**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 June 30, 2008**

**o 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                of incorporation)  |   | **20-1917956**(I.R.S.                Employer Identification No.) |
|-----------------------------------------------------------|--------|-------------------------------------------------------------------|

**Xicheng      Industrial Zone of Luoshan, Xinyang**

**Henan      Province, The People’s Republic of China**

**(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      o**

**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 o**
**Accelerated      filer o**

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

**Indicate      by check mark whether the registrant is an accelerated filer (as defined in      Rule      12-b2 of the Exchange Act).**

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

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

**Yes      o**
**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 August 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.**

**Index      to Financial Statements**

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

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**CONDENSED      CONSOLIDATED BALANCE SHEET**

**(UNAUDITED)**

|                                                                                                                                                                                                                              |   | **June 30, 2008** |       | **March 31, 2008** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|------------------------------|--------|
|                                                                                                                                                                                                                              |   | **(Unaudited)**             |       |                         |   |
| **ASSETS**                                                                                                                                                                                                                        |   |
|                                                                                                                                                                                                                              |   |                        |       |                         |   |
| **CURRENT                ASSETS**                                                                                                                                                                                                 |   |                        |       |                         |   |
| Cash                and cash equivalents                                                                                                                                                                                          |   | $                           | 1,636,234  |                         | $      | 7,487,808 |   |
| Restricted                cash                                                                                                                                                                                                    |   |                        | 7,140,150  |                         |   | 5,438,809 |   |
| Notes                receivable, net of reserve of $145,792 and $135,563 at June 30, 2008                and                March 31, 2008, respectively                                                                          |   |                        | 597,746    |                         |   | 647,908 |   |
| Inventories                                                                                                                                                                                                                       |   |                        | 5,236,548  |                         |   | 2,171,040 |   |
| Prepayments                for goods                                                                                                                                                                                              |   |                        | 378,460    |                         |   | 1,196,831 |   |
| Due                from employees                                                                                                                                                                                                 |   |                        | 22,626     |                         |   | 13,213 |   |
| Other                assets                                                                                                                                                                                                       |   |                        | 87,848     |                         |   | 134,993 |   |
| Due                from related parties                                                                                                                                                                                           |   |                        | 302,937    |                         |   | - |   |
| Total                current assets                                                                                                                                                                                               |   |                        | 15,402,549 |                         |   | 17,090,602 |   |
|                                                                                                                                                                                                                              |   |                        |       |                         |   |   |   |
| Plant                and equipment, net                                                                                                                                                                                           |   |                        | 20,515,470 |                         |   | 20,102,938 |   |
| Land                use rights, net                                                                                                                                                                                               |   |                        | 1,658,671  |                         |   | 1,629,633 |   |
| Construction                in progress                                                                                                                                                                                           |   |                        | 17,437,409 |                         |   | 9,740,638 |   |
| Deposits                                                                                                                                                                                                                          |   |                        | 2,036,189  |                         |   | 1,978,389 |   |
| Deferred                taxes                                                                                                                                                                                                     |   |                        | 183,245    |                         |   | 179,541 |   |
| Other                long-term assets                                                                                                                                                                                             |   |                        | 33,143     |                         |   | 32,574 |   |
| Total                long-term assets                                                                                                                                                                                             |   |                        | 41,864,127 |                         |   | 33,663,713 |   |
|                                                                                                                                                                                                                              |   |                        |       |                         |   |   |   |
| **TOTAL                ASSETS**                                                                                                                                                                                                   |   | $                           | 57,266,676 |                         | $      | 50,754,315 |   |
|                                                                                                                                                                                                                              |   |                        |       |                         |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS' EQUITY**                                                                                                                                                                           |
| **CURRENT                LIABILITIES**                                                                                                                                                                                            |   |                        |       |                         |   |   |   |
| Accounts                payable                                                                                                                                                                                                   |   | $                           | 3,048,291  |                         | $      | 1,656,883 |   |
| Other                payables and accrued liabilities                                                                                                                                                                             |   |                        | 647,167    |                         |   | 545,090 |   |
| Short-term                debt                                                                                                                                                                                                    |   |                        | 20,730,854 |                         |   | 17,954,837 |   |
| Customer                deposits                                                                                                                                                                                                  |   |                        | 4,129,364  |                         |   | 4,220,527 |   |
| Payable                to contractors                                                                                                                                                                                             |   |                        | 474,473    |                         |   | 506,364 |   |
| Due                to related parties                                                                                                                                                                                             |   |                        | 6,920,942  |                         |   | 5,708,995 |   |
| Taxes                payable                                                                                                                                                                                                      |   |                        | 1,288,696  |                         |   | 1,424,992 |   |
| Total                current liabilities                                                                                                                                                                                          |   |                        | 37,239,787 |                         |   | 32,017,688 |   |
|                                                                                                                                                                                                                              |   |                        |       |                         |   |   |   |
| **LONG-TERM                LIABILITIES**                                                                                                                                                                                          |   |                        |       |                         |   |   |   |
| Long-term                notes payable                                                                                                                                                                                            |   |                        | 529,224    |                         |   | 517,168 |   |
| Deferred                taxes                                                                                                                                                                                                     |   |                        | 780,245    |                         |   | 773,449 |   |
| Due                to employees                                                                                                                                                                                                   |   |                        | 159,874    |                         |   | 156,517 |   |
| Total                long-term liabilities                                                                                                                                                                                        |   |                        | 1,469,343  |                         |   | 1,447,134 |   |
|                                                                                                                                                                                                                              |   |                        |       |                         |   |   |   |
| **TOTAL                LIABILITIES**                                                                                                                                                                                              |   | $                           | 38,709,130 |                         | $      | 33,464,822 |   |
|                                                                                                                                                                                                                              |   |                        |       |                         |   |   |   |
| **CONTINGENCIES**                                                                                                                                                                                                                 |   | $                           | 0          |                         | $      | 0 |   |
|                                                                                                                                                                                                                              |   |                        |       |                         |   |   |   |
| **SHAREHOLDERS'                EQUITY**                                                                                                                                                                                           |   |                        |       |                         |   |   |   |
| Common                stock, par value $0.001 per share; 30,000,000 shares authorized,                12,640,000 shares issued and outstanding as of June 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 June 30, 2008 and                March                31, 2008, respectively)                                                                             |   |                        | 11,454,518 |                         |   | 10,626,499 |   |
| Accumulated                other comprehensive income                                                                                                                                                                             |   |                        | 2,517,183  |                         |   | 2,077,149 |   |
| **TOTAL                SHAREHOLDERS' EQUITY**                                                                                                                                                                                     |   |                        | 18,557,546 |                         |   | 17,289,493 |   |
|                                                                                                                                                                                                                              |   |                        |       |                         |   |   |   |
| **TOTAL                LIABILITIES AND SHAREHOLDERS' EQUITY**                                                                                                                                                                     |   | $                           | 57,266,676 |                         | $      | 50,754,315 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**CONDENSED      CONSOLIDATED STATEMENT OF INCOME AND**

