----

----

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

----

| **Delaware**                                     | **20-1917956**                       |
|--------------------------------------------------|--------------------------------------|
| (State                  or Other Jurisdiction of | (I.R.S.                  Employer    |
| Incorporation                  or Organization)  | Identification                  No.) |

----

**NEW      ORIENTAL ENERGY CORP., INC.**

**INDEX**

**PART      I. FINANCIAL INFORMATION**

| **Item                  1. Financial Statements**                                                                                                                                                                       |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                                                                                                                                                    |   |   |   |
| **Condensed                  Consolidated Balance Sheets as of December 31, 2007 (Unaudited)                  and March                  31, 2007**                                                                     |   |   | **2**  |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Condensed                  Consolidated Statements of Income and Comprehensive Income for                  the Three                  and Nine Months Ended December 31, 2007 and 2006                  (Unaudited)** |   |   | **4**  |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Condensed                  Consolidated Statements of Cash Flows for the Nine Months Ended                  December                  31, 2007 and 2006 (Unaudited)**                                                 |   |   | **6**  |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Notes                  to Condensed Consolidated Financial Statements for the Three and                  Nine                  Months Ended December 31, 2007 and 2006                  (Unaudited)**                 |   |   | **8**  |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Item                  2. Management's Discussion and Analysis or Plan of                  Operation**                                                                                                                 |   |   | **23** |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Item                  3. Controls and Procedures**                                                                                                                                                                    |   |   | **37** |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **PART                  II. OTHER INFORMATION**                                                                                                                                                                         |   |   |   |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Item                  1. Legal Proceedings**                                                                                                                                                                          |   |   | **37** |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Item                  2. Unregistered Sales of Equity Securities and Use of                  Proceeds**                                                                                                               |   |   | **38** |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Item                  3. Defaults Upon Senior Securities**                                                                                                                                                            |   |   | **38** |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Item                  4. Submission of Matters to a Vote of Security                  Holders**                                                                                                                       |   |   | **38** |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Item                  5. Other Information**                                                                                                                                                                          |   |   | **38** |   |
|                                                                                                                                                                                                                    |   |   |   |   |
| **Item                  6. Exhibits**                                                                                                                                                                                   |   |   | **38** |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY        SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**CONDENSED        CONSOLIDATED BALANCE SHEETS**

|                                                                                                                                                   |   | **December                31,** |       | **March                31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|------------|------------------------------|--------|
|                                                                                                                                                   |   | **2007**                        |       | **2007**                     |   |
|                                                                                                                                                   |   | **(Unaudited)**                 |       |                         |   |
| **ASSETS**                                                                                                                                             |
| **CURRENT                ASSETS**                                                                                                                      |   |                            |       |                         |   |
| Cash                and cash equivalents                                                                                                               |   | $                               | 9,179,799  |                         | $      | 2,616,149 |   |
| Restricted                cash                                                                                                                         |   |                            | 7,822,947  |                         |   | 5,430,426 |   |
| Notes                receivable, net of reserve of $136,900 and $0 at December 31, 2007                and                March 31, 2007, respectively |   |                            | 574,980    |                         |   | 1,395,858 |   |
| Inventories                                                                                                                                            |   |                            | 2,029,379  |                         |   | 3,786,130 |   |
| Prepayments                for goods                                                                                                                   |   |                            | 3,803,457  |                         |   | 383,639 |   |
| Taxes                receivable                                                                                                                        |   |                            | -          |                         |   | 155,863 |   |
|  Due                from employees                                                                                                                |   |                            | 2,344      |                         |   | 113,275 |   |
| Other                assets                                                                                                                            |   |                            | 262,940    |                         |   | 204,508 |   |
| Current                assets of the discontinued operation                                                                                            |   |                            | -          |                         |   | 47,084 |   |
|  Total                current assets                                                                                                              |   |                            | 23,675,846 |                         |   | 14,132,932 |   |
|                                                                                                                                                   |   |                            |       |                         |   |   |   |
| Plant                and equipment, net                                                                                                                |   |                            | 19,757,665 |                         |   | 11,571,652 |   |
| Land                use rights, net                                                                                                                    |   |                            | 1,569,234  |                         |   | 1,510,695 |   |
| Construction                in progress                                                                                                                |   |                            | 4,888,192  |                         |   | 5,208,277 |   |
| Deposits                                                                                                                                               |   |                            | 1,817,775  |                         |   | 267,757 |   |
| Deferred                taxes                                                                                                                          |   |                            | 52,384     |                         |   | 646,331 |   |
| Other                long-term assets                                                                                                                  |   |                            | 31,478     |                         |   | 39,745 |   |
| Other                assets of the discontinued operation                                                                                              |   |                            | -          |                         |   | 125,875 |   |
|                                                                                                                                                   |   |                            |       |                         |   |   |   |
|  ** ****TOTAL                ASSETS**                                                                                                        |   | $                               | 51,792,574 |                         | $      | 33,503,264 |   |
|                                                                                                                                                   |   |                            |       |                         |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                                                                          |
|                                                                                                                                                   |   |                            |       |                         |   |   |   |
| **CURRENT                LIABILITIES**                                                                                                                 |   |                            |       |                         |   |   |   |
| Accounts                payable                                                                                                                        |   | $                               | 1,965,468  |                         | $      | 2,259,834 |   |
| Other                payables and accrued liabilities                                                                                                  |   |                            | 546,008    |                         |   | 409,025 |   |
| Short                term debt                                                                                                                         |   |                            | 19,801,700 |                         |   | 7,356,933 |   |
|  Notes                payable                                                                                                                     |   |                            | -          |                         |   | 572,781 |   |
| Customer                deposits                                                                                                                       |   |                            | 4,114,722  |                         |   | 5,385,425 |   |
| Payable                to contractors                                                                                                                  |   |                            | 918,046    |                         |   | 96,861 |   |
| Due                to related parties                                                                                                                  |   |                            | 4,401,901  |                         |   | 4,041,583 |   |
| Taxes                payable                                                                                                                           |   |                            | 1,886,292  |                         |   | 25,063 |   |
| Current                liabilities of the discontinued operation                                                                                       |   |                            | -          |                         |   | 12,711 |   |
|  Total                current liabilities                                                                                                         |   |                            | 33,634,137 |                         |   | 20,160,216 |   |
|                                                                                                                                                   |   |                            |       |                         |   |   |   |
| **LONG-TERM                LIABILITIES**                                                                                                               |   |                            |       |                         |   |   |   |
| Deferred                taxes                                                                                                                          |   |                            | 1,025,939  |                         |   | 1,619,110 |   |
|  Notes                payable                                                                                                                     |   |                            | 565,397    |                         |   | - |   |
| Due                to employees                                                                                                                        |   |                            | 150,808    |                         |   | 115,816 |   |
| Total                long-term liabilities                                                                                                             |   |                            | 1,742,144  |                         |   | 1,734,926 |   |
|                                                                                                                                                   |   |                            |       |                         |   |   |   |
| **TOTAL                LIABILITIES**                                                                                                                   |   | $                               | 35,376,281 |                         | $      | 21,895,142 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY        SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**CONDENSED        CONSOLIDATED BALANCE SHEETS**

|                                                                                                                                                                                                                                  |   | **December                31,** |       | **March                31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|------------|------------------------------|--------|
|                                                                                                                                                                                                                                  |   | **2007**                        |       | **2007**                     |   |
|                                                                                                                                                                                                                                  |   | **(Unaudited)**                 |       |                         |   |
|                                                                                                                                                                                                                                  |   |                            |       |                         |   |
| **SHAREHOLDERS’                EQUITY**                                                                                                                                                                                         |   |                            |       |                         |   |
| Common                stock, par value $0.001 per share; 30,000,000 shares authorized;                12,640,000 shares issued and outstanding as of December 31, 2007                and March                31, 2007, respectively |   | $                               | 12,640     |                         | $      | 12,640 |   |
| Additional                paid-in capital                                                                                                                                                                                             |   |                            | 4,573,205  |                         |   | 4,573,205 |   |
| Retained                earnings (restricted portion is $930,725 and $440,182 as of December                31,                2007 and March 31, 2007, respectively)                                                                 |   |                            | 10,636,544 |                         |   | 6,563,558 |   |
| Accumulated                other comprehensive income                                                                                                                                                                                 |   |                            | 1,193,904  |                         |   | 458,719 |   |
|                                                                                                                                                                                                                                  |   |                            |       |                         |   |   |   |
| Total                Shareholders’ Equity                                                                                                                                                                                       |   |                            | 16,416,293 |                         |   | 11,608,122 |   |
|                                                                                                                                                                                                                                  |   |                            |       |                         |   |   |   |
| **TOTAL                LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                                                                                                                   |   | $                               | 51,792,574 |                         | $      | 33,503,264 |   |

----

**NEW          ORIENTAL ENERGY & CHEMICAL CORP. **

**(FORMERLY          SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**CONDENSED          CONSOLIDATED STATEMENTS OF INCOME AND**

