branch		11.26	%		Equity	$	5,818,274
Anyang Urban Credit Cooperative		11.26	%		Equity		9,451,375
Ansteel Group Metallurgy Stove Co., Ltd.		19	%		Equity		2,463,280
Anyang Xinlong Coal (Group) Hongling Coal Co., Ltd.		16	%		Equity		8,019,896
						$	25,752,825

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

10.

Bank Notes Payable

The following table provides the name of the financial institutions, due dates, and amounts outstanding at June 30, 2012 for the Company’s bank notes payable:

Financial Institution	Due Date		6/30/2012

Guangdong Development Bank - Anyang Branch		9/5/2012		3,162,105
Guangdong Development Bank - Anyang Branch		9/16/2012		3,162,105
Guangdong Development Bank - Anyang Branch		9/19/2012		3,162,105
Guangdong Development Bank - Anyang Branch		9/20/2012		1,581,053
Guangdong Development Bank - Anyang Branch		9/6/2012		3,162,105
Guangdong Development Bank - Anyang Branch		9/27/2012		1,581,053
Guangdong Development Bank - Anyang Branch		10/16/2012		2,371,579
Guangdong Development Bank - Anyang Branch		10/27/2012		3,162,105
Guangdong Development Bank - Anyang Branch		11/30/2012		2,371,579
China Construction Bank - Zhongzhou Branch		9/19/2012		6,324,212
Shanghai Pudong Development Bank -Zhengzhou Branch		7/5/2012		6,324,212
Shanghai Pudong Development Bank -Zhengzhou Branch		7/6/2012		3,162,105
Shanghai Pudong Development Bank -Zhengzhou Branch		7/6/2012		3,162,105
Shanghai Pudong Development Bank -Zhengzhou Branch		8/21/2012		1,581,053
Shanghai Pudong Development Bank -Zhengzhou Branch		9/21/2012		3,162,105
Shanghai Pudong Development Bank -Zhengzhou Branch		9/28/2012		3,162,105
Shanghai Pudong Development Bank -Zhengzhou Branch		11/24/2012		2,371,579
Shanghai Pudong Development Bank -Zhengzhou Branch		12/5/2012		5,059,369
Shanghai Pudong Development Bank -Zhengzhou Branch		12/7/2012		4,743,158
Shanghai Pudong Development Bank -Zhengzhou Branch		12/7/2012		3,162,105
Shanghai Pudong Development Bank -Zhengzhou Branch		12/12/2012		3,004,000
Shanghai Pudong Development Bank -Zhengzhou Branch		12/26/2012		2,371,579
Commercial Bank of Anyang		8/6/2012		9,486,316
Commercial Bank of Anyang		11/29/2012		6,324,211
Commercial Bank of Anyang		10/1/2012		4,743,158
Commercial Bank of Anyang		12/11/2012		3,162,105
Bank of Luoyang - Zhengzhou Branch		10/11/2012		4,743,158
Bank of Luoyang - Zhengzhou Branch		10/26/2012		1,581,053
Bank of Luoyang - Zhengzhou Branch		12/27/2012		3,320,211
China Everbright Bank - Zhengzhou Branch		7/30/2012		6,314,319
China Everbright Bank - Zhengzhou Branch		8/20/2012		4,743,158
China Everbright Bank - Zhengzhou Branch		8/21/2012		3,162,105
China Everbright Bank - Zhengzhou Branch		10/12/2012		3,162,105
China Everbright Bank - Zhengzhou Branch		12/20/2012		7,272,842
China Everbright Bank - Zhengzhou Branch		8/15/2012		3,162,105
China Everbright Bank - Zhengzhou Branch		8/27/2012		1,581,053
China Everbright Bank - Zhengzhou Branch		10/26/2012		3,162,105
China Everbright Bank - Zhengzhou Branch		11/8/2012		3,162,105
Bank of Mingsheng - Zhengzhou Branch		8/8/2012		7,905,263
Bank of Mingsheng - Zhengzhou Branch		8/13/2012		3,952,632
Bank of Mingsheng - Zhengzhou Branch		10/20/2012		7,272,842
Bank of Mingsheng - Zhengzhou Branch		12/4/2012		7,114,737
Bank of Mingsheng - Zhengzhou Branch		12/15/2012		1,976,316
Bank of Mingsheng - Zhengzhou Branch		10/24/2012		1,581,053
China Citic Bank- Anyang Branch		11/21/2012		1,581,053
China Citic Bank- Anyang Branch		11/25/2012		3,162,105
China Citic Bank- Anyang Branch		11/28/2012		3,636,421
Bank of Ping Ding Shan		9/26/2012		9,486,316
China Merchants Bank - Anyang Branch		9/13/2012		7,905,263
Bank of China-Huojiacun Branch		9/15/2012		6,403,263
Industrial Bank-Weiyi Branch		7/9/2012		7,905,263
Industrial Bank-Weiyi Branch		7/10/2012		7,905,263
Industrial Bank-Weiyi Branch		7/12/2012		6,324,211
Industrial Bank-Weiyi Branch		8/28/2012		1,581,053
Industrial and Commercial Bank of China - Shuiye Branch		10/27/2012		1,581,053
China Minsheng Banking Corp.		8/15/2012		3,636,421

