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| Nevada                                        |   | 84-1491682                             |
|-----------------------------------------------|--------|----------------------------------------|
| (State or other jurisdictionof incorporation) |   | (I.R.S. EmployerIdentification Number) |

| 1603-1604, Tower B Fortune Centre Ao CityBeiyuan Road, Chaoyang District,Beijing, People’s Republic of China 100107 |
|---------------------------------------------------------------------------------------------------------------------------|
| (Address of principal executive offices)                                                                                  |
|  Issuer’s telephone number, including area code: 86-10-84928149                                                |

| Large accelerated filer                                          | o | Accelerated filer         | o |
|------------------------------------------------------------------|---|---------------------------|---|
| Non-accelerated filer(Do not check if smaller reporting company) | o | Smaller reporting company | x |

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|                                                                                                                                | Page   |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| Part I. Financial Information                                                                                                       |   |   |   |
|                                                                                                                                |   |   |   |
| Item 1. Consolidated Financial Statements                                                                                           |   | 1      |   |
|                                                                                                                                |   |   |   |
|  Consolidated Balance Sheets as of March 31, 2010 (Unaudited) and September 30, 2009                                           |   | 1      |   |
|                                                                                                                                |   |   |   |
|  Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2010 and 2009 (Unaudited) |   | 2      |   |
|                                                                                                                                |   |   |   |
|  Consolidated Statements of Operations and Comprehensive Income for the Six Months Ended March 31, 2010 and 2009 (Unaudited)   |   | 3      |   |
|                                                                                                                                |   |   |   |
|  Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2010 and 2009 (Unaudited)                            |   | 4      |   |
|                                                                                                                                |   |   |   |
|  Notes to Consolidated Financial Statements for the Three and Six Months Ended March 31, 2010 and 2009 (Unaudited)             |   | 5      |   |
|                                                                                                                                |   |   |   |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations                                 |   | 26     |   |
|                                                                                                                                |   |   |   |
| Item 4. Controls and Procedures                                                                                                     |   | 36     |   |
|                                                                                                                                |   |   |   |
| Part II. Other Information                                                                                                          |   | 38     |   |
|                                                                                                                                |   |   |   |
| Item 1.  Legal Matters                                                                                                    |   | 38     |   |
|                                                                                                                                |   |   |   |
| Item 5.  Other Information                                                                                                |   | 39     |   |
|                                                                                                                                |   |   |   |
| Item 6. Exhibits                                                                                                                    |   | 39     |   |
|                                                                                                                                |   |   |   |
| Signatures                                                                                                                          |   | 40     |   |

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|                                                                                                                                                         |   | March 31,2010 |    |   | September 30, 2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|--------------------|--------|
|                                                                                                                                                         |   | (unaudited)   |    |   |               |   |
| ASSETS                                                                                                                                                       |   |          |    |   |               |   |
| CURRENT ASSETS                                                                                                                                               |   |          |    |   |               |   |
| Cash                                                                                                                                                         |   | $             | 34,500  |   |               | $      | 18,237 |   |
| Restricted cash                                                                                                                                              |   |          | 285     |   |               |   | 1,413 |   |
| Accounts receivable, net                                                                                                                                     |   |          | 26,886  |   |               |   | 29,756 |   |
| Inventories                                                                                                                                                  |   |          | 6,070   |   |               |   | 4,619 |   |
| Other receivable, net                                                                                                                                        |   |          | 19,586  |   |               |   | 17,644 |   |
| Due from related party                                                                                                                                       |   |          | -       |   |               |   | 426 |   |
| Deposits and prepayments                                                                                                                                     |   |          | 7,706   |   |               |   | 8,629 |   |
| Deferred expenses                                                                                                                                            |   |          | 14      |   |               |   | 63 |   |
| TOTAL CURRENT ASSETS                                                                                                                                         |   |          | 95,047  |   |               |   | 80,787 |   |
|                                                                                                                                                         |   |          |    |   |               |   |   |   |
| Long-term investments                                                                                                                                        |   |          | 6,483   |   |               |   | 4,905 |   |
| Property, plant and equipment, net                                                                                                                           |   |          | 58,548  |   |               |   | 54,870 |   |
| Intangible assets                                                                                                                                            |   |          | 82      |   |               |   | 116 |   |
| Land use rights                                                                                                                                              |   |          | 30,573  |   |               |   | 30,370 |   |
| Other long term assets                                                                                                                                       |   |          | 17,142  |   |               |   | 7,672 |   |
| Goodwill                                                                                                                                                     |   |          | 1,906   |   |               |   | 1,906 |   |
| Deferred tax asset                                                                                                                                           |   |          | 26      |   |               |   | 20 |   |
| TOTAL NON-CURRENT ASSETS                                                                                                                                     |   |          | 114,760 |   |               |   | 99,859 |   |
|                                                                                                                                                         |   |          |    |   |               |   |   |   |
| TOTAL ASSETS                                                                                                                                                 |   | $             | 209,807 |   |               | $      | 180,646 |   |
|                                                                                                                                                         |   |          |    |   |               |   |   |   |
| CURRENT LIABILITIES                                                                                                                                          |   |          |    |   |               |   |   |   |
| Short-term bank loan                                                                                                                                         |   | $             | 47,200  |   |               | $      | 44,223 |   |
| Notes payable                                                                                                                                                |   |          | 308     |   |               |   | 4,583 |   |
| Accounts payable                                                                                                                                             |   |          | 6,910   |   |               |   | 5,193 |   |
| Advances from customers                                                                                                                                      |   |          | 1,187   |   |               |   | 2,100 |   |
| Additional interest payable under convertible note indenture                                                                                                 |   |          | -       |   |               |   | 280 |   |
| Income taxes payable                                                                                                                                         |   |          | 440     |   |               |   | 475 |   |
| Construction payables                                                                                                                                        |   |          | 1,905   |   |               |   | 2,982 |   |
| Other payables                                                                                                                                               |   |          | 20,784  |   |               |   | 2,801 |   |
| Due to related party                                                                                                                                         |   |          | 20,213  |   |               |   | - |   |
| Accrued expenses                                                                                                                                             |   |          | 441     |   |               |   | 538 |   |
| Deferred income                                                                                                                                              |   |          | 15      |   |               |   | 38 |   |
| Derivative liability                                                                                                                                         |   |          | 2,428   |   |               |   | - |   |
| Current portion of long-term notes payable                                                                                                                   |   |          | 11,812  |   |               |   | 26,667 |   |
| TOTAL CURRENT LIABILITIES                                                                                                                                    |   |          | 113,643 |   |               |   | 89,880 |   |
|                                                                                                                                                         |   |          |    |   |               |   |   |   |
| Long-term bank loan                                                                                                                                          |   |          | 38,088  |   |               |   | 26,358 |   |
| Deferred tax liabilities                                                                                                                                     |   |          | 1,095   |   |               |   | 1,095 |   |
| TOTAL LIABILITIES                                                                                                                                            |   |          | 152,826 |   |               |   | 117,333 |   |
|                                                                                                                                                         |   |          |    |   |               |   |   |   |
| Commitments                                                                                                                                                  |   |          |    |   |               |   |   |   |
|                                                                                                                                                         |   |          |    |   |               |   |   |   |
| SHAREHOLDERS’ EQUITY                                                                                                                                   |   |          |    |   |               |   |   |   |
| Common stock- par value $0.001 per share; Authorized - 50,000,000 shares; Issued and outstanding- 15,922,391 shares at March 31, 2010 and September 30, 2009 |   |          | 16      |   |               |   | 16 |   |
| Additional paid-in capital                                                                                                                                   |   |          | 27,224  |   |               |   | 34,543 |   |
| Retained earnings                                                                                                                                            |   |          | 7,011   |   |               |   | 6,850 |   |
| Accumulated other comprehensive income                                                                                                                       |   |          | 4,937   |   |               |   | 4,772 |   |
| Total parent shareholders’ equity                                                                                                                      |   |          | 39,188  |   |               |   | 46,181 |   |
| Non-controlling interest                                                                                                                                     |   |          | 17,793  |   |               |   | 17,132 |   |
|                                                                                                                                                         |   |          |    |   |               |   |   |   |
| TOTAL SHAREHOLDERS’ EQUITY                                                                                                                             |   |          | 56,981  |   |               |   | 63,313 |   |
|                                                                                                                                                         |   |          |    |   |               |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                             |   | $             | 209,807 |   |               | $      | 180,646 |   |

----

|                                                         |   | Three Months Ended March 31, |   |
|--------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                         |   | 2010                                        |   |   | 2009 |   |
| NET SALES                                                    |   | $                                           | 9,007  |   |   | $ | 6,971 |   |
| COST OF SALES                                                |   |                                        | (7,539 | ) |   |   | (5,495 | ) |
| GROSS PROFIT                                                 |   |                                        | 1,468  |   |   |   | 1,476 |   |
|                                                         |   |                                        |   |   |   |   |   |   |
| OPERATING EXPENSES                                           |   |                                        |   |   |   |   |   |   |
| Selling expenses                                             |   |                                        | 492    |   |   |   | 74 |   |
| General and administrative expenses                          |   |                                        | 2,009  |   |   |   | 3,382 |   |
|                                                         |   |                                        |   |   |   |   |   |   |
| TOTAL OPERATING EXPENSES                                     |   |                                        | 2,501  |   |   |   | 3,456 |   |
|                                                         |   |                                        |   |   |   |   |   |   |
| LOSS FROM OPERATIONS                                         |   |                                        | (1,033 | ) |   |   | (1,980 | ) |
|                                                         |   |                                        |   |   |   |   |   |   |
| OTHER INCOME (EXPENSES)                                      |   |                                        |   |   |   |   |   |   |
| Change in fair value of derivative liability                 |   |                                        | 1,163  |   |   |   | - |   |
| Loss from unconsolidated entity                              |   |                                        | (20    | ) |   |   | (17 | ) |
| Interest expense                                             |   |                                        | (1,660 | ) |   |   | (1,109 | ) |
| Additional interest payable under convertible note indenture |   |                                        | -      |   |   |   | (140 | ) |
| Other income, net                                            |   |                                        | 1      |   |   |   | 28 |   |
|                                                         |   |                                        |   |   |   |   |   |   |
| OTHER INCOME (EXPENSES), NET                                 |   |                                        | (516   | ) |   |   | (1,238 | ) |
|                                                         |   |                                        |   |   |   |   |   |   |
| LOSS BEFORE INCOME TAXES AND NONCONTROLLING INTEREST         |   |                                        | (1,549 | ) |   |   | (3,218 | )  |
| Income taxes (expense)                                       |   |                                        | (75    | ) |   |   | (46 | ) |
| CONSOLIDATED NET LOSS                                        |   |                                        | (1,624 | ) |   |   | (3,264 | )  |
| Noncontrolling interest                                      |   |                                        | 39     |   |   |   | 429 |   |
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                 |   |                                        | (1,585 | ) |   |   | (2,835 | )  |
| Other comprehensive income:                                  |   |                                        |   |   |   |   |   |   |
| Foreign currency translation adjustments                     |   |                                        | 160    |   |   |   | 624 |   |
| CONSOLIDATED COMPREHENSIVE LOSS                              |   | $                                           | (1,425 | ) |   | $ | (2,211 | )  |
| Net Loss Per Common Share                                    |   |                                        |   |   |   |   |   |   |
|   Basic                                                 |   | $                                           | (0.10  | ) |   | $ | (0.18 | )  |
|   Diluted                                               |   | $                                           | (0.10  | ) |   | $ | (0.18 | )  |
| Weighted Average Common Shares Outstanding                   |   |                                        |   |   |   |   |   |   |
|   Basic                                                 |   |                                        | 15,922 |   |   |   | 15,942 |   |
|   Diluted                                               |   |                                        | 15,922 |   |   |   | 15,942 |   |

