**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      DC 20549**

----

**FORM      10-Q**

**x**
**      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT      OF 1934**

**For      the quarterly period ended September 30, 2008**

** ̈**
**      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT      OF 1934**

**For      the transition period from ______ to ______.**

**Commission      file number: 001-33470**

**NEW      ORIENTAL ENERGY & CHEMICAL CORP. **

| **Delaware**(State                or other jurisdiction ofincorporation                or organization)  |   | **20-1917956**(I.R.S.                Employer Identification No.) |
|---------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|

| **Xicheng                Industrial Zone of****Luoshan,                Xinyang****Henan                Province, The People’s****Republic                of China** |   | **464200**                |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|
| (Address                of principal executive offices)                                                                                                                   |   | (Zip                Code) |

**(86)      27 853 75701**

**Indicate      by check mark whether the registrant: (1) has filed all reports required to      be      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during      the      preceding 12 months (or for such shorter period that the registrant was required      to file such reports), and (2) has been subject to such filing requirements      for      the past 90 days.**

**Yes      **
**x**
**No      **
** ̈**

**Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer, a non-accelerated filer, or a smaller reporting company.      See      the definitions of “large accelerated filer,” “accelerated filer” and “smaller      reporting company” in Rule 12b-2 of the Exchange Act.**

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

**Indicate      by check mark whether the registrant is a shell company (as defined in Rule      12-b2 of the Exchange Act).**

**Yes      **
** ̈**
**No      **
**x**

**Indicate      the number of shares outstanding of each of the issuer’s classes of common      stock, as of the latest practicable date.**

| **Class**                                                  |   | **Outstanding at November 13, 2008** |                     |
|------------------------------------------------------------|--------|----------------------------------------------------------|--------------------------|
| **Common                Stock, $.001 par value per share** |   |                                                     | **12,640,000****shares** |   |

----

**PART      I – FINANCIAL INFORMATION**

**Item      1.**
**Financial      Statements.**

**New      Oriental Energy & Chemical Corp.**

**(Formerly      Sports Source, Inc.) And Subsidiaries**

**Condensed      Consolidated Financial Statements**

**For      the Three and Six Months Ended September 30, 2008 And 2007**

|                                                                                                      | Page   |
|-----------------------------------------------------------------------------------------------------------|--------|
|                                                                                                      |   |
| Condensed                Consolidated Balance Sheets as of September 30, 2008                (Unaudited)  |   |
| and                March 31, 2008                                                                         | F-2    |
|                                                                                                      |   |
| Condensed                Consolidated Statements of (Loss) Income and Comprehensive                (Loss) |   |
| Income                for the Three and Six Months Ended September 30, 2008 and 2007                      |   |
| (Unaudited)                                                                                               | F-3    |
|                                                                                                      |   |
| Condensed                Consolidated Statements of Cash Flows for the Six Months                Ended    |   |
| September                30, 2008 and 2007 (Unaudited)                                                    | F-4    |
|                                                                                                      |   |
| Notes                to Condensed Consolidated Financial Statements for the Three and                Six  |   |
| Months                Ended September 30, 2008 and 2007 (Unaudited)                                       | F-6-21 |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

| **ASSETS**                                                                                                                                                                                                                             |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                   |   | **September 30, 2008** |   | **March 31, 2008** |   |
|                                                                                                                                                                                                                                   |   | **(Unaudited)** |   |   |   |
| **CURRENT                ASSETS**                                                                                                                                                                                                      |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                               |   | $ | 1,860,931 |   | $ | 7,487,808 |   |
| Restricted                cash                                                                                                                                                                                                         |   |   | 6,717,217 |   |   | 5,438,809 |   |
| Notes                receivable, net of reserve of $146,664 and $135,563 at September                30, 2008                and March 31, 2008, respectively                                                                          |   |   | 593,990 |   |   | 647,908 |   |
| Inventories,                net                                                                                                                                                                                                        |   |   | 2,567,692 |   |   | 2,171,040 |   |
| Prepayments                for goods                                                                                                                                                                                                   |   |   | 530,835 |   |   | 1,196,831 |   |
| Due                from employees                                                                                                                                                                                                      |   |   | 17,958 |   |   | 13,213 |   |
| Other                assets                                                                                                                                                                                                            |   |   | 73,218 |   |   | 134,993 |   |
| Due                from related parties                                                                                                                                                                                                |   |   | 172,799 |   |   | - |   |
| Total                current assets                                                                                                                                                                                                    |   |   | 12,534,640 |   |   | 17,090,602 |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |
| Long-term                investment                                                                                                                                                                                                    |   |   | 470,791 |   |   | - |   |
| Plant                and equipment, net                                                                                                                                                                                                |   |   | 19,961,732 |   |   | 20,102,938 |   |
| Land                use rights, net                                                                                                                                                                                                    |   |   | 1,659,591 |   |   | 1,629,633 |   |
| Construction                in progress                                                                                                                                                                                                |   |   | 21,313,759 |   |   | 9,740,638 |   |
| Deposits                                                                                                                                                                                                                               |   |   | 2,050,323 |   |   | 1,978,389 |   |
| Deferred                taxes                                                                                                                                                                                                          |   |   | 201,200 |   |   | 179,541 |   |
| Other                long-term assets                                                                                                                                                                                                  |   |   | 12,471 |   |   | 32,574 |   |
| Total                long-term assets                                                                                                                                                                                                  |   |   | 45,669,867 |   |   | 33,663,713 |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |
| **TOTAL                ASSETS**                                                                                                                                                                                                        |   | $ | 58,204,507 |   | $ | 50,754,315 |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS' EQUITY**                                                                                                                                                                                |   |   |   |   |   |   |   |
| **CURRENT                LIABILITIES**                                                                                                                                                                                                 |   |   |   |   |   |   |   |
| Accounts                payable                                                                                                                                                                                                        |   | $ | 6,009,712 |   | $ | 1,656,883 |   |
| Other                payables and accrued liabilities                                                                                                                                                                                  |   |   | 569,145 |   |   | 545,090 |   |
| Short-term                debt                                                                                                                                                                                                         |   |   | 17,749,293 |   |   | 17,954,837 |   |
| Customer                deposits                                                                                                                                                                                                       |   |   | 3,928,665 |   |   | 4,220,527 |   |
| Payable                to contractors                                                                                                                                                                                                  |   |   | 964,146 |   |   | 506,364 |   |
| Due                to related parties                                                                                                                                                                                                  |   |   | 8,587,539 |   |   | 5,708,995 |   |
| Taxes                payable                                                                                                                                                                                                           |   |   | 845,899 |   |   | 1,424,992 |   |
| Total                current liabilities                                                                                                                                                                                               |   |   | 38,654,399 |   |   | 32,017,688 |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |
| **LONG-TERM                LIABILITIES**                                                                                                                                                                                               |   |   |   |   |   |   |   |
| Long-term                notes payable                                                                                                                                                                                                 |   |   | 532,391 |   |   | 517,168 |   |
| Deferred                taxes                                                                                                                                                                                                          |   |   | 772,102 |   |   | 773,449 |   |
| Due                to employees                                                                                                                                                                                                        |   |   | 160,684 |   |   | 156,517 |   |
| Total                long-term liabilities                                                                                                                                                                                             |   |   | 1,465,177 |   |   | 1,447,134 |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |
| **TOTAL                LIABILITIES**                                                                                                                                                                                                   |   | $ | 40,119,576 |   | $ | 33,464,822 |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |
| **SHAREHOLDERS'                EQUITY**                                                                                                                                                                                                |   |   |   |   |   |   |   |
| Common                stock, par value $0.001 per share; 30,000,000 shares authorized,                12,640,000 shares issued and outstanding as of September 30, 2008                and                March 31, 2008, respectively |   |   | 12,640 |   |   | 12,640 |   |
| Additional                paid-in capital                                                                                                                                                                                              |   |   | 4,573,205 |   |   | 4,573,205 |   |
| Retained                earnings (restricted portion was $950,327 as of September 30, 2008                and                March 31, 2008, respectively)                                                                             |   |   | 10,872,622 |   |   | 10,626,499 |   |
| Accumulated                other comprehensive income                                                                                                                                                                                  |   |   | 2,626,464 |   |   | 2,077,149 |   |
| **TOTAL                SHAREHOLDERS' EQUITY**                                                                                                                                                                                          |   |   | 18,084,931 |   |   | 17,289,493 |   |
|                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |
| **TOTAL                LIABILITIES AND SHAREHOLDERS' EQUITY**                                                                                                                                                                          |   | $ | 58,204,507 |   | $ | 50,754,315 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**CONDENSED      CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND**

**COMPREHNENSIVE      (LOSS) INCOME**

**(UNAUDITED)**

|                                                                                                         |   | **Three Months Ended ****September 30,** |        | **Six Months Ended ****September 30,** |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|-------------|------------------------------------------------------------|--------|
|                                                                                                         |   | **2008**                                                     |        | **2007**                                                   |   | **2008** |   | **2007** |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |
| **REVENUES**                                                                                                 |   | $                                                            | 14,260,705  |                                                       | $      | 18,215,622 |   | $ | 30,107,977 |   | $ | 32,902,228 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **COST                OF GOODS SOLD**                                                                        |   |                                                         | (15,212,114 | )                                                          |   | (16,376,557 | ) |   | (28,332,521 | ) |   | (28,450,295 | ) |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **GROSS                (LOSS) PROFIT**                                                                       |   |                                                         | (951,409    | )                                                          |   | 1,839,065 |   |   | 1,775,456 |   |   | 4,451,933 |   |
| General                and administrative                                                                    |   |                                                         | 510,894     |                                                       |   | 541,512 |   |   | 1,457,664 |   |   | 1,020,280 |   |
| Selling                and distribution                                                                      |   |                                                         | 291,657     |                                                       |   | 208,584 |   |   | 567,093 |   |   | 644,997 |   |
| Research                and development                                                                      |   |                                                         | 89,982      |                                                       |   | - |   |   | 109,435 |   |   | - |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **(LOSS)                INCOME FROM OPERATIONS**                                                             |   |                                                         | (1,843,942  | )                                                          |   | 1,088,969 |   |   | (358,736 | ) |   | 2,786,656 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **OTHER                INCOME (EXPENSES)**                                                                   |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| Interest                expense, net                                                                         |   |                                                         | (232,826    | )                                                          |   | (161,789 | ) |   | (417,440 | ) |   | (261,049 | ) |
| Government                grants                                                                             |   |                                                         | 1,008,964   |                                                       |   | 79,332 |   |   | 997,297 |   |   | 78,714 |   |
| Other                (expenses) income, net                                                                  |   |                                                         | (1,209      | )                                                          |   | (2,644 | ) |   | (33,457 | ) |   | 7,905 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **(LOSS)                INCOME FROM OPERATIONS BEFORE INCOME TAXES**                                         |   |                                                         | (1,069,013  | )                                                          |   | 1,003,868 |   |   | 187,664 |   |   | 2,612,226 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **INCOME                TAX BENEFIT (EXPENSE)**                                                              |   |                                                         | 478,567     |                                                       |   | (160,976 | ) |   | 58,459 |   |   | (747,548 | ) |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **(LOSS)                INCOME FROM CONTINUING OPERATIONS**                                                  |   |                                                         | (590,446    | )                                                          |   | 842,892 |   |   | 246,123 |   |   | 1,864,678 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **DISCONTINUED                OPERATION**                                                                    |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| Gain                from discontinued operation (net of income tax $0 and $396,                respectively) |   |                                                         | -           |                                                       |   | 1,761 |   |   | - |   |   | 1,761 |   |
| Gain                from disposition of discontinued operation                                               |   |                                                         | -    |                                                       |   | 19,359 |   |   | -  |   |   | 19,931 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **NET                (LOSS) INCOME**                                                                         |   |                                                         | (590,446    | )                                                          |   | 864,012 |   |   | 246,123 |   |   | 1,886,370 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **OTHER                COMPREHENSIVE INCOME**                                                                |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| Foreign                currency translation gain                                                             |   |                                                         | 117,832     |                                                       |   | 145,816 |   |   | 549,315 |   |   | 537,348 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **OTHER                COMPREHENSIVE INCOME BEFORE TAX**                                                     |   |                                                         | 117,832     |                                                       |   | 145,816 |   |   | 549,315 |   |   | 537,348 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **INCOME                TAX EXPENSE RELATED TO OTHER COMPREHENSIVE INCOME**                                  |   |                                                         | -           |                                                       |   | 64,603 |   |   | - |   |   | 177,325 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **OTHER                COMPREHENSIVE INCOME, NET**                                                           |   |                                                         | 117,832     |                                                       |   | 81,213 |   |   | 549,315 |   |   | 360,023 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **COMPREHENSIVE                (LOSS) INCOME**                                                               |   | $                                                            | (472,614    | )                                                          | $      | 945,225 |   | $ | 795,438 |   | $ | 2,246,393 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **WEIGHTED                AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED**                                    |   |                                                         | 12,640,000  |                                                       |   | 12,640,000 |   |   | 12,640,000 |   |   | 12,640,000 |   |
|                                                                                                         |   |                                                         |        |                                                       |   |   |   |   |   |   |   |   |   |
| **(LOSS)                INCOME FROM CONTINUING OPERATIONS PER SHARE, BASIC AND                DILUTED**      |   | $                                                            | (0.05       | )                                                          | $      | 0.07 |   | $ | 0.06 |   | $ | 0.15 |   |
| **INCOME                FROM DISCONTINUED OPERATION PER SHARE, BASIC AND                DILUTED**            |   | $                                                            | -           |                                                       | $      | - |   | $ | - |   | $ | - |   |
| **NET                (LOSS) INCOME PER SHARE, BASIC AND DILUTED**                                            |   | $                                                            | (0.05       | )                                                          | $      | 0.07 |   | $ | 0.06 |   | $ | 0.15 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