			$	231,298,113

The bank notes payable do not carry a stated interest rate, but do carry a specific due date. These notes are negotiable documents issued by financial institutions on the Company’s behalf to vendors. These notes can either be endorsed by the vendor to other third parties as payment, or prior to coming due, they can factor these notes to other financial institutions. These notes are short term in nature and, as such, the Company does not calculate imputed interest with respect to them. These notes are collateralized by the Company’s deposits as described in Note 2 E - Restricted Cash.

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

11.

Loans

The components of the Company’s loans payable are as follows:

		Due		Interest
Name of Creditors	Note	Date		Rate			6/30/2012
Anyang Rural Credit Cooperative - Tongye Branch	A		3/23/2013		10.933	%		4,743,158
Shanghai Pudong Development Bank - Zhengzhou Branch	B		9/11/2012		6.710	%		6,324,211
Shanghai Pudong Development Bank - Zhengzhou Branch	C		3/23/2013		7.820	%		6,324,211
Shanghai Pudong Development Bank - Zhengzhou Branch	D		8/21/2012		6.710	%		1,581,053
Bank of China - Huojiacun Branch	E		9/27/2012		7.216	%		3,162,105
Commercial Bank of Anyang	F		6/14/2013		6.310	%		3,162,105
Agricultural Bank of China - Anyang Branch	G		10/10/2012		8.856	%		1,106,737
Agricultural Bank of China - Anyang Branch	H		10/10/2012		8.856	%		1,581,053
Agricultural Bank of China - Anyang Branch	I		10/10/2012		8.856	%		1,581,053
Agricultural Bank of China - Anyang Branch	J		10/10/2012		8.856	%		3,636,421
Guangdong Development Bank - Anyang Branch	K		7/14/2012		7.216	%		4,743,158
Bank of Luoyang - Zhengzhou Branch	M		7/14/2012		7.872	%		3,162,105
Bank of Luoyang - Zhengzhou Branch	N		4/9/2013		7.872	%		3,162,105
Bank of Luoyang – Zhengzhou Branch			12/20/2012		7.020	%		1,581,053
China Citic Bank – Anyang Branch	O		1/8/2013		7.544	%		3,162,105
China Merchants Bank - Anyang Branch	P		11/9/2012		7.544	%		1,581,053
China Merchants Bank - Anyang Branch	Q		11/30/2012		7.544	%		1,581,053
Zhengzhou Bank - Nongye Eastern Road Branch	R		12/14/2012		8.528	%		4,743,158
Industrial Bank - Weiyi Branch	S		1/13/2013		7.216	%		4,743,158
ICBC - Shuiye Branch	T		9/7/2012		7.216	%		4,268,842
ICBC - Shuiye Branch	U		10/1/2012		7.216	%		2,845,895
China Construction Bank - Anyang Branch	V		9/26/2012		6.655	%		1,581,053
China Construction Bank - Anyang Branch	W		10/26/2012		6.710	%		3,162,105
China Citic Bank - Anyang Branch	X		7/26/2012		7.216	%		3,162,105
Tongye Credit Cooperatives - Anyang Branch	Y		12/21/2012		15.088	%		4,695,726

