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-10.2 - New Oriental Energy & Chemical Corp. | v195816_ex10-2.htm |
| EX-99.1 - New Oriental Energy & Chemical Corp. | v195816_ex99-1.htm |
| EX-10.1 - New Oriental Energy & Chemical Corp. | v195816_ex10-1.htm |
Exhibit
99.3
NEW
ORIENTAL ENERGY & CHEMICAL CORP.
Xicheng
Industrial Zone of Luoshan, Xinyang
Henan
Province, The People’s Republic of China 464200
August
27, 2010
VIA
EMAIL (moira.keith@nasdaqomx.com)
The
Nasdaq Stock Market, Inc.
Listing
Qualifications
9600
Blackwell Road, Suite 500
Rockville,
MD 20850
Attention:
Moira Keith
|
Re:
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New
Oriental Energy & Chemical
Corp.
|
Dear Ms.
Keith,
I am the Chief Financial Officer of New Oriental Energy &
Chemical Corp. and I am writing on behalf of the Company in connection with your
letter dated July 6, 2010 regarding the Company’s non compliance with the minimum
stockholders’ equity requirement of $2,500,000 for
continued listing on The NASDAQ Capital Market
pursuant to NASDAQ Listing Rule 5550(b)(1). The Company’s management acknowledges that its
stockholders’ equity of $1,225,480 as reported in the
Company’s Annual Report on Form 10-K for the
fiscal year ended March 31, 2010, and ($470,784) as reported in
the Company’s Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2010 are below the minimum
stockholders’ equity requirement for continued
listing on The NASDAQ Capital Market. The Company’s management has discussed the Company’s non-compliance and the actions
possible to bring the Company back into compliance and has taken the actions
described in this letter to address the Company’s non-compliance.
The Company has just entered into
agreements with two former
shareholders, Long Triumph Investments Limited and Intellect Goal Investments
Limited, for the conversion of $700,000 and $739,899 of debt, respectively, into
shares of common stock of the Company at a conversion rate of $1.00 per share,
which is above the current market price for the
Company’s common stock. This debt
represents advances made from time to time to pay expenses on behalf of the
Company. Copies of the execution versions of the agreements with Long
Triumph Investments Limited and Intellect Goal Investments Limited are
attached to this letter as Schedule
A for your
reference.
The Company is currently negotiating
with related parties to enter into similar agreements for the conversion of
$1,473,101 of loans into shares of common stock of the Company at the same conversion
rate of $1.00 per share. The Company anticipates that these
agreements will be finalized and executed in the very near
future.
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The Company is currently preparing the
appropriate forms for filing with the Securities and Exchange Commission disclosing the
transactions described above and the NASDAQ Notification of Listing of
Additional Shares for the common stock of the Company being issued in connection
with those transactions and will submit them within the next few business days.
The Company has prepared pro forma
balance sheets demonstrating the effect of the transactions described above and
showing the anticipated shareholders’ equity after giving effect to the
conversion of the debt into shares of common stock of the Company. The pro forma
balance sheet is attached to this letter as Schedule
B for your
reference.
After giving effect to the conversions
of debt described above, the Shareholders’ Equity of the Company will still be
approximately $57,000 below the minimum stockholders’ equity requirement of $2,500,000 for
continued listing on The NASDAQ Capital Market pursuant to NASDAQ Listing Rule
5550(b)(1).
The Company is exploring all possible
approaches in order to meet the stockholders’ equity requirement for continued listing on The NASDAQ
Capital Market, including the following:
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|
1.
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In May of this year, the Company sold
1,460,000 million units ("the
Units") through a
private placement transaction. Each Unit consisted of 1 share of common stock,
and a warrant to
purchase one-half of one share of common stock (the
"Warrants"). The Warrants have an exercise price of two dollars
($2.00) and are not exercisable for the first six months following their
issuance (they will be exercisable in November). The
Company is negotiating with the
holders of the Warrants to lower the exercise price of the
Warrants in order to provide an incentive for these
investors to
exercise their
Warrants.
Since the current
market price of the Company’s common stock is below the
exercise price of
$2.00, the Company is negotiating with the holders of the Warrants to
reduce the Warrant exercise price to
$1.00.
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2.
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Management of the Company is discussing whether
to provide their personal funds for additional paid-in-capital of the Company in order to help the Company meet
the stockholders’ equity requirement for continued
listing on The NASDAQ Capital
Market.
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3.
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The Company has an additional
RMB70M in loans from related parties,
and is negotiating
with these related
parties regarding
the conversion of these loans into common stock of
the Company in order to meet the stockholders’ equity requirement for continued
listing on The NASDAQ Capital
Market.
|
In addition, the management of the
Company is certain that, given the current industry trends and the Company’s recent improvements in its revenues,
the Company will improve its performance in the coming fiscal quarters and
overcome the remaining shortfall in its shareholders’ equity. While the past two
years have been a difficult time for the Company, with it experiencing
consecutive periods of losses, the industry has recently changed
dramatically. Most of the Company’s competitors in the fertilizer market
have struggled as well, and very few can meet the more stringent emission
standards that are being announced, which has
resulted in many of them are being forced to close their
businesses. In addition, Sinopec, the biggest manufacturer in the
fertilizer industry, just announced that it will cease producing fertilizer
business from the third quarter of this year and will not
consider resuming fertilizer production until 2015. The management of
the Company is certain that it will see the sales results of its core fertilizer
product increase in China, due to the sharp increase in export orders for fertilizers in from August due
to seasonal demand, and will see the improvement in the price of its other
principal products, DME and Methanol. With these improvements, the
management of the Company is certain that it will achieve break-even or
a little profit by the end of the
year.
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In addition, the Company is currently in
negotiations with HENANWEITE Wind Power Co., Ltd. for the acquisition of a wind
power station to increase its revenue base and expand its product offerings and
expects to complete its
diligence phase and enter into agreements by the end of
September.
The Company has maintained a good and
supportive relationship with its shareholders and management throughout the
difficult period of the past two year and now the Company is projecting that it will make a profit
shortly, the management of the Company is asking that NASDAQ to provide the
Company with the opportunity to further improve its Shareholders’ Equity and regain and maintain its
compliance with the stockholders’ equity requirement for continued listing on The
NASDAQ Capital Market.
If you have any questions or require
anything further in connection with this letter, please do not hesitate to
contact myself or the Company’s legal counsel, Robert Matlin
(212-536-4066) or Aaron
Menzi (212-536-4883).
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Yours
sincerely,
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/s/ Dong Lai
Li
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Dong Lai
Li
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Chief Financial
Officer
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cc:
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Robert
S. Matlin, Esq.
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Aaron W. Menzi, Esq.
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