|                                                                       |   | **Six Months Ended****September 30,** |        |
|----------------------------------------------------------------------------|--------|------------------------------------------------------|-------------|
|                                                                       |   | **2008**                                             |        | **2007** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                   |   |                                                 |        |   |   |   |   |
| Net                income                                                  |   | $                                                    | 246,123     |   | $ | 1,886,370 |   |
| Adjustments                to reconcile net income to net cash provided by |   |                                                 |        |   |   |   |   |
| operating                activities:                                       |   |                                                 |        |   |   |   |   |
| Depreciation                and amortization                               |   |                                                 | 1,388,804   |   |   | 939,254 |   |
| Gain                on disposal of plant                                   |   |                                                 | (2,847      | ) |   | - |   |
| Cash                dividend from long term investment                     |   |                                                 | (1,896      | ) |   | - |   |
| Deferred                taxes                                              |   |                                                 | (23,006     | ) |   | (281,153 | ) |
| Provision                for inventory                                     |   |                                                 | 110,245     |   |   | - |   |
| Gain                on disposal of discontinued operations                 |   |                                                 | -           |   |   | (19,931 | ) |
| Discontinued                operation                                      |   |                                                 | -           |   |   | (1,761 | ) |
|                                                                       |   |                                                 |        |   |   |   |   |
| **Changes                in operating assets and liabilities:**            |   |                                                 |        |   |   |   |   |
|                                                                       |   |                                                 |        |   |   |   |   |
| **(Increase)                Decrease In:**                                 |   |                                                 |        |   |   |   |   |
| Inventories                                                                |   |                                                 | (506,897    | ) |   | 1,311,970 |   |
| Prepayment                for goods                                        |   |                                                 | 665,996     |   |   | (1,712,197 | ) |
| Due                from employees                                          |   |                                                 | (4,745      | ) |   | 80,631 |   |
| Other                assets                                                |   |                                                 | 61,775      |   |   | (263,169 | ) |
| Due                from related parties                                    |   |                                                 | (172,799    | ) |   | - |   |
| Discontinued                operation                                      |   |                                                 | -           |   |   | 21,692 |   |
|                                                                       |   |                                                 |        |   |   |   |   |
| **Increase                (Decrease) In:**                                 |   |                                                 |        |   |   |   |   |
| Accounts                payable                                            |   |                                                 | 4,352,829   |   |   | 1,712,623 |   |
| Other                payables and accrued liabilities                      |   |                                                 | 24,055      |   |   | 377 |   |
| Customer                deposits                                           |   |                                                 | (291,862    | ) |   | (1,876,307 | ) |
| Due                to employees                                            |   |                                                 | 10,878      |   |   | 3,024 |   |
| Taxes                payable                                               |   |                                                 | (579,093    | ) |   | 912,436 |   |
| Net                cash provided by operating activities                   |   |                                                 | 5,277,560   |   |   | 2,713,859 |   |
|                                                                       |   |                                                 |        |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                   |   |                                                 |        |   |   |   |   |
| Restricted                cash                                             |   |                                                 | (1,278,408  | ) |   | (2,790,204 | ) |
| Payment                for long-term investment                            |   |                                                 | (433,607    | ) |   | - |   |
| Purchases                of plant and equipment                            |   |                                                 | (133,587    | ) |   | (1,083,672 | ) |
| Purchases                of construction in progress                       |   |                                                 | (10,983,763 | ) |   | (1,331,150 | ) |
| Deposit                for land use rights                                 |   |                                                 | (13,500     | ) |   | (847,373 | ) |
| Purchases                of other long term assets                         |   |                                                 | (9,973      | ) |   | - |   |
| Cash                dividend from long term investment                     |   |                                                 | 1,896       |   |   | - |   |
| Proceeds                from disposition of discontinued operation         |   |                                                 | -           |   |   | 73,515 |   |
| Proceeds                on disposal of plant                               |   |                                                 | 96,310      |   |   | - |   |
| Repayment                of notes receivable                               |   |                                                 | 71,931      |   |   | 51,128 |   |
| ** **Net                cash used in investing activities             |   |                                                 | (12,682,701 | ) |   | (5,927,756 | ) |
|                                                                       |   |                                                 |        |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                    |   |                                                 |        |   |   |   |   |
| Proceeds                from short-term debt                               |   |                                                 | 13,733,794  |   |   | 19,025,071 |   |
| Repayments                of short-term debt                               |   |                                                 | (14,457,196 | ) |   | (8,947,116 | ) |
| Due                to related parties                                      |   |                                                 | 2,386,146   |   |   | (2,291,534 | ) |
| ** **Net                cash provided by financing activities         |   |                                                 | 1,662,744   |   |   | 7,786,421 |   |
|                                                                       |   |                                                 |        |   |   |   |   |
| **NET                (DECREASE) INCREASE IN CASH AND CASH QUIVALENTS**     |   |                                                 | (5,742,397  | ) |   | 4,572,524 |   |
|                                                                       |   |                                                 |        |   |   |   |   |
| Effect                of exchange rate changes on cash                     |   |                                                 | 115,520     |   |   | 267,918 |   |
| Cash                and cash equivalents at beginning of period            |   |                                                 | 7,487,808   |   |   | 2,616,149 |   |
|                                                                       |   |                                                 |        |   |   |   |   |
| **CASH                AND CASH EQUIVALENTS AT END OF PERIOD**              |   | $                                                    | 1,860,931   |   |   | 7,456,591 |   |
|                                                                       |   |                                                 |        |   |   |   |   |
| **SUPPLEMENTARY                CASH FLOW INFORMATION**                     |   |                                                 |        |   |   |   |   |
| Income                taxes paid                                           |   | $                                                    | 592,597     |   |   | - |   |
| Interest                paid                                               |   | $                                                    | 366,820     |   |   | 261,049 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

**SUPPLEMENTAL      NON-CASH DISCLOSURES:**

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR      THE THREE **

**AND      SIX **

**MONTHS      ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **1.** | **ORGANIZATION                AND PRINCIPAL ACTIVITIES** |
|--------|----------------------------------------------------------|

*Business      Combinations*

| **2.** | **BASIS                OF PRESENTATION** |
|--------|------------------------------------------|

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

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

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

| **Customer**               |   | **Sales**                                              |   | **Customer Deposits**             |   |
|----------------------------|--------|--------------------------------------------------------|--------|----------------------------------------|--------|
|                       |   | **Six Months Ended September 30,** |   | **As of September 30,** |   | **As of March 31, ** |   |
|                       |   | **2008**                                               |   | **2007**                               |   | **2008** |   | **2008** |   |
| Company                  A |   |                                                   | 20.74  | %                                      |   | 23.71 | % |   | 1.28 | % |   | 35.81 | % |
| Company                  B |   |                                                   | 10.27  | %                                      |   | 7.44 | % |   | 14.74 | % |   | 18.72 | % |
| Company                  C |   |                                                   | 9.65   | %                                      |   | 0.39 | % |   | 0.04 | % |   | 1.42 | % |
| Company                  D |   |                                                   | 5.16   | %                                      |   | - |   |   | 0.00 | % |   | - |   |

| **Supplier**             |   | **Purchases**                                          |   | **Accounts Payable****/Deposits** |   |
|--------------------------|--------|--------------------------------------------------------|--------|----------------------------------------|--------|
|                     |   | **Six Months Ended September 30,** |   | **As of September 30,** |   | **As of March 31,** |   |
|                     |   | **2008**                                               |   | **2007**                               |   | **2008** |   | **2008** |   |
| Company                E |   |                                                   | 24.36  | %                                      |   | 14.32 | % |   | 16.25 | % |   | 28.82 | % |
| Company                F |   |                                                   | 19.36  | %                                      |   | 7.43 | % |   | 11.51 | % |   | 8.42 | % |
| Company                G |   |                                                   | 19.17  | %                                      |   | 1.62 | % |   | 13.06 | % |   | 66.80 | % |
| Company                H |   |                                                   | 9.16   | %                                      |   | - |   |   | 2.40 | % |   | - |   |
| Company                I |   |                                                   | 8.78   | %                                      |   | 1.71 | % |   | 11.65 | % |   | 17.79 | % |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

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

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

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

|                                                                       |   | September 30, 2008 |   | March 31, 2008 |   | September 30, 2007 |   |
|----------------------------------------------------------------------------|--------|------------------------------|--------|--------------------------|--------|------------------------------|--------|
| Year                end RMB:                $                exchange rate |   |                         | 6.8183 |                     |   | 7.0190                       |   |   | 7.5108 |   |
| Average                yearly RMB: $ exchange rate                         |   |                         | 6.9187 |                     |   | 7.3766                       |   |   | 7.6225 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

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

**Fuel      Segment**
**:**

| **For                  The Three Months Ended September 30, 2008** |   |
|--------------------------------------------------------------------|--------|
|                                                               |   | **DME** |   | **Methanol** |   | **Segment                  Total** |   |
| Revenues                                                           |   | $ | 3,992,642 |   | $ | 366,753 |   | $ | 4,359,395 |   |
| COGS                                                               |   |   | 4,529,406 |   |   | 445,628 |   |   | 4,975,034 |   |
| Gross                  profit                                      |   | $ | (536,764 | ) | $ | (78,875 | ) | $ | (615,639 | ) |

| **For                  The Three Months Ended September 30, 2007** |   |
|--------------------------------------------------------------------|--------|
|                                                               |   | **DME** |   |  **Methanol** |   |  **Segment                  Total** |   |
| Revenues                                                           |   | $ | 12,206,012 |   |   | - |   | $ | 12,206,012 |   |
| COGS                                                               |   |   | 10,620,664 |   |   | - |   |   | 10,620,664 |   |
| Gross                  profit                                      |   | $ | 1,585,348 |   |   | - |   | $ | 1,585,348 |   |

| **For                The Six Months Ended September 30, 2008** |   |
|----------------------------------------------------------------|--------|
| **  **                                               |   | **DME** |   | **Methanol** |   | **Segment Total** |   |
| Revenues                                                       |   | $ | 8,876,798 |   | $ | 712,843 |   | $ | 9,589,641 |   |
| COGS                                                           |   |   | 8,518,796 |   |   | 678,402 |   |   | 9,197,198 |   |
| Gross                profit                                    |   | $ | 358,002 |   | $ | 34,441 |   | $ | 392,443 |   |

| **For                The Six Months Ended September 30, 2007** |   |
|----------------------------------------------------------------|--------|
|                                                           |   | **DME** |   | **Methanol** |   | **Segment                Total** |   |
| Revenues                                                       |   | $ | 16,564,488 |   | $ | 58,858 |   | $ | 16,623,346 |   |
| COGS                                                           |   |   | 14,367,334 |   |   | 55,647 |   |   | 14,422,981 |   |
| Gross                profit                                    |   | $ | 2,197,154 |   | $ | 3,211 |   | $ | 2,200,365 |   |