							$	81.376,781

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

SC Coke has collateralized its debt obligations above. Refer to notes below for collateral corresponding to each obligation.

Guaranteed by Henan Hubo Cement Co., Ltd and Linzhou Hongqiqu Electrical Carbon co., Ltd

Guaranteed by Anyang Liyuan Coking Co., Ltd and shareholders (Xinshun Wang, xinming Wang and Junsheng Cheng)

Guaranteed by Anyang Liyuan Coking Co., Ltd

Guaranteed by Henan Xinlei Coking Group Co., Ltd

Guaranteed by Linzhou Hongqiqu electrical Carbon Co., Ltd

Guaranteed by Henan Hubo Cement Co., Ltd

Guaranteed by Henan Henan Chengyu Coking Co., Ltd and Henan Hubo Cement Co., Ltd

Guaranteed by Anyang Xinpu Steel Co., Ltd, Xinshun Wang and Fengyun Wu

Guaranteed by Xinlei Group Cheng Chen Coking and Xinshun Wang

Guaranteed by Henan Chengyu Coking Co., Ltd

Guaranteed by Anyang Liyuan Coking Co., Ltd and Henan Chengyu Coking Co., Ltd

Guaranteed by Anyang Liyuan Coking Co., Ltd and Linzhou Hongqiqu electrical Carbon Co., Ltd

Guaranteed by Henan Yutian Chemical Co., Ltd and Henan Chengyu Coking Co., Ltd

Guaranteed by Cleaned coal

Guaranteed by Linzhou Hongqiqu electrical Carbon Co., Ltd

Guaranteed by Henan Shuncheng Group Coking Co., Ltd and Henan Small Corporation Investment Co., Ltd

Guaranteed by Anyang Nianxinpu Steel Co., Ltd

12.

Other Payable

Other payable as of June 30, 2012 and December 31, 2011 is detailed in the table below:

	6/30/2012		12/31/2011
Project safety deposit	$	1,702,817	$	2,681,680
Payable for raw materials in operation		-		20,542
Advances from individuals and companies payable on demand		8,017,071		5,477,457
Others		53,385		999,933

	$	9,773,273	$	9,179,612

13.

Notes Payable to Related Party

Creditor	Note		6/30/2012		12/31/2011
Chairman, Wang Xinshun		A	$	24,728,950	$	25,785,216
SC Coke Shareholders		B		39,663,893		44,405,553
			$	64,392,843	$	70,190,769

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

Notes Payable to Wang Xinshun

On May 23, 2010, SC Coke entered into a formal loan agreement with the Company’s Chairman, Mr. Wang Xinshun, for amounts owed to him in the amount of approximately $35.6 million at December 31, 2009. The significant terms of the loan are: (a) 12 year term, beginning as of December 31, 2009 to December 31, 2021, (b) 3% fixed simple annual interest, (c) SC Coke has the option, but not the obligation, to pay interest for the first two years, (d) after the first two years, the balance of the loan will be amortized over the remaining 10 years of the term and SC Coke is required to make monthly interest and principal payments, and (e) Mr. Wang Xinshun is prohibited from declaring default against SC Coke.

The Company has neither accrued nor paid any interest for the note payable to Mr. Wang Xinshun during the six months ended June 30, 2012.