----

|                                                          |   | Six Months Ended March 31, |    |
|---------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                          |   | 2010                                      |    |   | 2009 |   |
| NET SALES                                                     |   | $                                         | 21,535  |   |   | $ | 22,899 |   |
| COST OF SALES                                                 |   |                                      | (18,221 | ) |   |   | (16,621 | ) |
| GROSS PROFIT                                                  |   |                                      | 3,314   |   |   |   | 6,278 |   |
|                                                          |   |                                      |    |   |   |   |   |   |
| OPERATING EXPENSES                                            |   |                                      |    |   |   |   |   |   |
| Selling expenses                                              |   |                                      | 824     |   |   |   | 588 |   |
| General and administrative expenses                           |   |                                      | 4,474   |   |   |   | 4,739 |   |
|                                                          |   |                                      |    |   |   |   |   |   |
| TOTAL OPERATING EXPENSES                                      |   |                                      | 5,298   |   |   |   | 5,327 |   |
|                                                          |   |                                      |    |   |   |   |   |   |
| INCOME (LOSS) FROM OPERATIONS                                 |   |                                      | (1,984  | ) |   |   | 951 |   |
|                                                          |   |                                      |    |   |   |   |   |   |
| OTHER INCOME (EXPENSES)                                       |   |                                      |    |   |   |   |   |   |
| Rental income, net of land use right amortization             |   |                                      | -       |   |   |   | 1,329 |   |
| Change in fair value of derivative liability                  |   |                                      | 277     |   |   |   | - |   |
| Loss from unconsolidated entity                               |   |                                      | (88     | ) |   |   | (33 | ) |
| Interest expense                                              |   |                                      | (3,710  | ) |   |   | (2,317 | ) |
| Additional interest payable under convertible note indenture  |   |                                      | -       |   |   |   | (140 | ) |
| Other income, net                                             |   |                                      | 56      |   |   |   | 213 |   |
|                                                          |   |                                      |    |   |   |   |   |   |
| OTHER INCOME (EXPENSES), NET                                  |   |                                      | (3,465  | ) |   |   | (948 | )  |
|                                                          |   |                                      |    |   |   |   |   |   |
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTEREST |   |                                      | (5,449  | ) |   |   | 3 |   |
| Income taxes (expense)                                        |   |                                      | (421    | ) |   |   | (614 | ) |
| CONSOLIDATED NET LOSS                                         |   |                                      | (5,870  | ) |   |   | (611 | ) |
| Noncontrolling interest                                       |   |                                      | (396    | ) |   |   | (526 | ) |
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                  |   |                                      | (6,266  | ) |   |   | (1,137 | )  |
| Other comprehensive income:                                   |   |                                      |    |   |   |   |   |   |
| Foreign currency translation adjustments                      |   |                                      | 165     |   |   |   | 463 |   |
| CONSOLIDATED COMPREHENSIVE LOSS                               |   | $                                         | (6,101  | ) |   | $ | (674 | ) |
| Net Loss Per Common Share                                     |   |                                      |    |   |   |   |   |   |
|   Basic                                                  |   | $                                         | (0.39   | ) |   | $ | (0.07 | ) |
|   Diluted                                                |   | $                                         | (0.39   | ) |   | $ | (0.07 | ) |
| Weighted Average Common Shares Outstanding                    |   |                                      |    |   |   |   |   |   |
|   Basic                                                  |   |                                      | 15,922  |   |   |   | 15,942 |   |
|   Diluted                                                |   |                                      | 15,922  |   |   |   | 15,942 |   |

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|                                                                                      |   | Six Months Ended March 31, |    |
|-------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                     |   | 2010                                      |    |   | 2009 |   |
| Consolidated net loss                                                                     |   | $                                         | (6,266  | ) |   | $ | (1,137 | )  |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |   |                                      |    |   |   |   |   |   |
| Share-based compensation                                                                  |   |                                      | 80      |   |   |   | 157 |   |
| Change in fair value of derivative liability                                              |   |                                      | (277    | )  |   |   | - |   |
| Amortization of note discount                                                             |   |                                      | 842     |   |   |   | 686 |   |
| Deferred portion of interest expense                                                      |   |                                      | 966     |   |   |   | 722 |   |
| Additional interest payable                                                               |   |                                      | (280    | ) |   |   | - |   |
| Noncontrolling interest                                                                   |   |                                      | 661     |   |   |   | 844 |   |
| Depreciation                                                                              |   |                                      | 689     |   |   |   | 380 |   |
| Amortization of intangible assets                                                         |   |                                      | 128     |   |   |   | 227 |   |
| Recovery of doubtful accounts                                                             |   |                                      | (231    | ) |   |   | 13 |   |
| Changes in operating assets and liabilities:                                              |   |                                      |    |   |   |   |   |   |
| Accounts and notes receivable                                                             |   |                                      | 2,868   |   |   |   | (7,520 | ) |
| Other receivables, deposits and prepayments                                               |   |                                      | (311    | ) |   |   | 4,685 |   |
| Inventories                                                                               |   |                                      | (1,451  | ) |   |   | 3,212 |   |
| Deferred tax asset                                                                        |   |                                      | (6      | ) |   |   | (3 | ) |
| Accounts payable                                                                          |   |                                      | 1,717   |   |   |   | (94 | ) |
| Accrued expenses                                                                          |   |                                      | (97     | ) |   |   | (125 | ) |
| Advances from customers                                                                   |   |                                      | (913    | ) |   |   | (430 | ) |
| Other payables                                                                            |   |                                      | 466     |   |   |   | (3,237 | ) |
| Deferred income                                                                           |   |                                      | (23     | ) |   |   | (28 | ) |
| Income taxes payable                                                                      |   |                                      | (35     | )  |   |   | 182 |   |
|                                                                                      |   |                                      |    |   |   |   |   |   |
| Net cash used by operating activities                                                     |   |                                      | (1,473  | )  |   |   | (1,466 | )  |
|                                                                                      |   |                                      |    |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                      |   |                                      |    |   |   |   |   |   |
| Purchase of property, plant and equipment                                                 |   |                                      | (4,367  | ) |   |   | (8,078 | ) |
| Prepayment related to other long-term assets                                              |   |                                      | (9,470  | ) |   |   | (429 | )  |
| Transfer of land use rights                                                               |   |                                      | 16,440  |   |   |   | - |   |
| Purchase of land use right                                                                |   |                                      | -       |   |   |   | (1,583 | ) |
| Investment in unconsolidated entities                                                     |   |                                      | (1,578  | ) |   |   | (1,308 | ) |
| Changes in restricted cash                                                                |   |                                      | 1,128   |   |   |   | (325 | )  |
|                                                                                      |   |                                      |    |   |   |   |   |   |
| Net cash provided by (used in) investing activities                                  |   |                                      | 2,153   |   |   |   | (12,523 | ) |
|                                                                                      |   |                                      |    |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                      |   |                                      |    |   |   |   |   |   |
| Proceeds from bank loan                                                                   |   |                                      | 31,525  |   |   |   | 9,995 |   |
| Loan from related parties                                                                 |   |                                      | 20,213  |   |   |   | - |   |
| Payment of bank loan                                                                      |   |                                      | (20,526 | ) |   |   |   |   |
| Payments of senior notes                                                                  |   |                                      | (15,530 | ) |   |   | - |   |
| Net cash provided by financing activities                                                 |   |                                      | 15,682  |   |   |   | 9,995 |   |
|                                                                                      |   |                                      |    |   |   |   |   |   |
| Effect on cash of changes in exchange rate                                                |   |                                      | (99     | ) |   |   | 7 |   |
|                                                                                      |   |                                      |    |   |   |   |   |   |
| Net increase (decrease) in cash                                                           |   |                                      | 16,263  |   |   |   | (3,987 | ) |
| Cash at beginning of period                                                               |   |                                      | 18,237  |   |   |   | 8,871 |   |
|                                                                                      |   |                                      |    |   |   |   |   |   |
| Cash at end of period                                                                     |   | $                                         | 34,500  |   |   | $ | 4,884 |   |
| Supplemental disclosure of cash flow information:                                         |   |                                      |    |   |   |   |   |   |
| Interest paid                                                                             |   | $                                         | 832     |   |   | $ | 532 |   |
| Income taxes paid                                                                    |   | $                                         | 346     |   |   | $ | 338 |   |

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| Company                                                                                |   | Ownership % |   | Business activities                                                                                                                                          |
|----------------------------------------------------------------------------------------|--------|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Sinoenergy Holding Limited                                                             |   | 100%        |   | Holding company                                                                                                                                              |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Qingdao Sinogas GeneralMachinery Limited Corporation (“Sinogas”)           |   | 75.05%      |   | Production of compressed natural gas (CNG) facilities, technical consulting in CNG filling station construction, manufacturing of CNG vehicle conversion kit |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Qingdao Sinogas YuhanChemical Equipment Company Limited (“Yuhan”)          |   | 81%*        |   | Manufacturing of customized pressure containers                                                                                                              |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Wuhan Sinoenergy Gas Company Limited (“Wuhan Sinoenergy”)                  |   | 90%         |   | Construction and operating of CNG stations and the manufacturing and sales of automobile conversion kits                                                     |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Pingdingshan Sinoenergy GasCompany Limited (“Pingdingshan Sinoenergy”)     |   | 90%         |   | Construction and operating of CNG stations and the manufacturing and sales of automobile conversion kits                                                     |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Jiaxing Lixun AutomotiveElectronic Company Limited (“ Jiaxing Lixun”) |   | 81%*        |   | Design and manufacturing of electric control devices for alternative fuel                                                                                    |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Hubei Gather EnergyCompany Limited (“Hubei Gather”)                        |   | 80%         |   | Construction and operating of natural gas processing plants                                                                                                  |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Xuancheng SinoenergyVehicle Gas Company Limited(“Xuancheng Sinoenegy”)     |   | 100%        |   | Construction and operating of CNG stations and the manufacturing and sales of automobile conversion kits                                                     |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Qingdao Jingrun GeneralMachinery Company Limited (“Jingrun”)               |   | 100%        |   | Design and manufacturing of petroleum refinery equipment and petroleum machinery                                                                             |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Qingdao Sinoenergy GeneralMachinery Company Limited(“Qingdao Sinoenergy”)  |   | 75.05%      |   | Manufacturing and installation of general machinery equipment                                                                                                |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Nanjing Sinoenergy Gas Company Limited(“Nanjing Sinoenergy”)               |   | 90%         |   | Construction and operating of CNG stations and the manufacturing and sales of automobile conversion kits                                                     |
|                                                                                   |   |        |   |                                                                                                                                                         |
| Qingdao Sinoenergy General Gas Company Limited(“Sinoenergy Gas”)           |   | 90%**       |   | Construction and operating of CNG and LNG stations and the manufacturing and sales of automobile conversion kits                                             |
|                                                                                   |   |        |   |                                                                                                                                                         |