**COMPREHENSIVE      INCOME**

**(UNAUDITED)**

|                                                                                              |   | **Three Months Ended June 30,** |        |
|---------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|-------------|
|                                                                                              |   | **2008**                                            |        | **2007** |   |
|                                                                                              |   |                                                |        |   |   |
| **REVENUES**                                                                                      |   | $                                                   | 15,965,093  |   | $ | 14,727,290 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **COST                OF GOODS SOLD**                                                             |   |                                                | (13,257,214 | ) |   | (12,118,023 | ) |
|                                                                                              |   |                                                |        |   |   |   |   |
| **GROSS                PROFIT**                                                                   |   |                                                | 2,707,879   |   |   | 2,609,267 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| Research                and development                                                           |   |                                                | 20,433      |   |   | 51,662 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| Selling                and distribution                                                           |   |                                                | 277,989     |   |   | 435,049 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| General                and administrative                                                         |   |                                                | 949,161     |   |   | 428,226 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **INCOME                FROM OPERATIONS**                                                         |   |                                                | 1,460,296   |   |   | 1,694,330 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **OTHER                INCOME (EXPENSE)**                                                         |   |                                                |        |   |   |   |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| Interest                expense, net                                                              |   |                                                | (186,755    | ) |   | (99,834 | ) |
|                                                                                              |   |                                                |        |   |   |   |   |
| Other                (expense) income, net                                                        |   |                                                | (32,167     | ) |   | 10,456 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **INCOME                FROM OPERATIONS BEFORE INCOME TAXES**                                     |   |                                                | 1,241,374   |   |   | 1,604,952 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **INCOME                TAXES**                                                                   |   |                                                | 413,355     |   |   | 583,815 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **INCOME                FROM CONTINUING OPERATIONS**                                              |   |                                                | 828,019     |   |   | 1,021,137 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **DISCONTINUED                OPERATION**                                                         |   |                                                |        |   |   |   |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| Income                from discontinued operation (net of income tax of $396)                     |   |                                                | -           |   |   | 1,761 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **NET                INCOME**                                                                     |   |                                                | 828,019     |   |   | 1,022,898 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **OTHER                COMPREHENSIVE INCOME**                                                     |   |                                                |        |   |   |   |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| Foreign                currency translation gain                                                  |   |                                                | 440,034     |   |   | 341,582 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **OTHER                COMPREHENSIVE INCOME BEFORE TAX**                                          |   |                                                | 440,034     |   |   | 341,582 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **INCOME                TAX EXPENSE RELATED TO OTHER COMPREHENSIVE INCOME**                       |   |                                                | -           |   |   | 112,772 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **OTHER                COMPREHENSIVE INCOME, NET**                                                |   |                                                | 440,034     |   |   | 228,860 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **COMPREHENSIVE                INCOME**                                                           |   | $                                                   | 1,268,053   |   | $ | 1,251,758 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **WEIGHTED                AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED**                         |   |                                                | 12,640,000  |   |   | 12,640,000 |   |
|                                                                                              |   |                                                |        |   |   |   |   |
| **INCOME                FROM CONTINUING OPERATIONS PER SHARE, BASIC AND                DILUTED**  |   | $                                                   | 0.07        |   | $ | 0.08 |   |
| **INCOME                FROM DISCONTINUED OPERATION PER SHARE, BASIC AND                DILUTED** |   | $                                                   | 0.00        |   | $ | 0.00 |   |
| **NET                INCOME PER SHARE, BASIC AND DILUTED**                                        |   | $                                                   | 0.07        |   | $ | 0.08 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

