Nevada
|
45-0538522
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
Large Accelerated Filer
|
o
|
Accelerated Filer
|
o
|
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
x
|
PART I - FINANCIAL INFORMATION
|
|
Item 1. Financial Statements
|
4
|
Condensed Consolidated Balance Sheets
|
4
|
Condensed Consolidated Statements of Comprehensive Income (Loss)
|
5
|
Condensed Consolidated Statements of Cash Flows
|
6
|
Notes to Condensed Consolidated Financial Statements
|
7 – 22
|
Item 2. Management’s Discussion and Analysis or Plan of Operation
|
23
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
32
|
Item 4. Controls and Procedures
|
32
|
PART II – OTHER INFORMATION
|
35
|
Item 1. Legal Proceedings
|
35
|
Item 1A. Risk Factors
|
35
|
Item 2. Unregistered Sales of Equity Securities And Use Of Proceeds
|
35
|
Item 3. Defaults Upon Senior Securities
|
35
|
Item 4. Mine Safety Disclosures
|
35
|
Item 5. Other Information
|
35
|
Item 6. Exhibits
|
36
|
Note
|
September 30,
2012
|
December 31,
2011
|
||||||||||
(Unaudited)
|
||||||||||||
ASSETS
|
||||||||||||
Current assets:
|
||||||||||||
Cash
|
3
|
$
|
7,255,600
|
$
|
7,325,017
|
|||||||
Pledged bank deposits
|
200,972,578
|
156,318,066
|
||||||||||
Bills receivable
|
633,200
|
1,574,000
|
||||||||||
Accounts receivable
|
4
|
2,419,301
|
2,226,288
|
|||||||||
Inventories
|
5
|
69,292,607
|
38,945,968
|
|||||||||
Prepayments to suppliers
|
6
|
29,063,792
|
15,781,294
|
|||||||||
Consumption tax refund receivable
|
7
|
37,273,246
|
55,809,560
|
|||||||||
Amounts due from related parties
|
22
|
39,575
|
39,350
|
|||||||||
Other current assets
|
8
|
54,979,033
|
45,978,428
|
|||||||||
Deferred income tax assets
|
17
|
37,561
|
37,348
|
|||||||||
Total current assets
|
401,966,493
|
324,035,319
|
||||||||||
Property, plant and equipment, net
|
9
|
210,836,395
|
190,867,621
|
|||||||||
Intangible assets, net
|
10
|
903,959
|
978,503
|
|||||||||
Land use rights
|
11
|
10,794,017
|
11,068,762
|
|||||||||
VAT recoverable
|
8
|
1,390,582
|
2,893,635
|
|||||||||
Total assets
|
$
|
625,891,446
|
$
|
529,843,840
|
||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||||||
Current liabilities:
|
||||||||||||
Short-term bank borrowings
|
12
|
$
|
325,320,242
|
$
|
225,969,421
|
|||||||
Bills payable
|
107,327,400
|
63,550,250
|
||||||||||
Current portion of long-term bank borrowings
|
13
|
6,173,700
|
15,740,000
|
|||||||||
Accounts payable
|
43,882,748
|
97,588,137
|
||||||||||
Advances from customers
|
31,359,642
|
7,821,623
|
||||||||||
Accrued expenses and other payables
|
14
|
27,129,341
|
30,287,946
|
|||||||||
Income taxes payable
|
17
|
241,409
|
186,326
|
|||||||||
Dividends payable
|
2,381,759
|
2,381,759
|
||||||||||
Amounts due to related parties
|
22
|
-
|
621,077
|
|||||||||
Total liabilities, all current
|
543,816,241
|
444,146,539
|
||||||||||
Series B convertible preferred stock:
|
||||||||||||
Par value: $0.001; Authorized: 8,000,000 shares
|
||||||||||||
6% cumulative dividend with liquidation preference
|
||||||||||||
over common stock
|
||||||||||||
Issued and outstanding: 5,333,340shares,
|
||||||||||||
liquidation preference of $20,000,000
|
16,451,552
|
16,451,552
|
||||||||||
Commitments and contingencies
|
18
|
-
|
-
|
|||||||||
Stockholders’ equity:
|
||||||||||||
Common stock:
|
||||||||||||
Par value:$0.001; Authorized: 100,000,000 shares;
|
||||||||||||
Issued and outstanding: 57,646,160 shares as at September 30, 2012 and
|
||||||||||||
December 31, 2011
|
57,646
|
57,646
|
||||||||||
Additional paid-in capital
|
50,303,562
|
49,198,278
|
||||||||||
Statutory reserve
|
3,744,304
|
3,744,304
|
||||||||||
Accumulated other comprehensive income
|
5,848,820
|
6,545,811
|
||||||||||
Retained earnings
|
5,669,321
|
9,699,710
|
||||||||||
Total stockholders’ equity
|
65,623,653
|
69,245,749
|
||||||||||
Total liabilities and stockholders' equity
|
$
|
625,891,446
|
$
|
529,843,840
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Sales
|
||||||||||||||||
External parties
|
$
|
164,347,259
|
$
|
123,429,226
|
$
|
532,097,663
|
$
|
362,865,970
|
||||||||
Related parties
|
-
|
41,225,747
|
-
|
99,443,224
|
||||||||||||
Total Sales
|
164,347,259
|
164,654,973
|
532,097,663
|
462,309,194
|
||||||||||||
Cost of sales
|
||||||||||||||||
External parties
|
160,472,369
|
126,185,505
|
512,329,534
|
351,055,636
|
||||||||||||
Related parties
|
-
|
41,846,664
|
-
|
100,123,349
|
||||||||||||
Total Cost of sales
|
160,472,369
|
168,032,169
|
512,329,534
|
451,178,985
|
||||||||||||
Gross profit (loss)
|
3,874,890
|
(3,377,196
|
)
|
19,768,129
|
11,130,209
|
|||||||||||
Operating expenses
|
||||||||||||||||
Selling expenses
|
251,399
|
91,607
|
892,522
|
846,287
|
||||||||||||
General and administrative expenses
|
2,127,023
|
5,220,525
|
7,393,838
|
12,985,350
|
||||||||||||
Total operating expenses
|
2,378,422
|
5,312,132
|
8,286,360
|
13,831,637
|
||||||||||||
Income (loss) from operations
|
1,496,468
|
(8,689,328
|
)
|
11,481,769
|
(2,701,428
|
)
|
||||||||||
Other income (expense)
|
||||||||||||||||
Interest income
|
1,518,802
|
1,497,644
|
4,340,849
|
3,186,530
|
||||||||||||
Interest expense
|
(5,863,569
|
)
|
(5,963,264
|
)
|
(13,172,551
|
)
|
(11,798,628
|
)
|
||||||||
Foreign exchange gain (loss), net
|
331,405
|
1,466,275
|
(33,113
|
)
|
4,666,631
|
|||||||||||
Liquidated damages expense
|
-
|
(1,424,609
|
)
|
-
|
(2,725,339
|
)
|
||||||||||
Other
|
(5,439,250
|
)
|
(159,370
|
)
|
(5,656,289
|
)
|
2,409,165
|
|||||||||
Total other expenses
|
(9,452,612
|
)
|
(4,583,324
|
)
|
(14,521,104
|
)
|
(4,261,641
|
)
|
||||||||
Loss before income taxes
|
(7,956,144
|
)
|
(13,272,652
|
)
|
(3,039,335
|
) |
(6,963,069
|
)
|
||||||||
Income tax (benefit) expense
|
(1,018,411
|
)
|
(2,613,449
|
)
|
991,058
|
304,529
|
||||||||||
Net loss attributable to Keyuan
|
||||||||||||||||
Petrochemicals Inc. stockholders
|
(6,937,733
|
)
|
(10,659,203
|
)
|
(4,030,393
|
)
|
(7,267,598
|
)
|
||||||||
Dividends to Series B convertible
|
||||||||||||||||
preferred stockholders
|
-
|
306,247
|
-
|
908,753
|
||||||||||||
Net loss attributable to Keyuan
|
||||||||||||||||
Petrochemicals Inc. common stockholders
|
$
|
(6,937,733
|
)
|
$
|
(10,965,450
|
)
|
$
|
(4,030,393
|
)
|
$
|
(8,176,351
|
)
|
||||
Net loss attributable to Keyuan
|
||||||||||||||||
Petrochemicals Inc. stockholders
|
$
|
(6,937,733
|
)
|
$
|
(10,659,203
|
)
|
$
|
(4,030,393
|
)
|
$
|
(7,267,598
|
)
|
||||
Other comprehensive (loss) income
|
||||||||||||||||
Foreign currency translation adjustment
|
(827,671
|
)
|
942,212
|
(696,991
|
)
|
2,674,383
|
||||||||||
Comprehensive loss
|
$
|
(7,765,404
|
)
|
$
|
(9,716,991
|
)
|
$
|
(4,727,384
|
)
|
$
|
(4,593,215
|
)
|
||||
Loss per share
|
||||||||||||||||
Attributable to common stock
|
||||||||||||||||
- Basic
|
$
|
(0.12
|
)
|
$
|
(0.19
|
)
|
$
|
(0.07
|
)
|
$
|
(0.14
|
)
|
||||
- Diluted
|
$
|
(0.12
|
)
|
$
|
(0.19
|
)
|
$
|
(0.07
|
)
|
$
|
(0.14
|
)
|
||||
Weighted average number of shares of common stock used in calculation
|
||||||||||||||||
Basic
|
57,646,160
|
57,579,490
|
57,646,160
|
57,579,096
|
||||||||||||
Diluted
|
57,646,160
|
57,579,490
|
57,646,160
|
57,579.096
|
Nine Months Ended
September 30,
|
||||||||
2012
|
2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(4,030,393
|
)
|
$
|
(7,267,598
|
)
|
||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||
Loss on disposal of property and equipment
|
-
|
3,528
|
||||||
Depreciation
|
7,341,232
|
6,994,230
|
||||||
Amortization
|
80,251
|
78,033
|
||||||
Land use rights amortization
|
338,504
|
329,183
|
||||||
Share-based compensation expense
|
1,206,126
|
1,695,078
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Bills receivable
|
951,117
|
6,972,884
|
||||||
Account receivable
|
(180,533
|
)
|
-
|
|||||
Inventories
|
(30,165,815
|
)
|
41,427,530
|
|||||
Prepayments to suppliers
|
(13,210,595
|
)
|
(9,138,576
|
)
|
||||
Consumption tax refund receivable
|
18,881,633
|
(12,669,298
|
)
|
|||||
Other assets
|
(6,491,085
|
)
|
(9,613,538
|
)
|
||||
Accounts payable
|
(54,641,410
|
)
|
13,727,663
|
|||||
Accounts payable-related parties
|
(625,497
|
)
|
505,542
|
|||||
Advances from customers
|
23,525,946
|
7,750,302
|
||||||
Income taxes payable
|
(409,611
