New Oriental Energy & Chemical Corp.
(NASDAQ: NOEC) (the "Company"), a China-based specialty chemical
and emerging coal-based alternative fuel manufacturer, today
announced results for its third quarter and nine months ended
December 31, 2010.
In the Company's third quarter, on a decline in revenues from
$8,7700,449 in the same period last year to $943,757, the Company
incurred a net loss of $(2,477,305) or $(0.15) per share on
17,012,458 weighted average shares outstanding. This compared with
a net loss in the third quarter last year of $(1,616,408) or
$(0.13) per share on 12,640,000 weighted average shares
outstanding.
Revenues in the first nine months of the current fiscal year
were $18,034,768 on which the Company incurred a net loss of
$(5,799,489) or $(0.38) per share on 15,079,883 weighted shares
outstanding. This compared with revenues in the prior fiscal year
nine month period of $24,704,321 and a net loss in the period of
$(7,940,922) or $(0.63) per share on 12,640,000 weighted average
shares outstanding.
The Company described the declines in third quarter and nine
month revenues and the resulting losses in these periods as mainly
due to the fact that from June 21, 2010 to October 15, 2010 the
Company ceased all production for maintenance of its manufacturing
systems. Further, after a brief resumption of production, the
Company again ceased production on November 15, 2010 due to its
cash flow problems. The Company noted that as of December 31, 2010
it had a negative cash flow from operations of $6,247,498 and a
working capital deficit of $43,244,159.
Financial Resources Being Sought To Resume
Production in February
Mr. Chen Si Qiang, President and CEO of the Company, stated, "We
have been working tirelessly to strengthen our financial position
and to obtain the financing required to restart production. We
believe production can be resumed by the end of February and that
operating performance can return to normal levels within one
year."
The Company said that its major shareholder has committed to
provide financial assistance of RMB 30 million to RMB 50 million
over the next few years, if necessary. In addition, he has extended
repayment for one more year of a $10,448,908 loan and has promised
to provide guarantees for future debt, if necessary.
The Company added that it intends to finance business activity
through bank loans, related party loans and notes payable, if
required, while other capital expenditures are expected to be
financed by cash flow from operations when manufacturing is
restarted. The Company anticipates improving cash flow as business
operations rebound and the global economy continues to recover.
Currently, the Company also projects that the 200,000 ton new
addition to its methanol manufacturing facility, previously
expected to be completed by December 31, 2010, will now be
completed in April. As of December 31, 2010 the Company entered
into agreements and made a down payment of $25.1 million toward the
purchase of production equipment to be used in its methanol
production. The Company will be required to pay the $7.82 million
remaining amount of the purchase price prior to delivery of
equipment, which is estimated to occur this year, and will need $12
million to finish the methanol plant expansion.
Mr. Chen Si Qiang concluded, "We are sincerely appreciative for
the cooperation we have received from the Company's lenders,
suppliers and shareholders in this difficult period, and remain
optimistic that our alternative energy products and solutions will
ultimately achieve their potential."
NEW ORIENTAL ENERGY & CHEMICAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(UNAUDITED)
Three Months Ended Nine Months Ended
December 31, December 31,
------------------------- --------------------------
2010 2009 2010 2009
------------ ----------- ------------ ------------
REVENUES $ 943,757 $ 8,770,449 $ 18,034,768 $ 24,704,321
COST OF GOODS SOLD (1,911,527) (8,515,088) (19,904,189) (28,006,407)
------------ ----------- ------------ ------------
GROSS (LOSS) PROFIT (967,770) 255,361 (1,869,421) (3,302,086)
General and
administrative 549,159 622,722 1,680,316 1,829,231
Selling and
distribution 34,269 367,075 289,016 914,635
Research and
development 12,340 14,707 39,845 57,375
------------ ----------- ------------ ------------
LOSS FROM OPERATIONS (1,563,538) (749,143) (3,878,598) (6,103,327)
OTHER INCOME
(EXPENSES)
Interest expense, net (956,460) (597,012) (2,271,518) (1,484,457)
Government grants 338,156 - 335,008 -
Other income, net 385 10,551 9,422 13,300
Change in fair value
of derivatives (295,848) - 6,197 -
------------ ----------- ------------ ------------
LOSS BEFORE INCOME
TAXES (2,477,305) (1,335,604) (5,799,489) (7,574,484)
INCOME TAX EXPENSE - (280,804) - (366,438)
------------ ----------- ------------ ------------
NET LOSS (2,477,305) (1,616,408) (5,799,489) (7,940,922)
------------ ----------- ------------ ------------
OTHER COMPREHENSIVE
INCOME
----------------------
Foreign currency
translation gain 31,253 18,681 80,651 8,255
------------ ----------- ------------ ------------
OTHER COMPREHENSIVE
INCOME 31,253 18,681 80,651 8,255
------------ ----------- ------------ ------------
COMPREHENSIVE LOSS $ (2,446,052) $(1,597,727) $ (5,718,838) $ (7,932,667)
---------------------- ============ =========== ============ ============
WEIGHTED AVERAGE
SHARES OUTSTANDING,
BASIC AND DILUTED 17,012,458 12,640,000 15,079,883 12,640,000
============ =========== ============ ============
NET LOSS PER SHARE,
BASIC AND DILUTED $ (0.15) $ (0.13) $ (0.38) $ (0.63)
============ =========== ============ ============
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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