Notes Payable to SC Coke Shareholders

On March 31, 2010, the SC Coke Shareholders, and Anyang Xinlong Coal (Group) Hongling Coal Co., Ltd., Anyang Huichang Coal Washing Co., Ltd. and Anyang Jindu Coal Co., Ltd (collectively, the “third party lenders”) formalized the terms for approximately $35.5 million of loans previously extended to SC Coke by the three lenders.

On June 21, 2010, the SC Coke Shareholders entered into an agreement with the third party lenders to assume the obligations of the third party lenders, and concurrently the third party lenders released SC Coke from any liability.

Also, on June 21, 2010, SC Coke and the SC Coke Shareholders entered into a debt agreement for the original principal amount of the loans due to the third party lenders (approximately $35.5 million), the significant terms of which are: (a) 15 year term, commencing on June 21, 2010, (b) 2% fixed simple annual interest, (c) SC Coke has the option, but not the obligation, to pay interest when accrued, and (d) the SC Coke Shareholders do not have the ability to declare a default.

14.

Forgivable Loans

SC Coke is currently the beneficiary of two government grants that are generally intended to be used towards capital technology improvement with the end goal of increased production and energy efficiency. The grants were awarded during 2008 and 2009, respectively. These grants have been recorded as forgivable loans in the liability section of the balance sheet. SC Coke has received payment of the grants, but has not yet met all the criteria set forth under the grant. Upon receiving government approval of fulfilling all of the criteria set forth under the grant, SC Coke will credit the balance to other income on the consolidated statement of operations. SC Coke will also appropriate that same amount from retained earnings to statutory reserves indicating that the assets associated with these grants are not available for dividend distribution.

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

15.

Related Party Transactions

SC Coke has specified the following transactions with related parties with ending balances as of June 30, 2012:

Trade Receivables and Revenue

(a)

Angang Steel Group Metallurgy Furnace Co., Ltd (Angang), in which SC Coke owns a 19% stake, is one of the customers of SC Coke.

There was an ending balance in accounts receivable from Angang of approximately $47,801 as of June 30, 2012.

Revenue recorded in the consolidated financial statements from Angang amounts to approximately $ 699,732 for the six months ended June 30, 2012.

Deposits and Cost of Revenues

(a)

The Chairman and majority owner, Mr. Wang Xinshun, owns a 43.86% interest in Anyang Bailianpo Coal Co., Ltd. (Bailianpo) which provides raw coal to SC Coke.

SC Coke had outstanding prepayment to Bailianpo of $434,997 as of June 30, 2012.

There were purchase transactions from Bailianpo amounted to approximately $63,713 for the six months ended June 30, 2012.

(b)

SC Coke holds a 16% interest in Anyang Xinlong Coal (Group) Hongling Coal Co., Ltd. (Anyang Xinlong), which is a coal mine located in Anyang County providing SC Coke with a substantial portion of its coking coal requirements.

SC Coke has an ending balance in accounts receivable from Anyang Xinlong of $61,314 as of June 30, 2012.

Advance to relatives of the Chairman

As of June 30, 2012 and December 31, 2011, the advances to relatives of the Chairman are $9,284,898 and $2,351,815, respectively

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

16.

Income Taxes

The Company and its operating entities are subject to income tax under the jurisdictions where they operate. The following table details the Company and its operating entities, and the statutory tax rates to which they are subject:

Entity	Country of Domicile		Income Tax Rate

Birch Branch, Inc.		USA		15.00%-35.00	%
Shuncheng Holdings HongKong Ltd.		HK		16.50	%
Anyang Shuncheng Energy Technology Co., Ltd.		PRC		25.00	%
Henan Shuncheng Group Coal Coke Co., Ltd.		PRC		25.00	%
Henan Shuncheng Group Longdu Trade Co., Ltd.		PRC		25.00	%

Although the Company is subject to United States income taxes, it is a holding company with no operations or profits within the U.S. borders. The Company currently only incurs expenses in the United States that are associated with being a public company.