|
)
|
(12,780,611
|
)
|
||||
Accrued expenses and other payables
|
(2,134,091
|
)
|
(7,281,521
|
)
|
||||
Net cash (used in) provided by operating activities
|
(59,564,221
|
)
|
20,732,831
|
|||||
Cash flows from investing activities:
|
||||||||
Proceeds from property disposal of property and equipment
|
-
|
10,582
|
||||||
Purchase of property, plant and equipment,
|
(27,415,396
|
)
|
(23,631,456
|
)
|
||||
Net cash used in investing activities
|
(27,415,396
|
)
|
(23,620,874
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Pledged bank deposits used for bank borrowings
|
(43,821,515
|
)
|
(56,821,639
|
)
|
||||
Proceeds from short-term bank borrowings
|
663,720,065
|
189,192,525
|
||||||
Repayment of short-term bank borrowings
|
(565,966,718
|
)
|
(130,501,038
|
)
|
||||
Proceeds from bills payable
|
172,786,800
|
85,470,630
|
||||||
Repayment of bills payable
|
(129,312,690
|
)
|
(94,796,100
|
)
|
||||
Repayments of long-term bank borrowings
|
(9,669,720
|
)
|
(13,101,900
|
)
|
||||
Short-term financing from related parties
|
-
|
13,232,658
|
||||||
Short-term financing to related parties
|
-
|
(13,118,390
|
)
|
|||||
Proceeds from warrant exercise
|
-
|
7,332
|
||||||
Dividends paid
|
-
|
(2,585,647
|
)
|
|||||
Net cash provided by (used in) financing activities
|
87,736,222
|
(23,021,569
|
)
|
|||||
Effect of foreign currency exchange rate changes on cash
|
(826,022
|
)
|
316,817
|
|||||
Net decrease in cash
|
(69,417
|
)
|
(25,592,795
|
)
|
||||
Cash at beginning of the period
|
7,325,017
|
29,336,241
|
||||||
Cash at end of the period
|
$
|
7,255,600
|
$
|
3,743,446
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Income taxes paid
|
$
|
1,820,668
|
$
|
13,085,140
|
||||
Interest paid, net of capitalized interest
|
$
|
9,264,849
|
$
|
11,798,628
|
||||
Dividends accrued
|
$
|
-
|
$
|
4,436,753
|
||||
Non-cash financing activities:
|
||||||||
Payable for purchase of property, plant and equipment
|
$
|
8,816,043
|
$
|
14,668,112
|
|
September 30,
|
December 31,
|
||||||
|
2012
|
2011
|
||||||
|
(Unaudited)
|
|||||||
Raw materials
|
$ | 55,506,637 | $ | 26,226,388 | ||||
Finished goods
|
8,677,501 | 10,891,825 | ||||||
Work-in-process
|
5,108,469 | 1,827,755 | ||||||
Total
|
$ | 69,292,607 | $ | 38,945,968 |
September 30,
|
December 31,
|
|||||||
|
2012
|
2011
|
||||||
|
(Unaudited)
|
|||||||
VAT recoverable
|
$ | 31,544,594 | $ | 9,991,877 | ||||
Receivable from Ningbo Litong (Note 22)
|
690,584 | 2,740,970 | ||||||
Customs deposits for imported inventories
|
16,656,326 | 29,102,193 | ||||||
Others
|
5,624,467 | 4,143,388 | ||||||
Income tax receivable | 463,062 | - | ||||||
$ | 54,979,033 | $ | 45,978,428 |
Sptember 30,
|
December 31,
|
|||||||
|
2012
|
2011
|
||||||
|
(Unaudited)
|
|||||||
Buildings
|
$ | 3,910,467 | $ | 3,888,234 | ||||
Machinery and equipment
|
230,024,640 | 175,736,470 | ||||||
Vehicles
|
785,091 | 663,985 | ||||||
Office equipment and furniture
|
247,592 | 134,929 | ||||||
Construction-in-progress
|
302,729 | 27,449,846 | ||||||
235,270,519 | 207,873,464 | |||||||
Less: Accumulated depreciation
|
(24,434,124 | ) | (17,005,843 | ) | ||||
$ | 210,836,395 | $ | 190,867,621 |
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30
|
September 30
|
|||||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Cost of sales
|
$ | 1,846,619 | $ | 2,280,341 | $ | 7,206,265 | $ | 6,870,200 | ||||||||
Selling, general and administrative expenses
|
47,300 | 42,323 | 134,967 | 124,030 | ||||||||||||
$ |
1,893,919
|
$ | 2,322,664 | $ | 7,341,232 | $ | 6,994,230 |
Amortization
|
September 30,
|
December 31,
|
|||||||||||
Period
|
2012
|
2011
|
|||||||||||
Years
|
(Unaudited)
|
||||||||||||
Licensing agreements
|
10-20 | $ | 1,503,850 | $ | 1,495,300 | ||||||||
Less: Accumulated amortization
|
(599,891 | ) | (516,797 | ) | |||||||||
$ | 903,959 | $ | 978,503 |
September 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
Land use rights
|
$ | 12,251,756 | $ | 12,182,100 | ||||
Less: Accumulated amortization
|
(1,457,739
|
) | (1,113,338 | ) | ||||
$ | 10,794,017 | $ | 11,068,762 |
September 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
Bank borrowings-secured/guaranteed
|
$ | 325,320,242 | $ | 225,969,421 |
September 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
Loan from China Construction Bank
|
$ | 6,173,700 | $ | 15,740,000 | ||||
Less: current portion
|
(6,173,700 | ) | (15,740,000 | ) | ||||
$ | - | $ | - |
September 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
Payable for purchase of property, plant and equipment
|
$ | 21,477,138 | $ | 24,590,217 | ||||
Accrued payroll and welfare
|
370,791 | 1,061,508 | ||||||
Liquidated damages
|
2,493,326 | 2,493,326 | ||||||
Other accruals and payables
|
2,788,086 | 2,142,895 | ||||||
$ | 27,129,341 | $ | 30,287,946 |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
PRC
|
$
|
(7,152,274
|
)
|
$
|
9,087,464
|
$
|
850,930
|
$
|
2,852,121
|
|||||||
U.S.
|
(554,940
|
)
|
3,610,942
|
(1,980,970
|
)
|
(8,315,021
|
)
|
|||||||||
Hong Kong and BVI
|
(248,928
|
)
|
574,246
|
(1,909,295
|
)
|
(1,500,169
|
)
|
|||||||||
Loss before income taxes
|
$
|
(7,956,142
|
)
|
$
|
13,272,652
|
$
|
(3,039,335
|
) |
$
|
(6,963,069
|
)
|
PRC:
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Current income tax (benefit) expense
|
$ | (1,018,411 | ) | $ | - | $ | 991,058 | $ | 304,529 | |||||||
Deferred income tax benefit
|
- | (2,613,449 | ) | - | - | |||||||||||
Total income tax (benefit) expense
|
$ | (1,018,411 | ) | $ | (2,613,449 | ) | $ | 991,058 | $ | 304,529 |
Three months ended September 30,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
Loss before income
|
$
|
(7,956,142
|
)
|
$
|
(13,272,652
|
)
|
||||||||||
Computed income tax (benefit) expense
|
(1,989,036
|
)
|
25.0
|
%
|
(3,318,163
|
)
|
25.0
|
%
|
||||||||
NOLs from overseas subsidiaries
|
200,967
|
(4.1
|
%)
|
1,356,212
|
(10.2
|
%)
|
||||||||||
Others/Timing differences
|
769,658
|
|
9.7
|
%
|
(651,498
|
)
|
4.9
|
%
|
||||||||
Actual income tax (benefit) expense
|
$
|
(1,018,411
|
)
|
21.0
|
%
|
$
|
2,613,449
|
19.7
|
%
|
Nine months ended September 30,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
Income (Loss) before income taxes
|
$
|
(3,039,335
|
) |
$
|
(6,963,069
|
)
|
||||||||||
Computed expected income tax expense
|
(759,834
|
) |
25.0
|
%
|
(1,740,767
|
)
|
25.0
|
%
|
||||||||
NOLs from overseas subsidiaries
|
972,566
|
131
|
%
|
3,155,416
|
(45.4
|
%)
|
||||||||||
Others/Timing differences
|
778,326
|
26
|
%
|
(1,110,120
|
)
|
16
|
%
|
|||||||||
Actual income tax expense
|
$
|
991,058
|
117
|
%
|
$
|
304,529
|
(4.4
|
%)
|
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Net loss income attribute to Keyuan Petrochemicals, Inc. stockholders
|
$
|
(6,937,733
|
)
|
$
|
(10,659,203
|
)
|
$
|
(4,030,393
|
)
|
$
|
(7,267,598
|
)
|
||||
Less: Dividend attributable to preferred stockholders
|
-
|
306,247
|
-
|
908,753
|
||||||||||||
Net loss attributable to Keyuan Petrochemical Inc. common stockholders
|
$
|
(6,937,733
|
)
|
$
|
(10,965,450
|
)
|
$
|
(4,030,392
|
)
|
$
|
(8,176,351
|
)
|
||||
Weighted average common shares basic and diluted
|
57,646,160
|
57,579,490
|
57,646,160
|
57,579,096
|
||||||||||||
Net loss per share-basic and diluted
|
$
|
(0.12
|
)
|
$
|
(0.19
|
)
|
$
|
( 0.07
|
)
|
$
|
(0.14
|
)
|
Three months ended September 30, 2012
|
Three months ended September 30, 2011
|
||||||||||||||||
(Unaudited)
|
(Unaudited)
|
||||||||||||||||
Largest
|
Amount of
|
% Total
|
Largest
|
Amount of
|
% Total
|
||||||||||||
Customers
|
Sales
|
Sales
|
Customers
|
Sales
|
Sales
|
||||||||||||
Customer A
|
$ | 25,073,797 | 15 | % |
Customer A
|
$ | 41,225,299 | 25 | % | ||||||||
Customer B
|
19,205,656 | 12 | % |
Customer I
|
13,170,091 | 8 | % | ||||||||||
Customer C
|
9,186,080 | 6 | % |
Customer F
|
11,137,634 | 7 | % | ||||||||||
Customer D
|
8,164,027 | 5 | % |
Customer J
|
12,173,190 | 7 | % | ||||||||||
Customer E
|
7,836,830 | 5 | % |
Customer K
|
6,372,752 | 4 | % | ||||||||||
Total
|
$ |
69,466,390
|
43 | % |
Total
|
$ |
84,078,966
|
51 | % |
Nine months ended September 30, 2012
|
Nine months ended September 30, 2011
|
||||||||||||||||
(Unaudited)
|
(Unaudited)
|
||||||||||||||||
Largest
|
Amount of
|
% Total
|