**Fertilizer      Segment**
**:**

| **For                  The Three Months Ended September 30, 2008** |   |
|--------------------------------------------------------------------|--------|
|                                                               |   | **Urea** |   | **Ammonium                  Bicarbonate** |   |  **Liquefied****Ammonia** |   | **Ammonia****Water** |   | **Segment                  Total** |   |
| Revenues                                                           |   | $ | 8,601,623 |   | $ | 1,083,837 |   | $ | 131,205 |   | $ | 84,645 |   | $ | 9,901,310 |   |
| COGS                                                               |   |   | 8,733,875 |   |   | 1,234,487 |   |   | 150,900 |   |   | 117,818 |   |   | 10,237,080 |   |
| Gross                  profit                                      |   | $ | (132,252 | ) | $ | (150,650 | ) | $ | (19,695 | ) | $ | (33,173 | ) | $ | (335,770 | ) |

| **For                  The Three Months Ended September 30, 2007** |   |
|--------------------------------------------------------------------|--------|
|                                                               |   | **Urea** |   | **Ammonium****Bicarbonate** |   | **Liquefied****Ammonia** |   | **Ammonia****Water** |   | **Segment                  Total** |   |
| Revenues                                                           |   | $ | 5,455,413 |   | $ | 339,430 |   | $ | 171,889 |   | $ | 42,878 |   | $ | 6,009,610 |   |
| COGS                                                               |   |   | 5,190,129 |   |   | 341,492 |   |   | 181,766 |   |   | 42,506 |   |   | 5,755,893 |   |
| Gross                  profit                                      |   | $ | 265,284 |   | $ | (2,062 | ) | $ | (9,877 | ) | $ | 372 |   | $ | 253,717 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

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

|  **For                The Six Months Ended September 30, 2008** |   |
|----------------------------------------------------------------------|--------|
|                                                                 |   | **Urea** |   | **Ammonium ****Bicarbonate** |   | **Liquefied ****Ammonia** |   | **Ammonia ****Water** |   | **Segment Total** |   |
| Revenues                                                             |   | $ | 18,449,402 |   | $ | 1,734,298 |   | $ | 164,018 |   | $ | 170,618 |   | $ | 20,518,336 |   |
| COGS                                                                 |   |   | 16,745,697 |   |   | 2,000,664 |   |   | 175,866 |   |   | 213,096 |   |   | 19,135,323 |   |
| Gross                profit                                          |   | $ | 1,703,705 |   | $ | (266,366 | ) | $ | (11,848 | ) | $ | (42,478 | ) | $ | 1,383,013 |   |

| **For                The Six Months Ended September 30, 2007** |   |
|----------------------------------------------------------------|--------|
|                                                           |   | **Urea** |   | **Ammonium ****Bicarbonate** |   | **Liquefied ****Ammonia** |   | **Ammonia ****Water** |   | **Segment Total** |   |
| Revenues                                                       |   | $ | 14,693,406 |   | $ | 1,140,950 |   | $ | 347,741 |   | $ | 96,785 |   | $ | 16,278,882 |   |
| COGS                                                           |   |   | 12,463,358 |   |   | 1,128,108 |   |   | 347,462 |   |   | 88,386 |   |   | 14,027,314 |   |
| Gross                profit                                    |   | $ | 2,230,048 |   | $ | 12,842 |   | $ | 279 |   | $ | 8,399 |   | $ | 2,251,568 |   |

**Combined      Segments:**

| **For                  The Three Months Ended September 30, 2008** |   |
|--------------------------------------------------------------------|--------|
|                                                               |   | **Fuel                  Segment** |   | **Fertilizer                  Segment** |   | **Consolidated                  Total** |   |
| Revenues                                                           |   | $ | 4,359,395 |   | $ | 9,901,310 |   | $ | 14,206,705 |   |
| COGS                                                               |   |   | 4,975,034 |   |   | 10,237,080 |   |   | 15,212,114 |   |
| Gross                  profit                                      |   | $ | (615,639 | ) | $ | (335,770 | ) | $ | (951,409 | ) |

| **For                  The Three Months Ended September 30, 2007** |   |
|--------------------------------------------------------------------|--------|
|                                                               |   | **Fuel                  Segment** |   | **Fertilizer                  Segment** |   | **Consolidated                  Total** |   |
| Revenues                                                           |   | $ | 12,206,012 |   | $ | 6,009,610 |   | $ | 18,215,622 |   |
| COGS                                                               |   |   | 10,620,664 |   |   | 5,755,893 |   |   | 16,376,557 |   |
| Gross                  profit                                      |   | $ | 1,585,348 |   | $ | 253,717 |   | $ | 1,839,065 |   |

| **For                The Six Months Ended September 30, 2008** |   |
|----------------------------------------------------------------|--------|
| **  **                                               |   | **Fuel Segment** |   | **Fertilizer Segment** |   | **Consolidated Total** |   |
| Revenues                                                       |   | $ | 9,589,641 |   | $ | 20,518,336 |   | $ | 30,107,977 |   |
| COGS                                                           |   |   | 9,197,198 |   |   | 19,135,323 |   |   | 28,332,521 |   |
| Gross                profit                                    |   | $ | 392,443 |   | $ | 1,383,013 |   | $ | 1,775,456 |   |

| **For                The Six Months Ended September 30, 2007**                       |   |
|--------------------------------------------------------------------------------------|--------|
|                |   | **Fuel Segment** |   | **Fertilizer Segment** |   | **Consolidated Total** |   |
| Revenues                                                                             |   | $ | 16,623,346 |   | $ | 16,278,882 |   | $ | 32,902,228 |   |
| COGS                                                                                 |   |   | 14,422,981 |   |   | 14,027,314 |   |   | 28,450,295 |   |
| Gross                profit                                                          |   | $ | 2,200,365 |   | $ | 2,251,568 |   | $ | 4,451,933 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

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

*Noncontrolling      Interests in Consolidated Financial Statements*

*Business      Combinations*

*Disclosures      about Derivative Instruments and Hedging Activities*

| **4.** | **INVENTORIES** |
|--------|-----------------|

|                             |   | **September 30, 2008** |      | **March 31, 2008** |   |
|----------------------------------|--------|----------------------------------|-----------|------------------------------|--------|
|                             |   | **Unaudited**                    |      |                         |   |
| Finished goods              |   | $                                | 167,299   |                         | $      | 281,851 |   |
| Raw materials               |   |                             | 1,121,271 |                         |   | 1,185,758 |   |
| Packing materials           |   |                             | 1,279,122 |                         |   | 703,431 |   |
| Total inventories, net |   | $                                | 2,567,692 |                         | $      | 2,171,040 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **4.** | **INVENTORIES                  (CONTINUED)** |
|--------|----------------------------------------------|

| **5.** | **RELATED PARTY TRANSACTIONS ** |
|--------|------------------------------------------------|

|                                                   |   | **September 30, 2008** |    | **March 31, 2008** |   |
|--------------------------------------------------------|--------|----------------------------------|---------|------------------------------|--------|
|                                                   |   | **Unaudited**                    |    |                         |   |
| Current:                                               |   |                             |    |                         |   |   |   |
| Huaiyang Desheng Chemical Co., Ltd |   | $                                | 172,799 |                         | $      | - |   |

|   | (II) | Due to Related Parties  |
|--------|------|---------------------------------------------|

|                                                                    |   |   |   | **September 30, 2008** |   | **March 31, 2008** |   |
|-------------------------------------------------------------------------|--------|--------|--------|----------------------------------|--------|------------------------------|--------|
|                                                                    |   |   |   | **Unaudited**                    |   |                         |   |
| Principal:                                                              |   |   |   |                             |   |                         |   |   |   |   |
| Xinyang Hong Chang Pipeline Gas Co., Ltd. |   |   | (a)    |                             | $      | 4,986,580                    |   | $ | 4,131,643 |   |
| Long Triumph Investments Limited                         |   |   | (b)    |                             |   | 1,367,408                    |   |   | 862,035 |   |
| Chen Siqiang                                                       |   |   | (c)    |                             |   | 1,026,649                    |   |   | 712,352 |   |
| Wang Guiquan                                                       |   |   | (d)    |                             |   | 351,995                      |   |   | - |   |
| Zhou Dianchang                                                     |   |   | (e)    |                             |   | 73,332                       |   |   | - |   |
| Mai Xiaofu                                                         |   |   | (f)    |                             |   | 146,664                      |   |   | - |   |
| Yu Zhiyang                                                         |   |   | (g)    |                             |   | 43,999                       |   |   | - |   |
| Yang Hongtao                                                       |   |   | (h)    |                             |   | 43,999                       |   |   | - |   |
| Li Donglai                                                         |   |   | (i)    |                             |   | 219,996                      |   |   | - |   |
| Due to employees                                              |   |   | (j)    |                             |   | 9,859                        |   |   | 2,965 |   |
| Subtotal                                                                |   |   |   |                             |   | 8,270,481                    |   |   | 5,708,995 |   |
|                                                                    |   |   |   |                             |   |                         |   |   |   |   |
| Interest:                                                               |   |   |   |                             |   |                         |   |   |   |   |
| Xinyang Hong Chang Pipeline Gas Co., Ltd. |   |   | (a)    |                             |   | 240,261                      |   |   | - |   |
| Chen Siqiang                                                       |   |   | (c)    |                             |   | 56,671                       |   |   | - |   |
| Wang Guiquan                                                       |   |   | (d)    |                             |   | 5,738                        |   |   | - |   |
| Zhou Dianchang                                                     |   |   | (e)    |                             |   | 3,187                        |   |   | - |   |
| Mai Xiaofu                                                         |   |   | (f)    |                             |   | 7,001                        |   |   | - |   |
| Yu Zhiyang                                                         |   |   | (g)    |                             |   | 2,100                        |   |   | - |   |
| Yang Hongtao                                                       |   |   | (h)    |                             |   | 2,100                        |   |   | - |   |
| Subtotal                                                                |   |   |   |                             | $      | 317,058                      |   | $ | - |   |
|                                                                    |   |   |   |                             |   |                         |   |   |   |   |
| Total                                                                   |   |   |   |                             | $      | 8,587,539                    |   | $ | 5,708,995 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **5.** | **RELATED                  PARTY TRANSACTIONS                  (CONTINUED)** |
|--------|------------------------------------------------------------------------------|