----

----

| Buildings and facilities    | 15-20 years   |
|-----------------------------|---------------|
| Machinery and equipment     | 5-20 years    |
| Motor vehicles              | 10-20 years   |
| Office equipment and others | 5 to 10 years |

|                                                         |   | Six months ended March 31, |   |
|--------------------------------------------------------------|--------|----------------------------|--------|
|                                                         |   | 2010                       |   |   | 2009 |   |
| Product warranty liability, beginning of period              |   | $                          | 227    |   |   | $ | 167 |   |
| Changes in liability for warranties issued during the period |   |                       | 39     |   |   |   | 33 |   |
| Foreign exchange (loss)                                      |   |                       | -      |   |   |   | (1 | ) |
| Product warranties, end of period                            |   | $                          | 266    |   |   | $ | 199 |   |

----

|                               |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total     |
|------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|-----------|
| Fair value of embedded derivatives |   |    | -      |   |    |   | -      |    |   | $      | 2,427,774 |   |   | $ | 2,427,774 |

----

|                     |   | March 31,2010 |      |   | September 30,2009 |   |      | Date of issuanceSeptember 30, 2007 |   |
|--------------------------|--------|---------------|-----------|--------|-------------------|--------|-----------|-----------------------------------------|--------|
| Conversion feature:      |   |          |      |   |              |   |      |                                    |   |
| Risk-free interest rate  |   |          | 1.48      | %      |              |   | 1.38      | %                                       |   |   | 4.23% | % |
| Expected volatility      |   |          | 89.14     | %      |              |   | 109.51    | %                                       |   |   | 79.64 | % |
| Expected life (in years) |   | 2.5 years     |      |   | 3.0 years         |   |      | 5.0 years                               |   |
| Expected dividend yield  |   |          | 0         |   |              |   | 0         |                                    |   |   | 0 |   |
|                     |   |          |      |   |              |   |      |                                    |   |   |   |   |
| Fair Value:              |   |          |      |   |              |   |      |                                    |   |   |   |   |
| Conversion feature       |   | $             | 2,427,774 |   |              | $      | 2,705,232 |                                    |   | $ | 11,946,000 |   |

|  Derivative Instrument: |   | Additional Paid-in Capital |       |   | Retained Earnings |    |      | Derivative Liability |   |
|------------------------------|--------|----------------------------|------------|--------|-------------------|---------|-----------|----------------------|--------|
| Conversion feature           |   | $                          | -7,400,000 |   |              |  $ | 6,425,000 |                 |   | $ | 2,705,232 |   |

----

----

|                                     |   | March 31, 2010 |   |    | September 30, 2009 |   |
|------------------------------------------|--------|----------------|--------|---------|--------------------|--------|
| Accounts receivable                      |   | $              | 27,711 |    |               | $      | 30,903 |   |
| Notes receivable-bank acceptance         |   |           | 378    |    |               |   | 74 |   |
| Less: allowance for doubtful receivables |   |           | (1,223 | )  |               |   | (1,221 | ) |
|                                     |   |           |   |    |               |   |   |   |
| Total                                    |   | $              | 26,866 |    |               | $      | 29,756 |   |

|                                     |   | March 31, 2010 |   |    | September 30, 2009 |   |
|------------------------------------------|--------|----------------|--------|---------|--------------------|--------|
| Rental receivable                        |   | $              | 2,636  |    |               | $      | 2,636 |   |
| Due from third parties                   |   |           | 10,400 |    |               |   | 9,734 |   |
| Others current accounts                  |   |           | 8,176  |    |               |   | 7,133 |   |
| Less: allowance for doubtful receivables |   |           | (1,626 | )  |               |   | (1,859) |   |
|                                     |   |           |   |    |               |   |   |   |
| Total                                    |   | $              | 19,586 |    |               | $      | 17,644 |   |

----

|                    |   | March 31, 2010 |   |   | September 30, 2009 |   |
|-------------------------|--------|---------------------|--------|--------|------------------------------|--------|
|                    |   |                |   |   |                         |   |
| Related to construction |   | $                   | 955    |   |                         | $      | 1,681 |   |
| Raw materials           |   |                | 3,142  |   |                         |   | 3,000 |   |
| Related to equipment    |   |                | 2,927  |   |                         |   | 1,303 |   |
| Natural gas             |   |                | 531    |   |                         |   | 2,303 |   |
| Others                  |   |                | 151    |   |                         |   | 342 |   |
|                    |   |                |   |   |                         |   |   |   |
| Total                   |   | $                   | 7,706  |   |                         | $      | 8,629 |   |

|                  |   | March 31, 2010 |   |   | September 30, 2009 |   |
|-----------------------|--------|----------------|--------|--------|------------------------------|--------|
|                  |   |           |   |   |                         |   |
| Raw materials         |   | $              | 2,390  |   |                         | $      | 2,153 |   |
| Work in progress      |   |           | 1,200  |   |                         |   | 288 |   |
| Finished goods        |   |           | 2,430  |   |                         |   | 2,159 |   |
| Low value consumables |   |           | 50     |   |                         |   | 19 |   |
|                  |   |           |   |   |                         |   |   |   |
| Total                 |   | $              | 6,070  |   |                         | $      | 4,619 |   |

----

|                       |   | March 31, 2010 |   |   | September 30, 2009 |   |
|----------------------------|--------|----------------|--------|--------|--------------------|--------|
|                       |   |           |   |   |               |   |   |   |
| Buildings and facility     |   | $              | 14,994 |   |               | $      | 15,637 |   |
| Machinery equipment        |   |           | 17,064 |   |               |   | 15,616 |   |
| Motor vehicles             |   |           | 1,788  |   |               |   | 2,241 |   |
| Office equipment and other |   |           | 974    |   |               |   | 596 |   |
| Total                      |   |           | 34,820 |   |               |   | 34,090 |   |
|                       |   |           |   |   |               |   |   |   |
| Accumulated depreciation   |   |           | (2,958 | )      |               |   | (2,308) |   |
|                       |   |           |   |   |               |   | 31,782 |   |
|                       |   |           |   |   |               |   |   |   |
| Construction in process    |   |           | 26,686 |   |               |   | 23,088 |   |
|                       |   |           |   |   |               |   |   |   |
| Net book value             |   | $              | 58,548 |   |               | $      | 54,870 |   |

|                     |   | March 31, 2010 |   |   | September 30, 2009 |   |
|--------------------------|--------|----------------|--------|--------|------------------------------|--------|
|                     |   |           |   |   |                         |   |
| Land use rights          |   |           | 31,789 |   |                         |   | 31,495 |   |
|                     |   |           |   |   |                         |   |   |   |
| Accumulated amortization |   |           | (1,216 | )      |                         |   | (1,125) |   |
|                     |   |           |   |   |                         |   |   |   |
| Net book value           |   | $              | 30,574 |   |                         | $      | 30,370 |   |

| Owner                |   | Cost   |   | Expiration |
|----------------------|--------|--------|--------|------------|
| Sinogas              |   | $      | 20,749 |       | May 2057 |
| Jingrun              |   |   | 4,095  |       | December 2056 |
| Xuancheng Sinoenergy |   |   | 1,015  |       | June 2058 |
| Qingdao Sinoenergy   |   |   | 3,338  |       | June 2058 |
| Jiaxing Lixun        |   |   | 368    |       | June 2058 |
| Hubei Gather         |   |   | 525    |       | June 2059 |
| Total                |   | $      | 30,090 |       |   |
| Wuhan Sinoenergy     |   |   | 1,699  |       | * |

----

| Transactions                                           |   | March 31, 2010 |   |   | September 30, 2009 |   |
|--------------------------------------------------------|--------|----------------|--------|--------|------------------------------|--------|
|                                                   |   |           |   |   |                         |   |
| Purchase of an additional 80% equity interest in Yuhan |   | $              | 995    |   |                         | $      | 995 |   |
| Purchase of 90% equity in Jiaxing Lixun                |   |           | 619    |   |                         |   | 619 |   |
| Purchase of a 70% equity in Xuancheng Sinoenergy       |   |           | 258    |   |                         |   | 258 |   |
| Purchase of Jingrun                                    |   |           | 34     |   |                         |   | 34 |   |
|                                                   |   |           |   |   |                         |   |   |   |
| Total                                                  |   | $              | 1,906  |   |                         | $      | 1,906 |   |

|                                         |   | March 31, 2010 |   |   | September 30, 2009 |   |
|----------------------------------------------|--------|----------------|--------|--------|-------------------------|--------|
|                                         |   |           |   |   |                    |   |
| Prepaid CNG land rental                      |   | $              | 4,484  |   |                    | $      | 2,937 |   |
| Plant construction in progress               |   |           | 11,331 |   |                    |   | 3,096 |   |
| CNG station equipment on order from overseas |   |           | -      |   |                    |   | 342 |   |
| Others                                       |   |           | 1,327  |   |                    |   | 1,297 |   |
|                                         |   |           |   |   |                    |   |   |   |
| Total                                        |   | $              | 17,142 |   |                    | $      | 7,672 |   |

| Bank Name                 |   | Purpose         |   | Borrowing Date   |   | Borrowing Term |   | Annual Interest Rate |   |   | Amount |   |
|---------------------------|--------|-----------------|--------|------------------|--------|----------------|--------|----------------------|--------|--------|--------|--------|
| China Construction Bank   |   | Working Capital |   | March 16, 2010   |   | One year       |   |                 | 5.5755 | %      |   | $      | 4,981 |   |
| China Construction Bank   |   | Working Capital |   | April 20, 2009   |   | One year       |   |                 | 5.31   | %      |   |   | 21,974 |   |
| Industrial Bank Co., Ltd. |   | Working Capital |   | May 25, 2009     |   | One year       |   |                 | 5.81   | %      |   |   | 381 |   |
| Industrial Bank Co., Ltd. |   | Working Capital |   | June 2, 2009     |   | One year       |   |                 | 5.81   | %      |   |   | 645 |   |
| Bank of Communication     |   | Working Capital |   | July 3, 2009     |   | One year       |   |                 | 5.576  | %      |   |   | 147 |   |
| China Merchants Bank      |   | Working Capital |   | February 1, 2010 |   | One year       |   |                 | 5.841  | %      |   |   | 2,930 |   |
| China Merchants Bank      |   | Working Capital |   | March 5, 2010    |   | One year       |   |                 | 5.5755 | %      |   |   | 439 |   |
| China Merchants Bank      |   | Working Capital |   | May 8, 2009      |   | One year       |   |                 | 5.5755 | %      |   |   | 1,025 |   |
| Hankou Bank               |   | Working Capital |   | July 21, 2009    |   | One year       |   |                 | 5.841  | %      |   |   | 2,930 |   |
| CITIC Bank                |   | Working Capital |   | August 26, 2009  |   | One year       |   |                 | 6.372  | %      |   |   | 2,637 |   |
| Industrial Bank Co., Ltd. |   | Working Capital |   | March 12, 2010   |   | One year       |   |                 | 5.31   | %      |   |   | 5,860 |   |
| Bank of Communication     |   | Working Capital |   | October 9, 2009  |   | One year       |   |                 | 5.841  | %      |   |   | 2,373 |   |
| Bank of Communication     |   | Working Capital |   | October 26, 2009 |   | Half year      |   |                 | 5.346  | %      |   |   | 293 |   |
| Bank of Communication     |   | Working Capital |   | October 29, 2009 |   | Half year      |   |                 | 5.346  | %      |   |   | 586 |   |
| Total                     |   |            |   |             |   |           |   |                 |   |   |   | $      | 47,200 |   |