Largest
|
Amount of
|
% Total
|
||||||||||||
Customers
|
Sales
|
Sales
|
Customers
|
Sales
|
Sales
|
||||||||||||
Customer A
|
$ | 77,871,098 | 15 | % |
Customer A
|
$ | 99,376,211 | 21 | % | ||||||||
Customer B
|
33,060,210 | 6 | % |
Customer L
|
42,569,008 | 9 | % | ||||||||||
Customer F
|
26,439,522 | 5 | % |
Customer F
|
41,406,576 | 9 | % | ||||||||||
Customer G
|
24,755,435 | 5 | % |
Customer M
|
19,465,251 | 4 | % | ||||||||||
Customer H
|
20,021,342 | 4 | % |
Customer N
|
18,257,022 | 4 | % | ||||||||||
Total
|
$ | 182,147,607 | 35 | % |
Total
|
$ | 221,074,068 |
47
|
% |
Name of parties
|
Relationship
|
|
Mr. Chunfeng Tao
|
Majority stockholder
|
|
Mr. Jicun Wang
|
Principal stockholder
|
|
Mr. Peijun Chen
|
Principal stockholder
|
|
Ms. Sumei Chen
|
Member of the Company’s Board of Supervisors and spouse of Mr. Wang
|
|
Ms. Yushui Huang
|
Vice President of Administration, Ningbo Keyuan
|
|
Mr. Weifeng Xue
|
Vice President of Accounting, Ningbo Keyuan through August 2011
|
|
Mr. Hengfeng Shou
|
Vice President of Sales, Ningbo Keyuan Petrochemical
|
|
Ningbo Kewei Investment Co., Ltd
|
A company controlled by Mr. Tao through September 2011
|
|
(Ningbo Kewei)
|
||
Ningbo Pacific Ocean Shipping Co., Ltd
|
100% ownership by Mr. Wang
|
|
(Ningbo Pacific)
|
||
Ningbo Hengfa Metal Product Co., Ltd
|
100% ownership by Mr. Chen
|
|
(Ningbo Hengfa, former name "Ningbo Tenglong")
|
||
Shandong Tengda Stainless Steel Co., Ltd
|
100% ownership by Mr. Chen
|
|
(Shandong Tengda)
|
||
Ningbo Xinhe Logistic Co., Ltd
|
||
(Ningbo Xinhe)
|
10% ownership by Ms. Huang
|
|
Ningbo Kunde Petrochemical Co, Ltd.
|
Mr. Tao’s mother was a 65% nominee shareholder for Mr. Hu, a third party through September 2011 and included in transactions with certain other beginning October 1, 2011
|
|
(Ningbo Kunde)
|
||
Ningbo Jiangdong Jihe Construction Materials
|
Controlled by Mr. Xue’s Brother-in-law
|
|
Store (Jiangdong Jihe)
|
||
Ningbo Wanze Chemical Co., Ltd
|
Mr. Tao’s sister-in-law is the legal representative
|
|
(Ningbo Wanze)
|
||
Ningbo Zhenhai Jinchi Petroleum Chemical Co., Ltd
|
Controlled by Mr. Shou
|
|
(Zhenhai Jinchi) |
Three Months ended September 30,
|
||||||||
2012
|
2011
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Sales of products (a)
|
$ | - | $ | 41,225,747 | ||||
Purchase of raw material (b)
|
$ | - | $ | - | ||||
Purchase of transportation services (c)
|
$ | 1,011,084 | $ | 1,230,893 | ||||
Credit line of guarantee provision for bank borrowings (d)
|
$ | 34,398,840 | $ | - | ||||
Loan guarantee fees (d)
|
$ | 102,889 | $ | 402,447 | ||||
Short-term financing from related parties (e)
|
$ | - | $ | - | ||||
Short-term financing to related parties (e)
|
$ | - | $ | - | ||||
Nine Months ended September 30,
|
||||||||
2012 | 2011 | |||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Sales of products (a)
|
$ | - | $ | 99,443,224 | ||||
Purchase of raw material (b)
|
$ | - | $ | 7,113,589 | ||||
Purchase of transportation services (c)
|
$ | 2,675,446 | $ | 2,158,772 | ||||
Credit line of guarantee provision for bank borrowings (d)
|
$ | 34,398,840 | $ | - | ||||
Loan guarantee fees (d)
|
$ | 306,873 | $ | 1,159,365 | ||||
Short-term financing from related parties (e)
|
$ | - | $ | 13,232,658 | ||||
Short-term financing to related parties (e)
|
$ | - | $ | 13,118,390 | ||||
September 30,
|
December 31,
|
|||||||
2012 | 2011 | |||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Amounts due from related parties (f)
|
$ | 39,575 | $ | 39,350 | ||||
Amounts due to related parties (g)
|
$ | - | $ | 621,077 |
Guarantee provided during
the three months ended September 30
|
Guarantee provided during
the nine months ended September 30
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Mr. Tao
|
$
|
16,644,600
|
$
|
-
|
$
|
16,644,600
|
$
|
-
|
||||||||
Jicun Wang and Chen
|
17,754,240
|
-
|
17,754,240
|
-
|
Bank Loans guaranteed
|
||||||||
as of
|
||||||||
September 30
|
December 31
|
|||||||
2012
|
2011
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Mr. Tao
|
$
|
9,923,700
|
$
|
34,628,000
|
||||
Jicun Wang and Chen
|
6,399,600
|
1,983,523
|
||||||
Ningbo Pacific
|
29,290,544
|
27,918,200
|
||||||
Ningbo Hengfa
|
-
|
14,795,600
|
||||||
Shandong Tengda
|
-
|
944,400
|
||||||
Total
|
$
|
45,613,844
|
$
|
80,269,723
|
Nine Months Ended September 30
|
||||||||||||||||||||||||
2012
|
2011
|
|||||||||||||||||||||||
From(i)
|
To(i)
|
Balance(ii)
|
From(i)
|
To(i)
|
Balance(ii)
|
|||||||||||||||||||
Ningbo Kewei
|
$ | - | $ | - | $ | - | $ | 5,394,900 | $ | (5,394,900 | ) | $ | - | |||||||||||
Ningbo Kunde
|
- | - | - | 5,394,900 | (5,394,900 | ) | - | |||||||||||||||||
Jiangdong Jihe
|
- | - | - | 2,442,858 | (2,328,590 | ) | ||||||||||||||||||
$ | - | $ | - | $ | - | $ | 13,232,658 | $ | (13,118,390 | ) | $ | - |
September 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
Related Party
|
(Unaudited)
|
(Unaudited)
|
||||||
Mr. Tao
|
$ | 39,575 | $ | 39,350 | ||||
$ | 39,575 | $ | 39,350 |
September 30,
|
December 31,
|
|||||||
Related Party
|
2012
|
2011
|
||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Ninbo Xinhe
|
$
|
-
|
$
|
621,077
|
Name of parties
|
Relationship
|
|
Ningbo Litong Petrochemical Co., Ltd
|
Former 12.75% nominee shareholder of Ningbo
|
|
(Ningbo Litong)
|
Keyuan
|
|
Ningbo Jiangdong Haikai Construction
|
Controlled by cousin of Mr. Weifeng Xue, Vice
|
|
Materials Store (Jiangdong Haikai)
|
President of Accounting through August 2011
|
|
Ningbo Jiangdong Deze Chemical Co., Ltd
|
Controlled by cousin of Mr. Weifeng Xue, Vice
|
|
(Jiangdong Deze)
|
President of Accounting through August 2011
|
|
Ningbo Anqi Petrochemical Co., Ltd
|
Controlled by cousin of Mr. Weifeng Xue, Vice
|
|
(Ningbo Anqi)
|
President of Accounting through August 2011
|
|
Ningbo Kewei Investment Co., Ltd
|
A related party through September 2011 when control
|
|
(Ningbo Kewei)
|
transferred, and included in transactions with certain other parties beginning October 1, 2011
|
|
Ningbo Kunde Petrochemical Co., Ltd
|
A related party through September 2011 when control
|
|
(Ningbo Kunde)
|
transferred, and included in transactions with certain other parties beginning October 1, 2011
|
Three Months Ended September 30,
|
||||||||
(Unaudited)
|
||||||||
2012
|
2011
|
|||||||
Sales of products (h)
|
$ | 25,073,797 | $ | - | ||||
Purchase of raw material (i)
|
$ | 17,183,224 | $ | 5,302,905 | ||||
Credit line of guarantee for bank borrowings (j)
|
$ | 51,043,440 | $ | - | ||||
Loan guarantee fees(j)
|
$ | 374,184 | $ | 256,020 | ||||
Short-term financing from theses parties (k)
|
$ | - | $ | 3,949,020 | ||||
Short-term financing to these parties (k)
|
$ | - | $ | 3,949,020 | ||||
Amounts due from these parties
|
$ | 1,731,172 | $ | - | ||||
Nine Months Ended September 30,
|
||||||||
(Unaudited)
|
||||||||
2012 | 2011 | |||||||
Sales of products (h)
|
$ | 95,033,299 | $ | 777,960 | ||||
Purchase of raw material (i)
|
$ | 39,521,516 | $ | 14,839,187 | ||||
Credit line of guarantee for bank borrowings (j)
|
$ | 192,105,440 | $ | - | ||||
Loan guarantee fees(j)
|
$ | 1,116,489 | $ | 761,676 | ||||
Short-term financing from theses parties (k)
|
$ | - | $ | 51,835,741 | ||||
Short-term financing to these parties (k)
|
$ | - | $ | 49,582,214 | ||||
Amounts due from these parties
|
$ | 1,731,172 | $ | - | ||||
Amounts due to these parties
|
$ | - | $ | 64,201 |
Guarantee provided during
the three months ended September 30 (Unaudited)
|
Guaranted provided during
the nine months ended September 30 (Unaudited)
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Ningbo Litong
|
$ | 16,644,600 | $ | - | $ | 67,252,200 | $ | 39,907,500 | ||||||||
Ningbo Kewei
|
$ | 34,398,840 | $ | - | $ | 145,362,840 | $ | - |
Bank loans guaranteed
As of
|
||||||||
September 30
|
December 31
|
|||||||
2012
|
2011
|
|||||||
(Unaudited)
|
||||||||
Ningbo Litong
|
$ | 41,261,306 | $ | 61,632,077 | ||||
Ningbo Keiwei
|
$ | 32,716,374 | $ | - |
Three Months Ended September 30
(Unaudited)
|
||||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||||
From(i)
|
To(i)
|
Balance(ii)
|
From(i)
|
To(i)
|
Balance(ii)
|
|||||||||||||||||||
Ningbo Anqi
|
- | - | - | 3,949,020 | (3,949,020 | ) | - | |||||||||||||||||
