----

----

| 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                                            |   2                 |
|                                                                               |                     |
| Condensed Consolidated Balance Sheets                                              |   2                 |
|                                                                               |                     |
| Condensed Consolidated Statements of Operations and Comprehensive Income           |   3                 |
|                                                                               |                     |
| Condensed Consolidated Statements of Cash Flows                                    |   4                 |
|                                                                               |                     |
| Notes to Condensed Consolidated Financial Statements                               |   5 – 18 |
|                                                                               |                     |
| Item 2.  Management’s Discussion and Analysis or Plan of Operation |   19                |
|                                                                               |                     |
| Item 3.  Quantitative and Qualitative Disclosures About Market Risk      |   24                |
|                                                                               |                     |
| Item 4. Controls and Procedures                                                    |   24                |
|                                                                               |                     |
| PART II – OTHER INFORMATION                                                  |   26                |
|                                                                               |                     |
| Item 1.  Legal Proceedings                                               |   26                |
|                                                                               |                     |
| Item 1A. Risk Factors                                                              |   26                |
|                                                                               |                     |
| Item 2.  Unregistered Sales of Equity Securities And Use Of Proceeds     |   26                |
|                                                                               |                     |
| Item 3.  Defaults Upon Senior Securities                                 |   26                |
|                                                                               |                     |
| Item 4.  (Removed and Reserved)                                          |   26                |
|                                                                               |                     |
| Item 5.  Other Information                                               |   26                |
|                                                                               |                     |
| Item 6.  Exhibits                                                        |   27                |
|                                                                               |                     |

----

----

|                                                                               |   |   |    |   | March 31,   |   |        | December 31, |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|-------------|--------|-------------|--------------|--------|
|                                                                               |   | Note   |    |   | 2011        |   |        | 2010         |   |
|                                                                               |   |   |    |   | (unaudited) |   |        |         |   |
| ASSETS                                                                             |   |   |    |   |        |   |        |         |   |
| Current assets:                                                                    |   |   |    |   |        |   |        |         |   |
| Cash                                                                               |   |   | 3       |   |        | $      | 50,755,191  |         |   | $ | 29,336,241 |   |
| Pledged bank deposits                                                              |   |   |    |   |        |   | 117,668,482 |         |   |   | 98,053,146 |   |
| Bills receivable                                                                   |   |   |    |   |        |   | 9,393,557   |         |   |   | 9,194,513 |   |
| Inventories                                                                        |   |   | 4       |   |        |   | 54,786,605  |         |   |   | 86,831,556 |   |
| Prepayments to suppliers                                                           |   |   | 5       |   |        |   | 18,662,430  |         |   |   | 14,071,219 |   |
| Consumption tax refund receivable                                                  |   |   | 6       |   |        |   | 24,968,205  |         |   |   | 39,144,688 |   |
| Amounts due from related parties                                                   |   |   | 22      |   |        |   | 5,382,675   |         |   |   | 5,332,193 |   |
| Other current assets                                                               |   |   | 7       |   |        |   | 31,439,959  |         |   |   | 28,608,833 |   |
| Deferred income tax assets                                                         |   |   |    |   |        |   | 473,012     |         |   |   | 469,914 |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Total current assets                                                               |   |   |    |   |        |   | 313,530,116 |         |   |   | 311,042,303 |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Property, plant and equipment, net                                                 |   |   | 8       |   |        |   | 140,956,246 |         |   |   | 129,781,304 |   |
| Intangible assets, net                                                             |   |   | 9       |   |        |   | 1,026,589   |         |   |   | 1,045,466 |   |
| Land use rights                                                                    |   |   | 10      |   |        |   | 11,064,321  |         |   |   | 11,099,875 |   |
| Prepayment for property, plant and equipment                                       |   |   | 5  |   |        |   | 3,216,373   |         |   |   | - |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Total assets                                                                       |   |   |    |   |        | $      | 469,793,645 |         |   | $ | 452,968,948 |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                         |   |   |    |   |        |   |        |         |   |   |   |   |
| Current liabilities:                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Short-term bank borrowings                                                         |   |   | 11      |   |        | $      | 147,120,780 |         |   | $ | 135,768,634 |   |
| Bills payable                                                                      |   |   |    |   |        |   | 50,696,400  |         |   |   | 60,224,900 |   |
| Current portion of long-term bank borrowings                                       |   |   | 12      |   |        |   | 4,581,000   |         |   |   | 17,445,500 |   |
| Accounts payable                                                                   |   |   |    |   |        |   | 120,789,027 |         |   |   | 92,225,936 |   |
| Advances from customers                                                            |   |   | 13      |   |        |   | 8,641,382   |         |   |   | 10,479,217 |   |
| Accrued expenses and other payables                                                |   |   | 14      |   |        |   | 16,167,041  |         |   |   | 18,205,110 |   |
| Income taxes payable                                                               |   |   | 17      |   |        |   | 7,569,366   |         |   |   | 10,699,778 |   |
| Dividends payable                                                                  |   |   |    |   |        |   | 3,838,677   |         |   |   | 234,393 |   |
| Amounts due to related parties                                                     |   |   | 22      |   |        |   | 133,170     |         |   |   | 115,535 |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Total current liabilities                                                          |   |   |    |   |        |   | 359,536,843 |         |   |   | 345,399,003 |   |
| Long-term bank borrowings                                                          |   |   | 12      |   |        |   | 15,270,000  |         |   |   | 15,170,000 |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Total liabilities                                                                  |   |   |    |   |        |   | 374,806,843 |         |   |   | 360,569,003 |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Series B convertible preferred stock:                                              |   |   |    |   |        |   |        |         |   |   |   |   |
|    Par value: $0.001; Authorized: 5,400,010  shares       |   |   |    |   |        |   |        |         |   |   |   |   |
| 6% cumulative dividend with liquidation preference                                 |   |   |    |   |        |   |        |         |   |   |   |   |
| over common stock                                                                  |   |   |    |   |        |   |        |         |   |   |   |   |
|    Issued and outstanding: 5,400,010 shares,                        |   |   |    |   |        |   |        |         |   |   |   |   |
|         liquidation preference of $20,250,000   |   |   |    |   |        |   | 16,701,565  |         |   |   | 16,701,565 |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Commitments and contingencies                                                      |   |   | 18      |   |        |   | -           |         |   |   | - |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Stockholders’ equity:                                                        |   |   |    |   |        |   |        |         |   |   |   |   |
| Series M convertible preferred stock:                                              |   |   |    |   |        |   |        |         |   |   |   |   |
|    Par value: $0.001; Authorized: 47,658 shares;                    |   |   |    |   |        |   |        |         |   |   |   |   |
|    Issued and outstanding: nil on March 31, 2011 and           |   |   |    |   |        |   |        |         |   |   |   |   |
|    on December 31, 2010                                        |   |   |    |   |        |   | -           |         |   |   | - |   |
| Common stock:                                                                      |   |   |    |   |        |   |        |         |   |   |   |   |
|    Par value: $0.001; Authorized: 100,000,000 shares;               |   |   |    |   |        |   |        |         |   |   |   |   |
|    Issued and outstanding: 57,578,990 shares on March 31, 2011 |   |   |    |   |        |   |        |         |   |   |   |   |
|    and 57,577,840 on December 31, 2010                         |   |   |    |   |        |   | 57,579      |         |   |   | 57,578 |   |
| Additional paid-in capital                                                         |   |   |    |   |        |   | 47,651,737  |         |   |   | 47,012,061 |   |
| Statutory reserve                                                                  |   |   |    |   |        |   | 3,075,356   |         |   |   | 3,075,356 |   |
| Accumulated other comprehensive income                                             |   |   |    |   |        |   | 3,867,714   |         |   |   | 3,310,416 |   |
| Retained earnings                                                                  |   |   |    |   |        |   | 23,632,851  |         |   |   | 22,242,969 |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Total stockholders’ equity                                                   |   |   |    |   |        |   | 78,285,237  |         |   |   | 75,698,380 |   |
|                                                                               |   |   |    |   |        |   |        |         |   |   |   |   |
| Total liabilities and stockholders' equity                                         |   |   |    |   |        | $      | 469,793,645 |         |   | $ | 452,968,948 |   |