**COMPREHENSIVE          INCOME **

**(UNAUDITED)**

|                                                           |   | **Three                Months Ended** |        | **Nine                Months Ended** |   |
|----------------------------------------------------------------|--------|---------------------------------------|-------------|--------------------------------------|--------|
|                                                           |   | **December                31,**       |        | **December                31,**      |   |
|                                                           |   | **2007**                              |        | **2006**                             |   | **2007** |   | **2006** |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |
| **REVENUES**                                                   |   | $                                     | 20,168,977  |                                 | $      | 10,639,802 |   | $ | 53,222,726 |   | $ | 27,855,298 |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| **COST                OF GOODS SOLD**                          |   |                                  | (15,760,191 | )                                    |   | (8,444,015 | ) |   | (44,366,458 | ) |   | (23,283,578 | ) |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| **GROSS                PROFIT**                                |   |                                  | 4,408,786   |                                 |   | 2,195,787 |   |   | 8,856,268 |   |   | 4,571,720 |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| Selling                and distribution                        |   |                                  | 277,661     |                                 |   | 134,237 |   |   | 927,376 |   |   | 491,421 |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| General                and administrative                      |   |                                  | 780,861     |                                 |   | 541,745 |   |   | 1,793,510 |   |   | 932,422 |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| **INCOME                FROM OPERATIONS**                      |   |                                  | 3,350,264   |                                 |   | 1,519,805 |   |   | 6,135,382 |   |   | 3,147,877 |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| **OTHER                INCOME (EXPENSES)**                     |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| Interest                expense, net                           |   |                                  | (92,231     | )                                    |   | (93,074 | ) |   | (355,489 | ) |   | (213,167 | ) |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| Government                grants                               |   |                                  | 1,350       |                                 |   | - |   |   | 81,123 |   |   | - |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| Other                income (expenses), net                    |   |                                  | 35,398      |                                 |   | (5,560 | ) |   | 43,332 |   |   | (67,246 | ) |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| **INCOME                FROM OPERATIONS BEFORE INCOME TAXES**  |   |                                  | 3,294,781   |                                 |   | 1,421,171 |   |   | 5,904,348 |   |   | 2,867,464 |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| **INCOME                TAXES**                                |   |                                  | (1,111,771  | )                                    |   | (475,683 | ) |   | (1,853,053 | ) |   | (1,035,062 | ) |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| **INCOME                FROM CONTINUING OPERATIONS**           |   |                                  | 2,183,010   |                                 |   | 945,488 |   |   | 4,051,295 |   |   | 1,832,402 |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| **DISCONTINUED                OPERATION**                      |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| Income                from discontinued operation              |   |                                  | -           |                                 |   | 6,316 |   |   | 1,761 |   |   | 9,484 |   |
| Income                from disposition of long term investment |   |                                  | -           |                                 |   | - |   |   | 19,930 |   |   | - |   |
|                                                           |   |                                  |        |                                 |   |   |   |   |   |   |   |   |   |
| **NET                INCOME**                                  |   |                                  | 2,183,010   |                                 |   | 951,804 |   |   | 4,072,986 |   |   | 1,841,886 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP. **

**(FORMERLY        SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**CONDENSED        CONSOLIDATED STATEMENTS OF INCOME AND**

**COMPREHENSIVE        INCOME **

**(UNAUDITED)**

|                                                                                                          |   | **Three                Months Ended** |       | **Nine                Months Ended** |   |
|---------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|------------|--------------------------------------|--------|
|                                                                                                          |   | **December                31,**       |       | **December                31,**      |   |
|                                                                                                          |   | **2007**                              |       | **2006**                             |   | **2007** |   | **2006** |   |
|                                                                                                          |   |                                  |       |                                 |   |   |   |   |   |
| Foreign                currency translation gain                                                              |   |                                  | 559,942    |                                 |   | 109,950 |   |   | 1,097,290 |   |   | 329,855 |   |
|                                                                                                          |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| **OTHER                COMPREHENSIVE INCOME BEFORE TAX**                                                      |   |                                  | 559,942    |                                 |   | 109,950 |   |   | 1,097,290 |   |   | 329,855 |   |
|                                                                                                          |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| **INCOME                TAX EXPENSE RELATED TO OTHER COMPREHENSIVE INCOME**                                   |   |                                  | (184,781   | )                                    |   | (36,284 | ) |   | (362,105 | ) |   | (108,852 | ) |
|                                                                                                          |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| **OTHER                COMPREHENSIVE INCOME, NET**                                                            |   |                                  | 375,161    |                                 |   | 73,666 |   |   | 735,185 |   |   | 221,003 |   |
|                                                                                                          |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| **COMPREHENSIVE                INCOME**                                                                       |   | $                                     | 2,558,171  |                                 |   | 1,025,470 |   |   | 4,808,171 |   | $ | 2,062,889 |   |
|                                                                                                          |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| **WEIGHTED                AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED**                                     |   |                                  | 12,640,000 |                                 |   | 10,908,043 |   |   | 12,640,000 |   |   | 8,640,145 |   |
|                                                                                                          |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| **INCOME                PER SHARE FROM CONTINUING OPERATIONS, BASIC AND                DILUTED**              |   | $                                     | 0.17       |                                 | $      | 0.09 |   | $ | 0.32 |   | $ | 0.21 |   |
|                                                                                                          |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| **INCOME                PER SHARE FROM INCOME FROM DISCONTINUED OPERATION, BASIC AND                DILUTED** |   | $                                     | -          |                                 | $      | 0.00 |   | $ | 0.00 |   | $ | 0.00 |   |
|                                                                                                          |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| **NET                INCOME PER SHARE, BASIC AND DILUTED**                                                    |   | $                                     | 0.17       |                                 | $      | 0.09 |   | $ | 0.32 |   | $ | 0.21 |   |

----

**NEW          ORIENTAL ENERGY & CHEMICAL CORP. **

**(FORMERLY          SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**CONDENSED          CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

|                                                                                                           |   | **Nine                Months Ended December 31,** |        |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|-------------|
|                                                                                                           |   | **2007**                                          |        | **2006** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                       |   |                                              |        |   |   |
| Net                income                                                                                      |   | $                                                 | 4,072,986   |   | $ | 1,841,886 |   |
| Adjustments                to reconcile net income to net cash provided byoperating                activities: |   |                                              |        |   |   |   |   |
| Depreciation                and amortization                                                                   |   |                                              | 1,516,482   |   |   | 1,184,820 |   |
| Deferred                taxes                                                                                  |   |                                              | (244,287    | ) |   | 108,652 |   |
| Provision                for notes receivable                                                                  |   |                                              | 136,900     |   |   | - |   |
|                                                                                                           |   |                                              |        |   |   |   |   |
| **Changes                in operating assets and liabilities:**                                                |   |                                              |        |   |   |   |   |
|                                                                                                           |   |                                              |        |   |   |   |   |
| **(Increase)                Decrease In:**                                                                     |   |                                              |        |   |   |   |   |
| Accounts                receivable                                                                             |   |                                              | -           |   |   | (87,467 | ) |
| Inventories                                                                                                    |   |                                              | 1,756,751   |   |   | (2,446,595 | ) |
| Prepayments                for goods                                                                           |   |                                              | (3,419,818  | ) |   | (3,588,210 | ) |
| Other                assets                                                                                    |   |                                              | (58,432     | ) |   | (932,692 | ) |
| Taxes                receivable                                                                                |   |                                              | 155,863     |   |   | - |   |
| Discontinued                operation                                                                          |   |                                              | -           |   |   | (268,708 | ) |
|                                                                                                           |   |                                              |        |   |   |   |   |
| **Increase                (Decrease) In:**                                                                     |   |                                              |        |   |   |   |   |
| Accounts                payable                                                                                |   |                                              | (294,366    | ) |   | 1,225,036 |   |
| Other                payables and accrued liabilities                                                          |   |                                              | 136,983     |   |   | 219,321 |   |
| Customer                deposits                                                                               |   |                                              | (1,270,703  | ) |   | 7,818,559 |   |
| Taxes                payable                                                                                   |   |                                              | 1,861,228   |   |   | 567,333 |   |
| Discontinued                operation                                                                          |   |                                              | -           |   |   | 331,695 |   |
| Net                cash provided by operating activities                                                       |   |                                              | 4,349,587   |   |   | 5,973,630 |   |
|                                                                                                           |   |                                              |        |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                                                       |   |                                              |        |   |   |   |   |
| Restricted                cash                                                                                 |   |                                              | (2,392,521  | ) |   | (2,745,873 | ) |
| Purchases                of plant and equipment                                                                |   |                                              | (1,584,775  | ) |   | (1,166,829 | ) |
| Long-term                investment                                                                            |   |                                              | -           |   |   | (26,893 | ) |
| Purchases                of marketable securities                                                              |   |                                              | -           |   |   | 12,580 |   |
| Deposit                for equipment                                                                           |   |                                              | -           |   |   | (985,953 | ) |
| Deposit                for land use right                                                                      |   |                                              | (882,530    | ) |   | - |   |
| Proceeds                from disposition of long term investment                                               |   |                                              | 143,414     |   |   | - |   |
| Proceeds                from disposition of plant and equipment                                                |   |                                              | 18,795      |   |   | - |   |
| Repayment                (issuance) of notes receivable                                                        |   |                                              | 19,032      |   |   | (59,160 | ) |
| Purchases                of construction in progress                                                           |   |                                              | (5,988,410  | ) |   | (1,467,971 | ) |
| Due                from employees                                                                              |   |                                              | 110,930     |   |   | - |   |
| Net                cash used in investing activities                                                           |   |                                              | (10,556,065 | ) |   | (6,440,099 | ) |
|                                                                                                           |   |                                              |        |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                                        |   |                                              |        |   |   |   |   |
| Proceeds                from short-term debt                                                                   |   |                                              | 24,880,692  |   |   | 589,281 |   |
| Repayments                of short-term debt                                                                   |   |                                              | (12,909,673 | ) |   | (896,436 | ) |
| Advances                from related parties                                                                   |   |                                              | 388,499     |   |   | (297,100 | ) |
| Proceeds                from notes payable                                                                     |   |                                              | -           |   |   | 2,442,402 |   |
| Net                cash provided by financing activities                                                       |   |                                              | 12,359,518  |   |   | 1,838,147 |   |
|                                                                                                           |   |                                              |        |   |   |   |   |
| **NET                INCREASE IN CASH AND CASH EQUIVALENTS**                                                   |   |                                              | 6,153,040   |   |   | 1,371,678 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP. **