$ | - | $ | - | $ | - | $ | 3,949,020 | $ | (3,949,020 | ) | $ | - | ||||||||||||
Nine Months Ended September 30
(Unaudited)
|
||||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||||
From(i)
|
To(i)
|
Balance(ii)
|
From(i)
|
To(i)
|
Balance(ii)
|
|||||||||||||||||||
Ningbo Litong
|
$ | - | $ | - | $ | - | $ | 38,399,357 | $ | (36,145,830 | ) | $ | - | |||||||||||
Jiangdong Deze
|
- | - | - | 2,620,380 | (2,620,380 | ) | - | |||||||||||||||||
Ningbo Anqi
|
- | - | - | 10,816,004 | (10,816,004 | ) | - | |||||||||||||||||
$ | - | $ | - | $ | - | $ | 51,835,741 | $ | (49,582,214 | ) | $ | - |
● Heavy oil catalytic pyrolysis processing equipment- risers/generators/precipitators, fuel gas boilers, fractionating tower, absorbing re-absorbing and desorbing towers, heat exchangers, pumps, a stabilizing tower;
|
● Gas fractionation processing equipment- de-propanizing tower, refining propylene tower, de-ethanizination tower, heat exchangers, pumps;
|
● Ethylbenzene processing equipment- alkylation reactor, anti-alkylation reactor, dehydrogenation reactor, propylene absorbing tower, de-ethylene tower, ethylbenzene recovering tower, heating furnace for benzene, heating furnace for gas, steam overheating furnace, tail gas compressor, washing tower; and
|
● Liquefied petroleum gas (LPG) and sulfur recovery process- LPG desulfurization extraction tower, dry gas desulfurization tower, regenerating tower, LPG de-mecaptan extraction tower.
|
● BTX Aromatics: consisting of benzene, toluene, xylene and other chemical components for further processing into plastics, gasoline and solvents materials widely used in paint, ink, construction coating and pesticide.
|
● Propylene: a chemical intermediate as one of the building blocks for an array of chemical and plastic products that are commonly used to produce polypropylene, acrylonitrile, oxo alcohols, propylene oxide, cumene, isopropyl alcohol, acrylic acid and other chemicals for paints, household detergents, automotive brake fluids, indoor/outdoor carpeting, textile, insulating materials, auto parts and electrical appliances.
|
● Styrene: a precursor to polystyrene and several copolymers widely used for packaging materials, construction materials, electronic parts, home appliances, household goods, home furnishings, toys, sporting goods and others.
|
● LPG: a mixture of hydrocarbon gases used as fuel in heating appliances and vehicles. A replacement for chlorofluorocarbons as an aerosol propellant and a refrigerant which reduces damage to the ozone layer.
|
● MTBE & Other Chemicals: MTBE, oil slurry, sulphur and others are used for a variety of applications including fuel components, refrigeration systems, fertilizers, insecticides and fungicides, etc.
|
Completed SBS facility in September 2011(achieved)
|
|
Completed trial production and began SBS production and sales in the fourth quarter of 2011 (achieved)
|
|
Complete storage capacity expansion, pretreatment facility and asphalt by June 30, 2013
|
|
Complete first phase construction of an ABS facility by the end of 2013
|
For the three months
|
Year to Year Comparison
|
For the nine months
|
Year to Year Comparison
|
|||||||||||||||||||||||||||||
Ended September 30,
|
Increase
|
Percentage
|
Ended September 30,
|
Increase
|
Percentage
|
|||||||||||||||||||||||||||
2012
|
2011
|
/(Decrease)
|
change
|
2012
|
2011
|
/(Decrease)
|
change
|
|||||||||||||||||||||||||
Sales
|
||||||||||||||||||||||||||||||||
Third parties
|
$
|
164,347,259
|
$
|
123,429,226
|
$
|
40.918.033
|
33
|
%
|
$
|
532,097,663
|
$
|
362,865,970
|
$
|
169,231,693
|
47
|
%
|
||||||||||||||||
Related Parties
|
-
|
41,225,747
|
(41,225,747
|
)
|
(100
|
%)
|
-
|
99,443,224
|
(99,443,224
|
)
|
(100
|
%)
|
||||||||||||||||||||
Total sales
|
$
|
164,347,259
|
$
|
164,654,973
|
$
|
(307,714
|
)
|
(0.2
|
%)
|
$
|
532,097,663
|
$
|
462,309,194
|
$
|
69,788,469
|
15
|
%
|
|||||||||||||||
Cost of sales
|
||||||||||||||||||||||||||||||||
Third parties
|
160,472,369
|
126,185,505
|
34,286,864
|
27
|
%
|
512,329,534
|
351,055,636
|
161,273,898
|
46
|
%
|
||||||||||||||||||||||
Related Parties
|
-
|
41,846,664
|
(41,846,664
|
)
|
(100
|
%)
|
-
|
100,123,349
|
(100,123,346
|
)
|
(100
|
%)
|
||||||||||||||||||||
Total cost of sales
|
160,472,369
|
168,032,169
|
(7,559,800
|
)
|
(4.5
|
%)
|
512,329,534
|
451,178,985
|
61,150,549
|
14
|
%
|
|||||||||||||||||||||
Gross profit
|
3,874,890
|
(3,377,196
|
)
|
7,252,086
|
215
|
%
|
19,768,129
|
11,130,209
|
8,637,920
|
78
|
%
|
|||||||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||||||||||
Selling expenses
|
251,399
|
91,607
|
159,792
|
174
|
%
|
892,522
|
846,287
|
46,235
|
)
|
5
|
%
|
|||||||||||||||||||||
General and administrative expenses
|
2,127,023
|
5,220,525
|
(3,093,502
|
)
|
(59
|
%)
|
7,393,838
|
12,985,350
|
(5,591,512
|
)
|
(43
|
%)
|
||||||||||||||||||||
Total operating expenses
|
2,378,422
|
5,312,132
|
(2,933,710
|
)
|
(55
|
%)
|
8,286,360
|
13,831,637
|
(5,545,276
|
)
|
(40
|
%)
|
||||||||||||||||||||
Income (Loss) from operations
|
1,496,468
|
(8,689,328
|
)
|
10,185,796
|
117%
|
11,481,769
|
(2,701,428
|
)
|
14,183,197
|
525
|
%
|
|||||||||||||||||||||
Other income (expenses):
|
||||||||||||||||||||||||||||||||
Interest income
|
1,518,802
|
1,497,644
|
21,158
|
1.4
|
% |
4,340,849
|
3,186,530
|
1,154,319
|
36
|
% | ||||||||||||||||||||||
Interest expense, net
|
(5,863,564
|
)
|
(5,963,264
|
)
|
99,700
|
1.7
|
%
|
(13,172,551
|
)
|
(11,798,628
|
)
|
1,373,923
|
(12
|
%)
|
||||||||||||||||||
Foreign exchange gain (loss), net
|
(331,405
|
)
|
1,466,275
|
(1,797,680
|
)
|
(123
|
%)
|
(33,113
|
)
|
4,666,631
|
(4,699,744
|
)
|
(101
|
%)
|
||||||||||||||||||
Liquidated damage expenses
|
-
|
(1,424,609
|
)
|
1,424,609
|
(100
|
%)
|
-
|
(2,725,339
|
)
|
2,725,339
|
(100
|
%)
|
||||||||||||||||||||
Non-operating income (expenses)
|
(5,439,250
|
)
|
(159,370
|
)
|
(2,494,543
|
)
|
157
|
%
|
(5,656,289
|
)
|
2,409,165
|
(8,065,454
|
)
|
(335
|
%)
|
|||||||||||||||||
Total other expenses
|
(9,452,612
|
)
|
(4,583,324
|
)
|
4,869,288
|
|
106
|
%
|
(14,521,104
|
)
|
(4,261,641
|
)
|
10,259,463
|
|
241
|
%
|
||||||||||||||||
Income (Loss) before income taxes
|
(7,956,142
|
)
|
(13,272,652
|
)
|
(5,316,510
|
) |
(40
|
%)
|
(3,039,335
|
) |
(6,963,069
|
)
|
(3,923,734
|
)
|
(56
|
%)
|
||||||||||||||||
Income tax expense
|
(1,018,411
|
)
|
(2,613,449
|
)
|
3,389,466
|
(130
|
%)
|
991,058
|
304,529
|
686,529
|
225
|
%
|
||||||||||||||||||||
(Loss) Net Income
|
(6,937,733
|
)
|
(10,659,203
|
)
|
(3,721,470
|
) |
(35
|
%)
|
(4,030,393
|
)
|
(7,267,598
|
)
|
(3,237,205
|
) |
(45
|
%)
|
||||||||||||||||
Other comprehensive loss
|
||||||||||||||||||||||||||||||||
Foreign currency translation adjustment
|
(827,671
|
)
|
942,212
|
(1,769,883
|
)
|
(188
|
%)
|
(696,991
|
)
|
2,674,383
|
(3,371,374
|
)
|
(126
|
%)
|
||||||||||||||||||
Comprehensive income (loss)
|
$
|
(7,765,404
|
)
|
$
|
(9,716,991
|
)
|
$
|
(1,951,587
|
)
|
20
|
%
|
$
|
(4,727,384
|
)
|
$
|
(4,593,215
|
)
|
$
|
134,169
|
2.9
|
%
|
For the Nine Months Ended
September 30,
|
||||||||
2012
(Unaudited)
|
2011
(Unaudited)
|
|||||||
Net cash (used in) provided by operating activities
|
(59,564,221
|
)
|
20,732,831
|
|||||
Net cash used in investing activities
|
(27,415,396
|
)
|
(23,620,874
|
)
|
||||
Net cash (used in) provided by financing activities
|
87,736,222
|
(23,021,569
|
)
|
Bank loans guaranteed as of
|
||||
September 30
|
||||
2012
|
||||
(Unaudited)
|
||||
Mr. Tao(1)
|
$
|
9,923,700
|
||
Jincun Wang and Chen(2)
|
6,399,600
|
|||
Ningbo Pacific(4)
|
29,290,544
|
|||
Total
|
$
|
45,613,844
|
Loan Guarantees provided during
|
Loan Guarantees provided during
|
|||||||||||||||
the three months ended September 30
|
the nine months ended September 30
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Ningbo Litong(7)
|
$
|
16,644,600
|
$
|
-
|
$
|
67,252,200
|
$
|
39,907,500
|
||||||||
Ningbo Kewei (3)
|
34,398,840
|
-
|
145,362,840
|
-
|
||||||||||||
$
|
51,043,440
|
$
|
-
|
$
|
212,615,040
|
$
|
39,907,500
|
Bank loans
guaranteed As of
|
|
|||
September 30
|
||||
2012
|
||||
(Unaudited)
|
||||
Ningbo Litong
|
$
|
41,261,306
|
||
Ningbo Keiwei
|
$
|
32,716,374
|
(1)
|
Mr. Tao is a principal shareholder, the CEO and President of the Company.