----

|                                                                  |   |   |   |   | Three Months Ended March 31, |        |
|-----------------------------------------------------------------------|--------|--------|--------|--------|------------------------------|-------------|
|                                                                  |   | Note   |   |   | 2011                         |        |   | 2010 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |
| Sales                                                                 |   |   |   |   |                         |        |   |   |   |
| Third parties                                                    |   |   |   |   | $                            | 124,154,798 |   |   | $ | 96,554,477 |   |
| Related parties                                                       |   |   | 22     |   |                         |        | 22,609,819 |   |   |   | 20,817,409 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Total Sales                                                           |   |   |   |   |                         |        | 146,764,617 |   |   |   | 117,371,886 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Cost of sales                                                         |   |   |   |   |                         |        |   |   |   |   |   |   |
| Third parties                                                    |   |   |   |   |                         |        | 113,814,197 |   |   |   | 88,923,328 |   |
| Related parties                                                       |   |   | 22     |   |                         |        | 20,299,359 |   |   |   | 19,633,114 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Cost of sales                                                         |   |   |   |   |                         |        | 134,113,556 |   |   |   | 108,556,442 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Gross profit                                                          |   |   |   |   |                         |        | 12,651,061 |   |   |   | 8,815,444 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Selling expenses                                                      |   |   |   |   |                         |        | 539,132 |   |   |   | 84,512 |   |
| General and administrative expenses                                   |   |   |   |   |                         |        | 3,235,080 |   |   |   | 805,532 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Total operating expenses                                              |   |   |   |   |                         |        | 3,774,212 |   |   |   | 890,044 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Income from operations                                                |   |   |   |   |                         |        | 8,876,849 |   |   |   | 7,925,400 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Other income (expense):                                               |   |   |   |   |                         |        |   |   |   |   |   |   |
| Interest income                                                       |   |   |   |   |                         |        | 906,944 |   |   |   | 18,232 |   |
| Interest expense                                                      |   |   |   |   |                         |        | (3,196,629 | ) |   |   | (1,091,757 | ) |
| Other income (expense), net                                           |   |   |   |   |                         |        | 879,130 |   |   |   | (109,203 | ) |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Total other expense, net                                              |   |   |   |   |                         |        | (1,410,555 | ) |   |   | (1,182,728 | ) |
| Income before income taxes                                            |   |   |   |   |                         |        | 7,466,294 |   |   |   | 6,742,672 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Income tax expense                                                    |   |   | 17     |   |                         |        | 2,252,151 |   |   |   | 1,687,514 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Net income attributable to Keyuan                                     |   |   |   |   |                         |        |   |   |   |   |   |   |
|    Petrochemicals Inc. stockholders                    |   |   |   |   |                         |        | 5,214,143 |   |   |   | 5,055,158 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Dividends to Series B convertible                                     |   |   |   |   |                         |        |   |   |   |   |   |   |
|     preferred stockholders                        |   |   | 15     |   |                         |        | 296,260 |   |   |   | - |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Net income attributable to Keyuan                                     |   |   |   |   |                         |        |   |   |   |   |   |   |
|    Petrochemicals Inc. common stockholders             |   |   |   |   |                         | $           | 4,917,883 |   |   | $ | 5,055,158 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Net income attributable to Keyuan Petrochemicals Inc. stockholders    |   |   |   |   |                         |        | 5,214,143 |   |   |   | 5,055,158 |   |
|     Foreign currency translation adjustment       |   |   |   |   |                         |        | 557,297 |   |   |   | 2,302 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Comprehensive income                                                  |   |   |   |   |                         | $           | 5,771,440 |   |   |   | 5,057,460 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Earnings per share:                                                   |   |   |   |   |                         |        |   |   |   |   |   |   |
| Attributable to common stock:                                         |   |   |   |   |                         |        |   |   |   |   |   |   |
| - Basic                                                               |   |   | 19     |   |                         | $           | 0.09 |   |   | $ | 0.11 |   |
| - Diluted                                                             |   |   | 19     |   |                         | $           | 0.08 |   |   | $ | 0.11 |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
|                                                                  |   |   |   |   |                         |        |   |   |   |   |   |   |
| Weighted average number of shares of common stock used in calculation |   |   |   |   |                         |        |   |   |   |   |   |   |
| Basic                                                                 |   |   | 19     |   |                         |        | 57,578,300 |   |   |   | 47,658,000 |   |
| Diluted                                                               |   |   | 19     |   |                         |        | 63,880,139 |   |   |   | 47,658,000 |   |