**(FORMERLY      SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

|                                                            |   | **Nine                Months Ended December 31,** |      |
|-----------------------------------------------------------------|--------|---------------------------------------------------|-----------|
|                                                            |   | **2007**                                          |      | **2006** |   |
|                                                            |   |                                              |      |   |   |
| Effect                of exchange rate changes on cash          |   |                                              | 410,610   |   |   | 289,575 |   |
| Cash                and cash equivalents at beginning of period |   |                                              | 2,616,149 |   |   | 3,281,761 |   |
|                                                            |   |                                              |      |   |   |   |   |
| **CASH                AND CASH EQUIVALENTS AT END OF PERIOD**   |   | $                                                 | 9,179,799 |   | $ | 4,943,014 |   |
|                                                            |   |                                              |      |   |   |   |   |
| **SUPPLEMENTARY                CASH FLOW INFORMATION**          |   |                                              |      |   |   |   |   |
| Income                taxes paid                                |   | $                                                 | -         |   | $ | 250,692 |   |
| Interest                paid                                    |   | $                                                 | 157,094   |   | $ | 317,106 |   |

**SUPPLEMENTAL      NON-CASH DISCLOSURES:**

----

**NEW          ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY          SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR          THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**1.**
**ORGANIZATION      AND PRINCIPAL ACTIVITIES**

**2.      **
**BASIS      OF PRESENTATION**

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY        SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**3.      **
**SUMMARY      OF SIGNIFICANT ACCOUNTING POLICIES**

|   | (i) | Kinfair                Holding Limited. (“KHL”) (An inactive holding company, 100% subsidiary of                NOEC). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Henan                Jinding Chemicals Co., Ltd. (“Henan Jinding”) ( 100% subsidiary of                KHL) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | Luoshan                Jinding Chemicals Co., Ltd. (“Luoshan Jinding”) ( 100% subsidiary of Henan                Jinding) |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------|

| **Major                Customers** |   | **Sales**                                         |   | **Customer                Deposits** |   |
|------------------------------------|--------|---------------------------------------------------|--------|--------------------------------------|--------|
|                               |   | **Nine                Months Ended December 31,** |   | **December                31,**      |   | **March                31,** |   |
|                               |   | **2007**                                          |   | **2006**                             |   | **2007** |   | **2007** |   |
| **Company                A**       |   |                                              | 22.5   | %                                    |   | 17.2 | % |   | 3.9 | % |   | 62.1 | % |
| **Company                B**       |   |                                              | 11.0   | %                                    |   | - |   |   | 14.3 | % |   | - |   |
| **Company                C**       |   |                                              | 7.4    | %                                    |   | 8.7 | % |   | 4.8 | % |   | 3.3 | % |
| **Company                D**       |   |                                              | 6.6    | %                                    |   | - |   |   | 12.6 | % |   | - |   |
| **Company                E**       |   |                                              | -      |                                 |   | 7.3 | % |   | - |   |   | 7.5 | % |
| **Company                F**       |   |                                              | -      |                                 |   | 5.2 | % |   | - |   |   | - |   |

| **Major                Suppliers** |   | **Purchases**                                     |   | **Accounts                Payable/Deposits*** |   |
|------------------------------------|--------|---------------------------------------------------|--------|-----------------------------------------------|--------|
|                               |   | **Nine                Months Ended December 31,** |   | **December                31,**               |   | **March                31,** |   |
|                               |   | **2007**                                          |   | **2006**                                      |   | **2007** |   | **2007** |   |
| **Company                G**       |   |                                              | 17.6   | %                                             |   | - |   |   | 0.4 | % |   | - |   |
| **Company                H**       |   |                                              | 17.0   | %                                             |   | - |   |   | 7.4 | % |   | - |   |
| **Company                I**       |   |                                              | 14.4   | %                                             |   | - |   |   | - |   |   | - |   |
| **Company                J**       |   |                                              | 12.3   | %                                             |   | 10.4 | % |   | 27.0 | % |   | (12.7 | %) |
| **Company                K**       |   |                                              | -      |                                          |   | 12.7 | % |   | - |   |   | 0.0 | % |
| **Company                L**       |   |                                              | -      |                                          |   | 10.2 | % |   | - |   |   | 0.0 | % |
| **Company                M**       |   |                                              | -      |                                          |   | 9.8 | % |   | - |   |   | (8.4 | %) |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY        SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**3.      **
**SUMMARY      OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY        SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**3.      **
**SUMMARY      OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

|  | · | Persuasive                evidence of an arrangement exists, |
|--|--------|--------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   | ·   | Delivery              has occurred or services have been rendered, |
|--------|--------------------|--------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   | ·  | The              seller’s price to the buyer is fixed or determinable,              and |
|--------|--------------|-----------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   | ·  | Collectibility              is reasonably assured. |
|--------|--------------|----------------------------------------------------|

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY        SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**3.      **
**SUMMARY      OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)**

|                                                 |   | March                31, 2007 |   | December                31, 2007 |   | December                31, 2006 |   |
|------------------------------------------------------|--------|-------------------------------|--------|----------------------------------|--------|----------------------------------|--------|
| Period                end RMB: US$ exchange rate     |   |                          | 7.7342 |                             |   | 7.3046                           |   |   | 7.8087 |   |
| Average                period RMB: US$ exchange rate |   |                          | 7.8756 |                             |   | 7.5194                           |   |   | 7.9128 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY      SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR      THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**3.      **
**SUMMARY      OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)**

**4.**
**INVENTORIES**

|                             |   | **December                31, 2007** |      | **March                31, 2007** |   |
|----------------------------------|--------|--------------------------------------|-----------|-----------------------------------|--------|
|                             |   | **Unaudited**                        |      |                              |   |
| Finished                goods    |   | $                                    | 620,654   |                              | $      | 2,626,187 |   |
| Raw                materials     |   |                                 | 1,102,034 |                              |   | 561,995 |   |
| Packing                materials |   |                                 | 306,691   |                              |   | 597,948 |   |
| Total                inventories |   | $                                    | 2,029,379 |                              | $      | 3,786,130 |   |

** **

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY      SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR      THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**5.**
**RELATED      PARTY TRANSACTIONS**

|                                                        |   | **December                31, 2007** |      | **March                31, 2007** |   |
|-------------------------------------------------------------|--------|--------------------------------------|-----------|-----------------------------------|--------|
|                                                        |   | **Unaudited**                        |      |                              |   |
|                                                        |   |                                 |      |                              |   |
| Xinyang                Hong Chang Pipeline Gas Co,. Ltd.(a) |   | $                                    | 3,970,101 |                              | $      | 3,749,580 |   |
| Long                Triumph Investments Limited(b)          |   |                                 | 424,648   |                              |   | 162,209 |   |
| Chen                Siqiang(c)                              |   |                                 | -         |                              |   | 129,296 |   |
| Due                to employees                             |   |                                 | 7,152     |                              |   | 498 |   |
|                                                        |   | $                                    | 4,401,901 |                              | $      | 4,041,583 |   |

|  | (a) | Xinyang                Hong Chang Pipeline Gas Co., Ltd. is a company controlled by the                chairman                of the board and chief executive officer of the Company. The amount                represents advances from Xinyang Hong Chang Pipeline Gas Co., Ltd..                The                amount is unsecured. Included in the $3,970,101 is $2,338,001 which                has                interest at 8.748% per annum and is due on April 15, 2008. The interest                expense of $41,688 was capitalized in construction in progress, since                the                amount was used for construction. Also see Note 8. The balance of                $1,232,100 is interest free and has no fixed repayment                terms. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (b) | Long                Triumph Investment Limited is a shareholder of the Company. The amount                represents advances from Long Triumph Investment Limited. The amount                is                unsecured, interest free, and has no fixed repayment                terms. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (c) | Chen                Siqiang is the chairman of the board and chief executive officer                of the                Company. The amount was unsecured, had interest at 7.2% per annum                and was                due on August 3, 2008. The amount was repaid in December of                2007. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY      SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR      THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**6.      **
**PLANT      AND EQUIPMENT**

|                                          |   | **December                31, 2007** |       | **March                31, 2007** |   |
|-----------------------------------------------|--------|--------------------------------------|------------|-----------------------------------|--------|
|                                          |   | **Unaudited**                        |       |                              |   |
| At                cost:                       |   |                                 |       |                              |   |
| Buildings                                     |   | $                                    | 2,144,815  |                              | $      | 1,362,587 |   |
| Machinery                                     |   |                                 | 22,748,453 |                              |   | 13,737,425 |   |
| Motor                vehicles                 |   |                                 | 296,905    |                              |   | 295,231 |   |
| Office                equipment               |   |                                 | 229,393    |                              |   | 109,900 |   |
|                                          |   |                                 | 25,419,566 |                              |   | 15,505,143 |   |
| Less:                Accumulated depreciation |   |                                 |       |                              |   |   |   |
| Buildings                                     |   |                                 | 282,987    |                              |   | 215,272 |   |
| Machinery                                     |   |                                 | 5,198,914  |                              |   | 3,584,558 |   |
| Motor                vehicles                 |   |                                 | 117,206    |                              |   | 97,162 |   |
| Office                equipment               |   |                                 | 62,794     |                              |   | 36,499 |   |
|                                          |   |                                 | 5,661,901  |                              |   | 3,933,491 |   |
| Plant                and equipment, net       |   | $                                    | 19,757,665 |                              | $      | 11,571,652 |   |