|
(2)
|
Mr. Wang is a principal stockholder of the Company and Ms. Chen is his spouse.
|
(3)
|
Ningbo Kewei is a company controlled by Mr. Tao through September 2011. After control was transferred, Ningbo Kewei is included in transaction with certain other parties beginning October 2011. The Company purchased raw materials of nil and $4,465,563 from Ningbo Kewei during the years ended December 31, 2011 and 2010, respectively, with no outstanding amount payable to Ningbo Kewei at December 31, 2011 and 2010 in respect of these purchase transactions. The Company had short-term financing transaction with Ningbo Kewei in 2011 and 2010 of approximately $5,423,600 and $1,479,400, respectively.
|
(4)
|
Ningbo Pacific is 100% owned by Mr. Wang, a principal stockholder of the Company. The Company has no other transactions with Ningbo Pactific.
|
(5)
|
Ningbo Hengfa is wholly owned by Mr. Peijun Chen, a principal stockholder of the Company. The Company has no other transactions with Ningbo Hengfa.
|
(6)
|
Shangdong Tengda is wholly-owned by Mr. Peijun Chen. The Company had short-term financing transactiosn with Shangdong Tengda during the years ended December 31, 2011 and 2010 of nil and approximately $2,219,100, respectively. Other than the short-term financing transactions and the loan guaranty, the Company has no other transactions with Shangdong Tengda.
|
(7)
|
Through October 2011, Ningbo Litong was a 12.75% nominee shareholder of Ningbo Keyuan. The Company sold finished products of $7,360,796 and $29,625,766 to Ningbo Litong during the years ended December 31, 2011 and 2010, respectively. Amounts received in advance from Litong were nil and $110,134 as of December 31, 2011 and 2010. The Company purchased raw materials of $20,253,780 from Ningbo Litong during the year ended December 31, 2011. During the year ended December 31, 2010, the Company purchased raw materials of $18,994,104 from Ningbo Litong. Amounts prepayables to Litong were $2,740,970 and nil as of December 31, 2011 and 2010, respectively. During the three months ended September 30, 2012 and 2011, the Company sold finished products of nil and nil to Ningbo Litong. During the nine months ended September 30, 2012 and 2011, the Company sold finished products of $17,162,201 and $ 777,960 to Ningbo Litong. Amounts received in advance from Litong were nil and $17,851, respectively as of September 30, 2012 and December 31, 2011. During the three months ended September 30, 2012 and 2011, the Company purchased raw materials of $16,868,696 and $ 5,302,905, respectively from Ningbo Litong. During the nine months ended September 30, 2012 and 2011, the Company purchased raw materials of $ 26,084,507and $14,839,87, respectively from Ningbo Litong.
|
(a) Evaluation of disclosure controls and procedures
|
(b) Changes in internal control over financial reporting
|
1)
|
A review of the responsibilities of senior management and a restructuring of our organization chart in order to provide for proper segregation of duties, including but not limited to:
|
a)
|
Completion of restructuring our previous accounting department into Planning Finance Department and Funds Department, and streamlining the department’s roles to ensure clear responsibilities, work efficiency and adequate oversight of the CFO; and
|
b)
|
Termination of Mr. Xue in August 2011, our former Vice President of Accounting/ PRC CFO and hiring of Mr. Fan Zhang as Vice President of Accounting/PRC CFO.
|
2)
|
Continued and careful evaluation of control processes and systems by the Audit Committee, the Board of Directors and Management, including but not limited to:
|
a)
|
Engagement of a compliance officer to monitor the Company’s corporate governance and compliance, reporting directly to the Audit Committee;
|
b)
|
Evaluation of the duties and responsibilities of the CEO and his role in day-to-day operations of the Company and the control environment; and the appointment of Mr. Jiangtao Ma as General Manger of Ningbo Keyuan in December 2011 to replace Mr. Tao, so that Mr. Tao can focus on the Company’s overall development and strategy;
|
c)
|
Implementation of a comprehensive budget management procedure based upon the evaluation of the management and proposals from an outside consultant to assist with SOX 404 compliance; and
|
d)
|
The addition of one or one or more additional independent, bilingual Chinese-speaking directors to facilitate the Board oversight and assist and augment the efforts of the current independent directors. To date, we have engaged one independent, bilingual Chinese-English speaking director. Mr. Yuxin Xiang in September 2012 and added one independent, bilingual board observer, Mr. Lei Xu in January 2012, and we are currently searching for additional candidates for independent director.
|
3)
|
Implementation of additional controls and procedures to ensure the preparation and review of complete and transparent US GAAP financial statements in a timely and efficient manner, including but not limited to:
|
a)
|
Planning to provide additional training in U.S. GAAP for our accounting staff to ensure the accuracy of the financial statement; and
|
b)
|
Hiring of additional qualified accounting personnel, including an experienced controller;
|
4)
|
Cessation of the use of an off-balance sheet cash account and the adoption of policies and procedures to prevent the future use of off balance sheet accounts as well as development of new policies and procedures to strengthen effective management and day-to-day operation of funds;
|
5)
|
Implementation of new procedures for the identification and approval of and appropriate disclosure of related party transactions;
|
6)
|
Development and implementation of Customer Access System and Database Management System to review business licenses and other related documents, as well as conducting site visits to current and potential customers to ensure their good standing and improve the Company’s recording of transactions;
|
7)
|
Implementation of new policies and procedures to ensure that all transactions are supported by sufficient documentation;
|
8)
|
Development and implementation of policies and procedures that provide continuous risk assessment of legal and regulatory considerations related to business activities;
|
9)
|
Development of policies to ensure that all identified contingencies are evaluated completely and in a timely manner;
|
10)
|
Development and implementation of policies and procedures to ensure that revenues are properly recorded and all invoices are appropriately reviewed by accounting personnel;
|
11)
|
Implementation of policies and procedures to ensure inventory purchases are properly recorded;
|
12)
|
Implementation of policies and procedures to ensure that all liabilities are recorded on the proper period;
|
13)
|
Development and implementation of policies and procedures to ensure that financial information is appropriately shared during inter-departmental meetings;
|
14)
|
Development and implementation of procedures to set up an effective incentive system and commitment system to retain personnel and prevent talent losses; and
|
15)
|
Planned adoption of a Corporate Best Practices Manual;
|
2.1
|
Share Exchange Agreement dated April 22, 2010 (incorporated by reference to Exhibit 2.1 of the Registrant’s Form 8-K filed on April 28, 2010)
|
2.2
|
Agreement and Plan of Merger (incorporated by reference to Exhibit 2.1 of the Registrant’s Form 8-K filed on May 19, 2010)
|
3.1
|
Amended Articles of Incorporation of Keyuan Petrochemicals, Inc. (f/k/a Silver Pearls, Inc.), filed with the Secretary of State of Nevada (incorporated by reference to Exhibit 3.1 of the Registrant’s Form S-1 filed on December 29, 2010).