|                                                                                 |   | **Three Months Ended****June 30,** |       |
|--------------------------------------------------------------------------------------|--------|---------------------------------------------------|------------|
|                                                                                 |   | **2008**                                          |       | **2007** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                             |   |                                              |       |   |   |
| Net                income                                                            |   | $                                                 | 828,019    |   | $ | 1,022,898 |   |
| Adjustments                to reconcile net income to net cash provided by (used in) |   |                                              |       |   |   |   |   |
| operating                activities:                                                 |   |                                              |       |   |   |   |   |
| Depreciation                and amortization                                         |   |                                              | 694,446    |   |   | 455,958 |   |
| Deferred                taxes                                                        |   |                                              | 3,092      |   |   | (155,320 | ) |
|                                                                                 |   |                                              |       |   |   |   |   |
| **Changes                in operating assets and liabilities:**                      |   |                                              |       |   |   |   |   |
|                                                                                 |   |                                              |       |   |   |   |   |
| **(Increase)                Decrease In:**                                           |   |                                              |       |   |   |   |   |
| Inventories                                                                          |   |                                              | (3,065,508 | ) |   | 1,367,786 |   |
| Prepayment                for goods                                                  |   |                                              | 818,371    |   |   | (598,137 | ) |
| Other                assets                                                          |   |                                              | 47,145     |   |   | (82,667 | ) |
| Due                from employees                                                    |   |                                              | (9,413     | ) |   | - |   |
| Due                from related parties                                              |   |                                              | (302,937   | ) |   | - |   |
| Discontinued                operation                                                |   |                                              | -          |   |   | (8,272 | ) |
|                                                                                 |   |                                              |       |   |   |   |   |
| **Increase                (Decrease) In:**                                           |   |                                              |       |   |   |   |   |
| Accounts                payable                                                      |   |                                              | 1,391,408  |   |   | 676,071 |   |
| Other                payables and accrued liabilities                                |   |                                              | 102,077    |   |   | 100,398 |   |
| Customer                deposits                                                     |   |                                              | (91,163    | ) |   | (4,087,656 | ) |
| Taxes                payable                                                         |   |                                              | (136,296   | ) |   | 606,892 |   |
| Due                to employees                                                      |   |                                              | 3,357      |   |   | - |   |
| Discontinued                operation                                                |   |                                              | -          |   |   | 49 |   |
| Net                cash provided by (used in) operating activities                   |   |                                              | 282,598    |   |   | (702,000 | ) |
|                                                                                 |   |                                              |       |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                             |   |                                              |       |   |   |   |   |
| Restricted                cash                                                       |   |                                              | (1,701,341 | ) |   | (688,673 | ) |
| Purchases                of plant and equipment                                      |   |                                              | (24,714    | ) |   | (30,311 | ) |
| Deposit                for land use rights                                           |   |                                              | (11,544    | ) |   | (805,541 | ) |
| Proceeds                from notes receivable                                        |   |                                              | 64,514     |   |   | 56,485 |   |
| Purchases                of construction in progress                                 |   |                                              | (8,032,005 | ) |   | (1,164,383 | ) |
| ** **Due                from employees                                          |   |                                              | -          |   |   | 40,475 |   |
| ** **Net                cash used in investing activities                       |   |                                              | (9,705,090 | ) |   | (2,591,948 | ) |
|                                                                                 |   |                                              |       |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                              |   |                                              |       |   |   |   |   |
| Proceeds                from short-term debt                                         |   |                                              | 10,811,200 |   |   | 8,285,733 |   |
| Repayments                of short-term debt                                         |   |                                              | (8,480,927 | ) |   | (4,727,201 | ) |
| Advances                from related parties                                         |   |                                              | 1,084,243  |   |   | 216,258 |   |
| Due                to employees                                                      |   |                                              | -          |   |   | 1,295 |   |
| ** **Net                cash provided by financing activities                   |   |                                              | 3,414,516  |   |   | 3,776,085 |   |
|                                                                                 |   |                                              |       |   |   |   |   |
| **NET                (DECREASE) INCREASE IN CASH AND CASH QUIVALENTS**               |   |                                              | (6,007,976 | ) |   | 482,137 |   |
|                                                                                 |   |                                              |       |   |   |   |   |
| Effect                of exchange rate changes on cash                               |   |                                              | 156,402    |   |   | 183,149 |   |
| Cash                and Cash equivalents at beginning of period                      |   |                                              | 7,487,808  |   |   | 2,616,149 |   |
|                                                                                 |   |                                              |       |   |   |   |   |
| **CASH                AND CASH EQUIVALENTS AT END OF PERIOD**                        |   | $                                                 | 1,636,234  |   | $ | 3,281,435 |   |
|                                                                                 |   |                                              |       |   |   |   |   |
| **SUPPLEMENTARY                CASH FLOW INFORMATION**                               |   |                                              |       |   |   |   |   |
| Income                taxes paid                                                     |   | $                                                 | 590,855    |   | $ | - |   |
| Interest                paid                                                         |   | $                                                 | 243,949    |   | $ | 76,493 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