| (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 $4,986,580 is $2,933,282,                  which has                  an interest rate of 8.748% per annum and is due on June 30, 2009.                  Included                  in the $4,986,580 is $733,321, which has an interest rate of 15%                  per annum                  and is due on September 25, 2009. The remaining balance of $1,319,977                  is                  interest free and has no fixed repayment terms. The interest expense                  for                  the six months ended September 30, 2008 and 2007 is $130,109 and                  $0,                  respectively. Of the $130,109 of interest expense, $128,302 was                  capitalized interest in construction in progress, since the amount                  was                  used for construction. Also see Note                  9. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Long                  Triumph Investments Limited is a former shareholder of the Company.                  The                  amount represents advances from Long Triumph Investments 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 is unsecured and has an interest rate of 9.6%                  per                  annum. Included in the $1,026,649 is $733,321, which is due on                  February 3,                  2009. The balance of $293,328 is due on May 21, 2009. The interest                  expense                  for the six months ended September 30, 2008 and 2007 is $45,525                  and $0,                  which was capitalized interest in construction in progress, since                  the                  amount was used for construction. Also see Note 9. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Wang                Guiquan is the president and director of the Company. The amount                is                unsecured. Included in the $351,995 is $131,998 with an interest                rate of                9.6% per annum and is due on April 18, 2009. The balance of $219,997                has                an interest rate of 14.4% per annum and is due on October 13, 2008                and                subsequently repaid on its due date. The interest expense for the                six                months ended September 30, 2008 and 2007 of $5,911 and $0.Of the                $5,911 of                interest expense $5,738 was capitalized interest in construction                in                progress, since the amount was used for construction. Also see Note                9. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Zhou                Dianchang is a director of the Company. The amount is unsecured,                has an                interest rate of 9.6% per annum and is due on April 18, 2009. The                interest                expense for the six months ended September 30, 2008 and 2007 of $3,187                and                $0, was capitalized in construction in progress, since the amount                was used                for construction. Also see Note 9. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f) | Mai                Xiaofu is a director of Henan Jinding. The amount is unsecured, has                an                interest rate of 9.6% per annum and is due on April 2, 2009. The                interest                expense for the six months ended September 30, 2008 and 2007 of $7,001                and                $0, was capitalized in construction in progress, since the amount                was used                for construction. Also see Note 9. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g) | Yu                Zhiyang is a significant shareholder of the Company. The amount is                unsecured, has an interest rate of 9.6% per annum and is due on April                2,                2009. The interest expense for the six months ended September 30,                2008 and                2007 of $2,100 and $0, was capitalized in construction in progress,                since                the amount was used for construction. Also see Note                9. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h) | Yang                Hongtao is a significant shareholder of the Company. The amount is                unsecured, has an interest rate of 9.6% per annum and is due on April                2,                2009. The interest expense for the six months ended September 30,                2008 and                2007 of $2,100 and $0, was capitalized in construction in progress,                since                the amount was used for construction. Also see Note                9. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i) | Li                Donglai is the vice-president of the Company. The amount is unsecured,                has                an interest rate of 14.4% per annum and was due on October 13, 2008.                The                full amount was repaid on its due                date. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**NEW          ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR          THE THREE **

**AND          SIX **

**MONTHS          ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **5.** | **RELATED                  PARTY TRANSACTIONS                  (CONTINUED)** |
|--------|------------------------------------------------------------------------------|

| (j) | The                amount due to employees is unsecured, interest free, and has no fixed                repayment terms. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

| (III) | Due                    from Employees |
|-------|---------------------------------------|

|                                           |   | **September 30, 2008** |   | **March 31, 2008** |   |
|------------------------------------------------|--------|----------------------------------|--------|------------------------------|--------|
|                                           |   | **Unaudited**                    |   |                         |   |
| Current                                        |   | $                                | 17,958 |                         | $      | 13,213 |   |
| Total                amount due from employees |   | $                                | 17,958 |                         | $      | 13,213 |   |

|   | (IV) | Due                to Employees |
|--------|------|---------------------------------|

|                                              |   | **September 30, 2008** |    | **March 31, 2008** |   |
|---------------------------------------------------|--------|----------------------------------|---------|------------------------------|--------|
|                                              |   | **Unaudited**                    |    |                         |   |
| Long-term                                         |   | $                                | 160,684 |                         | $      | 156,517 |   |
| Total amount due to employees |   | $                                | 160,684 |                         | $      | 156,517 |   |

| **6.** | **LONG-TERM INVESTMENT** |
|--------|-------------------------------|

|                                             |   | **September 30, 2008** |    | **March 31, 2008** |   |
|--------------------------------------------------|--------|----------------------------------|---------|------------------------------|--------|
|                                             |   | **Unaudited**                    |    |                         |   |
|                                             |   |                             |    |                         |   |
| Luoshan Rural Credit Cooperatives |   | $                                | 470,791 |                         | $      | - |   |

----

**NEW          ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR          THE THREE **

**AND          SIX **

**MONTHS          ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **7.** | **PLANT AND EQUIPMENT** |
|--------|-----------------------------------|

|                                           |   | **September 30, 2008** |       | **March 31, 2008** |   |
|------------------------------------------------|--------|----------------------------------|------------|------------------------------|--------|
|                                           |   | **Unaudited**                    |       |                         |   |
| At cost:                                  |   |                             |       |                         |   |   |   |
|   Buildings                          |   | $                                | 2,371,018  |                         | $      | 2,133,765 |   |
|   Machinery                          |   |                             | 25,150,712 |                         |   | 23,988,684 |   |
|   Motor vehicles                |   |                             | 329,727    |                         |   | 314,870 |   |
|   Office equipment              |   |                             | 270,022    |                         |   | 247,367 |   |
|                                           |   |                             | 28,121,479 |                         |   | 26,684,686 |   |
| Less:  Accumulated depreciation |   |                             |       |                         |   |   |   |
|   Buildings                          |   |                             | 366,093    |                         |   | 304,052 |   |
|   Machinery                          |   |                             | 7,519,886  |                         |   | 6,063,257 |   |
|   Motor vehicles                |   |                             | 169,654    |                         |   | 136,381 |   |
|   Office equipment              |   |                             | 104,114    |                         |   | 78,058 |   |
|                                           |   |                             | 8,159,747  |                         |   | 6,581,748 |   |
| Plant and equipment, net        |   | $                                | 19,961,732 |                         | $      | 20,102,938 |   |

| **8.** | **LAND USE RIGHTS** |
|--------|-------------------------------|

|                                     |   | **September 30, 2008** |      | **March 31, 2008** |   |
|------------------------------------------|--------|----------------------------------|-----------|------------------------------|--------|
|                                     |   | **Unaudited**                    |      |                         |   |
| Cost                                     |   | $                                | 1,801,180 |                         | $      | 1,749,677 |   |
| Less: Accumulated amortization |   |                             | 141,589   |                         |   | 120,044 |   |
| Land use rights, net      |   | $                                | 1,659,591 |                         | $      | 1,629,633 |   |

| 2009       |   | $      | 18,274    |   |
|------------|--------|--------|-----------|--------|
| 2010       |   |   | 36,024    |   |
| 2011       |   |   | 36,024    |   |
| 2012       |   |   | 36,024    |   |
| 2013       |   |   | 36,024    |   |
| Thereafter |   |   | 1,497,221 |   |
| Total      |   | $      | 1,659,591 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **9.** | **CONSTRUCTION IN PROGRESS** |
|--------|----------------------------------------|

|      |   | **September 30, 2008** |       | **March 31, 2008** |   |
|-----------|--------|----------------------------------|------------|------------------------------|--------|
|      |   | **Unaudited**                    |       |                         |   |
| Plant     |   | $                                | 17,452,966 |                         | $      | 4,525,886 |   |
| Machinery |   |                             | 3,856,070  |                         |   | 5,213,755 |   |
| Other     |   |                             | 4,723      |                         |   | 997 |   |
|      |   | $                                | 21,313,759 |                         | $      | 9,740,638 |   |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **10.** | **SHORT-TERM DEBT** |
|---------|--------------------------|

|                                                                                                                                                                                                                                             |   | **September****30, ****2008** |      | **March 31,****2008** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-----------|----------------------------|--------|
|                                                                                                                                                                                                                                             |   | **Unaudited**                      |      |                       |   |
| **Bank                Loans:**                                                                                                                                                                                                                   |   |                               |      |                       |   |   |   |
| Xinyang                Chengxing Credit Cooperatives, Due April 25, 2009, interest rate                at 11.56%                per annum, collateralized by finished goods inventory.                                                           |   | $                                  | 1,466,641 |                       | $      | - |   |
|                                                                                                                                                                                                                                             |   |                               |      |                       |   |   |   |
| Rural                Credit Cooperatives,                Due June 12, 2009, interest rate at 14.19% per annum, collateralized                by                construction in progress.                                                         |   |                               | 571,990   |                       |   | - |   |
|                                                                                                                                                                                                                                             |   |                               |      |                       |   |   |   |
| Xinyang                Chengxing Credit Cooperatives, Due December 27, 2008, interest rate                at                11.23% per annum, collateralized by finished goods                inventory.                                         |   |                               | 2,346,626 |                       |   | 2,279,527 |   |
|                                                                                                                                                                                                                                             |   |                               |      |                       |   |   |   |
| Xinyang                Chengxing Credit Cooperatives, Due February 3, 2009, interest rate                at                11.56% per annum, collateralized by finished goods                inventory.                                          |   |                               | 1,466,641 |                       |   | 1,424,704 |   |
|                                                                                                                                                                                                                                             |   |                               |      |                       |   |   |   |
| Bank                of China Luoshan Branch, Due August 13, 2008, interest rate at 6.84%                per                annum, collateralized by land use rights. (Subsequently repaid on                its due                date)         |   |                               | -         |                       |   | 2,849,409 |   |
|                                                                                                                                                                                                                                             |   |                               |      |                       |   |   |   |
| China                Construction Bank Luoshan Branch, Due June 30, 2008, interest rate                at                7.29% per annum, collateralized by land use rights. (Subsequently                repaid                on its due date) |   |                               | -         |                       |   | 2,849,409 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **10.** | **SHORT-TERM                  DEBT (CONTINUED)** |
|---------|--------------------------------------------------|

|                                                                                                                                                                                                                                               |   | **September****30,****2008** |       | **March                  31,****2008** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|------------|----------------------------------------|--------|
|                                                                                                                                                                                                                                               |   | **Unaudited**                |       |                                   |   |
| **Bank                  Loans:**                                                                                                                                                                                                                   |   |                         |       |                                   |   |
| Xinyang                  Chengxing Credit Cooperatives, Due April 16, 2008, interest rate                  at 9.55%                  per annum, collateralized by finished goods inventory. (Subsequently                  repaid on its due date) |   |                         | -          |                                   |   | 1,424,704 |   |
|                                                                                                                                                                                                                                               |   |                         |       |                                   |   |   |   |
| **Notes                  Payable to Unrelated Companies:**                                                                                                                                                                                         |   |                         |       |                                   |   |   |   |
| Due                  July, 2008 (subsequently repaid on its due date)                                                                                                                                                                              |   |                         | -          |                                   |   | 712,352 |   |
| Due                  August, 2008 (subsequently repaid on its due date)                                                                                                                                                                            |   |                         | -          |                                   |   | 1,022,226 |   |
| Due                  September, 2008 (subsequently repaid on its due date)                                                                                                                                                                         |   |                         | -          |                                   |   | 1,282,234 |   |
| Due                  October, 2008 (subsequently repaid on its due date)                                                                                                                                                                           |   |                         | 4,473,257  |                                   |   | - |   |
| Due                  November 6, 2008 (subsequently repaid on its due date)                                                                                                                                                                        |   |                         | 65,999     |                                   |   | - |   |
| Due                  November 8, 2008 (subsequently repaid on its due date)                                                                                                                                                                        |   |                         | 14,666     |                                   |   | - |   |
| Due                  November 12, 2008 (subsequently repaid on its due date)                                                                                                                                                                       |   |                         | 1,393,310  |                                   |   | - |   |
| Due                  November 13, 2008 (subsequently repaid on its due date)                                                                                                                                                                       |   |                         | 659,989    |                                   |   | - |   |
| Due                  November 20, 2008                                                                                                                                                                                                             |   |                         | 183,330    |                                   |   | - |   |
| Due                  November 23, 2008                                                                                                                                                                                                             |   |                         | 439,992    |                                   |   | - |   |
| Due                  November 29, 2008                                                                                                                                                                                                             |   |                         | 73,332     |                                   |   | - |   |
| Due                  December 16, 2008                                                                                                                                                                                                             |   |                         | 586,656    |                                   |   | - |   |
| Due                  December 20, 2008                                                                                                                                                                                                             |   |                         | 513,324    |                                   |   | - |   |
| Due                  January 10, 2009                                                                                                                                                                                                              |   |                         | 1,466,642  |                                   |   | - |   |
| Due                  January 18, 2009                                                                                                                                                                                                              |   |                         | 879,985    |                                   |   | - |   |
| Due                  January 31, 2009                                                                                                                                                                                                              |   |                         | 586,656    |                                   |   | - |   |
| Due                  April, 2008 (subsequently repaid on its due date)                                                                                                                                                                             |   |                         | -          |                                   |   | 1,944,721 |   |
| Due                  May, 2008 (subsequently repaid on its due date)                                                                                                                                                                               |   |                         | -          |                                   |   | 1,310,728 |   |
| Due                  June, 2008 (subsequently repaid on its due date)                                                                                                                                                                              |   |                         | -          |                                   |   | 854,823 |   |
|                                                                                                                                                                                                                                               |   |                         |       |                                   |   |   |   |
| **Notes                  Payable to an Unrelated Individual:**                                                                                                                                                                                     |   |                         | 560,257    |                                   |   | - |   |
| Due                  June 3, 2009                                                                                                                                                                                                                  |   | $                            | 17,749,293 |                                   |   | 17,954,837 |   |