**7.      **
**LAND      USE RIGHTS**

|                                          |   | **December                31, 2007** |      | **March                31, 2007** |   |
|-----------------------------------------------|--------|--------------------------------------|-----------|-----------------------------------|--------|
|                                          |   | **Unaudited**                        |      |                              |   |
| Cost                                          |   | $                                    | 1,681,267 |                              | $      | 1,587,880 |   |
| Less:                Accumulated amortization |   |                                 | 112,033   |                              |   | 77,185 |   |
| Land                use rights, net           |   | $                                    | 1,569,234 |                              | $      | 1,510,695 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY        SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**8.**
**CONSTRUCTION          IN PROGRESS**

|      |   | **December                  31,****2007** |      | **March                  31,****2007** |   |
|-----------|--------|-------------------------------------------|-----------|----------------------------------------|--------|
|      |   | **Unaudited**                             |      |                                   |   |
| Machinery |   | $                                         | 3,976,208 |                                   | $      | 1,823,426 |   |
| Plant     |   |                                      | 911,984   |                                   |   | 3,383,946 |   |
| Other     |   |                                      | —   |                                   |   | 905 |   |
|      |   | $                                         | 4,888,192 |                                   | $      | 5,208,277 |   |

**9.**
**SHORT-TERM          DEBT**

|                                                                                                                                                                                                                                                           |   | **December                  31,****2007** |      | **March                  31,****2007** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|-----------|----------------------------------------|--------|
| **Bank                  Loans:**                                                                                                                                                                                                                               |   | **Unaudited**                             |      |                                   |   |
|                                                                                                                                                                                                                                                           |   |                                      |      |                                   |   |
| Bank                  of China Luoshan Branch, Due August 13, 2008, interest rate at                  6.84% per                  annum, collateralized by land use rights.                                                                                     |   | $                                         | 2,738,001 |                                   | $      | - |   |
|                                                                                                                                                                                                                                                           |   |                                      |      |                                   |   |   |   |
| China                  Construction Bank Luoshan Branch, Due June 30, 2008, interest rate                  at                  7.29% per annum, collateralized by land use rights.                                                                             |   |                                      | 2,738,001 |                                   |   | - |   |
|                                                                                                                                                                                                                                                           |   |                                      |      |                                   |   |   |   |
| Xinyang                  Chengxing Credit Cooperatives, Due April 16, 2008, interest rate                  at 9.6%                  per annum, collateralized by finished goods inventory.                                                                     |   |                                      | 2,738,001 |                                   |   | - |   |
|                                                                                                                                                                                                                                                           |   |                                      |      |                                   |   |   |   |
| Xinyang                  Chengxing Credit Cooperatives, Due April 16, 2008, interest rate                  at 11.23%                  per annum, collateralized by finished goods inventory.                                                                   |   |                                      | 2,190,401 |                                   |   | - |   |
|                                                                                                                                                                                                                                                           |   |                                      |      |                                   |   |   |   |
| Rural                  Credit Cooperatives, Due July 24, 2007, interest rate at 11.16%                  per annum,                  guaranteed by Xinyang Hong Chang Pipeline Gas Co.Ltd. (Subsequently                  repaid                  in July 2007) |   |                                      | -         |                                   |   | 504,254 |   |
|                                                                                                                                                                                                                                                           |   |                                      |      |                                   |   |   |   |
| Bank                  of China Luoshan Branch, Due March 31, 2007, interest rate at 5.58%                  per                  annum, collateralized by a land use right. (Subsequently repaid                  in April                  2007)               |   |                                      | -         |                                   |   | 1,292,958 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY        SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

|                                                                        |   | **December                  31,**** 2007** |    | **March                  31,****2007** |   |
|-----------------------------------------------------------------------------|--------|-------------------------------------------------|---------|----------------------------------------|--------|
|                                                                        |   | **Unaudited**                                   |    |                                   |   |
| **Notes                  Payable to Unrelated Companies:**                  |   |                                            |    |                                   |   |
|                                                                        |   |                                            |    |                                   |   |
| Due                  January 5, 2008 (subsequently repaid on its due date)  |   | $                                               | 246,420 |                                   | $      | - |   |
| Due                  January 6, 2008 (subsequently repaid on its due date)  |   |                                            | 342,250 |                                   |   | - |   |
| Due                  January 9, 2008 (subsequently repaid on its due date)  |   |                                            | 547,600 |                                   |   | - |   |
| Due                  January 12, 2008 (subsequently repaid on its due date) |   |                                            | 246,420 |                                   |   | - |   |
| Due                  January 13, 2008 (subsequently repaid on its due date) |   |                                            | 95,830  |                                   |   | - |   |
| Due                  January 17, 2008 (subsequently repaid on its due date) |   |                                            | 191,660 |                                   |   | - |   |
| Due                  January 25, 2008 (subsequently repaid on its due date) |   |                                            | 451,770 |                                   |   | - |   |
| Due                  January 30, 2008 (subsequently repaid on its due date) |   |                                            | 581,825 |                                   |   | - |   |
| Due                  February 7, 2008                                       |   |                                            | 123,210 |                                   |   | - |   |
| Due                  February 9, 2008                                       |   |                                            | 184,815 |                                   |   | - |   |
| Due                  February 15, 2008                                      |   |                                            | 205,624 |                                   |   | - |   |
| Due                  February 16, 2008                                      |   |                                            | 342,250 |                                   |   | - |   |
| Due                  February 20, 2008                                      |   |                                            | 109,520 |                                   |   | - |   |
| Due                  February 23, 2008                                      |   |                                            | 143,745 |                                   |   | - |   |
| Due                  February 24, 2008                                      |   |                                            | 410,700 |                                   |   | - |   |
| Due                  February 29, 2008                                      |   |                                            | 608,042 |                                   |   | - |   |
| Due                  March 6, 2008                                          |   |                                            | 164,280 |                                   |   | - |   |
| Due                  March 12, 2008                                         |   |                                            | 383,320 |                                   |   | - |   |
| Due                  March 28, 2008                                         |   |                                            | 68,450  |                                   |   | - |   |
| Due                  April 11, 2008                                         |   |                                            | 177,970 |                                   |   | - |   |
| Due                  April 15, 2008                                         |   |                                            | 872,053 |                                   |   | - |   |
| Due                  April 17, 2008                                         |   |                                            | 32,856  |                                   |   | - |   |
| Due                  April 19, 2008                                         |   |                                            | 238,206 |                                   |   | - |   |
| Due                  April 30, 2008                                         |   |                                            | 547,600 |                                   |   | - |   |
| Due                  May 13, 2008                                           |   |                                            | 273,800 |                                   |   | - |   |
| Due                  May 23, 2008                                           |   |                                            | 273,800 |                                   |   | - |   |
| Due                  May 28, 2008                                           |   |                                            | 574,980 |                                   |   | - |   |
| Due                  May 30, 2008                                           |   |                                            | 136,900 |                                   |   | - |   |
| Due                  June 5, 2008                                           |   |                                            | 547,600 |                                   |   | - |   |
| Due                  June 26, 2008                                          |   |                                            | 273,800 |                                   |   | - |   |
| Due                  July 5, 2007 (subsequently repaid on its due date)     |   |                                            | -       |                                   |   | 129,295 |   |
| Due                  July 23, 2007 (subsequently repaid on its due date)    |   |                                            | -       |                                   |   | 646,478 |   |
| Due                  August 5, 2007 (subsequently repaid on its due date)   |   |                                            | -       |                                   |   | 387,888 |   |

----

**NEW          ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY          SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR          THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

|                                                                          |   |    | **December                  31,**** 2007** |   |   | **March                  31,****2007** |   |
|-------------------------------------------------------------------------------|--------|---------|-------------------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                          |   |    | **Unaudited**                                   |   |   |                                   |   |
|  **Notes                Payable to Unrelated Companies:**                |   |    |                                            |   |   |                                   |   |
|                                                                          |   |    |                                            |   |   |                                   |   |
| Due                  August 13, 2007 (subsequently repaid on its due date)    |   | $  | -                                               |   | $      | 387,888                                |   |
| Due                  September 13, 2007 (subsequently repaid on its due date) |   |    | -                                               |   |   | 387,888                                |   |
| Due                  September 26, 2007 (subsequently repaid on its due date) |   |    | -                                               |   |   | 258,591                                |   |
| Due                  April 11, 2007 (subsequently repaid on its due date)     |   |    | -                                               |   |   | 374,958                                |   |
| Due                  April 24, 2007 (subsequently repaid on its due date)     |   |    | -                                               |   |   | 336,169                                |   |
| Due                  May 1, 2007 (subsequently repaid on its due date)        |   |    | -                                               |   |   | 258,592                                |   |
| Due                  May 7, 2007 (subsequently repaid on its due date)        |   |    | -                                               |   |   | 387,888                                |   |
| Due                  May 17, 2007 (subsequently repaid on its due date)       |   |    | -                                               |   |   | 193,943                                |   |
| Due                  May 20 2007 (subsequently repaid on its due date)        |   |    | -                                               |   |   | 387,888                                |   |
| Due                  May 23, 2007 (subsequently repaid on its due date)       |   |    | -                                               |   |   | 387,888                                |   |
| Due                  June 6, 2007 (subsequently repaid on its due date)       |   |    | -                                               |   |   | 387,888                                |   |
| Due                  June 19, 2007 (subsequently repaid on its due date)      |   |    | -                                               |   |   | 387,888                                |   |
| Due                  June 27, 2007 (subsequently repaid on its due date)      |   |    | -                                               |   |   | 258,591                                |   |
|                                                                          |   | $       | 19,801,700                                      |   | $      | 7,356,933                              |   |