----

| Bank Name                 |   | Purpose         |   | Borrowing Date   |   | Borrowing Term |   | Annual Interest Rate |   |   | Amount |   |
|---------------------------|--------|-----------------|--------|------------------|--------|----------------|--------|----------------------|--------|--------|--------|--------|
| Bank of Communication     |   | Working Capital |   | April 27, 2009   |   | Eight months   |   |                 | 5.31   | %      |   | $      | 4,979 |   |
| China Construction Bank   |   | Working Capital |   | March 18, 2009   |   | One year       |   |                 | 5.31   | %      |   |   | 21,965 |   |
| China Construction Bank   |   | Working Capital |   | April 20, 2009   |   | One year       |   |                 | 5.5775 | %      |   |   | 7,322 |   |
| China Citic Bank          |   | Working Capital |   | February 6, 2009 |   | One year       |   |                 | 5.841  | %      |   |   | 73 |   |
| China Citic Bank          |   | Working Capital |   | January 4, 2009  |   | One year       |   |                 | 5.841  | %      |   |   | 220 |   |
| Industrial Bank Co., Ltd. |   | Working Capital |   | May 25, 2009     |   | One year       |   |                 | 5.841  | %      |   |   | 381 |   |
| Industrial Bank Co., Ltd. |   | Working Capital |   | June 2, 2009     |   | One year       |   |                 | 5.841  | %      |   |   | 644 |   |
| Bank of Communication     |   | Working Capital |   | July 3, 2009     |   | One year       |   |                 | 5.5755 | %      |   |   | 146 |   |
| China Merchants Bank      |   | Working Capital |   | January 19, 2009 |   | One year       |   |                 | 5.5755 | %      |   |   | 1,464 |   |
| China Merchants Bank      |   | Working Capital |   | March 5, 2009    |   | One year       |   |                 | 5.5755 | %      |   |   | 439 |   |
| China Merchants Bank      |   | Working Capital |   | May 8, 2009      |   | One year       |   |                 | 5.5755 | %      |   |   | 1,025 |   |
| Hankou Bank               |   | Working Capital |   | July 21, 2009    |   | One year       |   |                 | 5.841  | %      |   |   | 2,929 |   |
| CITIC Bank                |   | Working Capital |   | August 26, 2009  |   | One year       |   |                 | 6.372  | %      |   |   | 2,636 |   |
| Total                     |   |            |   |             |   |           |   |                 |   |   |   | $      | 44,223 |   |

----

|   | • | The failure of the Company’s common stock to be listed on The NASDAQ Stock Market.                                           |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                               |
|   | • | Trading in the Company’s common stock on any exchange or market has been suspended for ten or more consecutive trading days. |

|   | • | At the rate of 3.0% per annum if the Company has not obtained a listing of its common stock on the NASDAQ Global Market or the NASDAQ Capital Market by September 19, 2008 and maintained such listing continuously thereafter as long as the Notes are outstanding. At March 31, 2010, the Company had met this listing requirement.                                                                                                                             |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | • | At the rate of 1.0% for each 90-day period in which the Company has failed to comply with the registration obligations under the registration rights agreement. As of September 30, 2009, the Company had accrued additional interest totaling $560,000 pursuant to this provision, of which $280,000 has been paid. The noteholders have waived the right to require the additional interest from March 31, 2009 through September 30, 2009 and afterwards. |

| • | If the Company sells assets and does not reinvest the proceeds in its business within 180 days (270 days in the case of a sale of real property), to the extent that such proceeds not so reinvested exceed $5,000,000, the Company is required to offer the holders of the notes the right to have the Company use such excess proceed to purchase their notes at the principal amount plus accrued interest..                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| • | If there is a change of control, the Company is required to offer to repurchase the notes at 103% of the principal of the note, plus accrued interest. A change of control will occur if Bo Huang or Tianzhou Deng own less than 25% of the voting power of the Company’s voting stock or, with certain exceptions, a merger or consolidation or sale of substantially all of the Company’s and its subsidiaries’ assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| • | The Company is restricted from incurring additional debt unless, after giving effect to the borrowing, (i) the fixed charge coverage ratio would be greater than 2.0 to 1.0 through December 31, 2009 and 3.0 to 1.0 if the debt is incurred thereafter, and (ii) the leverage ratio would not exceed 6.0 to 1.0 through December 31, 2009 and 4.5 to 1.0 if the debt is incurred thereafter, provided, that Sinogas may continue to maintain debt under credit facilities of not more than $10,000,000, and may incur purchase money indebtedness. The fixed charge coverage ratio is the ratio of the Company’s earnings before interest, taxes, depreciation and amortization, which is generally known as EBITDA, to consolidated interest expense, as defined. Leverage ratio means the ratio of outstanding debt to EBITDA, with the interest component being the consolidated interest expense, as defined.  |
| • | The Company is subject to restriction in paying dividends, purchasing its own securities or those of its subsidiaries, prepaying subordinated debt, and making any investment other than any investments in itself and its subsidiaries engaged in the Company’s business and certain other permitted investments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| • | The Company is subject to restrictions on incurring liens.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| • | The Company cannot enter into, or permit its subsidiaries to enter into, transactions with affiliates unless it is in writing, in the Company’s best interest and not less favorable to the Company than it could obtain from a non-affiliate in an arms’ length transaction, with any transaction involving more than $1,000,000 requiring audit committee approval and any transaction involving more than $5,000,000 requiring a written opinion from an independent financial advisor.                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

| • | The Company shall maintain, as of the last day of each fiscal quarter, (i) a fixed charge coverage ratio of at least 2.00 to 1.00 through December 31, 2009 and 3.0 to 1.0 thereafter, (ii) a leverage ratio of not more than 6.0 to 1.00 through December 31, 2009 and 4.5 to 1.0 thereafter, and (iii) a consolidated subsidiary debt to consolidated net tangible asset ratio of not more than 0.35. The noteholders agreed that they would not take any action to declare an event of default as long as the Company is in compliance with the modified covenants.   |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| • | The Company shall make all payments of principal, interest and premium, if any, without withholding or deduction for taxes, and must offer to repurchase the notes if they are adversely affected by changes in tax laws that affect the payments to the holders.                                                                                                                                                                                                                                                                                                                  |

| ·   | The noteholders waived compliance with the covenants at September 30, 2009 and through March 31, 2010. |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | The Company repaid our 12% senior notes in the principal amount of $16 million prior to December 31, 2009. |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | The Company agreed to pay the convertible notes in the principal amount of $14 million in two installments, with an initial payment of $5 million being due ten days after the merger with Skywide becomes effective and the balance 30 days thereafter.  Since the note holders would not be converting the notes, we would pay interest to provide the note holders with a yield to maturity of 13.8%, net of payments previously made. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The noteholders reduced our remaining obligation for liquidated damages for failure to register the shares of common stock issuable upon conversion of the convertible notes to $280,000, which is payable by December 31, 2009. The payment was made on January 7, 2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The provision that would have resulted in a further decrease in the conversion price of the convertible notes if we did not meet certain levels of net income was eliminated. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The provisions of the indenture relating to the reduction in the conversion price of the convertible notes if we issue stock at a price, or issue convertible securities with a conversion or exercise price, that is less than the conversion price (presently $4.20 per share) were eliminated. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The investor has the right to approve the Company’s annual budget, and the Company cannot deviate by more than 15% of the amount in the approved budget.                                                                                                                                                                                                                                                                |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | • | The Company and its subsidiaries cannot replace or change the substantive responsibilities of the chief executive officer except in the event of his incapacity, resignation or retirement.                                                                                                                                                                                                                                   |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | • | The Company and its subsidiaries cannot take any action that would result in a change of control, as defined in the indentures.                                                                                                                                                                                                                                                                                               |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | • | The Company and its subsidiaries cannot change the number of board members or the composition or structure of the board or board committees or delegate powers to a committee or change the responsibilities and powers of any committee.                                                                                                                                                                                     |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | • | The Company shall, by April 1, 2008, have appointed an independent public accountant from a list of 16 firms provided by the investors, failing which the Company shall pay the investors the sum of $2,500,000 on April 1 of each year in which this condition is not met, and the Company shall not terminate the engagement of such auditor without prior investor approval. The Company has complied with this condition. |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | • | The investors have a right of first refusal on future financings by us and proposed transfers, with limited exceptions, by Mr. Huang and Mr. Deng. The investors also have a tag-along right in connection with proposed sales of stocks by Mr. Huang and Mr. Deng.                                                                                                                                                           |

