May 28, 2010 (FinancialWire) (Go to http://www.financialwire.net/?s=ftrdnwswnd for all of today’s featured news.) — China North East Petroleum Holdings Ltd. (AMEX: NEP) said it received a written notice from NYSE AMEX LLC on May 25 advising that the company is not in compliance with AMEX's continuing listing criteria. AMEX has halted trading in the stock.

Specifically, AMEX noted that China North East has not timely filed its annual report on Form 10-K for the fiscal year ended December 31, 2009 and its quarterly report on Form 10-Q for the quarter ended March 31, 2010.

In addition, AMEX stated that the Company's failure to file its Reports is a material violation of its listing agreement.

AMEX is authorized to suspend, and unless prompt corrective action is taken, remove the Company's common stock from AMEX. AMEX halted trading of the company's common stock on the same day.

As the company disclosed in its current report on From 8-K filed on April 16, 2010, AMEX required that it submit a plan of compliance by April 29, 2010 with the action the company has taken, or will take, to file the 10-K for 2009 and bring the company into compliance with the listing standards no later than July 14.

China North East said it submitted its plan on April 29, which the Corporate Compliance Department of AMEX is currently evaluating. The company may supplement its plan until June 8, 2010. China North East said it plans to submit such supplement by June 8.

The company had previously disclosed that, in the process of its 2009 year end audit review, the company identified potential internal control deficiencies over financial reporting in connection with certain expenditures relating to business development activities and the accounting treatment of certain of the company's accounts payables.

In response, on April 15, 2010, the China North East board directed and authorized the board’s audit committee to conduct a thorough review of the situation and to determine what corrective action, if any, should be taken.

On April 19, the audit committee retained the services of John Lees Associates of Hong Kong to conduct a forensic audit of the company's bank accounts with respect to the expenditures relating to business development activities in question.

The forensic audit preliminarily found that in 2009, cash transfers occurred between the bank accounts of the company and its subsidiaries and the personal bank accounts of Hongjun Wang, the company's chief executive officer, and Guizhi Ju, a company director and mother of Hongjun Wang.

According to China North East, the forensic audit has confirmed that some of the transferred funds were used to pay the company's expenses. To date, there is no indication that any of the funds were used for personal purposes, it said. The forensic audit is ongoing.

China-based China North East Petroleum Limited is an independent oil company that engages in the production of crude oil in Northern China.

The company has a guaranteed arrangement with the PetroChina to sell its produced crude oil for use in the China marketplace. The company currently operates four oilfields in Northern China. The company also recently added an oil service subsidiary through its acquisition of Song Yuan Tiancheng Drilling Engineering Co.

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