----

**NEW            ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY            SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR            THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**10.            **
**INCOME TAXES**

|                                |   | **Nine                  Months Ended December 31,** |      |
|-------------------------------------|--------|-----------------------------------------------------|-----------|
|                                |   | **2007**                                            |      | **2006** |   |
|                                |   | **Unaudited**                                       |      | **Unaudited** |   |
| Current:                            |   |                                                |      |   |   |
| CIT                                 |   | $                                                   | 2,826,607 |   | $ | 65,041 |   |
|                                |   |                                                |      |   |   |   |   |
| Deferred:                           |   |                                                |      |   |   |   |   |
| CIT                                 |   |                                                | (973,554  | ) |   | 970,021 |   |
|                                |   |                                                |      |   |   |   |   |
| Income                  tax expense |   | $                                                   | 1,853,053 |   | $ | 1,035,062 |   |

|                                                     |   | **Nine                  Months Ended December 31,** |         |
|----------------------------------------------------------|--------|-----------------------------------------------------|--------------|
|                                                     |   | **2007**                                            |         | **2006** |   |
|                                                     |   | **Unaudited**                                       |         | **Unaudited** |   |
|                                                     |   |                                                |         |   |   |
| Computed                  “expected” expense |   | $                                                   | 2,054,923    |   | $ | 949,393 |   |
| Permanent                  differences                   |   |                                                | (201,870     | ) |   | 85,669 |   |
|                                                     |   |                                                |    |   |   |    |   |
| Income                  tax expense                      |   | $                                                   | 1,853,053    |   | $ | 1,035,062 |   |

----

**NEW          ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY          SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR          THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**10.****INCOME            TAXES (CONTINUED)**

|                                            |   | **December                  31, 2007** |         | **March                  31, 2007** |   |
|-------------------------------------------------|--------|----------------------------------------|--------------|-------------------------------------|--------|
|                                            |   | **Unaudited**                          |         |                                |   |
| **Deferred                  tax assets:**       |   |                                   |         |                                |   |
| Non-current                  portion:           |   |                                   |         |                                |   |
| Cost                  of sales                  |   | $                                      | -            |                                | $      | 603,158 |   |
| Payroll                                         |   |                                   | 5,692        |                                |   | 7,096 |   |
| Other                  expenses                 |   |                                   | 12,467       |                                |   | 36,077 |   |
| Provision                  of notes receivable  |   |                                   | 34,225       |                                |   | - |   |
| Total                  deferred tax assets      |   |                                   | 52,384       |                                |   | 646,331 |   |
|                                            |   |                                   |         |                                |   |   |   |
| **Deferred                  tax liabilities:**  |   |                                   |         |                                |   |   |   |
| Non-current                  portion:           |   |                                   |         |                                |   |   |   |
| Depreciation                                    |   |                                   | 375,165      |                                |   | 495,756 |   |
| Amortization                                    |   |                                   | 28,862       |                                |   | 30,910 |   |
| Welfare                                         |   |                                   | 18,503       |                                |   | 54,758 |   |
| Cost                  of sales                  |   |                                   | 279,365      |                                |   | 776,372 |   |
| Government                  grants              |   |                                   | 55,102       |                                |   | 42,668 |   |
| Other                  income                   |   |                                   | 268,942      |                                |   | 218,646 |   |
|                                            |   |                                   |    |                                |   |    |   |
| Total                  deferred tax liabilities |   |                                   | 1,025,939    |                                |   | 1,619,110 |   |
| -                                               |   |                                   |    |                                |   |    |   |
| Net                  deferred tax liabilities   |   | $                                      | (973,555     | )                                   | $      | (972,779 | ) |

**11.          **
**SEGMENT          REPORTING**

----

**NEW            ORIENTAL ENERGY & CHEMICAL CORP.**

**(FORMERLY            SPORTS SOURCES, INC.) AND SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR            THE NINE MONTHS ENDED DECEMBER 31, 2007 AND 2006**

**(UNAUDITED)**

**11.            ****SEGMENT            REPORTING (CONTINUED)**

**Fuel        Segment:**

|                          |   | For                  The Nine Months Ended December 31, 2007 |       |
|-------------------------------|--------|--------------------------------------------------------------|------------|
|                          |   | DME                                                          |       | Methanol |   | Segment                  Total |   |
| Revenues                      |   | $                                                            | 27,351,989 |   | $ | 409,205 |   | $ | 27,761,194 |   |
| COGS                          |   |                                                         | 22,784,064 |   |   | 299,149 |   |   | 23,083,213 |   |
| Gross                  Profit |   |                                                         | 4,567,925  |   |   | 110,056 |   |   | 4,677,981 |   |

|                               |   |
|-------------------------------|--------|
|                          |   | For                  The Nine Months Ended December 31, 2006 |   |
|                          |   | DME |   | Methanol |   | Segment                  Total |   |
| Revenues                      |   | $ | 3,809,889 |   | $ | 4,699,148 |   | $ | 8,509,037 |   |
| COGS                          |   |   | 2,738,094 |   |   | 3,585,808 |   |   | 6,323,902 |   |
| Gross                  Profit |   |   | 1,071,795 |   |   | 1,113,340 |   |   | 2,185,135 |   |

**Fertilizer        Segment:**

|                          |   |   |       |        For                  The Nine Months Ended December 31, 2007 |   |
|-------------------------------|--------|--------|------------|--------------------------------------------------------------------------------------------------------|--------|
|                          |   | Urea   |       | Ammonium                  Bicarbonate                                                                  |   | Liquefied                  Ammonia |   | Ammonia                  Water |   | Segment                  Total |   |
| Revenues                      |   | $      | 22,648,524 |                                                                                                   | $      | 1,875,453 |   | $ | 771,453 |   | $ | 166,102 |   | $ | 25,461,532 |   |
| COGS                          |   |   | 18,521,656 |                                                                                                   |   | 1,842,673 |   |   | 768,908 |   |   | 150,008 |   |   | 21,283,245 |   |
| Gross                  Profit |   |   | 4,126,867  |                                                                                                   |   | 32,780 |   |   | 2,546 |   |   | 16,094 |   |   | 4,178,287 |   |

|                          |   |   |       |                          For The Nine Months Ended December 31,                  2006 |   |
|-------------------------------|--------|--------|------------|--------------------------------------------------------------------------------------------------------------------------|--------|
|                          |   | Urea   |       | Ammonium                  Bicarbonate                                                                                    |   | Liquefied                  Ammonia |   | Ammonia                  Water |   | Segment                  Total |   |
| Revenues                      |   | $      | 16,359,947 |                                                                                                                     | $      | 1,528,833 |   | $ | 1,355,892 |   | $ | 101,589 |   | $ | 19,346,261 |   |
| COGS                          |   |   | 14,238,000 |                                                                                                                     |   | 1,328,234 |   |   | 1,302,192 |   |   | 91,250 |   |   | 16,959,676 |   |
| Gross                  Profit |   |   | 2,121,947  |                                                                                                                     |   | 200,599 |   |   | 53,700 |   |   | 10,339 |   |   | 2,386,585 |   |

**12.**
**LITIGATION**

----

**Item          **
**2.          Management's Discussion and Analysis or Plan of          Operation**

**Forward        Looking Statements **

|   | ·   | The                  loss of primary customers; |
|--------|--------------------|-------------------------------------------------|

|   | ·   | Our                  ability to implement productivity improvements, cost reduction                  initiatives                  or facilities expansions; |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Market                  developments affecting, and other changes in, the demand for our                  products                  and the introduction of new competing products; |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Availability                  or increases in the price of our primary raw materials or active                  ingredients; |
|--------|--------------------|------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | The                  timing of planned capital expenditures; |
|--------|--------------------|--------------------------------------------------------------|

|   | ·   | Our                  ability to identify, develop or acquire, and market additional                  product                  lines and businesses necessary to implement our business strategy                  and our                  ability to finance such acquisitions and development; |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | The                  condition of the capital markets generally, which will be affected                  by                  interest rates, foreign currency fluctuations and general economic                  conditions; |
|--------|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | The                  ability to obtain registration and re-registration of our products                  under                  applicable law; |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ·   | The                  political and economic climate in the foreign or domestic jurisdictions                  in                  which we conduct business; and |
|--------|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Other                  People’s Republic of China (the “PRC”) or foreign regulatory or                  legislative developments which affect the demand for our products                  generally or increase the environmental compliance cost for our                  products                  or impose liabilities on the manufacturers and distributors of                  such                  products. |
|--------|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Critical        Accounting Policies and Estimates**