----

| ▪ | The noteholders agreed to waive default of the provisions that require the Company’s common stock to be publicly traded, that require the Company to repurchase the notes upon a change of control, and that require the Company’s common stock to be traded on the NASDAQ Capital Market or the NASDAQ Global Market. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪ | The noteholders waived covenant compliance requirements at September 30, 2009 and through March 31, 2010. |
|---------|-----------------------------------------------------------------------------------------------------------|

| ▪ | The Company agreed to repay the 12% senior notes in the principal amount of $16 million, At December 31, 2009, these notes had been paid in full. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪ | The Company agreed to pay the convertible notes in the principal amount of $14 million in two installments, with an initial payment of $5 million being due ten days after the merger with Skywide becomes effective and the balance 30 days thereafter.  The conversion feature of the notes will be eliminated. The Company will be required to pay interest to provide the note holders with a yield to maturity of 13.8% per annum. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪ | The noteholders reduced the remaining obligation for liquidated damages for failure to register the shares of common stock issuable upon conversion of the convertible notes to $280,000, which is to be paid by December 31, 2009.  This payment was made on January 7, 2010 with the consent of the noteholders. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪ | The provision requiring an adjustment to the conversion price of the notes based on stated annual earnings of the Company was eliminated. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ▪ | The provisions of the indenture relating to the reduction in the conversion price of the convertible notes if the Company issues stock at a price, or issue convertible securities with a conversion or exercise price that is less than the conversion price (presently $4.20 per share) were eliminated. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Original amount                                                   |   | $      | 14,000 |    |
|-------------------------------------------------------------------|--------|--------|--------|---------|
| Beneficial conversion feature                                     |   |   | (177   | )       |
| Balance, September 30, 2007                                       |   | $      | 13,823 |    |
| Amortization of beneficial conversion feature                     |   |   | 35     |    |
| Interest paid                                                     |   |   | (211   | )  |
| Interest accrued for guaranteed 13.8% return                      |   |   | 1,934  |    |
| Discount resulting from reset adjustment effective March 28, 2008 |   |   | (3,361 | )       |
| Amortization of discount resulting from reset                     |   |   | 373    |    |
| Balance, September 30, 2008                                       |   | $      | 12,593 |    |
| Interest accrued for guaranteed 13.8% return                      |   |   | 1,932  |    |
| Amortization of beneficial conversion feature                     |   |   | 35     |    |
| Amortization of discount resulting from reset                     |   |   | 1,519  |    |
| Discount resulting from reset adjustment effective March 28, 2009 |   |   | (3,862 | )       |
| Interest paid                                                     |   |   | (1,804 | )       |
| Balance, September 30, 2009                                       |   | $      | 10,413 |    |
| Interest accrued for guaranteed 13.8% return                      |   |   | 483    |    |
| Amortization of beneficial conversion feature                     |   |   | 9      |    |
| Adjustment-interest paid                                          |   |   | 1,376  |    |
| Cumulative change in accounting for conversion feature            |   |   | (1,730 | )       |
| Amortization of original discount                                 |   |   | 597    |    |
| Interest paid                                                     |   |   | (214   | )       |
| Balance, December 31,  2009                             |   | $      | 10,934 |    |
| Interest accrued for guaranteed 13.8% return                      |   |   | 483    |    |
| Amortization of beneficial conversion feature                     |   |   | 9      |    |
| Amortization of original discount                                 |   |   | 597    |    |
| Interest paid                                                     |   |   | (211   | )       |
| Balance, March 31, 2010                                           |   | $      | 11,812 |    |

| Bank Name               |   | Purpose              |   | Borrowing Date   |   | Borrowing Term |   | Annual Interest Rate |   |   | Amount |   |
|-------------------------|--------|----------------------|--------|------------------|--------|----------------|--------|----------------------|--------|--------|--------|--------|
| Bank of Communication   |   | Construction Capital |   | June 27, 2008    |   | Three years    |   |                 | 8.316  | %      |   | $      | 4,395 |   |
| China Construction Bank |   | Construction Capital |   | August 28, 2009  |   | Five years     |   |                 | 5.76   | %      |   |   | 21,974 |   |
| Rural Commercial Bank   |   | Construction Capital |   | January 20, 2010 |   | Three years    |   |                 | 6.00   | %      |   |   | 2,637 |   |
| Rural Commercial Bank   |   | Construction Capital |   | March 11, 2010   |   | Three years    |   |                 | 6.00   | %      |   |   | 9,082 |   |
| Total                   |   |                 |   |             |   |           |   |                 |   |   |   | $      | 38,088 |   |

| Bank Name               |   | Purpose              |   | Borrowing Date  |   | Borrowing Term |   | Annual Interest Rate |   |   | Amount |   |
|-------------------------|--------|----------------------|--------|-----------------|--------|----------------|--------|----------------------|--------|--------|--------|--------|
| Bank of Communication   |   | Construction Capital |   | June 27, 2008   |   | Three years    |   |                 | 8.316  | %      |   | $      | 4,393 |   |
| China Construction Bank |   | Construction Capital |   | August 28, 2009 |   | Five years     |   |                 | 5.76   | %      |   |   | 21,965 |   |
| Total                   |   |                 |   |            |   |           |   |                 |   |   |   | $      | 26,358 |   |

| Name of related party              |   | Relationship                                                                       |
|------------------------------------|--------|------------------------------------------------------------------------------------|
| Anhui Gather                       |   | Joint venture entity with China New Energy in which the Company has a 20% interest |
| China New Energy                   |   | 80% shareholder of Anhui Gather and 20% shareolder of Hubei Gather                 |
| Beijing Shanglira Capital Co, Ltd. |   | Controlled by Mr Tianzhou Deng and Mr Bo Huang                                     |
| Skywide                            |   | Owned by Mr Tianzhou Deng and Mr Bo Huang                                          |

----

| Name of the Company |   | March 31, 2010 |   | September 30, 2009      |
|---------------------|--------|----------------|--------|-------------------------|
| China New Energy    |   | -None          |   | $382 (current accounts) |
|                |   |           |   |                    |
| Anhui Gather        |   | -None          |   | $44 (current accounts)  |

| Name of the Company                |   | March 31, 2010              |   | September 30, 2009 |
|------------------------------------|--------|-----------------------------|--------|--------------------|
| Beijing Shanglira Capital Co, Ltd. |   | -$17,213 (current accounts) |   | -None              |
|                               |   |                        |   |               |
| Skywide                            |   | -$3,000 (current accounts)  |   | -None              |

|   Three Months Ended March 31, 2010(dollars in thousands) |   | Customizedpressurecontainers |   |      | CNG stationfacilities and construction |   |   |  CNG stationOperation |   |      | Vehicleconversionkits |    |   |   Total |   |
|---------------------------------------------------------------------|----------|------------------------------|----------|-----------|----------------------------------------|----------|--------|----------------------------|----------|-----------|-----------------------|-----------|--------|-------------------|--------|
| Net sales                                                           |   | $                            | 350      |    |                                   | $        | 2,613  |                     |     | $  | 4,099                 |    |   | $                 | 1,945  |   |   | $ | 9,007 |   |
| Cost of sales                                                       |   |                       | 302      |    |                                   |   | 2,000  |                     |     |    | 3,840                 |    |   |            | 1,397  |   |   |   | 7,539 |   |
| Gross profit                                                        |   |                       | 48       |    |                                   |   | 613    |                     |     |    | 259                   |    |   |            | 548    |   |   |   | 1,468 |   |
| Gross margin                                                        |   |                       | 14       | %  |                                   |   | 23     | %                   |     |    | 6                     | %  |   |            | 28     | %  |   |   | 16 | %  |
| Operating expenses:                                                 |   |                       |     |    |                                   |   |   |                     |     |    |                  |    |   |            |   |   |   |   |   |   |
| Selling expenses                                                    |   |                         | 22       |    |                                   |     | 30     |                     |     |      | 210                   |    |   |              | 230    |   |   |   | 492 |   |
| General and administrative expenses                                 |   |                       | 666      |    |                                   |   | 665    |                     |     |    | 313                   |    |   |            | 365    |   |   |   | 2,009 |   |
| Total operating expense                                             |   |                       | 688      |    |                                   |   | 695    |                     |     |    | 523                   |    |   |            | 595    |   |   |   | 2,501 |   |
| Loss from operations                                                |   | $                            | (640     | )  |                                   | $        | (82    | )                   |     | $  | (264                  | )  |   | $                 | (47    | )  |   | $ | (1,033 | )  |
|                                                                |     |                         |     |      |                                   |     |   |                       |     |      |                  |      |   |              |   |   |   |   |   |   |
| Total assets                                                        |     | $                            | 67,078   |      |                                   | $        | 62,632 |                       |     | $         | 66,308                |      |   | $                 | 13,789 |   |   | $ | 209,807 |   |

----

|   Three Months Ended March 31, 2009(dollars in thousands) |   | Customizedpressurecontainers |   |      | CNG stationfacilities and construction |   |   |  CNG stationOperation |   |      | Vehicleconversionkits |    |   |   Total |   |
|---------------------------------------------------------------------|----------|------------------------------|----------|-----------|----------------------------------------|----------|--------|----------------------------|----------|-----------|-----------------------|-----------|--------|-------------------|--------|
| Net sales                                                           |   | $                            | 685      |    |                                   | $        | 1,671  |                     |     | $  | 4,032                 |    |   | $                 | 583    |   |   | $ | 6,971 |   |
| Cost of sales                                                       |   |                       | 552      |    |                                   |   | 960    |                     |     |    | 3,640                 |    |   |            | 343    |   |   |   | 5,495 |   |
| Gross profit                                                        |   |                       | 133      |    |                                   |   | 711    |                     |     |    | 392                   |    |   |            | 240    |   |   |   | 1,476 |   |
| Gross margin                                                        |   |                       | 19       | %  |                                   |   | 43     | %                   |     |    | 10                    | %  |   |            | 41     | %  |   |   | 21 | %  |
| Operating expenses:                                                 |   |                       |     |    |                                   |   |   |                     |     |    |                  |    |   |            |   |   |   |   |   |   |
| Selling expenses                                                    |   |                         | 40       |    |                                   |     | 10     |                     |     |      | (52                   | )  |   |              | 76     |   |   |   | 74 |   |
| General and administrative expenses                                 |   |                       | 310      |    |                                   |   | 2,421  |                     |     |    | 447                   |    |   |            | 204    |   |   |   | 3,382 |   |
| Total operating expense                                             |   |                       | 350      |    |                                   |   | 2,431  |                     |     |    | 395                   |    |   |            | 280    |   |   |   | 3,456 |   |
| Loss from operations                                                |   | $                            | (217     | )  |                                   | $        | (1,720 | )                   |     | $  | (3                    | )  |   | $                 | (40    | )  |   | $ | (1,980 | )  |
|                                                                |     |                         |     |      |                                   |     |   |                       |     |      |                  |      |   |              |   |   |   |   |   |   |
| Total assets                                                        |     | $                            | 31,480   |      |                                   | $        | 65,032 |                       |     | $         | 36,610                |      |   | $                 | 7,869  |   |   | $ | 140,991 |   |