Income (loss) before taxes and provision for taxes (tax benefit) consisted of the following for the six months ended June 30, 2012 and 2011, respectively:

	6/30/2012			6/30/2011
Income (loss) before tax:
USA	$	-		$	-
HK		4			7
PRC		(27,785,140	)		(633,503	)
Total:	$	(27,785,136	)	$	(633,496	)

Provision for income taxes:
US Federal		-			-
State		-			-
PRC	$	-		$	-
Total provision for taxes (tax benefit):	$	-		$	-

Effective tax rate		25	%		25	%

The differences between the U.S. federal statutory income tax rates and the Company’s effective tax rate for the six months ended June 30, 2012 and 2011 are shown in the following table:

	6/30/2012			6/30/2011
US statutory tax rate		35	%		35	%
Lower rates in the PRC		-10	%		-10	%
Accrual and reconciling items					-25	%
Fully reserved net Operating Loss		-25	%
Effective tax rate:		0	%		0	%

Birch Branch, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2012 and December 31, 2011

17.

Commitments and Contingencies

Third Party Guarantees

SC Coke entered into agreements as a guarantor of debt for seventeen companies (the “guarantees”) in the amount of approximately $114,942,526 at June 30, 2012. Of the aforementioned guarantees, seven of the thirty companies have, in turn, guaranteed debts of approximately $69,566,317 on behalf of SC Coke at June 30, 2012. SC Coke has not historically incurred any losses due to such debt guarantees. Additionally, the Company has determined that the fair value of the guarantees is immaterial. For more details of the outstanding guarantees, see the table below:

		Guarantee
Guarantee Beneficiary	Creditor	End		6/30/2011
Linzhou Hongqiqu Electrical Carbon Co., Ltd	Agricultural Bank of China - Linzhou Branch		2013.4.16		3,162,105
Linzhou Hongqiqu Electrical Carbon Co., Ltd	Agricultural Bank of China - Linzhou Branch		2013.1.11		4,743,158
Linzhou Hongqiqu Electrical Carbon Co., Ltd	Agricultural Bank of China - Linzhou Branch		2013.5.20		3,162,105
Linzhou Hongqiqu Electrical Carbon Co., Ltd	Agricultural Bank of China - Linzhou Branch		2013.6.18		7,905,263
Linzhou Hongqiqu Electrical Carbon Co., Ltd	Agricultural Bank of China - Linzhou Branch		2012.9.2		7,905,263
Linzhou Hongqiqu Electrical Carbon Co., Ltd	Agricultural Bank of China - Linzhou Branch		2013.2.13		3,162,105
Henan Hubo Cement Co., Ltd.	Bank of China - Anyang Branch		2012.11.14		4,743,158
Henan Liyuan Coking Co., Ltd	China Merchants Bank - Anyang Branch		2013.1.31		1,581,053
Henan Liyuan Coking Co., Ltd	Shanghai Pudong Development Bank -Zhengzhou Branch		2013.12.20		7,905,263
Henan Liyuan Coking Co., Ltd	Shanghai Pudong Development Bank -Zhengzhou Branch		2012.8.16		7,114,737
Henan Liyuan Coking Co., Ltd	China Merchants Bank - Anyang Branch		2012.9.20		3,162,105
Henan Liyuan Coking Co., Ltd	China Merchants Bank - Anyang Branch		2012.8.1		3,162,105
Henan Liyuan Coking Co., Ltd	Bank of Luoyang - Zhengzhou Branch		2012.8.20		4,743,158
Henan Liyuan Coking Co., Ltd	Bank of China - Pangeng Branch		2013.3.23		6,324,211
Henan Chengyu Coking Co., Ltd	Guangdong Development Bank - Anyang Branch		2012.9.20		9,486,316
Henan Xinlei Group	China Minsheng Banking - Zhengzhou Branch		2012.10.10		1,581,053
Henan Fengtai Food Co.,	China Minsheng Banking - Zhengzhou Branch		2012.8.26		1,581,053
Anyang Zhanqian Materials Co.	Shanghai Pudong Development Bank -Zhengzhou Branch		2013.1.15		1,581,053
Anyang Houde Trade Co., Ltd	Citic Bank - Anyang Branch		2013.6.15		1,581,053
Anyang Xinpu Steel Co., Ltd	City Cooperative		2013.6.4		7,114,737
Anyang Qili Cement Co., Ltd	Bank of Anyang		2013.5.5		632,421
Anyang Hongyuan Yinsheng Steel Co., Ltd	Bank of Anyang		2013.5.5		158,105
Henan Shuncheng Group Longdu Trade Co., Ltd	Citic Bank - Anyang Branch		2012.7.27		3,162,105
Henan Yuxin Acticated Carbon Co., Ltd	China Construction Bank - Anyang Branch		2013.1.4		1,897,263
Anyang Lichuang Trade Co.	Guangdong Development Bank - Anyang Branch		2012.9.10		3,162,105
Henan Yulong Coking Co., Ltd	Tongye Credit Union		2013.2.15		3,162,105
Linzhou Fengbao Pipe Co., Ltd	China Minsheng Banking - Anyang Branch		2013.3.30		7,905,263
Anyang Zhongyang Industrial Co., Ltd	Shanghai Pudong Development Bank -Zhengzhou Branch		2012.9.6		790,526
Anyang Zhongyang Industrial Co., Ltd	Shanghai Pudong Development Bank -Zhengzhou Branch		2012.9.20		790,526
Anyang Zhongyang Industrial Co., Ltd	Bank of Luoyang - Zhengzhou Branch		2012.11.26		1,581,053