**SUPPLEMENTAL      NON-CASH DISCLOSURES:**

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

**1.      ORGANIZATION AND PRINCIPAL ACTIVITIES**

**2.      BASIS OF PRESENTATION**

**3.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

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

|  | (b) | Concentrations |
|--|-----|----------------|

| **Customer**                 |   | **Sales**                                           |   | **Customer Deposits**              |   |
|------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------|--------|
|                         |   | **Three Months Ended June 30,** |   | **As of****June 30,****2008** |   | **As of ****March 31, ****2008** |   |
|                         |   | **2008**                                            |   | **2007**                                |   |
| Company                    A |   |                                                | 20.39  | %                                       |   | 39.33 | % |   | 47.41 | % |   | 35.81 | % |
| Company                    B |   |                                                | 11.05  | %                                       |   | 10.21 | % |   | 14.04 | % |   | 18.72 | % |
| Company                    C |   |                                                | 15.56  | %                                       |   | - |   |   | 0.03 | % |   | - |   |
| Company                    D |   |                                                | -      |                                    |   | 10.65 | % |   | - |   |   | - |   |

| **Supplier**               |   | **Purchases**                                       |   | **Accounts Payable /****Deposits** |   |
|----------------------------|--------|-----------------------------------------------------|--------|----------------------------------------------|--------|
|                       |   | **Three Months Ended June 30,** |   | **As of****June 30,**              |   | **As of ****March 31,** |   |
|                       |   | **2008**                                            |   | **2007**                                     |   | **2008** |   | **2008** |   |
| Company                  E |   |                                                | 32.34  | %                                            |   | 15.32 | % |   | 15.98 | % |   | 28.82 | % |
| Company                  F |   |                                                | 38.69  | %                                            |   | - |   |   | - |   |   | - |   |
| Company                  G |   |                                                | 18.60  | %                                            |   | - |   |   | 8.51 | % |   | - |   |
| Company                  H |   |                                                | -      |                                         |   | 17.82 | % |   | - |   |   | 5.65 | % |
| Company                  I |   |                                                | -      |                                         |   | 20.39 | % |   | - |   |   | 2.13 | % |

|  | (c) | Economic                and Political Risks |
|--|-----|---------------------------------------------|

|  | (d) | Use                of Estimates |
|--|-----|---------------------------------|

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

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

|  | (e) | Fair                Value of Financial Instruments |
|--|-----|----------------------------------------------------|

|  | (f) | Cash                and Cash Equivalents |
|--|-----|------------------------------------------|

|  | (g) | Inventories |
|--|-----|-------------|

|   | (h) | Capitalized                Interest |
|--------|-----|-------------------------------------|

|   | (i) | Revenue                Recognition |
|--------|-----|------------------------------------|

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

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

|   | (j) | Foreign                Currency Translation |
|--------|-----|---------------------------------------------|

|                                               |   | June 30, 2008 |   | March 31, 2008 |   | June 30,                2007 |   |
|----------------------------------------------------|--------|-------------------------|--------|--------------------------|--------|-----------------------------------|--------|
| Year                end RMB: $ exchange rate       |   |                    | 6.8591 |                     |   | 7.0190                            |   |   | 7.6155 |   |
| Average                yearly RMB: $ exchange rate |   |                    | 6.9391 |                     |   | 7.3766                            |   |   | 7.6749 |   |

|  | (k) | Earnings                Per Share |
|--|-----|-----------------------------------|