----

|                                                                                                                       |   | Three Months Ended March 31, |        |
|----------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|
|                                                                                                                       |   | 2011                         |        |   | 2010 |   |
|                                                                                                                       |   |                         |        |   |   |   |
| Cash flows from operating activities:                                                                                      |   |                         |        |   |   |   |
| Net income                                                                                                                 |   | $                            | 5,214,143   |   |   | $ | 5,055,157 |   |
| Adjustments to reconcile net income to net cash                                                                            |   |                         |        |   |   |   |   |   |
|   provided by (used in) operating activities:                                                                    |   |                         |        |   |   |   |   |   |
|      Disposal loss (gain) of property and equipment                                               |   |                         | 3,483       |   |   |   | - |   |
|    Depreciation                                                                                             |   |                         | 2,500,670   |   |   |   | 2,032,136 |   |
|      Amortization                                                                                 |   |                         | 25,680      |   |   |   | 24,747 |   |
|      Land use rights amortization                                                                 |   |                         | 108,353     |   |   |   | 42,107 |   |
|      Deferred income tax expense                                                                  |   |                         | -           |   |   |   | 1,687,514 |   |
|      Share-based compensation expense                                                             |   |                         | 668,427     |   |   |   | - |   |
| Changes in operating assets and liabilities:                                                                               |   |                         |        |   |   |   |   |   |
| Bills receivable                                                                                                           |   |                         | (137,963    | ) |   |   | (5,611,676 | ) |
| Inventories                                                                                                                |   |                         | 32,506,267  |   |   |   | (20,693,412 | ) |
| Prepayments to suppliers                                                                                                   |   |                         | (4,611,229  | ) |   |   | (7,183,075 | ) |
| Consumption tax refund receivable                                                                                          |   |                         | 14,385,368  |   |   |   | - |   |
| Other current assets                                                                                                       |   |                         | (5,762,117  | ) |   |   | (5,126,418 | ) |
| Accounts payable                                                                                                           |   |                         | 13,330,081  |   |   |   | 41,193,379 |   |
| Advances (to) from customers                                                                                               |   |                         | (1,950,637  | ) |   |   | (13,363,257 | ) |
| Income taxes payable                                                                                                       |   |                         | (3,190,044  | ) |   |   | (219,975 | ) |
| Accrued expenses and other payables                                                                                        |   |                         | (442,096    | ) |   |   | 34,268 |   |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Net cash provided by (used in) operating activities                                                                        |   |                         | 52,648,387  |   |   |   | (2,128,505 | ) |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Cash flows from investing activities:                                                                                      |   |                         |        |   |   |   |   |   |
| Proceeds from disposal of property, plant and equipment                                                                    |   |                         | 10,448      |   |   |   | - |   |
| Purchase of property, plant and equipment,                                                                                 |   |                         |        |   |   |   |   |   |
|    including capitalized interest                                                                           |   |                         | (46,014     | ) |   |   | (9,498,013 | ) |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Net cash used in investing activities                                                                                      |   |                         | (35,566     | ) |   |   | (9,498,013 | ) |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Cash flows from financing activities:                                                                                      |   |                         |        |   |   |   |   |   |
| Pledged bank deposits used for bank borrowings                                                                             |   |                         | (18,904,378 | ) |   |   | (9,828,900 | ) |
| Proceeds from short-term bank borrowings                                                                                   |   |                         | 40,705,375  |   |   |   | 10,998,750 |   |
| Repayment of short-term bank borrowings                                                                                    |   |                         | (30,283,820 | ) |   |   | (6,599,250 | ) |
|     Proceeds from bills payable                                                                        |   |                         | 33,175,240  |   |   |   | 8,652,350 |   |
|     Prepayment of bills payable                                                                        |   |                         | (43,066,940 | ) |   |   | - |   |
| Repayments of long-term bank borrowings                                                                                    |   |                         | (12,935,300 | ) |   |   | - |   |
| Short-term financing from related parties                                                                                  |   |                         | 7,738,095   |   |   |   | 1,466,500 |   |
| Short-term financing to related parties                                                                                    |   |                         | (7,609,000  | ) |   |   | (1,466,500 | ) |
| Repayment to Ningbo Litong (Note 22)                                                                                       |   |                         | -           |   |   |   | (953,225 | ) |
| Repayments to related parties                                                                                              |   |                         | -           |   |   |   | (733,250 | ) |
| Proceeds from warrants exercise                                                                                            |   |                         | 4,865       |   |   |   | - |   |
| Dividends paid                                                                                                             |   |                         | (219,976    | ) |   |   | - |   |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Net cash (used in) provided by financing activities                                                                        |   |                         | (31,395,839 | ) |   |   | 1,536,475 |   |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Effect of foreign currency exchange rate changes on cash                                                                   |   |                         | 208,968     |   |   |   | (91 | ) |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Net increase in cash                                                                                                       |   |                         | 21,418,950  |   |   |   | (10,090,134 | ) |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Cash at beginning of quarter                                                                                               |   |                         | 29,336,241  |   |   |   | 14,030,655 |   |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Cash at end of quarter                                                                                                     |   | $                            | 50,755,191  |   |   | $ | 3,940,521 |   |
|                                                                                                                       |   |                         |        |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                                                          |   |                         |        |   |   |   |   |   |
| Income taxes paid                                                                                                          |   | $                            | 5,442,195   |   |   | $ | - |   |
|   Interest paid, net of capitalized interest                                                                     |   |                         | 3,196,629   |   |   |   | 1,091,757 |   |
|   Dividends accrued                                                                                                   |   |                         | 296,260     |   |   |   | - |   |
| Non-cash financing activities:                                                                                             |   |                         |        |   |   |   |   |   |
|           Accounts Payable for purchase of property, plant and equipment |   |                         | 12,736,521  |   |   |   | (7,539,447 | ) |
|                                                                                                                       |   |                         |        |   |   |   |   |   |