				$	114,942,526

Capital Lease Obligations

SC Coke has entered into a non-cancellable lease agreement for certain machinery and equipment. The following table details SC Coke’s commitments for minimum lease payments and the related principal outstanding at June 30, 2012:

Quarter ending June 30, 2012:	Principal		Payments
2012	$	2,179,057	$	2,845,193
2013		3,995,914		4,877,473
2014		4,349,836		4,877,473
2015		2,640,541		2,863,417
2016		1,168,102		1,193,091
Total future minimum lease payments	$	14,333,450	$	16,656,647

Accrued Payment of Enterprise Income Taxes

Effective January 1, 2008, PRC government implements a new 25% income tax rate for all enterprise regardless of whether domestic or foreign enterprise without any tax holiday. Certain local government has the authority to defer the enterprise’s tax payment in a way to support local business. SC Coke is subject to the 25% tax rule. However, Anyang City government defers SC Coke income tax payment by implementing fixed payment quota instead of determining based on taxable income assessment. As of June 30, 2012, SC Coke had accrued approximately $15.9 million liability for estimated taxes. In the event that, PRC tax authority starts to collect this deferral, SC Coke will be subject to an overdue fine at the rate of 0.05% per day of the amount of taxes in arrears. The tax authority may also impose an additional fine of 50% to five times the underpaid taxes. SC Coke has been unable to determine the potential penalties and interest related to the overdue tax balance at this time.

SC Coke has available funds to cover the unpaid tax liability, but may not have sufficient funds available to pay the fine. The Chairman entered into a tax indemnity agreement on May 23, 2010, pursuant to which he agreed to indemnify SC Coke for any interest, penalties or other related extra costs resulting from the prior and any future tax underpayments in tax years in which he managed and operated SC Coke. The indemnification is capped at $35.6 million.

PART II – OTHER INFORMATION

Item 6. Exhibits.

(a) Exhibits

Exhibit Number		Description
31.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		Interactive Data File (Form 10-Q for the quarterly period ended June 30, 2012 furnished in XBRL)

* To be filed by amendment and shall not be filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BIRCH BRANCH, INC.

Date: September 6, 2012	By:	/s/ Feng Wang
		Feng Wang
		President, Chief Executive Officer and Director

Date: September 6, 2012	By:	/s/ Lei Wang
		Lei Wang
		Chief Financial Officer

BIRCH BRANCH INC 10-Q/A