|   | (l) | Segments |
|--------|-----|----------|

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

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

**Fuel      Segment**
**:**

| **For The Three Months Ended June 30, 2008** |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   | **DME** |   | **Methanol** |   | **Segment Total** |   |
| Revenues                                                                        |   | $ | 4,915,616 |   | $ | 349,408 |   | $ | 5,265,024 |   |
| COGS                                                                            |   |   | 4,028,452 |   |   | 240,020 |   |   | 4,268,472 |   |
| Gross                profit                                                     |   | $ | 887,164 |   | $ | 109,388 |   | $ | 996,552 |   |

| **For The Three Months Ended June 30, 2007** |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   | **DME** |   | **Methanol** |   | **Segment Total** |   |
| Revenues                                                                        |   | $ | 4,424,938 |   | $ | 58,210 |   | $ | 4,483,148 |   |
| COGS                                                                            |   |   | 3,803,204 |   |   | 55,268 |   |   | 3,858,472 |   |
| Gross                profit                                                     |   | $ | 621,734 |   | $ | 2,942 |   | $ | 624,676 |   |

**Fertilizer      Segment**
**:**

| **For The Three Months Ended June 30, 2008** |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   | **Urea** |   | **Ammonium****Bicarbonate** |   | **Liquefied****Ammonia** |   | **Ammonia****Water** |   | **Segment Total** |   |
| Revenues                                                                        |   | $ | 9,917,995 |   | $ | 661,044 |   | $ | 34,318 |   | $ | 86,712 |   | $ | 10,700,069 |   |
| COGS                                                                            |   |   | 8,080,680 |   |   | 783,190 |   |   | 28,411 |   |   | 96,461 |   |   | 8,988,742 |   |
| Gross                profit (loss)                                              |   | $ | 1,837,315 |   | $ | (122,146 | ) | $ | 5,907 |   | $ | (9,749 | ) | $ | 1,711,327 |   |

| **For The Three Months Ended June 30, 2007** |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   | **Urea** |   | **Ammonium****Bicarbonate** |   | **Liquefied****Ammonia** |   | **Ammonia****Water** |   | **Segment Total** |   |
| Revenues                                                                        |   | $ | 9,217,132 |   | $ | 798,675 |   | $ | 174,821 |   | $ | 53,514 |   | $ | 10,244,142 |   |
| COGS                                                                            |   |   | 7,263,797 |   |   | 783,889 |   |   | 165,971 |   |   | 45,894 |   |   | 8,259,551 |   |
| Gross                profit                                                     |   | $ | 1,953,335 |   | $ | 14,786 |   | $ | 8,850 |   | $ | 7,620 |   | $ | 1,984,591 |   |

**Combined      Segments:**

| **For The Three Months Ended June 30, 2008** |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   | **Fuel Segment** |   | **Fertilizer Segment** |   | **Consolidated Total** |   |
| Revenues                                                                        |   | $ | 5,265,024 |   | $ | 10,700,069 |   | $ | 15,965,093 |   |
| COGS                                                                            |   |   | 4,268,472 |   |   | 8,988,742 |   |   | 13,257,214 |   |
| Gross                profit                                                     |   | $ | 996,552 |   | $ | 1,711,327 |   | $ | 2,707,879 |   |

|  **For The Three Months Ended June 30, 2007** |   |
|---------------------------------------------------------------------------------------|--------|
|                                                                                  |   | **Fuel Segment** |   | **Fertilizer Segment** |   | **Consolidated Total** |   |
| Revenues                                                                              |   | $ | 4,483,148 |   | $ | 10,244,142 |   | $ | 14,727,290 |   |
| COGS                                                                                  |   |   | 3,858,472 |   |   | 8,259,551 |   |   | 12,118,023 |   |
| Gross                profit                                                           |   | $ | 624,676 |   | $ | 1,984,591 |   | $ | 2,609,267 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

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

**4.      NOTES RECEIVABLE**

|                                                     |   | **June 30, 2008** |   | **March 31, 2008** |   |
|----------------------------------------------------------|--------|-----------------------------|--------|------------------------------|--------|
|                                                     |   | **(Unaudited)**             |   |                         |   |
| Bank                acceptance notes:                    |   |                        |   |                         |   |
|                                                     |   |                        |   |                         |   |
| Due                May 9, 2008 (subsequently settled)    |   | $                           | -      |                         | $      | 21,371 |   |
| Due                April 30, 2008 (subsequently settled) |   |                        | -      |                         |   | 17,096 |   |
| Due                July 17, 2008 (subsequently settled)  |   |                        | -      |                         |   | 32,966 |   |
| Due                April 30, 2008 (subsequently settled) |   |                        | -      |                         |   | 6,593 |   |
| Due                August 23, 2008                       |   |                        | 14,579 |                         |   | - |   |
| Subtotal                                                 |   | $                           | 14,579 |                         | $      | 78,026 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