----

----

|            |   | March 31, |       |   | December 31, |   |
|-----------------|--------|-----------|------------|--------|--------------|--------|
|            |   | 2011      |       |   | 2010         |   |
|            |   |      |       |   |         |   |
| Raw materials   |   | $         | 25,310,418 |   |         | $      | 53,160,604 |   |
| Finished goods  |   |      | 26,935,970 |   |         |   | 30,024,896 |   |
| Work-in-process |   |      | 2,540,217  |   |         |   | 3,646,056 |   |
|            |   |      |       |   |         |   |   |   |
| Total           |   | $         | 54,786,605 |   |         | $      | 86,831,556 |   |

----

|                                      |   | March 31, |       |   | December 31, |   |
|-------------------------------------------|--------|-----------|------------|--------|--------------|--------|
|                                      |   | 2011      |       |   | 2010         |   |
| VAT recoverable                           |   | $         | 10,446,036 |   |         | $      | 21,953,590 |   |
| Receivable from Ningbo Litong (Note 22)   |   |      | 5,726,250  |   |         |   | 2,217,854 |   |
| Customs deposits for imported inventories |   |      | 12,543,647 |   |         |   | 1,972,682 |   |
| Others                                    |   |      | 2,724,026  |   |         |   | 2,464,707 |   |
|                                      |   |      |       |   |         |   |   |   |
|                                      |   | $         | 31,439,959 |   |         | $      | 28,608,833 |   |
|                                      |   |      |       |   |         |   |   |   |

|                           |   | March 31, |        |   | December 31, |   |
|--------------------------------|--------|-----------|-------------|--------|--------------|--------|
|                           |   | 2011      |        |   | 2010         |   |
|                           |   |      |        |   |         |   |
|                           |   |      |        |   |         |   |
| Buildings                      |   | $         | 3,757,725   |   |         | $      | 3,733,116 |   |
| Machinery and equipment        |   |      | 135,192,138 |   |         |   | 130,513,767 |   |
| Vehicles                       |   |      | 535,336     |   |         |   | 560,440 |   |
| Office equipment and furniture |   |      | 130,900     |   |         |   | 130,043 |   |
| Construction-in-progress       |   |      | 12,161,492  |   |         |   | 3,117,935 |   |
|                           |   |      |        |   |         |   |   |   |
|                           |   |      | 151,777,591 |   |         |   | 138,055,301 |   |
| Less: Accumulated depreciation |   |      | (10,821,345 | )      |         |   | (8,273,997 | ) |
|                           |   |      |        |   |         |   |   |   |
|                           |   | $         | 140,956,246 |   |         | $      | 129,781,304 |   |
|                           |   |      |        |   |         |   |   |   |

|                                         |   | Three months ended March 31, |      |
|----------------------------------------------|--------|------------------------------|-----------|
|                                         |   | 2011                         |      |   | 2010 |   |
|                                         |   |                         |      |   |   |   |
| Cost of sales                                |   | $                            | 2,459,436 |   |   | $ | 2,006,330 |   |
| Selling, general and administrative expenses |   |                         | 41,234    |   |   |   | 25,806 |   |
|                                         |   |                         |      |   |   |   |   |   |
|                                         |   | $                            | 2,500,670 |   |   | $ | 2,032,136 |   |
|                                         |   |                         |      |   |   |   |   |   |

|                           |   | Amortization |   |   | March 31, |   |      | December 31, |   |
|--------------------------------|--------|--------------|--------|--------|-----------|--------|-----------|--------------|--------|
|                           |   | Period       |   |   | 2011      |   |      | 2010         |   |
|                           |   | Years        |   |   |      |   |      |         |   |
|                           |   |         |   |   |      |   |      |         |   |
| Licensing agreements           |   |         | 10-20  |   |      | $      | 1,450,650 |         |   | $ | 1,441,150 |   |
| Less: Accumulated amortization |   |         |   |   |      |   | (424,061  | )            |   |   | (395,684 | ) |
|                           |   |         |   |   |      |   |      |         |   |   |   |   |
|                           |   |         |   |   |      | $      | 1,026,589 |         |   | $ | 1,045,466 |   |
|                           |   |         |   |   |      |   |      |         |   |   |   |   |

----

|                           |   | March 31, |       |   | December 31, |   |
|--------------------------------|--------|-----------|------------|--------|--------------|--------|
|                           |   | 2011      |       |   | 2010         |   |
|                           |   |      |       |   |         |   |
| Land use rights                |   | $         | 11,818,339 |   |         | $      | 11,740,943 |   |
| Less: Accumulated amortization |   |      | (754,018   | )      |         |   | (641,068 | ) |
|                           |   |      |       |   |         |   |   |   |
|                           |   | $         | 11,064,321 |   |         | $      | 11,099,875 |   |
|                           |   |      |       |   |         |   |   |   |

|                               |   | March 31, |        |   | December 31, |   |
|------------------------------------|--------|-----------|-------------|--------|--------------|--------|
|                               |   | 2011      |        |   | 2010         |   |
| Bank borrowings-secured/guaranteed |   | $         | 147,120,780 |   |         | $      | 135,768,634 |   |

|                                              |   | March 31, |       |   | December 31, |   |
|---------------------------------------------------|--------|-----------|------------|--------|--------------|--------|
|                                              |   | 2011      |       |   | 2010         |   |
|                                              |   |      |       |   |         |   |
| Loan from China Construction Bank                 |   | $         | 15,270,000 |   |         | $      | 15,170,000 |   |
| Loan from Industrial and Commercial Bank of China |   |      | 4,581,000  |   |         |   | 4,551,000 |   |
| Loan from Bank of China                           |   |      | -          |   |         |   | 12,894,500 |   |
|                                              |   |      | 19,851,000 |   |         |   | 32,615,500 |   |
| Less: current portion                             |   |      | (4,581,000 | )      |         |   | (17,445,500 | ) |
|                                              |   |      |       |   |         |   |   |   |
|                                              |   | $         | 15,270,000 |   |         | $      | 15,170,000 |   |

| 2011   |   | $      | 4,581,000  |   |
|--------|--------|--------|------------|--------|
| 2012   |   |   | 15,270,000 |   |
|   |   | $      | 19,851,000 |   |

