Attached files
| file | filename |
|---|---|
| 8-K - New Oriental Energy & Chemical Corp. | v195816_8-k.htm |
| EX-99.2 - New Oriental Energy & Chemical Corp. | v195816_ex99-2.htm |
| EX-99.3 - New Oriental Energy & Chemical Corp. | v195816_ex99-3.htm |
| EX-10.2 - New Oriental Energy & Chemical Corp. | v195816_ex10-2.htm |
| EX-10.1 - New Oriental Energy & Chemical Corp. | v195816_ex10-1.htm |
Exhibit
99.1
New
Oriental Energy & Chemical Corp. Responds To NASDAQ
Request
For Plan To Achieve Minimum Shareholder Equity Requirement
Company
Action Plan Includes Conversion of Certain Outstanding Debt to
Common
Equity and Plans to Encourage Conversion to Common Stock of
Certain
Additional Debt and Outstanding Warrants;
Management
Also May Contribute Paid-in Capital;
Company
Anticipates Achieving a Profit in its Fiscal Year Fourth Quarter As
Prices
of Fertilizer and Alternative Fuels Continue to Improve;
Planned
New Coal Venture with Shanxi Coal Transport & Sale
Expected
To Create New Revenue Streams
NASDAQ
Advises Company Its Shares Are Below Minimum Share Price
Requirement
XINYANG, CHINA--(September 1,
2010) - New Oriental Energy
& Chemical Corp. (NASDAQ: NOEC) (the "Company"), a
China-based specialty chemical and emerging coal-based alternative fuel
manufacturer, reported today that on Friday, August 27, 2010, the Company
outlined in a letter to the NASDAQ Stock Market (“NASDAQ”) the steps it is
undertaking to achieve compliance with NASDAQ’s minimum shareholder equity
requirement of $2,500,000. This letter and related attachments are
contained in a Form 8-K being filed by the Company with the U.S. Securities and
Exchange today.
In the
letter, management acknowledges that its stockholder equity as of June 30, 2010
of ($470,784) is below the minimum requirement for continued listing on
NASDAQ. The Company goes on to describe actions being taken by
management to bring the Company back into compliance.
Debt
Conversion Agreements
Management
reports it has entered into agreements with two former shareholders for the
conversion of $700,000 and $739,899 of debt, respectively, into shares of common
stock, at a conversion rate of $1.00 per share, which is above the current price
of New Oriental shares. This action would result in the issuance of
1,439,899 new common shares and a reduction in debt of $1,439,899.
1
The
Company also states it is in the process of negotiating similar agreements for
the additional conversion of approximately $1,473,000 of loans to common stock
at $1.00 per share, and anticipates these agreements will be executed in the
near future, resulting in the issuance of approximately 1,473,000 additional
common shares.
The
Company stated that each of these transactions is described in the Form 8-K
filed today, together with the pro forma balance sheets included below with this
press release, which describe the change in shareholder equity after giving
effect to the debt conversion.
Of note,
the shareholder equity of the Company will still be $57,000 below NASDAQ’s
minimum required shareholder equity after conversion of the debt into common
equity described above. Consequently, the Company describes in the
letter to NASDAQ other approaches it is exploring to meet the minimum
shareholder equity requirement. These include:
|
1.
|
Negotiations
with holders of the 1,460,000 units (consisting of one share of common
stock and warrants to purchase one-half share) issued by the Company in a
private placement in May this year. The Company is seeking to
lower the exercise price on the warrants from $2.00 to
$1.00. It is believed this would provide unit holders an
incentive to convert their warrants into common
stock.
|
|
2.
|
Discussions
with management of the Company about possibly providing their personal
funds for additional paid-in
capital.
|
|
3.
|
Discussions
with holders of an additional RMB 70MM in loans about possible conversion
of these loans into common stock.
|
Improving
Outlook For Achieving Profitability
As also
discussed in the Company’s recently issued first fiscal quarter results, in the
letter to NASDAQ, the Company describes some of the dramatic industry changes
coupled with improving market conditions for its key fertilizer and alternative
energy products that have developed recently after several quarters of poor
results. In July, the first month of fiscal second quarter, market
conditions that prevailed in the first quarter continued, and the Company made
the best use of murky conditions to undergo a comprehensive examination of its
production equipment. This necessitated a lengthy factory shutdown
which is expected to produce a loss in the second quarter ending September 30,
2010. However, the prices of products have been rising sharply since
August, which is the main reason the Company now expects it will achieve
breakeven in the third quarter and be profitable in the fourth quarter in its
fertilizer business and overall.