**4.         NOTES RECEIVABLE (CONTINUED)**

| Notes                receivable from unrelated companies: |   |   |     |   |   |     |   |
|-----------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
|                                                      |   |   |     |   |   |     |   |
| Due                December 31, 2007 (in litigation)      |   |   | 728,959  |   |   | 712,352  |   |
| Provision                for notes receivable             |   |   | (145,792 | )      |   | (142,470 | )      |
| Total                                                     |   | $      | 597,746  |   | $      | 647,908  |   |

**5.         INVENTORIES**

|                             |   | **June 30, 2008** |      | **March 31, 2007** |   |
|----------------------------------|--------|-----------------------------|-----------|------------------------------|--------|
|                             |   | **(Unaudited)**             |      |                         |   |
| Finished                goods    |   | $                           | 733,450   |                         | $      | 281,851 |   |
| Raw                materials     |   |                        | 3,007,958 |                         |   | 1,185,758 |   |
| Packing                materials |   |                        | 1,495,140 |                         |   | 703,431 |   |
| Total                inventories |   | $                           | 5,236,548 |                         | $      | 2,171,040 |   |

**6.          RELATED PARTY TRANSACTIONS**

|  | (I) | Due                From Related Parties |
|--|-----|-----------------------------------------|

|                                              |   | **June                30, 2008** |    | **March                31, 2008** |   |
|---------------------------------------------------|--------|----------------------------------|---------|-----------------------------------|--------|
|                                              |   | **(Unaudited)**                  |    |                              |   |
| Current:                                          |   |                             |    |                              |   |   |   |
| Huaiyang                Desheng Chemical Co., Ltd |   | $                                | 302,937 |                              |   | - |   |

*** ***

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

**6.          RELATED PARTY TRANSACTIONS (CONTINUED)**

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

|                                                     |   |   |   | **June 30, 2008** |   | **March 31, 2008** |   |
|----------------------------------------------------------|--------|--------|--------|-----------------------------|--------|------------------------------|--------|
|                                                     |   |   |   | **(Unaudited)**             |   |                         |   |
| Current:                                                 |   |   |   |                        |   |                         |   |   |   |   |
| Xinyang                Hong Chang Pipeline Gas Co., Ltd. |   |   | (a     | )                           | $      | 4,227,960                    |   | $ | 4,131,643 |   |
| Long                Triumph Investments Limited          |   |   | (b     | )                           |   | 1,225,723                    |   |   | 862,035 |   |
| Chen                Siqiang                              |   |   | (c     | )                           |   | 1,020,542                    |   |   | 712,352 |   |
| Wang                Guiquan                              |   |   | (d     | )                           |   | 131,213                      |   |   | - |   |
| Zhou                Dianchang                            |   |   | (e     | )                           |   | 72,896                       |   |   | - |   |
| Mai                Xiaofu                                |   |   | (f     | )                           |   | 145,792                      |   |   | - |   |
| Yu                Zhiyang                                |   |   | (g     | )                           |   | 43,737                       |   |   | - |   |
| Yang                Hongtao                              |   |   | (h     | )                           |   | 43,737                       |   |   | - |   |
| Due                to employees                          |   |   | (i     | )                           |   | 9,342                        |   |   | 2,965 |   |
|                                                     |   |   |   |                        | $      | 6,920,942                    |   | $ | 5,708,995 |   |

|  | (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 $4,227,960 is $2,915,834, which                has                an interest rate of 8.748% per annum and is due on June 30, 2009.                The                interest expense for the three months ended June 30, 2008 and 2007                of                $63,770 and $0, respectively, was capitalized in construction in                progress,                since the amount was used for construction. Also see Note 9. The                balance                of $1,312,126 is interest free and has no fixed repayment terms.                Also see                the subsequent event discussion at note 14. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (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 $1,020,542 is $728,959, which is due on February                3,                2009. The balance of $291,583 is due on May 21, 2009. The interest                expense                for the three months ended June 30, 2008 and 2007 of $20,761 and                $0, was                capitalized 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, has an interest rate of 9.6% per annum and is due on                  April 18,                  2009. The interest expense for the three months ended June                  30, 2008 and 2007 of $2,554 and $0, was capitalized 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 three months ended June 30, 2008 and 2007 of $1,419                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 three months ended June 30, 2008 and 2007 of $3,460                and                $0, was capitalized in construction in progress, since the amount                was used                for construction. Also see Note                9. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