|   Six Months Ended March 31, 2010(dollars in thousands) |   | Customizedpressurecontainers |   |      | CNG stationfacilities and construction |   |   |  CNG stationOperation |   |      | Vehicleconversionkits |    |   |   Total |   |
|-------------------------------------------------------------------|----------|------------------------------|----------|-----------|----------------------------------------|----------|--------|----------------------------|----------|-----------|-----------------------|-----------|--------|-------------------|--------|
| Net sales                                                         |   | $                            | 3,503    |    |                                   | $        | 4,681  |                     |     | $  | 8,848                 |    |   | $                 | 4,503  |   |   | $ | 21,535 |   |
| Cost of sales                                                     |   |                       | 3,218    |    |                                   |   | 3,460  |                     |     |    | 8,190                 |    |   |            | 3,353  |   |   |   | 18,221 |   |
| Gross profit                                                      |   |                       | 285      |    |                                   |   | 1,221  |                     |     |    | 658                   |    |   |            | 1,150  |   |   |   | 3,314 |   |
| Gross margin                                                      |   |                       | 8        | %  |                                   |   | 26     | %                   |     |    | 7                     | %  |   |            | 26     | %  |   |   | 15 | %  |
| Operating expenses:                                               |   |                       |     |    |                                   |   |   |                     |     |    |                  |    |   |            |   |   |   |   |   |   |
| Selling expenses                                                  |   |                         | 53       |    |                                   |     | 73     |                     |     |      | 315                   |    |   |              | 383    |   |   |   | 824 |   |
| General and administrative expenses                               |   |                       | 1,148    |    |                                   |   | 1,801  |                     |     |    | 919                   |    |   |            | 606    |   |   |   | 4,474 |   |
| Total operating expense                                           |   |                       | 1,201    |    |                                   |   | 1,874  |                     |     |    | 1,234                 |    |   |            | 989    |   |   |   | 5,298 |   |
| Income (loss) from operations                                     |   | $                            | (916     | )  |                                   | $        | (653   | )                   |     | $  | (576                  | )  |   | $                 | 161    |   |   | $ | (1,984 | )  |

|   Six Months Ended March 31, 2009(dollars in thousands) |   | Customizedpressurecontainers |   |      | CNG stationfacilities and construction |   |   |  CNG stationOperation |   |      | Vehicleconversionkits |    |   |   Total |   |
|-------------------------------------------------------------------|----------|------------------------------|----------|-----------|----------------------------------------|----------|--------|----------------------------|----------|-----------|-----------------------|-----------|--------|-------------------|--------|
| Net sales                                                         |   | $                            | 3,821    |    |                                   | $        | 7,450  |                     |     | $  | 8,783                 |    |   | $                 | 2,845  |   |   | $ | 22,899 |   |
| Cost of sales                                                     |   |                       | 2,773    |    |                                   |   | 4,466  |                     |     |    | 7,423                 |    |   |            | 1,959  |   |   |   | 16,621 |   |
| Gross profit                                                      |   |                       | 1,048    |    |                                   |   | 2,984  |                     |     |    | 1,360                 |    |   |            | 886    |   |   |   | 6,278 |   |
| Gross margin                                                      |   |                       | 27       | %  |                                   |   | 40     | %                   |     |    | 15                    | %  |   |            | 31     | %  |   |   | 27 | %  |
| Operating expenses:                                               |   |                       |     |    |                                   |   |   |                     |     |    |                  |    |   |            |   |   |   |   |   |   |
| Selling expenses                                                  |   |                         | 98       |    |                                   |     | 32     |                     |     |      | 256                   |    |   |              | 202    |   |   |   | 588 |   |
| General and administrative expenses                               |   |                       | 588      |    |                                   |   | 2,878  |                     |     |    | 841                   |    |   |            | 432    |   |   |   | 4,739 |   |
| Total operating expense                                           |   |                       | 686      |    |                                   |   | 2,910  |                     |     |    | 1,097                 |    |   |            | 634    |   |   |   | 5,327 |   |
| Income from operations                                            |   | $                            | 362      |    |                                   | $        | 74     |                     |     | $  | 263                   |    |   | $                 | 252    |   |   | $ | 951 |   |

|   | • | 555,359 shares issuable upon exercise of warrants;                                                                                                                                                                     |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                   |
|   | • | 3,333,334 shares issuable upon conversion of 3% senior convertible notes;                                                                                                                                              |
|   |    |                                                                                                                                                                                                                   |
|   | • | 1,000,000 shares issuable upon exercise of stock options or other equity-based incentives pursuant to the Company’s 2006 long-term incentive plan, of which options to purchase 790,000 shares were outstanding. |

----

|                          |     | Number of shares issuable on exercise of warrants |     |
|-------------------------------|----------|---------------------------------------------------|----------|
|                        |   | $1.70 Warrants                                    |   |   | $2.40 Warrants |   |   | $4.20 Warrants |   |   | $8.00 Warrants |   |   | Total |   |
|                          |     |                                            |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at September 30, 2009 |   |                                            | 85,715   |   |   |   | 369,644 |   |   |   | 75,000 |   |   |   | 25,000 |   |   |   | 555,359 |   |
| Issued during the period      |   |                                            | -        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Exercised during the period   |   |                                            | -        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Balance at March 31, 2010     |   |                                            | 85,715   |   |   |   | 369,644 |   |   |   | 75,000 |   |   |   | 25,000 |   |   |   | 555,359 |   |

|                                      |   | Shares subjectto options |          |   | Weighted Average exercise price scope |    |            | Remaining Contractual life(years) |   |
|-------------------------------------------|--------|-------------------------------|---------------|--------|--------------------------------------------|---------|-----------------|---------------------------------------------|--------|
| Options outstanding at September 30, 2009 |   |                          | 790,000  |   |                                       |  $ | 1.32-8.20  |                                        |   |   | 4.17  |   |
| Options granted during the period         |   |                          | -             |   |                                       |    | -               |                                        |   |   | - |   |
| Options outstanding at March 31, 2010     |   |                          | 790,000  |   |                                       |    | 1.32-8.20  |                                        |   |   | 3.67 |   |
| Options exercisable at March 31, 2010     |   |                          | 711,800       |   |                                       | $       | 3.55            |                                        |   |   | 3.76 |   |

----

| Stock Options Granted On |   |
|--------------------------|--------|
| Grant Date               |   | April 1, 2009 |   |   | June 1, 2008 |   |   | March 10, 2008 |   |   | January 9, 2008 |   |   | April 9, 2007 |   |   | April 1, 2007 |   |   | June 2, 2006 |   |
|                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expected volatility      |   |   | 46.1 | % |   |   | 46.1 | % |   |   | 68.32 | % |   |   | 80.06 | % |   |   | 26.39 | % |   |   | 35.16 | % |   |   | 50 | % |
| Risk-free rate           |   |   | 2.93 | % |   |   | 2.93 | % |   |   | 4.64 | % |   |   | 4.64 | % |   |   | 4.64 | % |   |   | 4.64 | % |   |   | 4.64 | % |
| Expected term (years)    |   |   | 5 |   |   |   | 3 |   |   |   | 5 |   |   |   | 5 |   |   |   | 5 |   |   |   | 5 |   |   |   | 3 |   |
| Dividend yield           |   |   | 0 | % |   |   | 0 | % |   |   | 0 | % |   |   | 0 | % |   |   | 0 | % |   |   | 0 | % |   |   | 0 | % |
| Fair value per share     |   | $ | 0.58 |   |   | $ | 1.94 |   |   | $ | 3.56 |   |   | $ | 5.16 |   |   | $ | 1.24 |   |   | $ | 1.2 |   |   | $ | 0.5 |   |

|                                                                         |   | Six months ended March 31, 2010 |   | Six months ended March 31, 2009 |
|------------------------------------------------------------------------------|--------|---------------------------------|--------|---------------------------------|
| Weighted average common stock outstanding during period                      |   | 15,922,391                      |   | 15,942,336                      |
| Common stock issuable pursuant to warrants                                   |   | Anti-dilutive                   |   | -                               |
| Common stock issuable upon conversion of 3% convertible notes                |   | Anti-dilutive                   |   | -                               |
| Common stock issuable upon exercise of options outstanding during the period |   | Anti-dilutive                   |   | -                               |
| Total diluted outstanding shares                                             |   | 15,922,391                      |   | 15,942,336                      |

----

| ·   | the provisions of the original merger agreement, which accorded to Skywide a right to match or top an offer deemed by our board to be a “Superior Proposal,” would be eliminated; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | any termination fee payable to Skywide would be limited to Skywide’s actual expenses, and would be subject to a cap of 3% of the total value of the merger transaction, which is $552,861; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an updated fairness opinion would be – and has been – obtained and a discussion contained in the preliminary proxy statement of the fairness opinion that we originally filed would be revised so as to reflect the substance of the updated fairness opinion; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | counsel for the plaintiffs in the four actions could conduct, and they have already conducted, certain pre-trial confirmatory discovery consisting of a review of an agreed upon list of documents, the deposition of the chairman of the special committee of the board of directors and one of the members of the Brean Murray team who conducted the analysis upon which Brean Murray has based its fairness opinion and updated opinion; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | counsel for the plaintiffs in the four actions would be, and they were, given two opportunities to review and provide comments regarding the disclosures that we make in this proxy statement, and we would consider such comments in good faith in making a determination whether and to what extent to incorporate such comments into the final version of the proxy statement; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | counsel for the plaintiffs in the four actions would apply for an award of counsel fees (including costs and expenses), based upon the benefits that the settlement will provide to Sinoenergy’s shareholders, in an amount not to exceed, in the aggregate, $470,000; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the Company and its directors as well as Skywide vigorously deny any wrongdoing or liability with respect to all claims asserted in the four actions, including that they have committed any violations of law, that they have acted improperly in any way, that they have any liability or owe any damages of any kind to the class of plaintiffs and that the class of plaintiffs would release them from any and all claims, whether known or unknown, that they know or suspect exist at the time of the release; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for dismissal with prejudice of the four actions. |
|--------------------|---------------------------------------------------|

----

| Name                                 |   | Three Months EndedMarch 31, 2010 |   |   | Thee Months EndedMarch 31, 2009 |   |
|--------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
|                                 |   | Dollars                          |   |   | Percent                         |   |   | Dollars |   |   | Percent |   |
| Wuhan Lvneng Gas Transportation Co., |   | $                                | 2,585  |   |                            |   | 53.9 | % |   |  $ | 14,601 |   |   |   | 53.4 | % |