----

**NEW          ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR          THE THREE **

**AND          SIX **

**MONTHS          ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **10.** | **SHORT-TERM                  DEBT (CONTINUED)** |
|---------|--------------------------------------------------|

| **11.** | **LONG-TERM                NOTES PAYABLE** |
|---------|--------------------------------------------|

| **12.** | **INCOME                TAXES** |
|---------|---------------------------------|

**Corporation      Income Tax (“CIT”)**

|                                        |   | **Six Months Ended September 30,** |    |
|---------------------------------------------|--------|--------------------------------------------------------|---------|
|                                        |   | **2008**                                               |    | **2007** |   |
|                                        |   | **Unaudited**                                          |    | **Unaudited** |   |
| Current:                                    |   |                                                   |    |   |   |   |   |
| CIT                                         |   | $                                                      | 81,465  |   | $ | (903,779 | ) |
| Deferred:                                   |   |                                                   |    |   |   |   |   |
| CIT                                         |   |                                                   | (23,006 | ) |   | 156,231 |   |
|                                        |   |                                                   |    |   |   |   |   |
| Income                tax benefit (expense) |   | $                                                      | 58,459  |   | $ | (747,548 | ) |

|                                                             |   | **Six Months Ended September 30,** |    |
|------------------------------------------------------------------|--------|--------------------------------------------------------|---------|
|                                                             |   | **2008**                                               |    | **2007** |   |
|                                                             |   | **Unaudited**                                          |    | **Unaudited** |   |
| Computed                “expected” benefit (expense) |   | $                                                      | (46,916 | ) | $ | (872,788 | ) |
| Permanent                differences                             |   |                                                   | 105,375 |   |   | 125,240 |   |
|                                                             |   |                                                   |    |   |   |   |   |
| Income                tax benefit (expense)                      |   | $                                                      | 58,459  |   | $ | (747,548 | ) |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **12.** | **INCOME                TAXES (CONTINUED)** |
|---------|---------------------------------------------|

|                                          |   | **September 30, 2008** |     | **March 31, 2008** |   |
|-----------------------------------------------|--------|----------------------------------|----------|------------------------------|--------|
|                                          |   | **Unaudited**                    |     |                         |   |
| **Deferred                tax assets:**  |   |                             |     |                         |   |   |   |
| Non-current                portion:           |   |                             |     |                         |   |   |   |
| Cost                of sales                  |   | $                                | 54,949   |                         | $      | 73,207 |   |
| Financial                expense              |   |                             | 12,556   |                         |   | 11,840 |   |
| Welfare                                       |   |                             | 35,212   |                         |   | 11,893 |   |
| Provision                for notes receivable |   |                             | 36,665   |                         |   | 35,618 |   |
| Other                expense                  |   |                             | 61,818   |                         |   | 46,983 |   |
| Total                deferred tax assets      |   |                             | 201,200  |                         |   | 179,541 |   |
|                                          |   |                             |     |                         |   |   |   |
| **Deferred                tax liabilities:**  |   |                             |     |                         |   |   |   |
| Non-current                portion:           |   |                             |     |                         |   |   |   |
| Amortization                                  |   |                             | 24,845   |                         |   | 21,330 |   |
| Depreciation                                  |   |                             | 310,424  |                         |   | 353,039 |   |
| Financial                expense              |   |                             | 1,493    |                         |   | - |   |
| Cost                of sales                  |   |                             | 336,617  |                         |   | 314,511 |   |
| Government                grant               |   |                             | 58,665   |                         |   | 57,344 |   |
| Investment                income              |   |                             | 17,278   |                         |   | 16,785 |   |
| Other                expense                  |   |                             | 22,780   |                         |   | 10,440 |   |
| Total                deferred tax liabilities |   |                             | 772,102  |                         |   | 773,449 |   |
|                                          |   |                             |     |                         |   |   |   |
| Net                deferred tax liabilities   |   | $                                | (570,902 | )                            | $      | (593,908 | ) |

----

**NEW        ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR        THE THREE **

**AND        SIX **

**MONTHS        ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)**

| **12.** | **INCOME                  TAXES (CONTINUED)** |
|---------|-----------------------------------------------|

| **13.** | **CONTINGENCIES** |
|---------|-------------------|

**Pending      litigation:**

----

| **Item              2.** | **Management                Discussion and Analysis of Financial Conditions and Results of Operations** |
|--------------------------|---------------------------------------------------------------------------------------------------------|

**Forward      Looking Statements **

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

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

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

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

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

|   | Ÿ | 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; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

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

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

|   | Ÿ | 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 *

*Accounting      for Income Taxes*

*Foreign      currency transactions and comprehensive income (loss)*

**Recent      Accounting Pronouncements**

*Noncontrolling      Interests in Consolidated Financial Statements*

----

*Business      Combinations*

*Disclosures      about Derivative Instruments and Hedging Activities*

**Overview**

----

**RESULT      OF OPERATIONS **

**Three      Months Ended September 30, 2008 as compared to**

**Three      Months Ended September 30, 2007**

|                                                                 |   | **Three Months Ended** |        | **Three Months Ended** |   | **Comparisons** |   |
|----------------------------------------------------------------------|--------|----------------------------------|-------------|----------------------------------|--------|-----------------|--------|
|                                                                 |   | **September 30, 2008** |        | **September 30, 2007** |   |            |   | **Increase** |   |
|                                                                 |   |                             |        | **Percentage**                   |   |            |   | **Percentage** |   | **Growth in** |   | **(Decrease) in** |   |
| **Item**                                                             |   | **Amount**                       |        | **of Revenues**             |   | **Amount**      |   | **of Revenues** |   | **Amount** |   | **Percentage** |   |
| ** **                                                           |   | **US $**                    |        | **(%)**                          |   | **US $**   |   | **(%)** |   | **US $** |   | **(%)** |   |
| Revenues                                                             |   |                             | 14,260,705  |                             |   | 100.00          | %      |   | 18,215,622 |   |   | 100.00 | % |   | (3,954,917 | ) |   | (21.71 | )% |
| Cost                of Goods Sold                                    |   |                             | (15,212,114 | )                                |   | (106.67         | )%     |   | (16,376,557 | ) |   | (89.90 | )% |   | 1,164,443 |   |   | (7.11 | )% |
| Gross                Profit                                          |   |                             | (951,409    | )                                |   | (6.67           | )%     |   | 1,839,065 |   |   | 10.10 | % |   | (2,790,474 | ) |   | (151.73 | )% |
| General                & administrative                          |   |                             | 510,894     |                             |   | 3.58            | %      |   | 541,512 |   |   | 2.97 | % |   | (30,618 | ) |   | (5.65 | )% |
| Selling                and distribution                              |   |                             | 291,657     |                             |   | 2.05            | %      |   | 208,584 |   |   | 1.15 | % |   | 83,073 |   |   | 39.83 | % |
| Research                and development                              |   |                             | 89,982      |                             |   | 0.63            | %      |   | - |   |   | 0.00 | % |   | 89,982 |   |   | 100.00 | % |
| Income                from operations                                |   |                             | (1,843,942  | )                                |   | (12.93          | )%     |   | 1,088,969 |   |   | 5.98 | % |   | (2,932,911 | ) |   | (269.33 | )% |
| Interest                expense, net                                 |   |                             | (232,826    | )                                |   | (1.63           | )%     |   | (161,789 | ) |   | (0.89 | )% |   | (71,037 | ) |   | 43.91 | % |
| Governments                grants                                    |   |                             | 1,008,964   |                             |   | 7.08            | %      |   | 79,332 |   |   | 0.44 | % |   | 929,632 |   |   | 1171.82 | % |
| Other                (expenses) income, net                          |   |                             | (1,209      | )                                |   | (0.01           | )%     |   | (2,644 | ) |   | (0.01 | )% |   | 1,435 |   |   | (54.27 | )% |
| Income                before tax                                     |   |                             | (1,069,013  | )                                |   | (7.50           | )%     |   | 1,003,868 |   |   | 5.51 | % |   | (2,072,881 | ) |   | (206.49 | )% |
| Income                taxes                                          |   |                             | 478,567     |                             |   | 3.36            | %      |   | (160,976 | ) |   | (0.88 | )% |   | 639,543 |   |   | (397.29 | )% |
| Income                from continuing operation                      |   |                             | (590,446    | )                                |   | (4.14           | )%     |   | 842,892 |   |   | 4.63 | % |   | (1,433,338 | ) |   | (170.05 | )% |
| Income                from discontinued operation                    |   |                             | -           |                             |   | 0.00            | %      |   | 1,761 |   |   | 0.01 | % |   | (1,761 | ) |   | (100.00 | )% |
| Gain                from disposition of discontinued operation       |   |                             | -           |                             |   | 0.00            | %      |   | 19,359 |   |   | 0.11 | % |   | (19,359 | ) |   | (100.00 | )% |
| Net                income (loss)                                     |   |                             | (590,446    | )                                |   | (4.14           | )%     |   | 864,012 |   |   | 4.74 | % |   | (1,454,458 | ) |   | (168.34 | )% |
| Foreign                currency translation gain                     |   |                             | 117,832     |                             |   | 0.83            | %      |   | 145,816 |   |   | 0.80 | % |   | (27,984 | ) |   | (19.19 | )% |
| Other                comprehensive income, net                       |   |                             | 117,832     |                             |   | 0.83            | %      |   | 81,213 |   |   | 0.45 | % |   | 36,619 |   |   | 45.09 | % |
| Comprehensive                income                                  |   |                             | (472,614    | )                                |   | (3.31           | )%     |   | 945,225 |   |   | 5.19 | % |   | (1,417,839 | ) |   | (150.00 | )% |
| Weighted                average shares outstanding basic and diluted |   |                             | 12,640,000  |                             |   | -               |   |   | 12,640,000 |   |   | - |   |   | - |   |   | - |   |
| Net                income per share, basic and diluted               |   |                             | (0.05       | )                                |   | -               |   |   | 0.07 |   |   | - |   |   | (0.12 | ) |   | - |   |