**6.          RELATED PARTY TRANSACTIONS (CONTINUED)**

|  | (g) | Yu                Zhiyang is a significant shareholder in the majority 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 three months                ended June 30, 2008 and 2007 of $1,038 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 in the majority 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 three months                ended June 30, 2008 and 2007 of $1,038 and $0, was capitalized in                construction in progress, since the amount was used for construction.                Also                see Note 9. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|  | (II) | Due                from Employees |
|--|------|-----------------------------------|

|                                           |   | **June 30, 2008** |   | **March 31, 2008** |   |
|------------------------------------------------|--------|-----------------------------|--------|------------------------------|--------|
|                                           |   | **(Unaudited)**             |   |                         |   |
| Current                                        |   | $                           | 22,626 |                         | $      | 13,213 |   |
| Total                amount due from employees |   | $                           | 22,626 |                         | $      | 13,213 |   |

|  | (III) | Due                to Employees |
|--|-------|---------------------------------|

|                                         |   | **June 30, 2008** |    | **March 31, 2008** |   |
|----------------------------------------------|--------|-----------------------------|---------|------------------------------|--------|
|                                         |   | **(Unaudited)**             |    |                         |   |
| Long-term                                    |   | $                           | 159,874 |                         | $      | 156,517 |   |
| Total                amount due to employees |   | $                           | 159,874 |                         | $      | 156,517 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

**7.          PLANT AND EQUIPMENT**

|                                          |   | **June 30, 2008** |       | **March 31, 2008** |   |
|-----------------------------------------------|--------|-----------------------------|------------|------------------------------|--------|
|                                          |   | **(Unaudited)**             |       |                         |   |
| At                cost:                       |   |                        |       |                         |   |   |   |
| Buildings                                     |   | $                           | 2,183,507  |                         | $      | 2,133,765 |   |
| Machinery                                     |   |                        | 25,179,549 |                         |   | 23,988,684 |   |
| Motor                vehicles                 |   |                        | 325,651    |                         |   | 314,870 |   |
| Office                equipment               |   |                        | 255,350    |                         |   | 247,367 |   |
|                                          |   |                        | 27,944,057 |                         |   | 26,684,686 |   |
| Less:                Accumulated depreciation |   |                        |       |                         |   |   |   |
| Buildings                                     |   |                        | 334,363    |                         |   | 304,052 |   |
| Machinery                                     |   |                        | 6,848,715  |                         |   | 6,063,257 |   |
| Motor                vehicles                 |   |                        | 154,010    |                         |   | 136,381 |   |
| Office                equipment               |   |                        | 91,499     |                         |   | 78,058 |   |
|                                          |   |                        | 7,428,587  |                         |   | 6,581,748 |   |
| Plant                and equipment, net       |   | $                           | 20,515,470 |                         | $      | 20,102,938 |   |

**8.          **
**LAND      USE RIGHTS**

|                                          |   | **June 30, 2008** |      | **March 31, 2008** |   |
|-----------------------------------------------|--------|-----------------------------|-----------|------------------------------|--------|
|                                          |   | **(Unaudited)**             |      |                         |   |
| Cost                                          |   | $                           | 1,790,466 |                         | $      | 1,749,677 |   |
| Less:                Accumulated amortization |   |                        | 131,795   |                         |   | 120,044 |   |
| Land                use rights, net           |   | $                           | 1,658,671 |                         | $      | 1,629,633 |   |

| 2009       |   | $      | 26,857    |   |
|------------|--------|--------|-----------|--------|
| 2010       |   |   | 35,809    |   |
| 2011       |   |   | 35,809    |   |
| 2012       |   |   | 35,809    |   |
| 2013       |   |   | 35,809    |   |
| Thereafter |   |   | 1,488,578 |   |
| Total      |   | $      | 1,658,671 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

**9.          CONSTRUCTION IN PROGRESS**

|      |   | **June 30, 2008** |       | **March 31, 2008** |   |
|-----------|--------|-----------------------------|------------|------------------------------|--------|
|      |   | **(Unaudited)**             |       |                         |   |
| Machinery |   | $                           | 5,161,242  |                         | $      | 5,213,755 |   |
| Plant     |   |                        | 12,275,146 |                         |   | 4,525,886 |   |
| Other     |   |                        | 1,021      |                         |   | 997 |   |
|      |   | $                           | 17,437,409 |                         | $      | 9,740,638 |   |

**10.        SHORT-TERM DEBT**

|                                                                                                                                                                                                                                             |   | **June 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.                                                           |   | $                           | 1,457,917 |                         | $      | - |   |
|                                                                                                                                                                                                                                             |   |                        |      |                         |   |   |   |
| Rural                Credit Cooperatives, Due June 12, 2009, interest rate at 14.19% per                annum,                collateralized by construction in progress.                                                                        |   |                        | 568,588   |                         |   | - |   |
|                                                                                                                                                                                                                                             |   |                        |      |                         |   |   |   |
| Bank                of China Luoshan Branch, Due August 13, 2008, interest rate at 6.84%                per                annum, collateralized by land use rights.                                                                             |   |                        | 2,915,834 |                         |   | 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 |   |
|                                                                                                                                                                                                                                             |   |                        |      |                         |   |   |   |
| 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 |   |
|                                                                                                                                                                                                                                             |   |                        |      |                         |   |   |   |
| Xinyang                Chengxing Credit Cooperatives, Due December 27, 2008, interest rate                at                11.23% per annum, collateralized by finished goods                inventory.                                         |   |                        | 2,332,668 |                         |   | 2,279,527 |   |
|                                                                                                                                                                                                                                             |   |                        |      |                         |   |   |   |
| Xinyang                Chengxing Credit Cooperatives, Due February 3, 2009, interest rate                at                11.56% per annum, collateralized by finished goods                inventory.                                          |   |                        | 1,457,917 |                         |   | 1,424,704 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