----

----

| ·   | the manufacture of equipment for CNG vehicles and gas stations, and |
|--------------------|---------------------------------------------------------------------|

| ·   | the design of CNG station and construction plans, construction of CNG stations and installation of CNG station equipment and related systems. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

|   ▪ | The manufacture and installation of CNG vehicle and gas station equipment that is used in the transportation and storage of CNG and the operation of a CNG station. We provide these services for other companies that operate CNG stations. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   ▪ | CNG station construction service, which includes the design of CNG station construction plans, construction of CNG stations, and installation of CNG station equipment and related systems. Because of our emergence into the CNG filling station business in 2006, we did not receive any CNG station construction service orders from the beginning of 2007. Our operating results in this segment reflects contracts which we entered into during or prior to the beginning of 2007. We anticipate that, at least in the near term, we will devote most, if not all, of our CNG construction business to the construction of our own CNG filling stations. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   Three Months Ended March 31, 2010(dollars in thousands) |   | Customizedpressurecontainers |   |      | CNG stationfacilities and construction |   |   |  CNG stationOperation |   |      | Vehicleconversionkits |    |   |   Total |   |
|---------------------------------------------------------------------|----------|------------------------------|----------|-----------|----------------------------------------|----------|--------|----------------------------|----------|-----------|-----------------------|-----------|--------|-------------------|--------|
| Net sales                                                           |   | $                            | 350      |    |                                   | $        | 2,613  |                     |     | $  | 4,099                 |    |   | $                 | 1,945  |   |   | $ | 9,007 |   |
| Cost of sales                                                       |   |                       | 302      |    |                                   |   | 2,000  |                     |     |    | 3,840                 |    |   |            | 1,397  |   |   |   | 7,539 |   |
| Gross profit                                                        |   |                       | 48       |    |                                   |   | 613    |                     |     |    | 259                   |    |   |            | 548    |   |   |   | 1,468 |   |
| Gross margin                                                        |   |                       | 14       | %  |                                   |   | 23     | %                   |     |    | 6                     | %  |   |            | 28     | %  |   |   | 16 | %  |
| Operating expenses:                                                 |   |                       |     |    |                                   |   |   |                     |     |    |                  |    |   |            |   |   |   |   |   |   |
| Selling expenses                                                    |   |                         | 22       |    |                                   |     | 30     |                     |     |      | 210                   |    |   |              | 230    |   |   |   | 492 |   |
| General and administrative expenses                                 |   |                       | 666      |    |                                   |   | 665    |                     |     |    | 313                   |    |   |            | 365    |   |   |   | 2,009 |   |
| Total operating expense                                             |   |                       | 688      |    |                                   |   | 695    |                     |     |    | 523                   |    |   |            | 595    |   |   |   | 2,501 |   |
| Loss from operations                                                |   | $                            | (640     | )  |                                   | $        | (82    | )                   |     | $  | (264                  | )  |   | $                 | (47    | )  |   | $ | (1,033 | )  |
|                                                                |     |                         |     |      |                                   |     |   |                       |     |      |                  |      |   |              |   |   |   |   |   |   |
| Total assets                                                        |     | $                            | 67,078   |      |                                   | $        | 62,632 |                       |     | $         | 66,308                |      |   | $                 | 13,789 |   |   | $ | 209,807 |   |

|   Three Months Ended March 31, 2009(dollars in thousands) |   | Customizedpressurecontainers |   |      | CNG stationfacilities and construction |   |   |  CNG stationOperation |   |      | Vehicleconversionkits |    |   |   Total |   |
|---------------------------------------------------------------------|----------|------------------------------|----------|-----------|----------------------------------------|----------|--------|----------------------------|----------|-----------|-----------------------|-----------|--------|-------------------|--------|
| Net sales                                                           |   | $                            | 685      |    |                                   | $        | 1,671  |                     |     | $  | 4,032                 |    |   | $                 | 583    |   |   | $ | 6,971 |   |
| Cost of sales                                                       |   |                       | 552      |    |                                   |   | 960    |                     |     |    | 3,640                 |    |   |            | 343    |   |   |   | 5,495 |   |
| Gross profit                                                        |   |                       | 133      |    |                                   |   | 711    |                     |     |    | 392                   |    |   |            | 240    |   |   |   | 1,476 |   |
| Gross margin                                                        |   |                       | 19       | %  |                                   |   | 43     | %                   |     |    | 10                    | %  |   |            | 41     | %  |   |   | 21 | %  |
| Operating expenses:                                                 |   |                       |     |    |                                   |   |   |                     |     |    |                  |    |   |            |   |   |   |   |   |   |
| Selling expenses                                                    |   |                         | 40       |    |                                   |     | 10     |                     |     |      | (52                   | )  |   |              | 76     |   |   |   | 74 |   |
| General and administrative expenses                                 |   |                       | 310      |    |                                   |   | 2,421  |                     |     |    | 447                   |    |   |            | 204    |   |   |   | 3,382 |   |
| Total operating expense                                             |   |                       | 350      |    |                                   |   | 2,431  |                     |     |    | 395                   |    |   |            | 280    |   |   |   | 3,456 |   |
| Loss from operations                                                |   | $                            | (217     | )  |                                   | $        | (1,720 | )                   |     | $  | (3                    | )  |   | $                 | (40    | )  |   | $ | (1,980 | )  |
|                                                                |     |                         |     |      |                                   |     |   |                       |     |      |                  |      |   |              |   |   |   |   |   |   |
| Total assets                                                        |     | $                            | 31,480   |      |                                   | $        | 65,032 |                       |     | $         | 36,610                |      |   | $                 | 7,869  |   |   | $ | 140,991 |   |

|   | • | Our gross margin for the customized pressure containers decreased from 19% to 14%. Since these products are customized, with wide range of gross margin because of the variety of the products. We had to reduce our prices to meet competition during a period of general economic downturn without a reduction in our cost.  As a result we sustained a significantly lower gross margin in this segment.                                                                               |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | • | Our gross margin for the CNG station facilities and construction decreased from 43% to 23% because we had to reduce our prices to meet competition. Also, we began to design and sell other kinds of CNG station facilities with different gross margin with traditional CNG station facilites.                                                                                                                                                                                                     |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | • | Our gross margin for the operation of our CNG stations decreased from 10% to 6%. The cost of natural gas increased approximately 10% and the freight costs (the transmission of the CNG to our stations), which are included in cost of sales, increased approximately 10%, which significantly affected the gross margin in this segment. The gross margin for this segment reflects the effects of price controls, which cover both the price at which we buy and the price at which we sell CNG. |

----

|   Six Months Ended March 31, 2010(dollars in thousands) |   | Customizedpressurecontainers |   |      | CNG stationfacilities and construction |   |   |  CNG stationOperation |   |      | Vehicleconversionkits |    |   |   Total |   |
|-------------------------------------------------------------------|----------|------------------------------|----------|-----------|----------------------------------------|----------|--------|----------------------------|----------|-----------|-----------------------|-----------|--------|-------------------|--------|
| Net sales                                                         |   | $                            | 3,503    |    |                                   | $        | 4,681  |                     |     | $  | 8,848                 |    |   | $                 | 4,503  |   |   | $ | 21,535 |   |
| Cost of sales                                                     |   |                       | 3,218    |    |                                   |   | 3,460  |                     |     |    | 8,190                 |    |   |            | 3,353  |   |   |   | 18,221 |   |
| Gross profit                                                      |   |                       | 285      |    |                                   |   | 1,221  |                     |     |    | 658                   |    |   |            | 1,150  |   |   |   | 3,314 |   |
| Gross margin                                                      |   |                       | 8        | %  |                                   |   | 26     | %                   |     |    | 7                     | %  |   |            | 26     | %  |   |   | 15 | %  |
| Operating expenses:                                               |   |                       |     |    |                                   |   |   |                     |     |    |                  |    |   |            |   |   |   |   |   |   |
| Selling expenses                                                  |   |                         | 53       |    |                                   |     | 73     |                     |     |      | 315                   |    |   |              | 383    |   |   |   | 824 |   |
| General and administrative expenses                               |   |                       | 1,148    |    |                                   |   | 1,801  |                     |     |    | 919                   |    |   |            | 606    |   |   |   | 4,474 |   |
| Total operating expense                                           |   |                       | 1,201    |    |                                   |   | 1,874  |                     |     |    | 1,234                 |    |   |            | 989    |   |   |   | 5,298 |   |
| Income from operations                                            |   | $                            | (916     | )  |                                   | $        | (653   | )                   |     | $  | (576                  | )  |   | $                 | 161    |   |   | $ | (1,984 | )  |

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|   Six Months Ended March 31, 2009(dollars in thousands) |   | Customizedpressurecontainers |   |      | CNG stationfacilities and construction |   |   |  CNG stationOperation |   |      | Vehicleconversionkits |    |   |   Total |   |
|-------------------------------------------------------------------|----------|------------------------------|----------|-----------|----------------------------------------|----------|--------|----------------------------|----------|-----------|-----------------------|-----------|--------|-------------------|--------|
| Net sales                                                         |   | $                            | 3,821    |    |                                   | $        | 7,450  |                     |     | $  | 8,783                 |    |   | $                 | 2,845  |   |   | $ | 22,899 |   |
| Cost of sales                                                     |   |                       | 2,773    |    |                                   |   | 4,466  |                     |     |    | 7,423                 |    |   |            | 1,959  |   |   |   | 16,621 |   |
| Gross profit                                                      |   |                       | 1,048    |    |                                   |   | 2,984  |                     |     |    | 1,360                 |    |   |            | 886    |   |   |   | 6,278 |   |
| Gross margin                                                      |   |                       | 27       | %  |                                   |   | 40     | %                   |     |    | 15                    | %  |   |            | 31     | %  |   |   | 27 | %  |
| Operating expenses:                                               |   |                       |     |    |                                   |   |   |                     |     |    |                  |    |   |            |   |   |   |   |   |   |
| Selling expenses                                                  |   |                         | 98       |    |                                   |     | 32     |                     |     |      | 256                   |    |   |              | 202    |   |   |   | 588 |   |
| General and administrative expenses                               |   |                       | 588      |    |                                   |   | 2,878  |                     |     |    | 841                   |    |   |            | 432    |   |   |   | 4,739 |   |
| Total operating expense                                           |   |                       | 686      |    |                                   |   | 2,910  |                     |     |    | 1,097                 |    |   |            | 634    |   |   |   | 5,327 |   |
| Income from operations                                            |   | $                            | 362      |    |                                   | $        | 74     |                     |     | $  | 263                   |    |   | $                 | 252    |   |   | $ | 951 |   |

|   | • | Our gross margin for the customized pressure containers decreased from 27% to 8%. Since these products are customized, with wide range of gross margin because of the variety of the products. We had to reduce our prices to meet competition during a period of general economic downturn without a reduction in our cost.  As a result we sustained a significantly lower gross margin in this segment.                                                                                |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | • | Our gross margin for the CNG station facilities and construction decreased from 40% to 26% because we had to reduce our prices to meet competition. Also, the Company began to design and sell other kinds of CNG station facilities with different gross margin with traditional CNG station facilities.                                                                                                                                                                                           |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | • | Our gross margin for the operation of our CNG stations decreased from 15% to 7%. The cost of natural gas increased approximately 10% and the freight costs (the transmission of the CNG to our stations), which are included in cost of sales, increased approximately 10%, which significantly affected the gross margin in this segment. The gross margin for this segment reflects the effects of price controls, which cover both the price at which we buy and the price at which we sell CNG. |