----

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

|                           |   | **3 Months Ended**     |       | **3 Months Ended**     |   | **Comparisons** |   |
|-------------------------------------|--------|----------------------------------|------------|----------------------------------|--------|-----------------|--------|
|                                |   | **September 30, 2008** |       | **September 30, 2007** |   |            |   | **Increase** |   |
|                                |   |                             |       | **Percentage**                   |   |            |   | **Percentage** |   | **Growth in** |   | **(Decrease) in** |   |
|                                |   | **Amount**                       |       | **of Revenues**             |   | **Amount**      |   | **of Revenues** |   | **Amount** |   | **Percentage** |   |
| **Products**                        |   | **US $**                    |       | **(%)**                          |   | **US $**   |   | **(%)** |   | **US $** |   | **(%)** |   |
| Urea                                |   |                             | 8,601,623  |                             |   | 60.32           | %      |   | 5,455,413 |   |   | 29.95 | % |   | 3,146,210 |   |   | 57.67 | % |
| Ammonium                bicarbonate |   |                             | 1,083,837  |                             |   | 7.60            | %      |   | 339,430 |   |   | 1.86 | % |   | 744,407 |   |   | 219.31 | % |
| Methanol                            |   |                             | 366,753    |                             |   | 2.57            | %      |   | - |   |   | 0.00 | % |   | 366,753 |   |   | 100.00 | % |
| Liquefied                Ammonia    |   |                             | 131,205    |                             |   | 0.92            | %      |   | 171,889 |   |   | 0.94 | % |   | (40,684 | ) |   | (23.67 | )% |
| DME                                 |   |                             | 3,992,642  |                             |   | 28.00           | %      |   | 12,206,012 |   |   | 67.01 | % |   | (8,213,370 | ) |   | (67.29 | )% |
| Ammonia                Water        |   |                             | 84,645     |                             |   | 0.59            | %      |   | 42,878 |   |   | 0.24 | % |   | 41,767 |   |   | 97.41 | % |
| Total                               |   |                             | 14,260,705 |                             |   | 100.00          | %      |   | 18,215,622 |   |   | 100.00 | % |   | (3,954,917 | ) |   | (21.71 | )% |

|                              |   | **3 Months Ended**     |       | **3 Months Ended**     |   | **Comparisons** |   |
|-----------------------------------|--------|----------------------------------|------------|----------------------------------|--------|-----------------|--------|
|                              |   | **September 30, 2008** |       | **September 30, 2007** |   |            |   | **Increase** |   |
|                              |   |                             |       | **Percentage**                   |   |            |   | **Percentage** |   | **Growth in** |   | **(Decrease) in** |   |
|                              |   | **Amount**                       |       | **of Revenues**             |   | **Amount**      |   | **of Revenues** |   | **Amount** |   | **Percentage** |   |
| **Provinces**                     |   | **US $**                    |       | **(%)**                          |   | **US $**   |   | **(%)** |   | **US $** |   | **(%)** |   |
| Henan                Province     |   |                             | 3,947,312  |                             |   | 27.68           | %      |   | 5,900,446 |   |   | 32.39 | % |   | (1,953,134 | ) |   | (33.10 | )% |
| Guangdong                Province |   |                             | 7,397,425  |                             |   | 51.87           | %      |   | 2,911,816 |   |   | 15.99 | % |   | 4,485,609 |   |   | 154.05 | % |
| Hubei                Province     |   |                             | 1,074,404  |                             |   | 7.53            | %      |   | 4,696,754 |   |   | 25.78 | % |   | (3,622,350 | ) |   | (77.12 | )% |
| Anhui                Province     |   |                             | 525,106    |                             |   | 3.68            | %      |   | 695,899 |   |   | 3.82 | % |   | (170,793 | ) |   | (24.54 | )% |
| Hunan                Province     |   |                             | -          |                             |   | 0.00            | %      |   | 11,615 |   |   | 0.06 | % |   | (11,615 | ) |   | (100.00 | )% |
| Hebei                Province     |   |                             | 7,482      |                             |   | 0.05            | %      |   | 2,840,692 |   |   | 15.59 | % |   | (2,833,210 | ) |   | (99.74 | )% |
| Jiangxi                Province   |   |                             | 33,745     |                             |   | 0.24            | %      |   | 1,074,966 |   |   | 5.90 | % |   | (1,041,221 | ) |   | (96.86 | )% |
| Shandong                Province  |   |                             | 1,275,231  |                             |   | 8.94            | %      |   | - |   |   | 0.00 | % |   | 1,275,231 |   |   | 100.00 | % |
| Zhejiang                Province  |   |                             | -          |                             |   | 0.00            | %      |   | 83,434 |   |   | 0.46 | % |   | (83,434 | ) |   | (100.00 | )% |
| Total                             |   |                             | 14,260,705 |                             |   | 100.00          | %      |   | 18,215,622 |   |   | 100.00 | % |   | (3,954,917 | ) |   | (21.71 | )% |

----

|                              |   | **3 Months Ended**     |        | **3 Months Ended**     |   | **Comparisons** |   |
|-----------------------------------|--------|----------------------------------|-------------|----------------------------------|--------|-----------------|--------|
|                              |   | **September 30, 2008** |        | **September 30, 2007** |   |            |   | **Increase** |   |
|                              |   |                             |        | **Percentage**                   |   |            |   | **Percentage** |   | **Growth in** |   | **(Decrease) in** |   |
|                              |   | **Amount**                       |        | **of Revenues**             |   | **Amount**      |   | **of Revenues** |   | **Amount** |   | **Percentage** |   |
| **Item**                          |   | **US $**                    |        | **(%)**                          |   | **US $**   |   | **(%)** |   | **US $** |   | **(%)** |   |
| Revenues                          |   |                             | 14,260,705  |                             |   | 100.00          | %      |   | 18,215,622 |   |   | 100.00 | % |   | (3,954,917 | ) |   | (21.71 | )% |
| Cost                of Goods Sold |   |                             | (15,212,114 | )                                |   | (106.67         | )%     |   | (16,376,557 | ) |   | (89.90 | )% |   | 1,164,443 |   |   | (7.11 | )% |
| Gross                Profit       |   |                             | (951,409    | )                                |   | (6.67           | )%     |   | 1,839,065 |   |   | 10.10 | % |   | (2,790,474 | ) |   | (151.73 | )% |

----

|    |   |   |                               | **DME** |   | **Methanol** |   | **Urea** |    | **Ammonium****Bicarbonate** |   | **Liquefied****Ammonia** |   | **Ammonia****Water** |      |
|---------|--------|--------|------------------------------------|---------|--------|--------------|--------|----------|---------|-----------------------------|--------|--------------------------|--------|----------------------|-----------|
| 2009Q2  |   |   | Revenues                           |    |   | 3,992,642    |   |     | 366,753 |                        |   | 8,601,623                |   |                 | 1,083,837 |   |   | 131,205 |   |   | 84,645 |   |
|    |   |   | COGS                               |    |   | 4,529,406    |   |     | 445,628 |                        |   | 8,733,875                |   |                 | 1,234,487 |   |   | 150,900 |   |   | 117,818 |   |
|    |   |   | Gross                Profit        |    |   | (536,764     | )      |     | (78,875 | )                           |   | (132,252                 | )      |                 | (150,650  | ) |   | (19,695 | ) |   | (33,173 | ) |
|    |   |   | Gross                Profit        | %       |   | (13.44       | )%     |     | (21.51  | )%                          |   | (1.54                    | )%     |                 | (13.90    | )% |   | (15.01 | )% |   | (39.19 | )% |
| 2008Q2  |   |   | Revenues                           |    |   | 12,206,012   |   |     | -       |                        |   | 5,455,413                |   |                 | 339,430   |   |   | 171,889 |   |   | 42,878 |   |
|    |   |   | COGS                               |    |   | 10,620,664   |   |     | -       |                        |   | 5,190,129                |   |                 | 341,492   |   |   | 181,766 |   |   | 42,506 |   |
|    |   |   | Gross                Profit        |    |   | 1,585,348    |   |     | -       |                        |   | 265,284                  |   |                 | (2,062    | ) |   | (9,877 | ) |   | 372 |   |
|    |   |   | Gross                Profit        | %       |   | 12.99        | %      |     | 0.00    | %                           |   | 4.86                     | %      |                 | (0.61     | )% |   | (5.75 | )% |   | 0.87 | % |
| Changes |   |   | Revenues                           |    |   | (8,213,370   | )      |     | 366,753 |                        |   | 3,146,210                |   |                 | 744,407   |   |   | (40,684 | ) |   | 41,767 |   |
|    |   |   | Revenue                Growth      |    |   | (67.29       | )%     |     | 100     | %                           |   | 57.67                    | %      |                 | 219.31    | % |   | (23.67 | )% |   | 97.41 | % |
|    |   |   | Gross                Margin Growth |    |   | (26.43       | )%     |     | (21.51) | %                           |   | (6.40                    | )%     |                 | (13.29    | )% |   | (9.26 | )% |   | (40.06 | )% |

----

----

**Operating      Expenses**

** **

**Income      from Operations**

**Income      Tax**

**Net      Income (Loss)**

----

**Six      Months Ended September 30, 2008 as compared to**

**Six      Months Ended September 30, 2007**

|                                                                 |   | **Six Months Ended September** |        | **Six Months Ended September** |   | **Comparisons** |   |
|----------------------------------------------------------------------|--------|-----------------------------------------------|-------------|-----------------------------------------------|--------|-----------------|--------|
|                                                                 |   | **30, 2008**                             |        | **30, 2007**                             |   |            |   | **Increase** |   |
|                                                                 |   |                                          |        | **Percentage**                                |   |            |   | **Percentage** |   | **Growth in** |   | **(Decrease) in** |   |
| **Item**                                                        |   | **Amount**                                    |        | **of Revenues**                          |   | **Amount**      |   | **of Revenues** |   | **Amount** |   | **Percentage** |   |
|                                                                 |   | **US $**                                 |        | **(%)**                                       |   | **US $**   |   | **(%)** |   | **US $** |   | **(%)** |   |
| Revenues                                                             |   |                                          | 30,107,977  |                                          |   | 100.00          | %      |   | 32,902,228 |   |   | 100.00 | % |   | (2,794,251 | ) |   | (8.49 | )% |
| Cost                of Goods Sold                                    |   |                                          | (28,332,521 | )                                             |   | (94.10          | )%     |   | (28,450,295 | ) |   | (86.47 | )% |   | 117,774 |   |   | (0.41 | )% |
| Gross                Profit                                          |   |                                          | 1,775,456   |                                          |   | 5.90            | %      |   | 4,451,933 |   |   | 13.53 | % |   | (2,676,477 | ) |   | (60.12 | )% |
| General                & administrative                          |   |                                          | 1,457,664   |                                          |   | 4.84            | %      |   | 1,020,280 |   |   | 3.10 | % |   | 437,384 |   |   | 42.87 | % |
| Selling                and distribution                              |   |                                          | 567,093     |                                          |   | 1.88            | %      |   | 644,997 |   |   | 1.96 | % |   | (77,904 | ) |   | (12.08 | )% |
| Research                and development                              |   |                                          | 109,435     |                                          |   | 0.36            | %      |   | - |   |   | 0.00 | % |   | 109,435 |   |   | 100.00 | % |
| Income                from operations                                |   |                                          | (358,736    | )                                             |   | (1.19           | )%     |   | 2,786,656 |   |   | 8.47 | % |   | (3,145,392 | ) |   | (112.87 | )% |
| Interest                expense, net                                 |   |                                          | (417,440    | )                                             |   | (1.39           | )%     |   | (261,049 | ) |   | (0.79 | )% |   | (156,391 | ) |   | 59.91 | % |
| Governments                grants                                    |   |                                          | 997,297     |                                          |   | 3.31            | %      |   | 78,714 |   |   | 0.24 | % |   | 918,583 |   |   | 1166.99 | % |
| Other                (expenses) income, net                          |   |                                          | (33,457     | )                                             |   | (0.11           | )%     |   | 7,905 |   |   | 0.02 | % |   | (41,362 | ) |   | (523.24 | )% |
| Income                before tax                                     |   |                                          | 187,664     |                                          |   | 0.62            | %      |   | 2,612,226 |   |   | 7.94 | % |   | (2,424,562 | ) |   | (92.82 | )% |
| Income                taxes                                          |   |                                          | 58,459      |                                          |   | 0.19            | %      |   | (747,548 | ) |   | (2.27 | )% |   | 806,007 |   |   | (107.82 | )% |
| Income                from continuing operation                      |   |                                          | 246,123     |                                          |   | 0.82            | %      |   | 1,864,678 |   |   | 5.67 | % |   | (1,618,555 | ) |   | (86.80 | )% |
| Income                from discontinued operation                    |   |                                          | -           |                                          |   | 0.00            | %      |   | 1,761 |   |   | 0.01 | % |   | (1,761 | ) |   | (100.00 | )% |
| Gain                from disposition of discontinued operation       |   |                                          | -           |                                          |   | 0.00            | %      |   | 246,123 |   |   | 0.75 | % |   | (246,123 | ) |   | (100.00 | )% |
| Net                income (loss)                                     |   |                                          | 246,123     |                                          |   | 0.82            | %      |   | 1,886,370 |   |   | 5.73 | % |   | (1,640,247 | ) |   | (86.95 | )% |
| Foreign                currency translation gain                     |   |                                          | 549,315     |                                          |   | 1.82            | %      |   | 537,348 |   |   | 1.63 | % |   | 11,967 |   |   | 2.23 | % |
| Other                comprehensive income, net                       |   |                                          | 549,315     |                                          |   | 1.82            | %      |   | 360,023 |   |   | 1.09 | % |   | 189,292 |   |   | 52.58 | % |
| Comprehensive                income                                  |   |                                          | 795,438     |                                          |   | 2.64            | %      |   | 2,246,393 |   |   | 6.83 | % |   | (1,450,955 | ) |   | (64.59 | )% |
| Weighted                average shares outstanding basic and diluted |   |                                          | 12,640,000  |                                          |   | -               |   |   | 12,640,000 |   |   | - |   |   | - |   |   | - |   |
| Net                income per share, basic and diluted               |   |                                          | 0.02        |                                          |   | -               |   |   | 0.15 |   |   | - |   |   | -0.13 |   |   | - |   |