*Use        of estimates *

*Accounts        receivable *

*Inventories        *

*Property        and equipment*

*Revenue        recognition *

----

*Income        taxes *

*Foreign        currency transactions and comprehensive income (loss)*

**Recent        Accounting Pronouncements**

----

**Overview**

**RESULT        OF OPERATIONS**

**Three        Months Ended December 31, 2007 as compared to**

**Three        Months Ended December 31, 2006**

|                                                                   |   | **Three                  Months Ended****December                  31, 2007** |        | **Three                  Months Ended****December                  31, 2006** |       | **Comparisons**                     |       |
|------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|-------------|-------------------------------------------------------------------------------|------------|-------------------------------------|------------|
| **Item**                                                               |   | **Amount****US                  $**                                           | ** **  | **Percentage                    of Revenues****(%)**                          | ** ** | **Amount****US                  $** | ** ** | **Percentage                    of Revenues****(%)** |   | **Growth                    in Amount****US                  $** |   | **Increase                  (Decrease) in Percentage****(%)** |   |
| Revenues                                                               |   |                                                                          | 20,168,977  |                                                                          |       | 100.00                              | %          |   | 10,639,802 |   |   | 100.00 | % |   | 9,529,175 |   |   | 89.56 | % |
| Cost                  of Goods Sold                                    |   |                                                                          | (15,760,191 | )                                                                             |       | (78.14                              | %)         |   | (8,444,015 | ) |   | (79.36 | %) |   | (7,316,176 | ) |   | 86.64 | % |
| Gross                  Profit                                          |   |                                                                          | 4,408,786   |                                                                          |       | 21.86                               | %          |   | 2,195,787 |   |   | 20.64 | % |   | 2,212,999 |   |   | 100.78 | % |
| Selling                  and distribution                              |   |                                                                          | (277,661    | )                                                                             |       | (1.38                               | %)         |   | (134,237 | ) |   | (1.26 | %) |   | (143,424 | ) |   | 106.84 | % |
| General                  & administrative                          |   |                                                                          | (780,861    | )                                                                             |       | (3.87                               | %)         |   | (541,745 | ) |   | (5.09 | %) |   | (239,116 | ) |   | 44.14 | % |
| Income                  from operations                                |   |                                                                          | 3,350,264   |                                                                          |       | 16.61                               | %          |   | 1,519,805 |   |   | 14.28 | % |   | 1,830,459 |   |   | 120.44 | % |
| Interest                  expense, net                                 |   |                                                                          | (92,231     | )                                                                             |       | (0.46                               | %)         |   | (93,074 | ) |   | (0.87 | %) |   | (843 | ) |   | (0.91 | %) |
| Government                  grants                                     |   |                                                                          | 1,350       |                                                                          |       | 0.01                                | %          |   | 0 |   |   | 0.00 | % |   | 1,350 |   |   | 100.00 | % |
| Other,                  net                                            |   |                                                                          | 35,398      |                                                                          |       | 0.18                                | %          |   | (5,560 | ) |   | (0.05 | %) |   | 40,958 |   |   | 736.65 | % |
| Income                  before tax                                     |   |                                                                          | 3,294,781   |                                                                          |       | 16.34                               | %          |   | 1,421,171 |   |   | 13.36 | % |   | 1,873,610 |   |   | 131.84 | % |
| Income                  tax                                            |   |                                                                          | (1,111,771  | )                                                                             |       | (5.51                               | %)         |   | (475,683 | ) |   | (4.47 | %) |   | (636,088 | ) |   | 133.72 | % |
| Income                  from continuing operation                      |   |                                                                          | 2,183,010   |                                                                          |       | 10.82                               | %          |   | 945,488 |   |   | 8.89 | % |   | 1,237,522 |   |   | 130.89 | % |
| Discontinued                  operation                                |   |                                                                          | 0           |                                                                          |       | 0.00                                | %          |   | 6,316 |   |   | 0.06 | % |   | (6,316 | ) |   | (100.00 | %) |
| Net                  income (loss)                                     |   |                                                                          | 2,183,010   |                                                                          |       | 10.82                               | %          |   | 951,804 |   |   | 8.95 | % |   | 1,231,206 |   |   | 129.35 | % |
| Foreign                  currency translation gain                     |   |                                                                          | 559,942     |                                                                          |       | 2.78                                | %          |   | 109,950 |   |   | 1.03 | % |   | 449,992 |   |   | 409.27 | % |
| Other                  comprehensive income                            |   |                                                                          | 375,161     |                                                                          |       | 1.86                                | %          |   | 73,666 |   |   | 0.69 | % |   | 301,495 |   |   | 409.27 | % |
| Comprehensive                  income                                  |   |                                                                          | 2,558,171   |                                                                          |       | 12.68                               | %          |   | 1,025,470 |   |   | 9.64 | % |   | 1,532,701 |   |   | 149.46 | % |
| Weighted                  average shares outstanding basic and diluted |   |                                                                          | 12,640,000  |                                                                          |       |                                |       |   | 10,908,043 |   |   |   |   |   |   |   |   |   |   |
| Net                  income per share, basic and diluted               |   |                                                                          | 0.17        |                                                                          |       |                                |       |   | 0.09 |   |   |   |   |   |   |   |   |   |   |

----

**Revenues,        Cost of Goods Sold and Gross Profit**

|                                  |   | **3                  Months Ended****December                  31, 2007** |       | **3                  Months Ended****December                  31, 2006** |   | **Comparisons**                     |   |
|---------------------------------------|--------|---------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|--------|-------------------------------------|--------|
| **Products**                          |   | **Amount****US                  $**                                       |       | **Percentage                  of Revenues****(%)**                        |   | **Amount****US                  $** |   | **Percentage                  of Revenues****(%)** |   | **Growth                  in Amount****US                  $** |   | **Increase                  (Decrease) in Percentage**** (%)** |   |
| Urea                                  |   |                                                                      | 7,870,570  |                                                                      |   | 39.02                               | %      |   | 5,798,066 |   |   | 54.49 | % |   | 2,072,504 |   |   | 35.74 | % |
| Ammonium                  bicarbonate |   |                                                                      | 729,699    |                                                                      |   | 3.62                                | %      |   | 243,590 |   |   | 2.29 | % |   | 486,109 |   |   | 199.56 | % |
| Methanol                              |   |                                                                      | 354,538    |                                                                      |   | 1.76                                | %      |   | 2,551,955 |   |   | 23.99 | % |   | (2,197,417 | ) |   | (86.11 | %) |
| Liquefied                  Ammonia    |   |                                                                      | 425,261    |                                                                      |   | 2.11                                | %      |   | 1,052,770 |   |   | 9.89 | % |   | (627,509 | ) |   | (59.61 | %) |
| DME                                   |   |                                                                      | 10,719,893 |                                                                      |   | 53.15                               | %      |   | 942,236 |   |   | 8.86 | % |   | 9,777,657 |   |   | 1037.71 | % |
| Ammonia                  Water        |   |                                                                      | 69,016     |                                                                      |   | 0.34                                | %      |   | 51,185 |   |   | 0.48 | % |   | 17,831 |   |   | 34.84 | % |
| Total                                 |   |                                                                      | 20,168,977 |                                                                      |   | 100.00                              | %      |   | 10,639,802 |   |   | 100.00 | % |   | 9,529,175 |   |   | 89.56 | % |

----

|                                  |   | **3                    Months Ended****December                    31, 2007**  |       | **3                    Months Ended****December                    31, 2006**  |   | **Comparisons**                       |   |
|---------------------------------------|--------|-------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                    **Provinces** |   | **Amount****US                    $**                                               |       | **Percentage                    of Revenues****(%)**                                |   | **Amount****US                    $** |   | **Percentage                    of Revenues****(%)**  |   | **Growth                    in Amount****US                    $** |   | **Increase                    (Decrease) in Percentage (%)** |   |
| Henan                    Province     |   |                                                                                | 7,310,579  |                                                                                |   | 36.25                                 | %      |   | 4,076,520 |   |   | 38.31 | % |   | 3,234,059 |   |   | 79.33 | % |
| Guangdong                    Province |   |                                                                                | 4,492,459  |                                                                                |   | 22.27                                 | %      |   | 1,417,458 |   |   | 13.32 | % |   | 3,075,001 |   |   | 216.94 | % |
| Hubei                    Province     |   |                                                                                | 3,774,562  |                                                                                |   | 18.72                                 | %      |   | 1,317,661 |   |   | 12.38 | % |   | 2,456,901 |   |   | 186.46 | % |
| Anhui                    Province     |   |                                                                                | 1,079,847  |                                                                                |   | 5.35                                  | %      |   | 3,045,814 |   |   | 28.63 | % |   | (1,965,967 | ) |   | (64.55 | %) |
| Hunan                    Province     |   |                                                                                | 10,470     |                                                                                |   | 0.05                                  | %      |   | 384,355 |   |   | 3.61 | % |   | (373,885 | ) |   | (97.28 | %) |
| Hebei                    Province     |   |                                                                                | 2,825,976  |                                                                                |   | 14.01                                 | %      |   | 0 |   |   | 0.00 | % |   | 2,825,976 |   |   | 100.00 | % |
| Jiangxi                    Province   |   |                                                                                | 610,681    |                                                                                |   | 3.03                                  | %      |   | 212,622 |   |   | 2.00 | % |   | 398,058 |   |   | 187.21 | % |
| Shandong                    Province  |   |                                                                                | 0          |                                                                                |   | 0.00                                  | %      |   | 185,372 |   |   | 1.74 | % |   | (185,372 | ) |   | (100.00 | %) |
| Zhejiang                    Province  |   |                                                                                | 64,403     |                                                                                |   | 0.32                                  | %      |   | 0 |   |   | 0.00 | % |   | 64,403 |   |   | 100.00 | % |
| Total                                 |   |                                                                                | 20,168,977 |                                                                                |   | 100.00                                | %      |   | 10,639,802 |   |   | 100.00 | % |   | 9,529,175 |   |   | 89.56 | % |

|                                |   | **3                    Months Ended****December                    31, 2007**  |       | **3                  Months Ended****December                  31, 2006**  |   | **Comparisons**                           |   |
|-------------------------------------|--------|-------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                  **Item**      |   | **Amount****US                  $**                                            |       | **Percentage                  of Revenues****(%)**                         |   | **Amount****US                  $**  |   | **Percentage                  of Revenues****(%)**  |   | **Growth                  in Amount****US                  $**  |   | **Increase                  (Decrease) in Percentage****(%)** |   |
| Revenues                            |   |                                                                                | 20,168,977 |                                                                            |   | 100                                       | %      |   | 10,639,802 |   |   | 100 | % |   | 9,529,175 |   |   | 89.56 | % |
| Cost                  of Goods Sold |   |                                                                                | 15,760,191 |                                                                            |   | 78.14                                     | %      |   | 8,444,015 |   |   | 79.36 | % |   | 7,316,176 |   |   | 86.64 | % |
| Gross                  Profit       |   |                                                                                | 4,408,786  |                                                                            |   | 21.86                                     | %      |   | 2,195,787 |   |   | 20.64 | % |   | 2,212,999 |   |   | 100.78 | % |