----

|                                      |   | March 31, |       |   | December 31, |   |
|-------------------------------------------|--------|-----------|------------|--------|--------------|--------|
|                                      |   | 2011      |       |   | 2010         |   |
|                                      |   |      |       |   |         |   |
| Purchase of property, plant and equipment |   | $         | 15,481,063 |   |         | $      | 17,217,958 |   |
| Accrued payroll and welfare               |   |      | 312,159    |   |         |   | 690,831 |   |
| Other accruals and payables               |   |      | 373,819    |   |         |   | 296,311 |   |
|                                      |   |      |       |   |         |   |   |   |
|                                      |   | $         | 16,167,041 |   |         | $      | 18,205,110 |   |

----

----

----

|                             |   | Three months ended March 31, |      |
|----------------------------------|--------|------------------------------|-----------|
|                             |   | 2011                         |      |   | 2010 |   |
|                             |   |                         |      |   |   |   |
| PRC                              |   | $                            | 8,629,792 |   |   | $ | 6,750,057 |   |
| U.S.                             |   |                         | (938,337  | ) |   |   | - |   |
| Hong Kong and BVI                |   |                         | (225,161  | ) |   |   | (7,385 | ) |
|                             |   |                         |      |   |   |   |   |   |
| Total income before income taxes |   | $                            | 7,466,294 |   |   | $ | 6,742,672 |   |
|                             |   |                         |      |   |   |   |   |   |

----

| PRC:                        |   | Three months ended March 31, |      |
|-----------------------------|--------|------------------------------|-----------|
|                        |   | 2011                         |      |   | 2010 |   |
|                        |   |                         |      |   |   |   |
|                        |   |                         |      |   |   |   |
| Current income tax expense  |   | $                            | 2,252,151 |   |   | $ | - |   |
| Deferred income tax expense |   |                         | -         |   |   |   | 1,687,514 |   |
|                        |   |                         |      |   |   |   |   |   |
| Total income tax expense    |   | $                            | 2,252,151 |   |   | $ | 1,687,514 |   |
|                        |   |                         |      |   |   |   |   |   |

|                                           |   | Three months ended March 31, |      |
|------------------------------------------------|--------|------------------------------|-----------|
|                                           |   | 2011                         |      |   | 2010 |   |
|                                           |   |                         |      |   |   |   |   |   |   |   |   |   |
| Income before income taxes                     |   | $                            | 7,466,294 |   |   |   |   |   | $ | 6,742,672 |   |   |   |   |
|                                           |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |
| Computed expected income tax expense           |   |                         | 1,866,573 |   |   |   | 25.00 | % |   |   | 1,685,668 |   |   |   | 25.00 | % |
| NOLs from overseas subsidiaries not recognized |   |                         | 365,569   |   |   |   | 5.00 | % |   |   | 1,846 |   |   |   | 0.00 | % |
| Others                                         |   |                         | 20,009    |   |   |   | 0.2 | % |   |   | - |   |   |   | - |   |
| Actual income tax expense                      |   | $                            | 2,252,151 |   |   |   | 30.2 | % |   | $ | 1,687,514 |   |   |   | 25.00 | % |
|                                           |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                      |   | Three months ended March 31, |       |
|---------------------------------------------------------------------------|--------|------------------------------|------------|
|                                                                      |   | 2011                         |       |   | 2010 |   |
| Basic earnings per share:                                                 |   |                         |       |   |   |   |
| Net income attributable to Keyuan Petrochemicals, Inc. stockholders       |   | $                            | 5,214,143  |   |   | $ | 5,055,158 |   |
|                                                                      |   |                         |       |   |   |   |   |   |
| Fixed dividends to Series A convertible preferred stockholders            |   |                         | -          |   |   |   | - |   |
|                                                                      |   |                         |       |   |   |   |   |   |
| Fixed dividends to Series B convertible preferred stockholders            |   |                         | 296,260    |   |   |   | - |   |
|                                                                      |   |                         |       |   |   |   |   |   |
| Net income attributable to Keyuan Petrochemicals Inc. common stockholders |   | $                            | 4,917,883  |   |   | $ | 5,055,158 |   |
|                                                                      |   |                         |       |   |   |   |   |   |
| Weighted average common shares (Denominator for basic income per share)   |   |                         | 57,578,300 |   |   |   | 47,658,000 |   |
|                                                                      |   |                         |       |   |   |   |   |   |
| Effect of diluted securities:                                             |   |                         |       |   |   |   |   |   |
| - Series A convertible preferred stock                                    |   |                         | -          |   |   |   | - |   |
| - Series B convertible preferred stock                                    |   |                         | 5,400,010  |   |   |   | - |   |
| - Series M convertible preferred stock                                    |   |                         | -          |   |   |   | - |   |
| - Warrants                                                                |   |                         | 409,676    |   |   |   | - |   |
| - Options                                                                 |   |                         | 492,153    |   |   |   | - |   |
|                                                                      |   |                         | 63,880,139 |   |   |   | 47,658,000 |   |
|                                                                      |   |                         |       |   |   |   |   |   |
| Basic net income per share:                                               |   | $                            | 0.09       |   |   | $ | 0.11 |   |
| Diluted net income per share:                                             |   | $                            | 0.08       |   |   | $ | 0.11 |   |
|                                                                      |   |                         |       |   |   |   |   |   |