----

**Revenues**

|                                |   | **6 Months Ended**     |       | **6 Months Ended**     |   | **Comparisons** |   |
|-------------------------------------|--------|----------------------------------|------------|----------------------------------|--------|-----------------|--------|
|                                |   | **September 30, 2008** |       | **September 30, 2007** |   |            |   | **Increase** |   |
|                                |   |                             |       | **Percentage**                   |   |            |   | **Percentage** |   | **Growth in** |   | **(Decrease) in** |   |
|                                |   | **Amount**                       |       | **of Revenues**             |   | **Amount**      |   | **of Revenues** |   | **Amount** |   | **Percentage** |   |
| **Products**                        |   | **US $**                    |       | **(%)**                          |   | **US $**   |   | **(%)** |   | **US $** |   | **(%)** |   |
| Urea                                |   |                             | 18,449,402 |                             |   | 61.28           | %      |   | 14,693,406 |   |   | 44.66 | % |   | 3,755,996 |   |   | 25.56 | % |
| Ammonium                bicarbonate |   |                             | 1,734,298  |                             |   | 5.76            | %      |   | 1,140,950 |   |   | 3.47 | % |   | 593,348 |   |   | 52.00 | % |
| Methanol                            |   |                             | 712,843    |                             |   | 2.37            | %      |   | 58,858 |   |   | 0.18 | % |   | 653,985 |   |   | 1111.12 | % |
| Liquefied                Ammonia    |   |                             | 164,018    |                             |   | 0.54            | %      |   | 347,741 |   |   | 1.06 | % |   | (183,723 | ) |   | (52.83 | )% |
| DME                                 |   |                             | 8,876,798  |                             |   | 29.48           | %      |   | 16,564,488 |   |   | 50.34 | % |   | (7,687,690 | ) |   | (46.41 | )% |
| Ammonia                Water        |   |                             | 170,618    |                             |   | 0.57            | %      |   | 96,785 |   |   | 0.29 | % |   | 73,833 |   |   | 76.29 | % |
| Total                               |   |                             | 30,107,977 |                             |   | 100.00          | %      |   | 32,902,228 |   |   | 100.00 | % |   | (2,794,251 | ) |   | (8.49 | )% |

----

**Divided      by Regions**

|                    |   | **6 Months Ended**     |       | **6 Months Ended**     |   | **Comparisons** |   |
|-----------------------------------|--------|----------------------------------|------------|----------------------------------|--------|-----------------|--------|
|                         |   | **September 30, 2008** |       | **September 30, 2007** |   |            |   | **Increase** |   |
|                         |   |                             |       | **Percentage**                   |   |            |   | **Percentage** |   | **Growth in** |   | **(Decrease) in** |   |
|                              |   | **Amount**                       |       | **of Revenues**             |   | **Amount**      |   | **of Revenues** |   | **Amount** |   | **Percentage** |   |
| **Provinces**                |   | **US $**                    |       | **(%)**                          |   | **US $**   |   | **(%)** |   | **US $** |   | **(%)** |   |
| Henan                Province     |   |                             | 10,990,900 |                             |   | 36.50           | %      |   | 10,793,087 |   |   | 32.80 | % |   | 197,813 |   |   | 1.83 | % |
| Guangdong                Province |   |                             | 12,442,728 |                             |   | 41.33           | %      |   | 9,572,885 |   |   | 29.09 | % |   | 2,869,843 |   |   | 29.98 | % |
| Hubei                Province     |   |                             | 2,987,137  |                             |   | 9.92            | %      |   | 6,239,313 |   |   | 18.96 | % |   | (3,252,176 | ) |   | (52.12 | )% |
| Anhui                Province     |   |                             | 1,180,292  |                             |   | 3.92            | %      |   | 1,403,103 |   |   | 4.26 | % |   | (222,811 | ) |   | (15.88 | )% |
| Hunan                Province     |   |                             | 69,664     |                             |   | 0.23            | %      |   | 260,592 |   |   | 0.79 | % |   | (190,928 | ) |   | (73.27 | )% |
| Hebei                Province     |   |                             | 476,890    |                             |   | 1.58            | %      |   | 2,837,184 |   |   | 8.62 | % |   | (2,360,294 | ) |   | (83.19 | )% |
| Jiangxi                Province   |   |                             | 290,517    |                             |   | 0.96            | %      |   | 1,669,696 |   |   | 5.07 | % |   | (1,379,179 | ) |   | (82.60 | )% |
| Shandong                Province  |   |                             | 1,669,849  |                             |   | 5.55            | %      |   | 24,031 |   |   | 0.07 | % |   | 1,645,818 |   |   | 6848.73 | % |
| Zhejiang                Province  |   |                             | -          |                             |   | 0.00            | %      |   | 102,337 |   |   | 0.31 | % |   | (102,337 | ) |   | (100.00 | )% |
| Total                             |   |                             | 30,107,977 |                             |   | 100.00          | %      |   | 32,902,228 |   |   | 100.00 | % |   | (2,794,251 | ) |   | (8.49 | )% |

----

**Cost      of Goods Sold**

**Gross      Profit**

|               |   | **6 Months Ended**     |        | **6 Months Ended**     |   | **Comparisons** |   |
|-----------------------------------|--------|----------------------------------|-------------|----------------------------------|--------|-----------------|--------|
|                    |   | **September 30, 2008** |        | **September 30, 2007** |   |            |   | **Increase** |   |
|                    |   |                             |        | **Percentage**                   |   |            |   | **Percentage** |   | **Growth in** |   | **(Decrease) in** |   |
| ** **                        |   | **Amount**                       |        | **of Revenues**             |   | **Amount**      |   | **of Revenues** |   | **Amount** |   | **Percentage** |   |
| **Item**                          |   | **US $**                    |        | **(%)**                          |   | **US $**   |   | **(%)** |   | **US $** |   | **(%)** |   |
| Revenues                          |   |                             | 30,107,977  |                             |   | 100.00          | %      |   | 32,902,228 |   |   | 100.00 | % |   | (2,794,251 | ) |   | (8.49 | )% |
| Cost                of Goods Sold |   |                             | (28,332,521 | )                                |   | (94.10          | )%     |   | (28,450,295 | ) |   | (86.47 | )% |   | 117,774 |   |   | (0.41 | )% |
| Gross                Profit       |   |                             | 1,775,456   |                             |   | 5.90            | %      |   | 4,451,933 |   |   | 13.53 | % |   | (2,676,477 | ) |   | (60.12 | )% |

**Operating      Expenses**

----

**Income      from Operations**

**Income      Tax**

**Net      Income (Loss)**

----

**LIQUIDITY      AND CAPITAL RESOURCES**

*Cash      Flows*

|                                                                   |   | **Six months ended September 30,** |        |
|-----------------------------------------------------------------------------|--------|--------------------------------------------------------|-------------|
|                                                                   |   | **2008**                                               |        | **2007** |   |
| Net                cash provided by (used in)                               |   |                                                   |        |   |   |   |   |
| Operating                activities                                         |   | $                                                      | 5,277,560   |   |   | 2,713,859 |   |
| Investing                activities                                         |   |                                                   | (12,682,701 | ) |   | (5,927,756 | ) |
| Financing                activities                                         |   |                                                   | 1,662,744   |   |   | 7,786,421 |   |
| Net                change in cash and cash equivalents                      |   |                                                   | (5,742,397  | ) |   | 4,572,524 |   |
|                                                                        |   |                                                   |        |   |   |   |   |
| Effect                of exchange rate changes on cash and cash equivalents |   |                                                   | 115,520     |   |   | 267,918 |   |
|                                                                        |   |                                                   |        |   |   |   |   |
| Cash                and cash equivalents at beginning of period             |   |                                                   | 7,487,808   |   |   | 2,616,149 |   |
|                                                                        |   |                                                   |        |   |   |   |   |
| Cash                and cash equivalents at end of period                   |   | $                                                      | 1,860,931   |   |   | 7,456,591 |   |

*Liquidity*

----

*Capital      Resources*

**CONTINGENT      LIABILITIES **

**OFF      BALANCE SHEET ARRANGEMENTS**

**Item 3.**
**Quantitative      and Qualitative Disclosures About Market Risk.**

**Item      4.**
**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-Q 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      1A.          **
**Risk      Factors.**

**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** |   | **Exhibit                Description**                                                                                                                                                                                                                           |
|-----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |   |                                                                                                                                                                                                                                                             |
| 2.1                   |   | Share                Exchange Agreement dated as of October 11, 2006, between Sports Source,                Kinfair Holdings Limited and Auto Chance International Limited.                (2)                                                                   |
|                  |   |                                                                                                                                                                                                                                                             |
| 2.2                   |   | Share                Transfer Agreement, dated February 29, 2006, between Kinfair Holdings                Limited, Xinyang Hongchang Channel Gas Engineering Co., Ltd., Mai                XiaoFu,                Wang Guiquan, Yu Zhiyang and Yang Hongtao. (2) |
|                  |   |                                                                                                                                                                                                                                                             |
| 2.3                   |   | Stock                Purchase Agreement, dated February 19, 2006, by and between Henan                Jinding                Chemical Industry Co., Ltd. and Kinfair Holdings Limited.                (2)                                                        |
|                  |   |                                                                                                                                                                                                                                                             |
| 3.1                   |   | Certificate                of Incorporation of the Company, as amended by the current report                on Form                8-K filed with the SEC on February 7, 2007 (1)                                                                                |
|                  |   |                                                                                                                                                                                                                                                             |
| 3.2                   |   | Bylaws                of the Company, as amended by the current report on Form 8-K/A filed                with                the SEC on February 23, 2007 (1)                                                                                                   |
|                  |   |                                                                                                                                                                                                                                                             |
| 10.1                  |   | Loan                Contract (Short Term), dated March 31, 2006, by and between Luoshan                Jinding Chemical Co., Ltd. and Bank of China, Luoshan Sub-branch.                (2)                                                                 |
|                  |   |                                                                                                                                                                                                                                                             |
| 10.2                  |   | RMB                Currency Loan Contract, dated January 5, 2006, by and between Luoshan                Jinding Chemical Co., Ltd. and Xinyang Branch of China Construction                Bank.                (2)                                         |
|                  |   |                                                                                                                                                                                                                                                             |
| 10.3                  |   | RMB                Currency Loan Contract, dated March 1, 2006, by and between Luoshan                Jinding Chemical Co., Ltd. and Xinyang Branch of China Construction                Bank.                (2)                                           |
|                  |   |                                                                                                                                                                                                                                                             |
| 10.4                  |   | Employment                Contract, dated April 28, 2006, by and between Henan Jinding Chemical                Industry Co., Ltd. and Mr. Wu Peng.                (2)                                                                                       |