|
3.2
|
Articles of Merger (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on May 19, 2010)
|
3.3
|
Amended Bylaws of Keyuan Petrochemicals, Inc. dated June 29, 2010 (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on July 7, 2010)
|
4.1
|
Certificate of Designation of Rights and Preferences of Series A Preferred Stock (incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-K filed on April 28, 2010)
|
4.2
|
Certificate of Designation of Rights and Preferences of Series M Preferred Stock (incorporated by reference to Exhibit 4.2 of the Registrant’s Form 8-K filed on April 28, 2010)
|
4.3
|
Certificate of Designation of Rights and Preference of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on September 30, 2010)
|
10.1
|
Translation copy of Inward Bills Contract by and between Ningbo Keyuan Plastics Co., Ltd and Bank of China Inc., Beilun Branch dated September 27, 2012
|
10.2
|
Translation copy of “Daifuda” Business Contract by and between Ningbo Keyuan Plastics Co, Ltd and Bank of China Inc., Beilun Branch dated July 11, 2012
|
10.3
|
Translation copy of Inward Bills Application by and between Ningbo Keyuan Plastics Co., Ltd and China Merchants Bank
|
10.4
|
Translation copy of Maximum Guarantee Agreement by and among Hangzhou Bank Inc and Ningbo Litong Petrochemicals Co, Ltd, Ningbo Kewei Investment Co, Ltd, Chunfeng Tao dated July 25, 2012
|
10.5
|
Translation copy of Right Pledge Contract by and between Agriculture Bank of China, Economic and Technical Development Zone Branch and Ningbo Keyuan Plastics Co., Ltd dated July 17, 2012
|
10.6
|
Translation copy of Maximum Guarantee Contract by and among Agriculture Bank of China, Economic and Technical Development Zone Branch and Ningbo Pacific Shipping Co., Ltd, Jicun Wang, Sumei Chen, Ningbo Kewei Investments Co., Limited dated September 21, 2012
|
31.1
|
Certification of Chief Executive Officer required by Rule 13a-14/15d-14(a) under the Exchange Act
|
31.2
|
Certification of Chief Financial Officer required by Rule 13a-14/15d-14(a) under the Exchange Act
|
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.
|
XBRL Instance Document
|
|
101.SCH*
|
RL Taxonomy Extension Schema Document
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Pursuant to Rule 405(a)(2) of Regulation S-T, the registrant is relying upon the applicable 30-day grace period for the initial filing of its first Interactive Data File required to contain detail-tagged footnotes or schedules. The registrant intends to file the required detail-tagged footnotes or schedules by the filing of an amendment to this Quarterly Report on Form 10-Q within the 30-day period.
|
Date: November 19, 2012
|
Keyuan Petrochemicals, Inc.
|
By: |
/s/ Chunfeng Tao
|
Chunfeng Tao
|
|
Chief Executive Officer & President
|
|
By: |
/s/ Fan Zhang
|
Fan Zhang
Acting Chief Financial Officer/Vice President of Accounting
|
1.
|
This contract has already been effective;
|
2.
|
Party A obligates and signs the related documents, receipts, seal, related person’s name lists and samples of signatures for party B, and also fills in relevant certificates;
|
3.
|
Party A opens the required account to fulfill this contract;
|
4.
|
Party A arranges the required legal and administrative approval process to facilitate the business properly, and submits the duplicate copy of the approval documents and the copies of the original documents as requested by Party B;
|
5.
|
The guarantee on the provision of this contract has been effectively established;
|
6.
|
Other conditions requested by Party B.
|
1.
|
Interest rate (annual interest rate)
|
(1)
|
Inward Bills in RMB: fixed interest rate, and annual interest rate is / %;
|
(2)
|
Inward Bills in foreign currency:
|
A.
|
Fixed interest rate, and annual interest rate is / %;
|
B.
|
Loan interest rate in the floating period within / months / years since the Inward Bills date published by the Bank of China, Inc.
|
C.
|
Benchmark of LIBOR/HIBOR + 80 for the latest 4 months published by Reuters till the prior working day of the Inward Bills date.
|
2.
|
Calculation of interest
|
3.
|
Method of interest settlement
|
(1)
|
Settlement with quarter, 20th of each last month per quarter as the interest settlement day, and the 21st as the payment day.
|
(2)
|
Settlement with month, 20th of each month as the interest settlement day, and the 21st as the interest payment day.
|
(3)
|
Same as expiration date of principal.
|
(4)
|
Receive the interest in advance and settle when expiration date.
|
4.
|
Default interest
|
(1)
|
If Party A fails to return the payment of Inward Bills within the agreed time, as for the overdue payment, the default interest shall begin accruing according to the default interest rate starting from the date of late payment until both the principal and interest are paid off.
|
(2)
|
If Party A fails to pay the interest and default interest in time, it can be penalized with compound interest per month/per quarter according to agreed default interest in this contract.
|
(3)
|
Default interest rate
|
1.
|
In __/__ banking day since this contract became effective, pay with __/___.
|
2.
|
Party B is authorized to deduct from the Party A’s account (Account No.:361058330713)
|
3.
|
Other methods:____________________/_______________.
|
1)
|
Margin Amount: (Currency) CNY ; (Spell-Out) Fifteen Million;
|
2)
|
Party A pay for above margin with following method:
|
3)
|
In case above guarantee liability of margin has been removed by Party B, Party B shall return according to following methods:
|
1.
|
Party A registers and survives by law, and possess the complete capacity of civil rights needed to fulfill this contract;
|
2.
|
Party A signs and fulfills this contract based on true intention, has obtained the legal and effective authority according to the requirements of the Articles of Incorporation or other internal management documents, and is not allowed to violate any binding agreement, contract and other legal documents; Party A has gained or will gain all the relevant approvals, permits, files or registers.
|
3.
|
All the documents and certificates provided by party A to Party B is authentic, complete, accurate and effective under this contract;
|
4.
|
The trading background described by party A to party B is authentic and legal, and does not have the illegal purpose such as money laundering. Party A providing any documents according to party B’s requirements does not mean that party B has the obligations and responsibilities of inspection towards the authenticity and legality of party A’s trade;
|
5.
|
Party A will not hide any truths that may influence both parties’ financial situation and contractual capacity.
|
1.
|
Provide the statement of products sales regarding the import items in timely manner according to Party B’s requirement.
|
2.
|
If Party A has already signed or will sign counter-guarantee agreement or other similar agreements about the guaranteed obligations with the guarantor of this contract, then the agreement will not damage any rights owned by party B under this contract;
|
3.
|
If the products sales of the import items have serious difficulties, or situations that may influence both parties’ financial conditions and capacity to fulfill this contract, including but not limited to the change of any business pattern of dismantlement, merger, affiliation, joint venture with foreign merchants, cooperation, contractual operation, reorganization, reformation and listing program, reduction of registered capital, assignment of significant property or stock right, commitment of significant liabilities, or installation of new significant liabilities on the pledge, or involvement to grave litigation or arbitration cases, party A shall inform party B in time;
|
4.
|
As for pending matters, Party A agrees to handle according to the international conventions and agreement with Party B.
|
1.
|
Party A does not belong to the group client of party B according to the Management Guidance of Credit Extension Business Risk of Commercial Bank Group (short for Guidance).
|
2.
|
Party A belongs to the group client of party B according to Guidance. Party A shall report the situation of related transactions over 10% net assets in time, including the related relationship, trading projects, trading properties, trading amount, corresponding proportion and pricing policy and so on (including the trade with no capital but only proportion capital).
|
1.
|
Party A fails to fulfill its obligations to pay and repay to the party B according to this contract;
|
2.
|
The statements made by party A is untrue or default the commitments under this contract;
|
3.
|
The matters mentioned in No.3 of Item 2 in Article 9 happen; Party B considered those may affect the financial conditions and contractual capability of Party A or guarantor, and Party A has not provided new guarantee, replaced guarantor in accordance with the provisions of this contract.
|
4.
|
Party A closes down or is subject to disincorporation, revocation or bankrupt.
|
5.
|
Party A defaults other covenants in this contract;
|
6.
|
Party A default the other contracts signed with Party B or other institutions of Bank of China, Inc.
|
7.
|
Guarantor defaults the covenants of guarantee contract, or other contracts signed with Party B or other institutions of Bank of China, Inc.
|
1.
|
Request Party A and/or guarantor to amend the default behaviors within limited time;
|
2.
|
Entirely or partly suspend or terminate Party A’s business applications under this contract or the other contracts, entirely or partly suspend or terminated to grant and handle the un-granted loans, holding trading financing;
|
3.
|
Announce the unpaid loans/financing principals and interests and the other account payables to entirely or partly expire.
|
4.
|
Terminate or revoke this contract, entirely or partly terminate or revoke the other contracts between Party A and Party B;
|
5.
|
Request Party B to compensate the liquidated damages;
|
6.
|
Deduct funds from Party A’s account to repay entirely or partly liability under this contract.
|
7.
|
Execute real guarantee;
|
8.
|
Request guarantor to bear guarantee liability;
|
9.
|
Other measures considered necessary by Party B.
|
1.
|
Submit to ___________________Arbitration Committee to arbitrate.
|
2.
|
Submit to the People’s court located in the domicile of Party B or other corresponding institutions of Bank of China, Inc.
|
3.
|
Prosecute the People's Courts with jurisdiction.
|
1.
|
Without Party B’s written consent, Party A is not allowed to transfer rights or obligations to the third parties.
|
2.
|
If Party B entrusts any other institutes of Bank of China to execute the rights and obligations under this contract, Party A shall agree. Party B or its designees are entitled to exercise all the rights under this agreement and to file a lawsuit in the People's Courts or submit to the Arbitration Committee to arbitrate.
|
3.
|
In case of not affecting the other covenants of this contract, this contract has the legal binding to the heirs and transferees.
|
4.
|
Apart from the other covenants, the address specified in this contract by both parties is regarded as the contract address, and also promise that when the contract address changes, then information will sent to the party in written form in time.
|
5.
|
The titles and business names in this contract are just used for the purpose of convenience, and can’t be used for the purpose to explain the clause content, and obligations and rights of the party.
|
6.
|
Per the changes of laws and regulations or regulatory process or the requirements of regulatory authority, Party B is unable to execute this agreement or execute according to covenants, Party B has the right to terminate or amend this agreement or single agreement according to the changes of laws and regulations or regulatory process or the requirements of regulatory authority and exemption from liability.
|
1.
|
“Daifuda” means: Based on Party A’s application, Party B provides the short-term financing with its overseas branch or through inter-bank borrowing in domestic and international markets (hereinafter refer to as “Paying Bank”) for Party A’s account payable under the imported products or trade service. Party A shall pay off all the above mentioned financing including interests, commissions, fees and default interests within the time limits.
|
2.
|
The scope for import settlement account includes: Letter of Credit, collection, remittance (including prepayment, cash on delivery and trade service etc), all above mentioned settlements should be conducted in accordance with international practice and all signed contacts and agreements between Party A and Party B.
|
1.
|
This contract has already been effective;
|
2.
|
Party A obligates and signs the related documents, receipts, seal, related person’s name lists and samples of signatures for party B, and also fills in relevant certificates;
|
3.
|
Party A opens the required account to fulfill this contract;
|
4.