2
There are
other factors underlying the Company’s forecast. Among them is a
period of anticipated rising demand for product resulting from the reduced
spring and summer agricultural output. Additionally the Company cited new more
stringent government emission standards that cannot be met by many smaller
competitors who are going out of business as a consequence. Further,
the largest Chinese company in the business, Sinopec, has announced plans to
halt production from September until 2015, which will reduce their production by
10 million tons until 2015. New Oriental anticipates a positive
impact on the Company’s sales as a result.
Further,
current prices for coal, the principal raw material used in producing urea
(fertilizer), are expected to be in a range of $175 to $185 per ton in the
second half of the fiscal year, from $180 currently. The Company also
reported that it is in negotiations with the largest coal company in China,
Shanxi Coal Transport & Sale Corp --which owns 462 coal mines and produces
330 million tons of coal annually –with plans to establish a coal
logistics company with a 5 million ton capacity. Upon anticipated
completion, this will improve upon the Company’s former supply method, provide
coal with higher quality and lower prices, and also generate a new revenue
stream. The Company noted further that while prices for urea were
abnormally low in the first quarter due to severe weather conditions which
reduced crop output, they have begun to increase due to sharply increased export
orders and seasonal demand. The Company estimates Urea prices to be in a range
of $275 to $280 in the second half of the fiscal year from $220 per ton
currently, creating an opportunity for profitable gross margins.
Progress
in Alternative Fuels
The
Company anticipates the opportunity for profits in methanol to develop as well
and remains confident of the substantial longer term potential for this
alternative fuel. Driving the demand for methanol are requirements
for a more environmentally friendly methanol/ gasoline mix, that has not been
pushed by the government as hard as it is expected to be in the
future. Current coal based methanol prices are approximately $360 per
ton, but by October are expected to increase to $380 which should permit the
Company to achieve a profit in this product in its fiscal year third
quarter.
As
described in its first quarter results, the Company also is optimistic about an
increase in demand and prices for DME, after standards for a DME/gas mix are
established in October in Henan Province, where the government has asked NOEC to
spearhead the decision making process. DME sold for approximately
$440 per ton in July and is at $550 per ton currently, which is permitting the
Company to achieve a profit. The Company estimates that in October
this price will reach $580-$590 per ton and permit a profit of $45 to $50 per
ton. With this in mind, the Company announced plans to complete
construction of its methanol expansion in September and restart DME production,
after which it expects it will take about one year for DME production and sales
to return to former levels, when DME was the Company’s largest profit producing
product.
Share
Price Requirement
On August
26, 2010, the Company received a separate notification from NASDAQ that the bid
price of the Company’s common stock had closed below the minimum $1.00 per share
requirement for the previous 30 consecutive trading days. This notification has
no effect on the listing of the Common Stock at this time. To regain
compliance with this requirements, the bid price of the Company’s stock must
close at $1.00 per share or more for a minimum of 10 consecutive trading
days. The Company has until February 22, 2011 to regain compliance
with the minimum bid price requirement.