----

| 10.5   |   | Land                Use Certificates issued to Luoshan Jinding Chemical Industry Co.,                Ltd. by                the People’s Government of Luoshan County. (2)                                                                                                                                                                             |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 10.6   |   | Loan                Extension Agreement, dated February 17, 2006, by and between Xinyang                Hongchang Channel Gas Engineering Co., Ltd. and Luoshan Jinding Chemical                Co., Ltd. (2)                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 10.7   |   | Form                of Labor Contract for Henan Jinding Chemical Industry Co., Ltd.                (2)                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| *10.8  |   | Technology                Transfer Agreement, dated July 18, 2006, by and between Henan Jinding                Chemical Industry Co., Ltd. and Sichuan Tianyi Science and Technologies                Co., Ltd. (2)                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| *10.9  |   | Contract                from Technology Transfer, dated June 30, 2006, by and between Henan                Jinding Chemical Industry Co., Ltd. and SiChuan TianYi Science and                Technology Co., Ltd. (2)                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| *10.10 |   | Technology                Development Contract, dated September 1, 2005, by and between Henan                Jinding Chemical Industry Co., Ltd. and Tsinghua University (Department                of                Chemical Engineering). (2)                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| *10.11 |   | Long                Term Cooperation Agreement, dated July 25, 2006, by and between Henan                Jinding Chemical Industry Co., Ltd. and SiChuan TianYi Science and                Technology Co., Ltd. (Southwest Chemical Institute).                (2)                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| *10.12 |   | Engineering                Service Contract, dated October 30, 2005, by and between Henan Xinyang                Hongchang Pipeline and Gas Company and Hunan Chemical and Pharmaceutical                Design Institute. (2)                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| *10.13 |   | Agreement                on Cooperative Experimentation and Development of the Oil Crop Cyperus                Esculentus as New Energy, dated May 8, 2006, by and between the Institute                of Oil Crops Resea4ch Chinese Academy of Agriculture Sciences and                Xinyyang                Hongdrang Channel Engineering Co., Ltd. (2) |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| *10.14 |   | High-Voltage                Power Supply and Demand Contract, dated July 26, 2005, by and between                Henan Jinding Chemical Industry Co., Ltd. and the Electric Industry                Bureau                of Luoshan County. (2)                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 10.15  |   | Employment                Contract, dated April 27, 2006, by and between Henan Jinding Chemical                Industry Co., Ltd and Mr. Wang Xiang Fu. (2)                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 10.16  |   | Employment                Contract, dated September 28, 2003, by and between Henan Jinding                Chemical Industry Co., Ltd. and Mr. Li Dong Lai. (2)                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 10.17  |   | Employment                Contract, dated April 1, 2007, by and between New Oriental Energy&                Chemical Corp. and Mr. Ben Wang (3)                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 31.1   |   | Certification                of Principal Executive Officer under Section 302 of the Sarbanes-Oxley                Act                of 2002 (4)                                                                                                                                                                                                            |

----

| 31.2   |   | Certification                of Principal Financial Officer under Section 302 of the Sarbanes-Oxley                Act                of 2002 (4)                                           |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                        |
| 32.1   |   | Certification                of Principal Executive Officer under Section 906 of the Sarbanes-Oxley                Act                of 2002 (4)                                           |
|   |   |                                                                                                                                                                                        |
| 32.2   |   | Certification                of Principal Financial Officer under Section 906 of the Sarbanes-Oxley                Act                of 2002 (4)                                           |
|   |   |                                                                                                                                                                                        |
| 99.1   |   | Loan                Agreement, dated August 8, 2008, by and between New Oriental Energy&                Chemical Corp. and Xinyang Hong Chang Pipeline Gas Co., Ltd.                (5) |

----

| * | Confidentiality                treatment requested for certain portions of these                agreements. |
|---|-------------------------------------------------------------------------------------------------------------|

| (1) | Incorporation                by reference to the Company's Registration Statement on Form SB-2,                as                amended (Registration No.                333-125131). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated                by reference to the Company's Current Report on Form 8-K dated October                13,                2006. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated                by reference to the Company's Current Report on Form 8-K dated April                11,                2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Filed                herewith. |
|-----|--------------------------------|

| (5) | Incorporated                by reference to the Company’s Form 10-Q for the period ended June 30,                2008. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

|   | **NEW                  ORIENTAL ENERGY & CHEMICAL CORP.** |
|--------|---------------------------------------------------------------|
|   |                                                          |
|   | By:                                                           | /s/                  Chen Si Qiang |   |
|   |                                                          | Chen                  Si Qiang |
|   |                                                          | Chief                  Executive Officer and Chairman of the Board |
|   |                                                          |   |
|   | By:                                                           | /s/                  Ben Wang |   |
|   |                                                          | Ben                  Wang |
|   |                                                          | Chief                  Financial Officer |

----

**INDEX      TO EXHIBITS**

| **Exhibit****Number** |   | **Exhibit                Description**                                                                                                                                                                                                                             |
|-----------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |   |                                                                                                                                                                                                                                                               |
| 2.1                   |   | Share                Exchange Agreement dated as of October 11, 2006, between Sports Source,                Kinfair Holdings Limited and Auto Chance International Limited.                (2)                                                                     |
|                  |   |                                                                                                                                                                                                                                                               |
| 2.2                   |   | Share                Transfer Agreement, dated February 29, 2006, between Kinfair Holdings                Limited, Xinyang Hongchang Channel Gas Engineering Co., Ltd., Mai                XiaoFu,                Wang Guiquan, Yu Zhiyang and Yang Hongtao. (2)   |
|                  |   |                                                                                                                                                                                                                                                               |
| 2.3                   |   | Stock                Purchase Agreement, dated February 19, 2006, by and between Henan                Jinding                Chemical Industry Co., Ltd. and Kinfair Holdings Limited.                (2)                                                          |
|                  |   |                                                                                                                                                                                                                                                               |
| 3.1                   |   | Certificate                of Incorporation of the Company, as amended by the current report                on Form                8-K filed with the SEC on February 7, 2007 (1)                                                                                  |
|                  |   |                                                                                                                                                                                                                                                               |
| 3.2                   |   | Bylaws                of the Company, as amended by the current report on Form 8-K/A filed                with                the SEC on February 23, 2007 (1)                                                                                                     |
|                  |   |                                                                                                                                                                                                                                                               |
| 10.1                  |   | Loan                Contract (Short Term), dated March 31, 2006, by and between Luoshan                Jinding Chemical Co., Ltd. and Bank of China, Luoshan Sub-branch.                (2)                                                                   |
|                  |   |                                                                                                                                                                                                                                                               |
| 10.2                  |   | RMB                Currency Loan Contract, dated January 5, 2006, by and between Luoshan                Jinding Chemical Co., Ltd. and Xinyang Branch of China Construction                Bank.                (2)                                           |
|                  |   |                                                                                                                                                                                                                                                               |
| 10.3                  |   | RMB                Currency Loan Contract, dated March 1, 2006, by and between Luoshan                Jinding Chemical Co., Ltd. and Xinyang Branch of China Construction                Bank.                (2)                                             |
|                  |   |                                                                                                                                                                                                                                                               |
| 10.4                  |   | Employment                Contract, dated April 28, 2006, by and between Henan Jinding Chemical                Industry Co., Ltd. and Mr. Wu Peng. (2)                                                                                                        |
|                  |   |                                                                                                                                                                                                                                                               |
| 10.5                  |   | Land                Use Certificates issued to Luoshan Jinding Chemical Industry Co.,                Ltd. by                the People’s Government of Luoshan County. (2)                                                                                   |
|                  |   |                                                                                                                                                                                                                                                               |
| 10.6                  |   | Loan                Extension Agreement, dated February 17, 2006, by and between Xinyang                Hongchang Channel Gas Engineering Co., Ltd. and Luoshan Jinding Chemical                Co., Ltd. (2)                                                 |
|                  |   |                                                                                                                                                                                                                                                               |
| 10.7                  |   | Form                of Labor Contract for Henan Jinding Chemical Industry Co., Ltd.                (2)                                                                                                                                                             |
|                  |   |                                                                                                                                                                                                                                                               |
| *10.8                 |   | Technology                Transfer Agreement, dated July 18, 2006, by and between Henan Jinding                Chemical Industry Co., Ltd. and Sichuan Tianyi Science and Technologies                Co., Ltd. (2)                                                |
|                  |   |                                                                                                                                                                                                                                                               |
| *10.9                 |   | Contract                from Technology Transfer, dated June 30, 2006, by and between Henan                Jinding Chemical Industry Co., Ltd. and SiChuan TianYi Science and                Technology Co., Ltd. (2)                                         |
|                  |   |                                                                                                                                                                                                                                                               |
| *10.10                |   | Technology                Development Contract, dated September 1, 2005, by and between Henan                Jinding Chemical Industry Co., Ltd. and Tsinghua University (Department                of                Chemical Engineering). (2)                   |
|                  |   |                                                                                                                                                                                                                                                               |
| *10.11                |   | Long                Term Cooperation Agreement, dated July 25, 2006, by and between Henan                Jinding Chemical Industry Co., Ltd. and SiChuan TianYi Science and                Technology Co., Ltd. (Southwest Chemical Institute).                (2) |

----

| *10.12 |   | Engineering                Service Contract, dated October 30, 2005, by and between Henan Xinyang                Hongchang Pipeline and Gas Company and Hunan Chemical and Pharmaceutical                Design Institute. (2)                                                                                                                               |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| *10.13 |   | Agreement                on Cooperative Experimentation and Development of the Oil Crop Cyperus                Esculentus as New Energy, dated May 8, 2006, by and between the Institute                of Oil Crops Resea4ch Chinese Academy of Agriculture Sciences and                Xinyyang                Hongdrang Channel Engineering Co., Ltd. (2) |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| *10.14 |   | High-Voltage                Power Supply and Demand Contract, dated July 26, 2005, by and between                Henan Jinding Chemical Industry Co., Ltd. and the Electric Industry                Bureau                of Luoshan County. (2)                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 10.15  |   | Employment                Contract, dated April 27, 2006, by and between Henan Jinding Chemical                Industry Co., Ltd and Mr. Wang Xiang Fu. (2)                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 10.16  |   | Employment                Contract, dated September 28, 2003, by and between Henan Jinding                Chemical Industry Co., Ltd. and Mr. Li Dong Lai. (2)                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 10.17  |   | Employment                Contract, dated April 1, 2007, by and between New Oriental Energy&                Chemical Corp. and Mr. Ben Wang (3)                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 31.1   |   | Certification                of Principal Executive Officer under Section 302 of the Sarbanes-Oxley                Act                of 2002 (4)                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 31.2   |   | Certification                of Principal Financial Officer under Section 302 of the Sarbanes-Oxley                Act                of 2002 (4)                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 32.1   |   | Certification                of Principal Executive Officer under Section 906 of the Sarbanes-Oxley                Act                of 2002 (4)                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 32.2   |   | Certification                of Principal Financial Officer under Section 906 of the Sarbanes-Oxley                Act                of 2002 (4)                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                         |
| 99.1   |   | Loan                Agreement, dated August 8, 2008, by and between New Oriental Energy&                Chemical Corp. and Xinyang Hong Chang Pipeline Gas Co., Ltd.                (5)                                                                                                                                                                  |

----

| * | Confidentiality                treatment requested for certain portions of these                agreements. |
|---|-------------------------------------------------------------------------------------------------------------|

| (1) | Incorporation                by reference to the Company's Registration Statement on Form SB-2,                as                amended (Registration No.                333-125131). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated                by reference to the Company's Current Report on Form 8-K dated October                13,                2006. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated                by reference to the Company's Current Report on Form 8-K dated April                11,                2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Filed                herewith. |
|-----|--------------------------------|

| (5) | Incorporated                by reference to the Company’s Form 10-Q for the period ended June 30,                2008. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

----