----

| For three months ended March 31, 2011 |   |   For three months ended March 31, 2010 |       |
|---------------------------------------|--------|---------------------------------------------------|------------|
| Largest                               |   | Amount of                                         |       |   | % Total |   | Largest |   | Amount of |   |   | % Total |   |
| Customers                             |   | Sales                                             |       |   | Sales |   | Customers |   | Sales |   |   | Sales |   |
|                                  |   |                                              |       |   |   |   |   |   |   |   |   |   |   |
| Customer A                            |   | $                                                 | 28,767,142 |   |   |   | 20 | % | Customer B |   | $ | 21,585,523 |   |   |   | 18 | % |
| Customer B                            |   |                                              | 22,543,658 |   |   |   | 16 | % | Customer F |   |   | 16,105,573 |   |   |   | 13 | % |
| Customer C                            |   |                                              | 13,889,494 |   |   |   | 10 | % | Customer G |   |   | 12,058,047 |   |   |   | 10 | % |
| Customer D                            |   |                                              | 10,298,926 |   |   |   | 7 | % | Customer H |   |   | 8,387,449 |   |   |   | 7 | % |
| Customer E                            |   |                                              | 8,129,979  |   |   |   | 6 | % | Customer C |   |   | 6,626,646 |   |   |   | 5 | % |
|                                  |   |                                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                 |   | $                                                 | 83,629,199 |   |   |   | 58 | % | Total |   | $ | 64,763,238 |   |   |   | 53 | % |

| 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                                           |
|   (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                      |
|   (Ningbo Kunde)                                 |   | through September 2011 for Mr. Hu, a third party                          |
| 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                   |   | Controlled by Mr. Shou                                                    |
| Co., Ltd (Zhenhai Jinchi)                                  |   |                                                                      |
|                                                       |   |                                                                      |

----

|                                                       |   | Three months ended March 31, |       |
|------------------------------------------------------------|--------|------------------------------|------------|
|                                                       |   | 2011                         |       |   | 2010 |   |
| Sales of products (a)                                      |   | $                            | 22,609,819 |   |   | $ | 20,817,409 |   |
| Purchase of raw material (b)                               |   | $                            | 7,023,135  |   |   | $ | 5,677,989 |   |
| Purchase of transportation services (c)                    |   | $                            | 611,373    |   |   | $ | 1,451,309 |   |
| Credit line of guarantee provision for bank borrowings (d) |   | $                            | -          |   |   | $ | 120,253,000 |   |
| Loan guarantee fees (d)                                    |   | $                            | 337,254    |   |   | $ | - |   |
| Short-term financing from related parties (e)              |   | $                            | 7,738,095  |   |   | $ | 1,466,500 |   |
| Short-term financing to related parties (e)                |   |                         | 7,609,000  |   |   | $ | 1,466,500 |   |
|                                                       |   |                         |       |   |   |   |   |   |

|                                 |   | March 31, |      |   | December 31, |   |
|--------------------------------------|--------|-----------|-----------|--------|--------------|--------|
|                                 |   | 2011      |      |   | 2010         |   |
|                                 |   |      |      |   |         |   |
| Amounts due from related parties (f) |   | $         | 5,382,675 |   |         | $      | 5,332,193 |   |
| Amounts due to related parties (g)   |   | $         | 133,170   |   |         | $      | 115,535 |   |
|                                 |   |      |      |   |         |   |   |   |

| (a)   | The Group sold finished products of $22,543,658 and $20,801,137 to Ningbo Kunde for the three months ended March 31, 2011 and 2010, respectively. There were outstanding amounts of $65,789 received in advance from Kunde as of March 31, 2011. Sales to Zhenhai Jinchi for the three months ended March 31, 2011 and 2010 were $66,161 and $16,272, respectively, with no outstanding balance. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The Group purchased raw materials of $4,426,624 from Ningbo Kewei during the three months ended March 31, 2010 with no outstanding amount payable to Ningbo Kewei as of March 31, 2010 in respect of these purchase transactions. The Group purchased raw materials of $7,023,135 and $1,251,365 from Ningbo Kunde during the three months ended March 31, 2011 and 2010, respectively. The outstanding payment in advance to Ningbo Kunde as of March 31, 2011 in respect of these purchase transactions was $5,344,500. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | The Group purchased transportation services of $611,373 and $1,451,309 from Ningbo Xinhe during the three months ended March 31, 2011 and 2010, respectively, and amounts owed to Ningbo Xinhe as of March 31, 2011 in respect of these purchase transactions was $51,045. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Guarantees for Bank Loans |
|-----------------|---------------------------|

|                |   | Guarantee provided during       |   |   | Guaranteed Bank Loans       |   |
|---------------------|--------|---------------------------------|--------|--------|-----------------------------|--------|
|                |   | The three months ended March 31 |   |   | March 31, December 31, |   |
|                |   | 2011                            |   |   | 2010                        |   |   | 2011 |   |   | 2010 |   |
| Mr. Tao             |   | $                               | -      |   |                        | $      | 79,191,000 |   |   | $ | 51,154,500 |   |   | $ | 36,408,000 |   |
| Jicun Wang and Chen |   |                            | -      |   |                        |   | - |   |   | $ | 9,756,736 |   |   | $ | 12,136,000 |   |
| Ningbo Kewei        |   |                            | -      |   |                        |   | 41,062,000 |   |   | $ | 8,938,500 |   |   | $ | 11,377,500 |   |
| Ningbo Pacific      |   |                            | -      |   |                        |   | - |   |   | $ | 14,337,736 |   |   | $ | 16,687,000 |   |
| Ningbo Hengfa       |   |                            | -      |   |                        |   | - |   |   | $ | 23,515,800 |   |   | $ | 36,256,300 |   |
| Shangdong Tengda    |   |                            | -      |   |                        |   | - |   |   | $ | 916,200 |   |   | $ | 910,200 |   |

| (e)   | Short-term financing transactions with related parties |
|-----------------|--------------------------------------------------------|

|           |   | Three Months Ended March 31 |      |
|----------------|--------|---------------------------------------|-----------|
|           |   | 2011                                  |      |   | 2010 |   |
|           |   | From(i)                               |      |   | To(i) |   |   | Balance(ii) |   |   | From(i) |   |   | To(i) |   |   | Balance(ii) |   |
| Ningbo Kewei   |   | $                                     | -         |   |   | $ | - |   |   | $ | - |   |   | $ | 1,466,500 |   |   | $ | (1,466,500 | ) |   |   | - |   |
| Ningbo Kunde   |   |                                  | 5,326,300 |   |   |   | (5,326,300 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Jiangdong Jihe |   |                                  | 2,411,795 |   |   |   | (2,282,700 | ) |   |   | (16,336 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
|           |   |                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           |   | $                                     | 7,738,095 |   |   | $ | (7,609,000 | )  |   | $ | (16,336 | ) |   | $ | 1,466,500 |   |   | $ | (1,466,500 | ) |   | $ | - |   |