3
NEW
ORIENTAL ENERGY & CHEMICAL CORP. AND SUBSIDIARIES PRO FORMA
CONDENSED
CONSOLIDATED BALANCE SHEET
|
June
30, 2010
|
||||
|
(Unaudited)
|
||||
|
CURRENT
ASSETS
|
||||
|
Cash
and cash equivalents
|
$ | 1,117,917 | ||
|
Restricted
cash
|
23,192,802 | |||
|
Notes
receivable, net of reserve of $736,279 and $732,461 at June 30, 2010 and
March 31, 2010, respectively
|
- | |||
|
Inventories,
net
|
2,765,992 | |||
|
Prepayments
for goods
|
323,773 | |||
|
Due
from employees
|
- | |||
|
Other
assets
|
224,266 | |||
|
Due
froma related party
|
233,080 | |||
|
Deferred
taxes
|
492,396 | |||
|
Total
current assets
|
28,350,226 | |||
|
Plant
and equipment, net
|
15,700,625 | |||
|
Land
use rights, net
|
1,602,991 | |||
|
Construction
in progress
|
30,077,799 | |||
|
Deposits
|
1,214,907 | |||
|
Deferred
taxes
|
761,785 | |||
|
Other
long-term assets
|
9,766 | |||
|
Total
long-term assets
|
49,367,873 | |||
|
TOTAL
ASSETS
|
$ | 77,718,099 | ||
|
CURRENT
LIABILITIES
|
||||
|
Accounts
payable
|
$ | 8,749,292 | ||
|
Other
payables and accrued liabilities
|
1,335,489 | |||
|
Short-term
debt
|
41,249,319 | |||
|
Customer
deposits
|
4,341,424 | |||
|
Due
to employees
|
88,159 | |||
|
Payable
to contractors
|
1,174,841 | |||
|
Due
to related parties
|
12,423,325 | |||
|
Deferred
taxes
|
459,427 | |||
|
Taxes
payable
|
573,587 | |||
|
Derivative
liabilities
|
479,645 | |||
|
Current
portion of long-term notes payable
|
534,539 | |||
|
Total
current liabilities
|
71,409,047 | |||
|
LONG-TERM
LIABILITIES
|
||||
|
Long-term
bank loan
|
2,945,118 | |||
|
Deferred
taxes
|
794,754 | |||
|
Due
to employees
|
127,506 | |||
|
Total
long-term liabilities
|
3,867,378 | |||
|
TOTAL
LIABILITIES
|
$ | 78,188,883 | ||
|
SHAREHOLDERS'
EQUITY
|
||||
|
Common
stock,par value $0.001 per share;30,000,000 shares authorized, 17,012,458
and 12,640,000 shares issued and outstanding at June 30,2010 and March
31,2010,respectively
|
17,012 | |||
|
Additional
paid-in capital
|
8,376,523 | |||
|
Retained
deficit(restricted portion was $0 and $950,327at June 30,2010 and March
31,2010,respectively )
|
(8,500,966 | ) | ||
|
Accumulated
other comprehensive income
|
2,549,105 | |||
|
TOTAL
SHAREHOLDERS' EQUITY
|
2,441,674 | |||
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 77,718,099 | ||
4
About New Oriental Energy &
Chemical Corp.
New
Oriental Energy & Chemical Corp. (NASDAQ: NOEC) is an emerging coal-based
alternative fuels and specialty chemical manufacturer based in Henan Province,
in the PRC. The Company's core products are urea and other coal-based chemicals
primarily utilized as fertilizers. Future growth is anticipated from its focus
on expanding production of coal-based alternative fuels, in particular,
methanol, as an additive to gasoline and dimethyl ether (DME), which has been a
cheaper, more environmentally friendly alternative to LPG for home heating and
cooking, and diesel fuel for cars and buses. All of the Company's sales are made
through a network of distribution partners in the PRC. Additional information on
the Company is available on its website at
www.neworientalenergy.com.
Safe
Harbor Statement
This
press release may contain forward-looking statements concerning New Oriental
Energy & Chemical Corp. The actual results may differ materially depending
on a number of risk factors including, but not limited to, the following:
general economic and business conditions, development, shipment, market
acceptance, additional competition from existing and new competitors, changes in
technology or product techniques, and various other factors beyond its control.
All forward-looking statements are expressly qualified in their entirety by this
Cautionary Statement and the risk factors detailed in the Company's reports
filed with the Securities and Exchange Commission. New Oriental Energy &
Chemical Corp. undertakes no duty to revise or update any forward-looking
statements to reflect events or circumstances after the date of this
release.
Contact:
Li
Donglai
Chief
Financial Officer
New
Oriental Energy & Chemical Corp.
Xicheng
Industrial Zone of Luoshan, Xinyang
Henan
Province, The People's Republic of China
Tel:
(011-86) 139-3764-6299
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