|
Party A arranges the required legal and administrative approval process to facilitate the business properly, and submits the duplicate copy of the approval documents or the copies of the original documents as requested by Party B;
|
5.
|
The guarantee on the provision of this contract has been effectively established;
|
6.
|
Other conditions requested by Party B.
|
1.
|
Interest rate (annual interest rate)
|
(1)
|
Financing in RMB: fixed interest rate, and annual interest rate is / %;
|
(2)
|
Financing in foreign currency:
|
A.
|
Fixed interest rate, and annual interest rate is / %;
|
B.
|
Loan interest rate in the floating period within / months / years since the financing date published by the Bank of China, Inc.
|
C.
|
Benchmark of LIBOR/HIBOR + 90 for the 3 months fixed by paying bank on financing date.
|
2.
|
Calculation of interest
|
3.
|
Method of interest settlement
|
(1)
|
Settlement with quarter, 20th of each last month per quarter as the interest settlement day, and the 21st as the payment day.
|
(2)
|
Settlement with month, 20th of each month as the interest settlement day, and the 21st as the interest payment day.
|
(3)
|
Same as expiration date of principal.
|
(4)
|
Receive the interest in advance and settle when expiration date.
|
4.
|
Default interest
|
(1)
|
If Party A fails to return the principal amount of financing within the agreed term, as for the overdue payment, the default interest shall begin accruing according to the default interest rate starting from the date of late payment until both the principal and interest are paid off.
|
(2)
|
If Party A fails to pay the interest and default interest in time, it can be penalized with compound interest per month/per quarter according to agreed default interest in this contract.
|
(3)
|
Default interest rate
|
1.
|
Arrangement of paying for another financing
|
2.
|
Telegraph expenses of Party B and paying bank: USD 23.83
|
1)
|
Margin Amount: (Currency) RMB ; (Spell-Out) Five Million Two Hundred and Sixty-Two Thousand; (Numeric) 5,262,000
|
2)
|
Party A pay for above margin with following method:
|
3)
|
In case above guarantee liability of margin has been removed by Party B, Party B shall return according to following methods:
|
1.
|
Party A registers and survives by law, and possess the complete capacity of civil rights needed to fulfill this contract;
|
2.
|
Party A signs and fulfills this contract based on true intention, has obtained the legal and effective authority according to the requirements of the Articles of Incorporation or other internal management documents, and is not allowed to violate any binding agreement, contract and other legal documents; Party A has gained or will gain all the relevant approvals, permits, files or registers.
|
3.
|
All the documents and certificates provided by party A to Party B is authentic, complete, accurate and effective under this contract;
|
4.
|
The trading background described by party A to party B is authentic and legal, and does not have the illegal purpose such as money laundering. Party A providing any documents according to party B’s requirements does not mean that party B has the obligations and responsibilities of inspection towards the authenticity and legality of party A’s trade;
|
5.
|
Party A will not hide any truths that may influence both parties’ financial situation and contractual capacity.
|
1.
|
Provide the statement of products sales regarding the import items in timely manner according to Party B’s requirement.
|
2.
|
If Party A has already signed or will sign counter-guarantee agreement or other similar agreements about the guaranteed obligations with the guarantor of this contract, then the agreement will not damage any rights owned by party B under this contract;
|
3.
|
If the products sales of the import items have serious difficulties, or situations that may influence both parties’ financial conditions and capacity to fulfill this contract, including but not limited to the change of any business pattern of dismantlement, merger, affiliation, joint venture with foreign merchants, cooperation, contractual operation, reorganization, reformation and listing program, reduction of registered capital, assignment of significant property or stock right, commitment of significant liabilities, or installation of new significant liabilities on the pledge, or involvement to grave litigation or arbitration cases, party A shall inform party B in time;
|
4.
|
Party A agrees that Party B has the right to provide related business documents to paying bank in order to continues to do business.
|
5.
|
As for pending matters, Party A agrees to handle according to the international conventions and agreement with Party B.
|
1.
|
Party A does not belong to the group client of party B according to the Management Guidance of Credit Extension Business Risk of Commercial Bank Group (“Guidance”).
|
2.
|
Party A belongs to the group client of party B according to Guidance. Party A shall report the situation of related transactions over 10% net assets in time, including the related relationship, trading projects, trading properties, trading amount, corresponding proportion and pricing policy and so on (including the trade with no capital but only proportion capital).
|
1.
|
Party A fails to fulfill its obligations to pay and repay to the party B according to this contract;
|
2.
|
The statements made by party A is untrue or default the commitments under this contract;
|
3.
|
The matters mentioned in No.3 of Item 2 in Article 9 happen; Party B considered those may affect the financial conditions and contractual capability of Party A or guarantor, and Party A has not provided new guarantee, replaced guarantor in accordance with the provisions of this contract.
|
4.
|
Party A closes down or is subject to disincorporation, revocation or bankrupt.
|
5.
|
Party A defaults other covenants in this contract;
|
6.
|
Party A default the other contracts signed with Party B or other institutions of Bank of China, Inc.
|
7.
|
Guarantor defaults the covenants of guarantee contract, or other contracts signed with Party B or other institutions of Bank of China, Inc.
|
1.
|
Request Party A and/or guarantor to amend the default behaviors within limited time;
|
2.
|
Entirely or partly suspend or terminate Party A’s business applications under this contract or the other contracts, entirely or partly suspend or terminated to grant and handle the un-granted loans, holding trading financing;
|
3.
|
Announce the unpaid loans/financing principals and interests and the other account payables to entirely or partly expire.
|
4.
|
Terminate or revoke this contract, entirely or partly terminate or revoke the other contracts between Party A and Party B;
|
5.
|
Request Party B to compensate the liquidated damages;
|
6.
|
Deduct funds from Party A’s account to repay entirely or partly liability under this contract.
|
7.
|
Execute real guarantee;
|
8.
|
Request guarantor to bear guarantee liability;
|
9.
|
Other measures considered necessary by Party B.
|
1.
|
Submit to ___________________Arbitration Committee to arbitrate.
|
2.
|
Submit to the People’s court located in the domicile of Party B or other corresponding institutions of Bank of China, Inc.
|
3.
|
Prosecute the People's Courts with jurisdiction.
|
1.
|
Without Party B’s written consent, Party A is not allowed to transfer rights or obligations to the third parties.
|
2.
|
If Party B entrusts any other institutes of Bank of China to execute the rights and obligations under this contract, Party A shall agree. Party B or its designees are entitled to exercise all the rights under this agreement and to file a lawsuit in the People's Courts or submit to the Arbitration Committee to arbitrate.
|
3.
|
In case of not affecting the other covenants of this contract, this contract has the legal binding to the heirs and transferees.
|
4.
|
Apart from the other covenants, the address specified in this contract by both parties is regarded as the contract address, and also promise that when the contract address changes, then information will sent to the party in written form in time.
|
5.
|
The titles and business names in this contract are just used for the purpose of convenience, and can’t be used for the purpose to explain the clause content, and obligations and rights of the party.
|
6.
|
Per the changes of laws and regulations or regulatory process or the requirements of regulatory authority, Party B is unable to execute this agreement or execute according to covenants, Party B has the right to terminate or amend this agreement or single agreement according to the changes of laws and regulations or regulatory process or the requirements of regulatory authority and exemption from liability.
|
Party A: Ningbo Keyuan Plastic Co., Ltd | Party B: Bank of China, Inc Beilun Branch | |
The authorized person: Chunfeng Tao | The authorized person: | |
July 11, 2012 | July 11, 2012 |
1.
|
Pursuant to < Letter of Credit Agreement >/<International Transaction Financing Agreement> (if have);
|
2.
|
Once your bank, executing the responsibility of issuing L/C, pays related fees according to this application which shall consist of inward bills of our company. The Company has obligation to repay according to this application.
|
3.
|
Pursuant to < Letter of Credit Certification>.
|
4.
|
Proceeds for products shall be received with your specified account and your bank has the right to deduct proceeds to repay inward bills. If the Company fails to repay entire principal and interest, your bank can deduct principal and interest, overdue interest, compound interest and take requested recovery measures; as well as the Company shall undertake the related charges as a result of recovery measures.
|
5.
|
The Company shall provide sales condition of the products under this L/C, business condition, financial condition and other necessary materials as requested by your bank and will coordinate to your investigation, review and supervision. If occurrence of any material matters affecting the Company’s debt repayment capability, the Company shall inform your bank immediately with written forms and actively coordinate to repay the charges regarding recovery measures.
|
6.
|
The Company will provide guarantee for principal and interest of bills, overdue interest and other charge under this application, the guarantee period is from signing date of this application to expiration of claims proceedings ( choose according to actual situation):
|
7.
|
The Company agrees the inward bills interest rate under this application shall execute as following standard: 3MLIBOR + 280BPS.
|
8.
|
Once the inward bills overdue, your bank has the right to collect overdue interest on the base of outstanding balance plus 50%.
|
9.
|
When business under this application occurred dispute, both parties shall handle on the provisions of covenants under < Letter of Credit Agreement >/<International Transaction Financing Agreement>; if without < Letter of Credit Agreement >/<International Transaction Financing Agreement>, both parties shall settle with negotiate, when negotiation failed, it shall settle as one of following methods:
|
1.
|
Determination period of claims: Stipulated by Term 1 under Article 13.
|
2.
|
Loanee: Refer to Term 2 under Article 13.
|
3.
|
Balance of maximum financing: Refer to Term3 under Article 13.
|
4.
|
Bank Financing Contract: Refers to the contracts regarding borrowing, bank acceptance, guarantee, bill discounting, loan commitment, L/C, factoring, International/Domestic trade financing, fund transaction between loanee and Party B in this contract.
|
1.
|
Guarantor is entitled to offer guarantee according to Chinese Law.
|
2.
|
Guarantor is capability of undertaking guarantee responsibility and won’t decrease or except from guarantee responsibility as a result of any instructions, change of financial condition and any agreement.
|
3.
|
In order to completely understand the financing purpose of loanee under main contract and provide guarantee, guarantor expresses truth intention under this contract.
|
4.
|
When loanee failed to repay liability and corresponding fees, Party B has the right to request Party A to execute guarantee responsibility within guarantee scope.
|
1.
|
The scope of guarantee under this contract includes entire principal, interest, compound interest, default interest, liquidate damages, claims and other payable fees;
|
2.