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| Category                                  | 31-Mar-10 |     | 30-Sep-09 | Change   |     |     | Percent Change |
|-------------------------------------------|-----------|----------|-----------|----------|----------|----------|----------------|
| ASSETS                                    |      |     |      |     |     |     |           |
| CURRENT ASSETS                            |      |     |      |     |     |     |           |
| Cash                                      |    | $        | 34,500    |   |   | $        | 18,237         |   |   | 16,263 |   |   | 89.2% |
| Restricted cash                           |    |   | 285       |   |     |   | 1,413          |   |   | (1,128) |   |   | -79.8% |
| Accounts and notes receivable, net        |    |   | 26,886    |   |     |   | 29,756         |   |   | (2,870) |   |   | -9.6% |
| Inventories                               |    |   | 6,070     |   |     |   | 4,619          |   |   | 1,451 |   |   | 31.4% |
| Other receivables, net                    |    |   | 19,586    |   |     |   | 17,644         |   |   | 1,942 |   |   | 11.0% |
| Deposits and prepayments                  |    |   | 7,706     |   |     |   | 8,629          |   |   | (923) |   |   | -10.7% |
| Due from related party                    |    |   | 0         |   |   |   | 426            |   |   | (426) |   |   | -100.0% |
| Deferred expenses                         |    |   | 14        |     |     |   | 63             |   |   | (49) |   |   | -77.8% |
|                                      |    |   |    |     |   |   |         |   |   |
| CURRENT LIABILITIES                       |    |   |    |     |   |   |         |   |   |
| Short-term loans                          |    | $        | 47,200    |   |   | $        | 44,223         |   | $ | 2,977 |   |   | 6.7% |
| Notes payable                             |    |   | 308       |   |     |   | 4,583          |   |   | (4,275) |   |   | -93.3% |
| Accounts payable                          |    |   | 6,910     |   |     |   | 5,193          |   |   | 1,717 |   |   | 33.1% |
| Advances from customers                   |    |   | 1,187     |   |     |   | 2,100          |   |   | (913) |   |   | -43.5% |
| Additional interest on notes              |    |   | 0         |   |     |   | 280            |   |   | (280) |   |   | -100.0% |
| Income taxes payable                      |    |   | 440       |   |     |   | 475            |   |   | (35) |   |   | -7.4% |
| Other payables                            |    |   | 22,689    |   |     |   | 5,783          |   |   | 16,906 |   |   | 292.3% |
| Due to related party                      |    |   | 20,213    |   |   |   | 0              |   |   | 20,213 |   |   | 0.0% |
| Accrued expenses                          |    |   | 441       |   |     |   | 538            |   |   | (97) |   |   | -18.0% |
| Deferred income                           |    |   | 15        |   |     |   | 38             |   |   | (23) |   |   | -60.5% |
| Derivative Liability                      |    |   | 2,428     |   |   |   | 0              |   |   | 2,428 |   |   | 0.0% |
| Long-term Notes payable (current portion) |    |   | 11,812    |   |   |   | 26,667         |   |   | (14,855) |   |   | -55.7% |
|                                    |    |   |    |   |   |   |         |   |   |   |
| Total current assets                      |    | $        | 95,047    |   |     | $        | 80,787         |   | $ | 14,260 |   |   | 17.7% |
| Less: total current liabilities      |    |   | 113,643   |   |   |   | 89,880         |   |   | 23,763 |   |   | 26.4% |
|                                    |    |   |    |   |   |   |         |   |   |   |
| Working capital deficiency                |    |   | (18,596)  |   |   |   | (9,093)        |   |   | (9,503) |   |   | 104.5% |

----

| ▪ | The noteholders waived compliance with the covenants at September 30, 2009 and through March 31, 2010. |
|---------|--------------------------------------------------------------------------------------------------------|

| ▪ | We repaid our 12% senior notes in the principal amount of $16 million prior to December 31, 2009. |
|---------|---------------------------------------------------------------------------------------------------|

| ▪ | We agreed to pay the convertible notes in the principal amount of $14 million in two installments, with an initial payment of $5 million being due ten days after the merger with Skywide becomes effective and the balance 30 days thereafter.  Since the note holders would not be converting the notes, we would pay interest to provide the note holders with a yield to maturity of 13.8%, net of payments previously made. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪ | The noteholders reduced our remaining obligation for liquidated damages for failure to register the shares of common stock issuable upon conversion of the convertible notes to $280,000, which is payable by December 31, 2009. The payment was made on January 7, 2010. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪ | The provision that would have resulted in a further decrease in the conversion price of the convertible notes if we did not meet certain levels of net income was eliminated. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪ | The provisions of the indenture relating to the reduction in the conversion price of the convertible notes if we issue stock at a price, or issue convertible securities with a conversion or exercise price, that is less than the conversion price (presently $4.20 per share) were eliminated. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • | We cannot incur any debt unless, after giving effect to the borrowing, (i) the fixed charge coverage ratio would be greater than 3.5 to 1.0, and (ii) the leverage ratio would not exceed 3.75 to 1.00, provided, that Sinogas continue to maintain debt under credit facilities of not more than $10,000,000, and may incur purchase money indebtedness. The fixed charge coverage ratio is the ratio of our earnings before interest, taxes, depreciation and amortization, which is generally known as EBITDA, to consolidated interest expense, as defined. Leverage ratio means the ratio of outstanding debt to EBITDA, with the interest component being the consolidated interest expense, as defined. At March 31, 2010, our fixed charge coverage ratio was negative 0.79 to 1.00, and our leverage ratio was negative 14.15 to 1.00. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | • | We must maintain, as of the last day of each fiscal quarter, (i) a fixed charge coverage ratio of at least 2.00 to 1.00 through December 31, 2009 and 3.0 to 1.00 thereafter, (ii) a leverage ratio of not more than 6.0 to 1.00 through December 31, 2009 and 4.5 to 1.00 thereafter, and (iii) a consolidated subsidiary debt to consolidated net tangible asset ratio of not more than 0.35 thereafter. The noteholders agreed that they would not take any action to declare an event of default as long as the Company is in compliance with the modified covenants.  At March 31, 2010, our fixed charge coverage ratio was negative 0.79 to 1.00, and our leverage ratio was negative 14.15 to 1.00, and our consolidated subsidiary debt to consolidated net tangible asset ratio was 0.65 to 1.00.                           |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | • | Sinogas cannot incur debt under its credit facilities except to the extent that such debt does not exceed $10.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | • | We are subject to restriction in paying dividends, purchasing our own securities or those of our subsidiaries, prepaying subordinated debt, and making any investment other any investments in itself and its subsidiaries engaged in our business and certain other permitted investments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | • | We are subject to restrictions on incurring liens.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

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----

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|   | • | an insufficient complement of personnel in our corporate accounting and financial reporting function with an appropriate level of technical accounting knowledge, experience, and training in the application of US GAAP commensurate with our complex financial accounting and reporting requirements and materiality thresholds. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                               |
|   | • | Lack of internal audit function - the monitoring function of internal control is not well performed due to insufficient resources. In addition, the scope and effectiveness of internal audit function have yet to be developed.                                                                                                   |
|   |    |                                                                                                                                                                                                                                                                                                                               |
|   | • | Insufficient or lack of written policies and procedures relating to periodic review of current policies and procedures and their implementation.                                                                                                                                                                                   |

|   | • | Reorganize and restructure our corporate accounting staff by: |
|--------|---------|---------------------------------------------------------------|
|   |    |                                                          |   |
|   |    | •                                                       | revising the reporting structure and establishing clear roles, responsibilities, and accountability; |
|   |    |                                                          |   |
|   |    | •                                                       | hiring additional technical accounting personnel to address our complex accounting and financial reporting requirements; |
|   |    |                                                          |   |

----

|   |    | •                                   | assessing the technical accounting capabilities at our subsidiaries to ensure the right complement of knowledge, skills, and training; and                                          |
|--------|---------|-------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                      |                                                                                                                                                                                |
|   |    | •                                   | establishing internal audit functions,                                                                                                                                              |
|   |    |                                      |                                                                                                                                                                                |
|   | • | Improve period-end closing procedures by: |
|   |    |                                      |                                                                                                                                                                                |
|   |    | •                                   | ensuring that account reconciliations and analyses for significant financial statement accounts are reviewed for completeness and accuracy by qualified accounting personnel;       |
|   |    |                                      |                                                                                                                                                                                |
|   |    | •                                   | implementing a process that ensures the timely review and approval of complex accounting estimates by qualified accounting personnel and subject matter experts, where appropriate; |
|   |    |                                      |                                                                                                                                                                                |
|   |    | •                                   | developing better monitoring controls for corporate accounting and at our subsidiaries,                                                                                             |
|   |    |                                      |                                                                                                                                                                                |
|   |    | •                                   | documenting and implementing antifraud programs and controls as well as comprehensive risk assessment of procedures, programs and controls, and                                     |
|   |    |                                      |                                                                                                                                                                                |
|   |    | •                                   | making efforts to develop written policies and procedures, but the progress has been slowed due to limited resources and personnel changes.                                         |

----

| ·   | the provisions of the original merger agreement, which accorded to Skywide a right to match or top an offer deemed by our board to be a “Superior Proposal,” would be eliminated; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | any termination fee payable to Skywide would be limited to Skywide’s actual expenses, and would be subject to a cap of 3% of the total value of the merger transaction, which is $552,861; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an updated fairness opinion would be – and has been – obtained and a discussion contained in the preliminary proxy statement of the fairness opinion that we originally filed would be revised so as to reflect the substance of the updated fairness opinion; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | counsel for the plaintiffs in the four actions could conduct, and they have already conducted, certain pre-trial confirmatory discovery consisting of a review of an agreed upon list of documents, the deposition of the chairman of the special committee of the board of directors and one of the members of the Brean Murray team who conducted the analysis upon which Brean Murray has based its fairness opinion and updated opinion; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | counsel for the plaintiffs in the four actions would be, and they were, given two opportunities to review and provide comments regarding the disclosures that we make in this proxy statement, and we would consider such comments in good faith in making a determination whether and to what extent to incorporate such comments into the final version of the proxy statement; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | counsel for the plaintiffs in the four actions would apply for an award of counsel fees (including costs and expenses), based upon the benefits that the settlement will provide to Sinoenergy’s shareholders, in an amount not to exceed, in the aggregate, $470,000; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the Company and its directors as well as Skywide vigorously deny any wrongdoing or liability with respect to all claims asserted in the four actions, including that they have committed any violations of law, that they have acted improperly in any way, that they have any liability or owe any damages of any kind to the class of plaintiffs and that the class of plaintiffs would release them from any and all claims, whether known or unknown, that they know or suspect exist at the time of the release; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for dismissal with prejudice of the four actions. |
|---------------|---------------------------------------------------|

| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act               |
|------|----------------------------------------------------------------------------------------------------------|
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act               |
| 32.1 | Certification of Chief Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act |

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|                | SINOENERGY CORPORATION.           |
|---------------------|-----------------------------------|
|                |  (Registrant)                |
|                |                              |
| Dated: May 19, 2010 | /s/ Bo Huang                      |
|                | Bo Huang, Chief Executive Officer |
|                |                              |
|                | /s/ ShiaoMing Sheng               |
| Dated: May 19, 2010 | Chief Financial Officer           |

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