----

|    |   |   |                                 | **DME** |   |       | **Methanol** |   |    | **Urea**   |   |   | **Ammonium                  Bicarbonate** |      |   | **Liquefied                  Ammonia** |   |    | **Ammonia                  Water** |   |
|---------|--------|--------|--------------------------------------|---------|--------|------------|--------------|--------|--------------|------------|--------|--------|-------------------------------------------|-----------|--------|----------------------------------------|--------|---------|------------------------------------|--------|
| 2008Q3  |   |   | Revenues                             |    |   | 10,719,893 |         |   |         | 354,538    |   |   |                                      | 7,870,570 |   |                                   |   | 729,699 |                               |   |   | 425,261 |   |   |   | 69,016 |   |
|         |   |   | COGS                                 |    |   | 8,343,681  |         |   |         | 246,398    |   |   |                                      | 5,976,187 |   |                                   |   | 709,639 |                               |   |   | 422,964 |   |   |   | 61,322 |   |
|         |   |   | Gross                  Profit        |    |   | 2,376,212  |         |   |         | 108,140    |   |   |                                      | 1,894,383 |   |                                   |   | 20,060  |                               |   |   | 2,297 |   |   |   | 7,694 |   |
|         |   |   | Gross                  Profit %      |    |   | 22.16      | %            |   |         | 30.50      | %      |   |                                      | 24.07     | %      |                                   |   | 2.75    | %                                  |   |   | 0.54 | % |   |   | 11.15 | % |
| 2007Q3  |   |   | Revenues                             |    |   | 942,236    |         |   |         | 2,551,955  |   |   |                                      | 5,798,066 |   |                                   |   | 243,590 |                               |   |   | 1,052,770 |   |   |   | 51,185 |   |
|         |   |   | COGS                                 |    |   | 595,115    |         |   |         | 1,602,687  |   |   |                                      | 4,978,123 |   |                                   |   | 225,253 |                               |   |   | 1,000,892 |   |   |   | 41,945 |   |
|         |   |   | Gross                  Profit        |    |   | 347,121    |         |   |         | 949,268    |   |   |                                      | 819,943   |   |                                   |   | 18,337  |                               |   |   | 51,878 |   |   |   | 9,240 |   |
|         |   |   | Gross                  Profit %      |    |   | 36.84      | %            |   |         | 37.20      | %      |   |                                      | 14.14     | %      |                                   |   | 7.53    | %                                  |   |   | 4.93 | % |   |   | 18.05 | % |
| Changes |   |   | Revenues                             |    |   | 9,777,657  |         |   |         | (2,197,417 | )      |   |                                      | 2,072,504 |   |                                   |   | 486,109 |                               |   |   | (627,509 | ) |   |   | 17,831 |   |
|         |   |   | Revenue                  Growth      |    |   | 1037.71    | %            |   |         | (86.11     | %)     |   |                                      | 35.74     | %      |                                   |   | 199.56  | %                                  |   |   | (59.61 | %) |   |   | 34.84 | % |
|         |   |   | Gross                  Margin Growth |    |   | (14.67     | %)           |   |         | (6.70      | %)     |   |                                      | 9.93      | %      |                                   |   | (4.78   | %)                                 |   |   | (4.39 | %) |   |   | (6.90 | %) |

----

**Operating        Expenses**

----

**Income      From Operations**

**Income      Tax**

**Net      Income (Loss)**

**Nine      Months Ended December 31, 2007 as compared to Nine Months Ended December 31,      2006**

|                                                                 |   | **Nine                Months Ended****December                31, 2007** |        | **Nine                Months Ended****December                31, 2006** |   | **Comparisons**         |   |
|----------------------------------------------------------------------|--------|--------------------------------------------------------------------------|-------------|--------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                      |   | **Amount**                                                               |        | **Percentage****of                Revenues**                             |   | **Amount**              |   | **Percentage                of Revenues** |   | **Growth                in Amount** |   | **Increase                (Decrease)****in                Percentage** |   |
| **Item**                                                             |   | **US                $**                                                  |        | **(%)**                                                                  |   | **US                $** |   | **(%)** |   | **US                $** |   | **(%)** |   |
| Revenues                                                             |   |                                                                     | 53,222,726  |                                                                     |   | 100.00                  | %      |   | 27,855,298 |   |   | 100.00 | % |   | 25,367,428 |   |   | 91.07 | % |
| Cost                of Goods Sold                                    |   |                                                                     | (44,366,458 | )                                                                        |   | (83.36                  | %)     |   | (23,283,578 | ) |   | (83.59 | %) |   | (21,082,880 | ) |   | 90.55 | % |
| Gross                Profit                                          |   |                                                                     | 8,856,268   |                                                                     |   | 16.64                   | %      |   | 4,571,720 |   |   | 16.41 | % |   | 4,284,548 |   |   | 93.72 | % |
| Selling                and distribution                              |   |                                                                     | (927,376    | )                                                                        |   | (1.74                   | %)     |   | (491,421 | ) |   | (1.76 | %) |   | (435,955 | ) |   | 88.71 | % |
| General                & administrative                          |   |                                                                     | (1,793,510  | )                                                                        |   | (3.37                   | %)     |   | (932,422 | ) |   | (3.35 | %) |   | (861,088 | ) |   | 92.35 | % |
| Income                from operations                                |   |                                                                     | 6,135,382   |                                                                     |   | 11.53                   | %      |   | 3,147,877 |   |   | 11.30 | % |   | 2,987,505 |   |   | 94.91 | % |
| Interest                expense, net                                 |   |                                                                     | (355,489    | )                                                                        |   | (0.67                   | %)     |   | (213,167 | ) |   | (0.77 | %) |   | (142,322 | ) |   | 66.77 | % |
| Government                grants                                     |   |                                                                     | 81,123      |                                                                     |   | 0.15                    | %      |   | 0 |   |   | 0.00 | % |   | 81,123 |   |   | 100.00 | % |
| Other,                net                                            |   |                                                                     | 43,332      |                                                                     |   | 0.08                    | %      |   | (67,246 | ) |   | (0.24 | %) |   | 110,578 |   |   | 164.44 | % |
| Income                before tax                                     |   |                                                                     | 5,904,348   |                                                                     |   | 11.09                   | %      |   | 2,867,464 |   |   | 10.29 | % |   | 3,036,884 |   |   | 105.91 | % |
| Income                tax                                            |   |                                                                     | (1,853,053  | )                                                                        |   | (3.48                   | %)     |   | (1,035,062 | ) |   | (3.72 | %) |   | 817,991 |   |   | 79.03 | % |
| Income                from continuing operation                      |   |                                                                     | 4,051,295   |                                                                     |   | 7.61                    | %      |   | 1,832,402 |   |   | 6.58 | % |   | 2,218,893 |   |   | 121.09 | % |
| Income                from discontinued operation                    |   |                                                                     | 1,761       |                                                                     |   | 0.00                    | %      |   | 9,484 |   |   | 0.03 | % |   | (7,723 | ) |   | (81.43 | %) |
| Income                from disposition of long term investment       |   |                                                                     | 19,930      |                                                                     |   | 0.04                    | %      |   | 0 |   |   | 0.00 | % |   | 19,930 |   |   | 100.00 | % |
| Net                income (loss)                                     |   |                                                                     | 4,072,986   |                                                                     |   | 7.65                    | %      |   | 1,841,886 |   |   | 6.61 | % |   | 2,231,100 |   |   | 121.13 | % |
| Foreign                currency translation gain                     |   |                                                                     | 1,097,290   |                                                                     |   | 2.06                    | %      |   | 329,855 |   |   | 1.18 | % |   | 767,435 |   |   | 232.66 | % |
| Other                comprehensive income                            |   |                                                                     | 735,184     |                                                                     |   | 1.38                    | %      |   | 221,003 |   |   | 0.79 | % |   | 514,181 |   |   | 232.66 | % |
| Comprehensive                income                                  |   |                                                                     | 4,808,170   |                                                                     |   | 9.03                    | %      |   | 2,062,889 |   |   | 7.41 | % |   | 2,745,281 |   |   | 133.08 | % |
| Weighted                average shares outstanding basic and diluted |   |                                                                     | 12,640,000  |                                                                     |   |                    |   |   | 8,640,145 |   |   |   |   |   | 3,999,855 |   |   | 46.29 | % |
| Net                income per share, basic and diluted               |   |                                                                     | 0.32        |                                                                     |   |                    |   |   | 0.21 |   |   |   |   |   | 0.11 |   |   | 51.16 | % |

