CHINA NORTH EAST PETROLEUM HOLDINGS LTD

8 Mar 2010financial restatement▼ BadMajor

This amendment gives the size of the restatement. Full-year 2008 net income goes from $19,582,038 to $22,113,643 (up $2.5M, mostly from warrant fair-value gains), but quarters swing widely: for example Q2 2008 becomes a loss of $9,826,156, Q1 2009 a loss of $12,129,855 and Q2 2009 a loss of $8,070,604. Q1 2009 oil and gas property carrying value falls from $67,671,268 to $56,462,878 after impairment errors. The company will disclose a material weakness in internal controls and has hired an outside accounting consultant; amended 10-K and 10-Qs are still to come.

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23 Feb 2010financial restatement▼ BadMajor

On Feb 22, 2010 the company said its 2008 annual and quarterly financials and the first three 2009 quarters can no longer be relied on, after SEC comments on its 2008 10-K. The errors are non-cash: warrants that should have been counted as liabilities, interest, warrant fair-value changes, oil and gas property impairment calculations, depletion, stock compensation, and the March 2009 debenture amendment that should have been treated as an extinguishment. It says revenues, cash and liquidity are unchanged and amended reports will follow; this is a new problem and echoes the earlier 2006 restatement of reserves.

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13 Jan 2010material agreement termination▲ GoodMajor

On Jan 12, 2010 the company repaid in full the $15M Lotusbox debenture, which would otherwise have matured Feb 28, 2012, owing $10,734,739.73 in principal and interest. It paid using December offering proceeds plus $2,038,479.30 from Lotusbox exercising Series B warrants for 867,438 shares at $2.35, with no prepayment penalty. The pledge on 66% of Song Yuan Technical, the security agreement and Lotusbox's option over up to 24% of Song Yuan Technical were all terminated, resolving the debt and listing-deadline obligations tied to that debenture.

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15 Dec 2009material agreement● NeutralMajor

The company agreed on Dec 14, 2009 to sell 1,963,637 shares at $6.875 plus warrants for 392,728 shares at $8.10 (exercisable from six months after issue until June 17, 2011), raising about $13.5 million gross through Rodman & Renshaw (estimated fee $810,000 plus 58,910 warrants at $8.10). The press release says proceeds will be used to redeem the Lotusbox 8% debenture from Feb 2008 and for working capital. This is a second share sale after September 2009 and dilutes existing holders.

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1 Oct 2009asset acquisition disposition● NeutralMajor

On Sept 25, 2009 the company's 90%-owned Song Yuan Technical agreed to buy 100% of Song Yuan Tiancheng Drilling Engineering Co. for US$13,000,000, paid in two $6.5M installments. The deal completed Sept 27, 2009 when the second $6.5M was paid and 95% of the equity was transferred; the other 5% is held in trust for Song Yuan Technical (stated as required by Chinese law). Pro forma financials are to be filed later by amendment. This adds a drilling services business and is the first use of cash following the September share offering (inference: the timing suggests that link; the filing does not state it).

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16 Sept 2009material agreement● NeutralMajor

The company agreed on Sept 15, 2009 to sell 4,000,000 new shares at $4.60 each, plus warrants for 800,000 more shares at $6.00 (exercisable from six months after issue until March 15, 2011), for about $18.4 million gross. Rodman & Renshaw is placement agent (estimated fees $736,000 plus 80,000 warrants at $6.00), and Wharton Capital Partners gets about $368,000 and 80,000 warrants for advisory work. The press release says proceeds go to future business expansion and general working capital; existing shareholders are diluted by the new shares and warrants.

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15 June 2009listing compliance notice▲ GoodMajor

the New York Stock Exchange certified CHINA NORTH EAST PETROLEUM HOLDINGS LTD's securities for listing, clearing them to begin trading.

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6 Mar 2009capital raising announcement● NeutralMajor

On March 5, 2009 the company and Lotusbox changed the $15M debenture: the US listing deadline moves to August 30, 2010, and the repayment schedule is reset (with payments through February 2012), in return for new warrants for 250,000 shares at $2.00 and 250,000 at $2.35. It also settled the Utah lawsuit with Topworth Asset Limited, with both sides releasing claims and Topworth's 627,360 shares released in stages through November 30, 2009. The company says those shares are already counted as outstanding, so they add no dilution. The company reports no other pending litigation.

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3 Mar 2008capital raising announcement● NeutralMajor

On February 28, 2008 the company agreed a $15 million 8% secured debenture due 2012 with Lotusbox Investments (part of Harmony Fund), plus five-year warrants for 1.2M shares at $0.01, 1.5M at $3.20 and 2.1M at $3.45. Only $1.75M was funded at first, with $13.25M held in escrow pending post-closing conditions, and about $10M is planned for drilling 100 new wells. It is secured by a pledge of 66% of the Song Yuan JV, an option for the investor on 24% of it, and Wang's pledge of 6,732,000 personal shares. The debenture requires a US exchange listing within a year or higher interest applies. This is the company's first debt facility in the record.

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