----

| (f)   | Amounts due from related parties consist of the following: |
|-----------------|------------------------------------------------------------|

|           |   | March 31, |      |   | December 31, |   |
|----------------|--------|-----------|-----------|--------|--------------|--------|
|           |   | 2011      |      |   | 2010         |   |
| Related Party  |   |      |      |   |         |   |
| Ningbo Kunde   |   | $         | 5,344,500 |   |         | $      | 5,181,809 |   |
| Jiangdong Jihe |   | $         | -         |   |         | $      | 112,459 |   |
| Mr. Tao        |   | $         | 38,175    |   |         |   | 37,925 |   |
|           |   | $         | 5,382,675 |   |         | $      | 5,332,193 |   |
|           |   |      |      |   |         |   |   |   |

| (g)   | Amounts due to related parties consists of the following: |
|-----------------|-----------------------------------------------------------|

|           |   | March 31, |    |   | December 31, |   |
|----------------|--------|-----------|---------|--------|--------------|--------|
| Related Party  |   | 2011      |    |   | 2010         |   |
|           |   |      |    |   |         |   |
| Ningbo Kunde   |   | $         | 65,789  |   |         |   | - |   |
| Jiangdong Jihe |   |      | 16,336  |   |         |   | - |   |
| Ningbo Jinchi  |   |      | -       |   |         |   | 115,416 |   |
| Ninbo Xinhe    |   |      | 51,045  |   |         |   | 119 |   |
|           |   | $         | 133,170 |   |         | $      | 115,535 |   |

| 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   |
|                                    |   |                                          |

|                                                       |   | Three months ended March 31, |       |
|------------------------------------------------------------|--------|------------------------------|------------|
|                                                       |   | 2011                         |       |   | 2010 |   |
| Sales of products (h)                                      |   | $                            | 768,068    |   |   | $ | 5,229,583 |   |
| Purchase of raw material (i)                               |   | $                            | -          |   |   | $ | 10,418,407 |   |
| Credit line of guarantee provision for bank borrowings (j) |   | $                            | -          |   |   | $ | 4,399,500 |   |
| Loan guarantee fees (j)                                    |   | $                            | 202,952    |   |   | $ | - |   |
| Short-term financing from theses parties (k)               |   | $                            | 34,692,475 |   |   | $ | - |   |
| Short-term financing to these parties (k)                  |   | $                            | 38,174,353 |   |   | $ |   |   |
|                                                       |   |                         |       |   |   |   |   |   |

|                           |   | March 31, |      |   | December 31, |   |
|--------------------------------|--------|-----------|-----------|--------|--------------|--------|
|                           |   | 2011      |      |   | 2010         |   |
|                           |   |      |      |   |         |   |
| Amounts due from these parties |   | $         | 5,726,250 |   |         | $      | 2,217,854 |   |
| Amounts due to these parties   |   | $         | -         |   |         | $      | (110,134 | ) |
|                           |   |      |      |   |         |   |   |   |

| (h)   | The Group sold finished products of $768,068 and $5,229,583 to Ningbo Litong during the three months ended March 31, 2011 and 2010, respectively. Amounts received in advance from Litong were $17,620 as of March 31, 2011 and are included in advances from customers on the consolidated balance sheet. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (i)   | The Group purchased raw materials of nil and $10,418,407 from Ningbo Litong during the three months ended March 31, 2011 and 2010, respectively. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| (j)   | Guarantees for Bank Loans |
|-----------------|---------------------------|

|                                  |   | Guarantee provided during       |   |   | Guarantee Bank Loan |   |
|---------------------------------------|--------|---------------------------------|--------|--------|---------------------|--------|
|                                  |   | the three months ended March 31 |   |   | March 31,           |   |   | December 31, |   |
|                                  |   | 2011                            |   |   | 2010                |   |   | 2011 |   |   | 2010 |   |
|  Ningbo Litong    |   | $                               | -      |   |                | $      | 4,399,500 |   |   | $ | 43,519,000 |   |   | $ | 43,993,000 |   |

|           |   | Three months Ended March 31 |       |
|----------------|--------|-----------------------------|------------|
|           |   | 2011                        |       |   | 2010 |   |
|           |   | From(i)                     |       |   | To(i) |   |   | Balance(ii) |   |   | From(i) |   |   | To(i) |   |   | Balance(ii) |   |
|           |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ningbo Litong  |   | $                           | 25,280,142 |   |   | $ | (28,762,020 | ) |   | $ | 5,726,250 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Jiangdong Deze |   |                        | 2,587,060  |   |   |   | (2,587,06 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Ningbo Anqi    |   |                        | 6,825,273  |   |   |   | (6,825,273 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|           |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           |   | $                           | 34,692,475 |   |   | $ | (38,174,353 | ) |   | $ | 5,726,250 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |

----

| l   | 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; |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| l   | Gas fractionation processing equipment- de-propanizing tower, refining propylene tower, de-ethanizination tower, heat exchangers, pumps;                                                                                |

| l   | 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 |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| l   | Liquefied petroleum gas (LPG) and sulfur recovery process- LPG desulfurization extraction tower, dry gas desulfurization tower, regenerating tower, LPG de-mecaptan extraction tower.                                                                                                                          |

----

| l   | BTX Aromatics: Consisting of benzene, toluene, xylene and other chemical components for further processing into oil resin, gasoline and solvents materials widely used in paint, ink, construction coating and pesticide. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| l   | 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 chemicals, 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. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| l   | 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. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| l   | 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. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| l   | 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. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| l   | Completed SBS facility in September 2011                     |
|---------------|--------------------------------------------------------------|
| l   | Begin SBS production and sales in the fourth quarter of 2011 |

| l   | Complete storage capacity expansion, pretreatment facility and asphalt by December 31, 2012 |
|---------------|---------------------------------------------------------------------------------------------|