----

**Revenues**

|                                |   | **9                Months Ended****December                31, 2007** |       | **9                Months Ended****December                31, 2006** |   | **Comparisons**                   |   |
|-------------------------------------|--------|-----------------------------------------------------------------------|------------|-----------------------------------------------------------------------|--------|-----------------------------------|--------|
| **Products**                        |   | **Amount****US                $**                                     |       | **Percentage                of Revenues****(%)**                      |   | **Amount****US                $** |   | **Percentage                of Revenues****(%)** |   | **Growth                in Amount****US                $** |   | **Increase                (Decrease) in Percentage****(%)** |   |
| Urea                                |   |                                                                  | 22,648,524 |                                                                  |   | 42.56                             | %      |   | 16,359,947 |   |   | 58.73 | % |   | 6,288,577 |   |   | 38.44 | % |
| Ammonium                bicarbonate |   |                                                                  | 1,875,453  |                                                                  |   | 3.52                              | %      |   | 1,528,833 |   |   | 5.49 | % |   | 346,620 |   |   | 22.67 | % |
| Methanol                            |   |                                                                  | 409,205    |                                                                  |   | 0.77                              | %      |   | 4,699,148 |   |   | 16.87 | % |   | (4,289,943 | ) |   | (91.29 | %) |
| Liquefied                Ammonia    |   |                                                                  | 771,453    |                                                                  |   | 1.45                              | %      |   | 1,355,892 |   |   | 4.87 | % |   | (584,439 | ) |   | (43.10 | %) |
| DME                                 |   |                                                                  | 27,351,989 |                                                                  |   | 51.39                             | %      |   | 3,809,889 |   |   | 13.68 | % |   | 23,542,100 |   |   | 617.92 | % |
| Ammonia                Water        |   |                                                                  | 166,102    |                                                                  |   | 0.31                              | %      |   | 101,589 |   |   | 0.36 | % |   | 64,513 |   |   | 63.50 | % |
| Total                               |   |                                                                  | 53,222,726 |                                                                  |   | 100.00                            | %      |   | 27,855,298 |   |   | 100.00 | % |   | 25,367,428 |   |   | 91.07 | % |

----

**Divided      by regions**

|                              |   | **9                Months Ended****December                31, 2007** |       | **9                Months Ended****December                31, 2006** |   | **Comparisons**                   |   |
|-----------------------------------|--------|-----------------------------------------------------------------------|------------|-----------------------------------------------------------------------|--------|-----------------------------------|--------|
| **Provinces**                     |   | **Amount****US                $**                                     |       | **Percentage                of Revenues****(%)**                      |   | **Amount****US                $** |   | **Percentage                of Revenues****(%)** |   | **Growth                in****Amount****US                $** |   | **Increase                (Decrease) in Percentage****(%)** |   |
| Henan                Province     |   |                                                                  | 17,683,138 |                                                                  |   | 33.22                             | %      |   | 10,784,762 |   |   | 38.72 | % |   | 6,898,376 |   |   | 63.96 | % |
| Guangdong                Province |   |                                                                  | 13,837,136 |                                                                  |   | 26.00                             | %      |   | 6,399,107 |   |   | 22.97 | % |   | 7,438,029 |   |   | 116.24 | % |
| Hubei                Province     |   |                                                                  | 10,418,522 |                                                                  |   | 19.58                             | %      |   | 2,973,409 |   |   | 10.67 | % |   | 7,445,113 |   |   | 250.39 | % |
| Anhui                Province     |   |                                                                  | 2,543,348  |                                                                  |   | 4.78                              | %      |   | 5,368,677 |   |   | 19.27 | % |   | (2,825,329 | ) |   | (52.63 | %) |
| Hunan                Province     |   |                                                                  | 268,714    |                                                                  |   | 0.51                              | %      |   | 567,576 |   |   | 2.04 | % |   | (298,862 | ) |   | (52.66 | %) |
| Hebei                Province     |   |                                                                  | 5,917,324  |                                                                  |   | 11.12                             | %      |   | 0 |   |   | 0.00 | % |   | 5,917,324 |   |   | 100.00 | % |
| Jiangxi                Province   |   |                                                                  | 2,369,812  |                                                                  |   | 4.45                              | %      |   | 892,991 |   |   | 3.21 | % |   | 1,476,821 |   |   | 165.38 | % |
| Shandong                Province  |   |                                                                  | 23,881     |                                                                  |   | 0.04                              | %      |   | 716,010 |   |   | 2.57 | % |   | (692,128 | ) |   | (96.66 | %) |
| Zhejiang                Province  |   |                                                                  | 160,851    |                                                                  |   | 0.30                              | %      |   | 80,546 |   |   | 0.29 | % |   | 80,305 |   |   | 99.70 | % |
| Guangxi                Province   |   |                                                                  | 0          |                                                                  |   | 0.00                              | %      |   | 72,220 |   |   | 0.26 | % |   | (72,220 | ) |   | (100.00 | %) |
| Total                             |   |                                                                  | 53,222,726 |                                                                  |   | 100.00                            | %      |   | 27,855,298 |   |   | 100.00 | % |   | 25,367,428 |   |   | 91.07 | % |

----

**Cost      of Goods Sold**

**Gross      Profit**

|                              |   | **9                Months Ended****December                31, 2007** |       | **9                Months Ended****December                31, 2006** |   | **Comparisons**                   |   |
|-----------------------------------|--------|-----------------------------------------------------------------------|------------|-----------------------------------------------------------------------|--------|-----------------------------------|--------|
| **Item**                          |   | **Amount****US                $**                                     |       | **Percentage                of Revenues****(%)**                      |   | **Amount****US                $** |   | **Percentage                of Revenues****(%)** |   | **Growth                in Amount****US                $** |   | **Increase                (Decrease) in Percentage****(%)** |   |
| Revenues                          |   |                                                                  | 53,222,726 |                                                                  |   | 100                               | %      |   | 27,855,298 |   |   | 100 | % |   | 25,367,428 |   |   | 91.07 | % |
| Cost                of Goods Sold |   |                                                                  | 44,366,458 |                                                                  |   | 83.36                             | %      |   | 23,283,578 |   |   | 83.59 | % |   | 21,082,880 |   |   | 90.55 | % |
| Gross                Profit       |   |                                                                  | 8,856,268  |                                                                  |   | 16.64                             | %      |   | 4,571,720 |   |   | 16.41 | % |   | 4,284,548 |   |   | 93.72 | % |

**Operating      Expenses**

**Income      From Operations**

----

**Income      Tax**

**Net      Income (Loss)**

**Summary      and Outlook**

----

|   | 1) | The                winter snowstorm is expected to last approximately 45 days in total,                with                continuing shortages of electricity and limited transportation. Unlike                Urea, DME is a gas and is difficult to store in warehouses or tanks,                especially given the Company’s very limited storage capacity. Our                production capacity is limited by the ability of trucks to deliver                methanol and distribute the DME. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) | Due                to the shorter month of February and the impact of the Chinese New                Year,                transportation drivers usually take the whole month off during extremely                inclement weather so they can avoid paying the monthly road toll                fees when                the limited number of working days would make it                unprofitable. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3) | Under                the circumstances, management believes it should be conservative                in                estimating March DME production, even if there is no snowstorm that                month.                The price of methanol has continued to fluctuate, which raises the                concern                of a negative profit margin if the Company purchases this feedstock                and                produces DME while the methanol price is too high. Consequently,                the                Company cautiously predicts that DME output may be at half its capacity                through March. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**LIQUIDITY      AND CAPITAL RESOURCES**

*Cash      Flows*

|                                                                        |   | **Nine                months ended****December                31,**  |        |
|-----------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|-------------|
|                                                                        |   | **2007**                                                                  |        | **2006** |   |
| Net                cash provided by (used in)                               |   |                                                                      |        |   |   |
| Operating                activities                                         |   | $                                                                         | 4,349,587   |   | $ | 5,973,630 |   |
| Investing                activities                                         |   |                                                                      | (10,556,065 | ) |   | (6,440,099 | ) |
| Financing                activities                                         |   |                                                                      | 12,359,518  |   |   | 1,838,147 |   |
| Net                change in cash and cash equivalents                      |   |                                                                      | 6,153,040   |   |   | 1,371,678 |   |
|                                                                        |   |                                                                      |        |   |   |   |   |
| Effect                of exchange rate changes on cash and cash equivalents |   |                                                                      | 410,610     |   |   | 289,575 |   |
|                                                                        |   |                                                                      |        |   |   |   |   |
| Cash                and cash equivalents at beginning of period             |   |                                                                      | 2,616,149   |   |   | 3,281,761 |   |
|                                                                        |   |                                                                      |        |   |   |   |   |
| Cash                and cash equivalents at end of period                   |   | $                                                                         | 9,179,799   |   | $ | 4,943,014 |   |

----

*Liquidity*

----

*Capital      Resources*

**Item      3. Controls and Procedures.**

**A.      Evaluation of Disclosure Controls and Procedures:**

**B.      Changes in Internal Control over Financial Reporting:**

There      was      no change in the Company's internal control over financial reporting that was      identified in connection with such evaluation that occurred during the period      covered by this Quarterly Report on Form 10-QSB that has materially affected,      or      is reasonably likely to materially affect, the Company's internal control over      financial reporting.

**PART      II**

**OTHER      INFORMATION**

**Item      1. Legal Proceedings.**

----

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds.**

**Item      3. Defaults Upon Senior Securities.**

**Item      4. Submission of Matters to a Vote of Security Holders.**

**Item      5. Other Information.**

**Item      6. Exhibits.**

| **Exhibit****Number** |   | **Description**                                                                                   |
|-----------------------|--------|---------------------------------------------------------------------------------------------------|
|                  |   |                                                                                              |
| 31.1                  |   | Certification                pursuant to Section 302 of Sarbanes Oxley Act of 2002                |
|                  |   |                                                                                              |
| 31.2                  |   | Certification                pursuant to Section 302 of Sarbanes Oxley Act of 2002                |
|                  |   |                                                                                              |
| 32.1                  |   | Certification                pursuant to Section 906 of Sarbanes Oxley Act of 2002                |
|                  |   |                                                                                              |
| 32.2                  |   | Certification                pursuant to Section 906 of Sarbanes Oxley Act of                2002 |

----

**SIGNATURES**

|                                 |                                                      |                                        |
|--------------------------------------|-----------------------------------------------------------|---------------------------------------------|
|                                 | **NEW              ORIENTAL ENERGY & CHEMICAL CORP.** |
|                            |                                                 |                                   |
| Date:              February 14, 2008 | By:                                             | /s/              Wang              Gui Quan |
|                                 | Name: Wang              Gui Quan                     |
|                                 | Title: President                                     |

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