|
According to this contract, Party B has the right to repay following items according to different demand:
|
1)
|
All fees regarding notarization, assessment, auctions and so on due to execution of mortgage.
|
2)
|
All fees regarding proceedings, lawyers due to realization of claims;
|
3)
|
Pay off interest (including compound interest) that loanee owed Party B;
|
4)
|
Pay off main claims, liquidated damages, penalty and so on that loanee owed Party B;
|
1.
|
Providing authentic, legal documents according to Party B’s request.
|
2.
|
After receiving collection letters or other collection documents sent by Party B, Party A is obligated to delivery return receipt within 6 days.
|
3.
|
Party A shall inform Party B with timely manner when occurred one of following conditions:
|
1)
|
Party A changed the business practice, including but not limited contract, leasing, joint operation, merge, spin-off, shareholding reform.
|
2)
|
Financial position deteriorated or occurrence of material economic dispute;
|
3)
|
Party A , its legal representative or actual controller has or is going to involve in material proceedings, arbitration or other legal dispute;
|
4)
|
Party A was announced to bankrupt, shutdown, close, revoke license or remove;
|
5)
|
Party A changes of its name, address, mail address, contact telephone, registered capital or legal representative;
|
6)
|
Party A offer any guarantee to third party;
|
7)
|
Party A has overdue outstanding debt;
|
8)
|
Party A violate other covenants regarding the party’s rights and obligations stipulated by this contract or other contracts entered with other branches of Hangzhou Bank;
|
9)
|
Party A has bad credit record in credit data base;
|
10)
|
Others that may affect Party A’s repayment ability.
|
4.
|
If occurrence of Item 1 and Item 6 listing Term 4, Party A shall inform Party B before 7 days; If occurrence of other conditions, Party A shall inform Party within 7 days.
|
5.
|
If loanee violated main contract or happened other conditions allowed Party Party B to declare the loan expired acceleration during the period of executing main liability, Party A promises to undertake joint liability.
|
6.
|
If loanee’s liability would be increased as a result of change of main contract, it shall be agreed by Party A; Party A shall undertake joint liability within original scope without obtaining Party A’s written consent.
|
7.
|
If repayment original loan with new loan during the period of the contract, Party A still undertakes joint liability.
|
8.
|
During period of this contract, Party B transferred the main claims to third party, Party A shall undertake joint liability within original guarantee scope;
|
9.
|
Party A will never undertake guarantee liability after loanee paid off all loans under the main contract.
|
1.
|
Party B has the right to request Party A to provide related documents to poof his legality;
|
2.
|
Party B has the right to request Party A to provide actual financial statement and other documents;
|
3.
|
Party B has the right to request Party A to undertake joint liability on the condition that Party B’s claims failed to partly or completely pay off;
|
4.
|
If occurrence of any following conditions, Party B has the right of inform Party A to undertake joint liability in advance with written form, Party B shall execute guarantee liability within 10 days since received the note:
|
1)
|
Party B terminate the main contract according to the law;
|
2)
|
Party B request to realize the claims or request loanee to repay in advance according to covenants under the main contract.
|
5.
|
During the period of this contract, Party B shall inform Party A with timely manner when transfer the main claims to third party.
|
1.
|
Party A shall pay damages as a result of fault statement and declaration in Article 1.
|
2.
|
After commencement of this contract, both parties shall completely execute covenants under this contract. Any party failed, he shall undertake corresponding violation responsibility and pay damages.
|
1.
|
The contract commenced since both parties’ legal representatives (authorized persons), principals signed and stamped with common seals.
|
2.
|
This contract is independent from main contract and would be still in valid even main contract is invalid.
|
3.
|
After commencement of this contract, both parties are not allowed to change or remove the covenants except from both parties agreed with written consent.
|
1.
|
Any disputes caused by execution of this contract, both parties shall be settled by friendly negotiation, or file to Party B’s Local People’s Court.
|
1.
|
This contract has four or more copies, each one has equal legal validity, among: one for Party A, one for loanee, two for Party B, and one for notary organs (if have).
|
2.
|
Party A is not allowed to transfer any rights and obligations under this contract to third party without Party B’s written consent.
|
3.
|
Party B is entitled to entrust other branches of Hangzhou Bank to execute this contract or the rights and obligations under main contract.
|
4.
|
Unless otherwise stipulated by other covenants, both parties indicate the address in this contract is the mail address and contact address, any written forms sending to this address shall be considered as validity. Party A shall inform Party B in timely manner if changed the mail address and contact address.
|
5.
|
Other covenants refer to Term 4 in Article 13.
|
1.
|
Determination Period of Claims in this contract is from July 25, 2012 to July 25, 2014.
|
2.
|
Loanee in this contract specially refers to Ningbo Keyuan Petrochemicals, Inc
|
3.
|
Balance of Maximum Financing is RMB 105,000,000.
|
4.
|
Statement for Article 13.
|
1.
|
Pledgor agrees to pledge with certificate of deposit.
|
2.
|
Above pledge right’s provisional price (currency and spell-out) USD Four Million and Six Hundred Thousand.
|
1.
|
Having got the authorization required by the contract guarantee according to relevant rules and procedures;
|
2.
|
Having sufficient, unquestioned ownership rights or disposition rights to pledge rights;
|
3.
|
Pledge rights can be transferred by law;
|
4.
|
Pledge rights would never be removed, revoked, dissented, sealed, freezed, supervised, suited, and so on;
|
5.
|
Pledgor has obtained co-owners’ agreement regarding pledge under this contract;
|
6.
|
The pledgor shall immediately notify the plegee with written form in any one of the following circumstances:
|
(1)
|
Pledge right has been entered into following conditions, including but not limited application for remove, announcement for invalidity, seal up, freeze, supervision, proceedings, arbitration and other similar conditions.
|
(2)
|
Business license has been revoked or removed, or pledgor is requested to close down and occurrence of other matters to dismiss.
|
(3)
|
Occurrence of application for bankrupt, reorganization, restructuring and so on;
|
7.
|
Pledge right has never other conditions that affect the realization of the right.
|
1.
|
If documents of right shall be delivered, pledgor shall deliver related documents of right to pledge within days since entered into this contract. Pledgee shall take care of the documents.
|
2.
|
Documents of right in the form of bills of exchange, promissory notes, checks, warehouse receipts, securities and other documents shall be endorsed with “Pledge”.
|
3.
|
If the pledge shall be registered, pledgor shall register or handle other legal procedures within days since entered into this contract, and pledge keeps the originals.
|
4.
|
During the duration of pledge right, pledgor is not allowed to grant, transfer or promise others to use or handle with any other ways without pledgee’s written consent. On the condition of pledgee’s written consent, the proceeds related to grant, transfer, use or handle right shall be used for pay off claims in advance or safe.
|
5.
|
During the duration of pledge right, pledge has the right to request pledge to approve and decrease the value of guarantee on the condition of decrease of the value of pledge right.
|
1.
|
Pledgee has the right to execute pledge right if occurrence of any following conditions:
|
1)
|
Pledgee is not being paid off when the expiration of debt execution under the main contract. ”Expiration” includes the expiration of debt execution under the main contract and the condition of acceleration maturity on the ground of national laws and regulations.
|
2)
|
Business license has been revoked or removed, or pledgor is requested to close down and occurrence of other matters to dismiss.
|
3)
|
The People’s court has accepted loanee and pledgor’s application for bankrupt or decided to reconciliation.
|
4)
|
Loanee and pledgor are dead or being declared to disappear or die.
|
5)
|
Pledge right has been applied to remove, revoke, dissent, seale, freeze, supervise, suit, and so on;
|
6)
|
Pledgor fails to provide guarantee as requested by pledge;
|
7)
|
Pledgor violates obligations under this contract;
|
8)
|
Others.
|
2.
|
If vesting date or delivery date of bills of exchange, promissory notes, checks, warehouse receipts, securities and other documents for pledge is earlier than claims expiration under this contract, pledge has the right to vest or delivery and corresponding proceeds shall be for pay off claims in advance or safe.
|
3.
|
If Pledgor provide guarantee for several loans between loanee and pledge with pledge right and the proceeds as a result of vesting, cashing, discounting or auctioning pledge right are insufficient to pay off all due loans, pledge has the right to decide the order of repaid loans.
|
1.
|
If loanee executes complete loans under main contract, or pledgor paid all guaranteed claims under main contract, pledge shall return documents of right in timely manner.
|
2.
|
Pledgor shall receive the documents of right timely. Otherwise, pledgee has the right to withdraw and the corresponding fees shall be paid by pledgor.
|
1.
|
If pledgor occurs any one of following conditions, he shall pay 20% of principals of claims to pledge as liquidated damages, as well as pay corresponding loss of pledgee:
|
1)
|
Fails to receive legal authorization for this guarantee under this contract;
|
2)
|
Fails to inform that pledge right has been applied to remove, revoke, dissent, seale, freeze, supervise, suit, and so on;
|
3)
|
Fails to delivery documents of right, endorse or register on the provision of covenants under this contract;
|
4)
|
Handle pledge right without obtaining pledgor’s written consent;
|
5)
|
Fails to provide guarantee as requested by pledgee;
|
6)
|
Other actions violate covenants under this contract or affect realization of pledge right.
|
2.
|
If pledgor caused loss as a result of pledgee’s any one of following actions, pledgee shall undertake corresponding liability:
|
1)
|
Documents of right are destroyed or dismissed due to pledgee’s improper safekeeping;
|
2)
|
After expiration, pledgee delays to execute pledge right when received pledgor’s written application.
|
Guarantor (full name): | 1) Ningbo Pacific Shipping Co., Ltd |
2) Jicun Wang, Sumei Chen | |
3) Ningbo Kewei Investments Co., Limited |
√ RMB/foreign currency loans | √ Margin relief for issuing | √ Export packing loan |
√ Discounted commercial bills
|
√ Import bill | √ Bank guarantee |
√ Commercial acceptance bill | √ Export bill |
Contract Name
|
Contract Number
|
Unpaid Debt Principal
|
Currency
|
1.
|
Guarantor should understand the loanee's business condition or the various of business and operation under the contract .The main contract, related law documents or voucher of various businesses under the contract shall not be delivered to the guarantor;
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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