----

|                |   | Product Manufactured |    |   | Product Sold |            |
|---------------------|--------|----------------------|---------|--------|--------------|-----------------|
| BTX Light Aromatics |   |                 | 64,307  |   |         |            | 74,842 |   |
| BTX Heavy Aromatics |   |                 | 27,117  |   |         |            | 24,607 |   |
| LPG                 |   |                 | 8,934   |   |         |            | 8,985 |   |
| MTBE and Others     |   |                 | 9,008   |   |         | 19,481 (Note 1) |   |
| Styrene             |   |                 | 9,052   |   |         |            | 8,748 |   |
| Propylene           |   |                 | 10,725  |   |         |            | 12,105 |   |
| Total Metric Tons:  |   |                 | 129,143 |   |         |            | 148,768 |   |

----

|                                                                                  |   | For the three monthsEnded March 31, |        |   | Period to Period Comparison |   |
|---------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|--------|---------------------------------------|--------|
|                                                                                  |   | 2011                                |        |   | 2010                                  |   |   | Increase/(Decrease) |   |   | Percentage Change |   |
|                                                                                  |   |                                |        |   |                                  |   |   |   |   |   |   |   |
| Sales                                                                                 |   |                                |        |   |                                  |   |   |   |   |   |   |   |
|          Third parties                   |   | $                                   | 124,154,798 |   |                                  | $      | 96,554,477 |   |   | $ | 27,600,321 |   |   |   | 29 | % |
|          Related Parties                      |   |                                | 22,609,819  |   |                                  |   | 20,817,409 |   |   |   | 1,792,410 |   |   |   | 9 | % |
| Total Sales                                                                           |   |                                | 146,764,617 |   |                                  |   | 117,371,886 |   |   |   | 29,392,731 |   |   |   | 25 | % |
|                                                                                  |   |                                |        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                                                         |   |                                |        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
|          Third parties                   |   |                                | 113,814,197 |   |                                  |   | 88,923,328 |   |   |   | 24,890,869 |   |   |   | 28 | % |
|          Related Parties                 |   |                                | 20,299,359  |   |                                  |   | 19,633,114 |   |   |   | 666,245 |   |   |   | 3 | % |
| Total Cost of sales                                                                   |   |                                | 134,113,556 |   |                                  |   | 108,556,442 |   |   |   | 25,557,114 |   |   |   | 24 | % |
| Gross profit                                                                          |   |                                | 12,651,061  |   |                                  |   | 8,815,444 |   |   |   | 3,835,617 |   |   |   | 44 | % |
|                                                                                  |   |                                |        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                                                    |   |                                |        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Selling expenses                                                                      |   |                                | 539,132     |   |                                  |   | 84,512 |   |   |   | 454,620 |   |   |   | 538 | % |
| General and administrative expenses                                                   |   |                                | 3,235,080   |   |                                  |   | 805,532 |   |   |   | 2,429,548 |   |   |   | 302 | % |
| Total operating expenses                                                              |   |                                | 3,774,212   |   |                                  |   | 890,044 |   |   |   | 2,884,168 |   |   |   | 324 | % |
|                                                                                  |   |                                |        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations                                                           |   |                                | 8,876,849   |   |                                  |   | 7,925,400 |   |   |   | 951,449 |   |   |   | 12 | % |
|                                                                                  |   |                                |        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expenses):                                                              |   |                                |        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
|       Interest expense, net                             |   |                                | (2,289,685  | )      |                                  |   | (1,073,525 | ) |   |   | (1,216,160 | ) |   |   | 113 | % |
| Non-operating income (expenses)                                                       |   |                                | 879,130     |   |                                  |   | (109,203 | ) |   |   | 988,333 |   |   |   | (905 | ) % |
|            Total other expense |   |                                | (1,410,555  | )      |                                  |   | (1,182,728 | ) |   |   | (227,827 | ) |   |   | 19 | % |

| Income before income taxes         |   |   | 7,466,294 |   |   |   | 6,742,672 |   |   |   | 723,622 |   |   |   | 11     | %  |
|-----------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|--------|---------|
| Income tax expense                      |   |   | 2,252,151 |   |   |   | 1,687,514 |   |   |   | 564,637 |   |   |   | 33     | %       |
| Net income                              |   |   | 5,214,143 |   |   |   | 5,055,158 |   |   |   | 158,985 |   |   |   | 3      | %       |
| Other comprehensive income              |   |   |      |   |   |   |      |   |   |   |    |   |   |   |   |    |
| Foreign currency translation adjustment |   |   | 557,297   |   |   |   | 2,302     |   |   |   | 554,995 |   |   |   | 24109  | %       |
| Comprehensive income                    |   |   | 5,771,440 |   |   |   | 5,057,460 |   |   |   | 713,980 |   |   |   | 14     | %       |

----

|                                                | For the Three Months Ended March 31, |   |
|-----------------------------------------------------|--------------------------------------|--------|
|                                                | 2011                                 |   |   | 2010 |   |
| Net cash provided by (used in) operating activities |                                 |   | 52,648,387 |   |   |   | (2,128,505 | ) |
| Net cash used in investing activities               |                                 |   | (35,566 | ) |   |   | (9,498,013 | ) |
| Net cash provided by financing activities           |                                 |   | 31,395,839 |   |   |   | 1,536,475 |   |
|                                                |                                 |   |   |   |   |

----

| (a)      Evaluation of disclosure controls and procedures |
|------------------------------------------------------------------------------------|

| (b)     Changes in internal control over financial reporting |
|---------------------------------------------------------------------------------------|

----

| a)   | Restructuring of our accounting department, and streamlining the department’s roles to ensure that the CFO maintains adequate oversight; 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. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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; |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| c)   | Engagement of 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. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| a)   | Additional training in U.S. GAAP for our accounting staff; and |
|----------------|----------------------------------------------------------------|

| b)   | Hiring of additional qualified accounting personnel, including an experienced controller. |
|----------------|-------------------------------------------------------------------------------------------|

----

----

| 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)                                                           |
| 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.                                                                                   |

----

| Date:   November 1,  2011 | Keyuan Petrochemicals, Inc.             |
|----------------------------------------------------|-----------------------------------------|
|                                               |                                    |
|                                               | By: /s/ Chunfeng Tao               |
|                                               | Chunfeng Tao                            |
|                                               | Chief Executive Officer & President |
|                                               |                                    |
|                                               | By:  /s/ Fan Zhang            |
|                                               | Fan ZhangActing Chief Financial Officer |

----