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

|                                                                    |   | **June 30, 2008** |       | **March 31, 2008** |   |
|-------------------------------------------------------------------------|--------|-----------------------------|------------|------------------------------|--------|
|                                                                    |   | **(Unaudited)**             |       |                         |   |
| **Notes                Payable to Unrelated Companies****:**            |   |                        |       |                         |   |
| Due                July 11, 2008 (subsequently repaid on its due date)  |   |                        | 145,792    |                         |   | 142,470 |   |
| Due                July 18, 2008 (subsequently repaid on its due date)  |   |                        | 583,167    |                         |   | 569,882 |   |
| Due                August 19, 2008                                      |   |                        | 98,409     |                         |   | 96,168 |   |
| Due                August 25, 2008                                      |   |                        | 874,750    |                         |   | 854,823 |   |
| Due                August 28, 2008                                      |   |                        | 72,896     |                         |   | 71,235 |   |
| Due                September 11, 2008                                   |   |                        | 437,375    |                         |   | 427,411 |   |
| Due                September 25, 2008                                   |   |                        | 874,750    |                         |   | 854,823 |   |
| Due                October 7, 2008                                      |   |                        | 43,738     |                         |   | - |   |
| Due                October 9, 2008                                      |   |                        | 145,792    |                         |   | - |   |
| Due                October 10, 2008                                     |   |                        | 291,583    |                         |   | - |   |
| Due                October 14, 2008                                     |   |                        | 728,959    |                         |   | - |   |
| Due                October 22, 2008                                     |   |                        | 1,049,700  |                         |   | - |   |
| Due                October 24, 2008                                     |   |                        | 583,167    |                         |   | - |   |
| Due                October 29, 2008                                     |   |                        | 1,603,710  |                         |   | - |   |
| Due                November 6, 2008                                     |   |                        | 65,606     |                         |   | - |   |
| Due                November 8, 2008                                     |   |                        | 14,579     |                         |   | - |   |
| Due                November 12, 2008                                    |   |                        | 1,385,021  |                         |   | - |   |
| Due                November 13, 2008                                    |   |                        | 656,063    |                         |   | - |   |
| Due                November 20, 2008                                    |   |                        | 182,240    |                         |   | - |   |
| Due                November 23, 2008                                    |   |                        | 437,375    |                         |   | - |   |
| Due                November 29, 2008                                    |   |                        | 72,896     |                         |   | - |   |
| Due                December 16, 2008                                    |   |                        | 583,167    |                         |   | - |   |
| Due                December 20, 2008                                    |   |                        | 510,271    |                         |   | - |   |
| Due                April 11, 2008 (subsequently repaid on its due date) |   |                        | -          |                         |   | 185,212 |   |
| Due                April 15, 2008 (subsequently repaid on its due date) |   |                        | -          |                         |   | 765,065 |   |
| Due                April 17, 2008 (subsequently repaid on its due date) |   |                        | -          |                         |   | 176,663 |   |
| Due                April 19, 2008 (subsequently repaid on its due date) |   |                        | -          |                         |   | 247,899 |   |
| Due                April 30, 2008 (subsequently repaid on its due date) |   |                        | -          |                         |   | 569,882 |   |
| Due                May 13, 2008 (subsequently repaid on its due date)   |   |                        | -          |                         |   | 284,941 |   |
| Due                May 23, 2008 (subsequently repaid on its due date)   |   |                        | -          |                         |   | 284,941 |   |
| Due                May 28, 2008 (subsequently repaid on its due date)   |   |                        | -          |                         |   | 598,376 |   |
| Due                May 30, 2008 (subsequently repaid on its due date)   |   |                        | -          |                         |   | 142,470 |   |
| Due                June 5, 2008 (subsequently repaid on its due date)   |   |                        | -          |                         |   | 569,882 |   |
| Due                June 26, 2008 (subsequently repaid on its due date)  |   |                        | -          |                         |   | 284,941 |   |
|                                                                    |   |                        |       |                         |   |   |   |
| **Notes                Payable to an Unrelated Individual****:**        |   |                        |       |                         |   |   |   |
| Due                June 3, 2009                                         |   |                        | 556,924    |                         |   | - |   |
|                                                                    |   | $                           | 20,730,854 |                         | $      | 17,954,837 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

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

**11.   LONG-TERM      NOTES PAYABLE**

**12.   TAXES**

|                              |   | **Three Months Ended June 30,** |    |
|-----------------------------------|--------|-----------------------------------------------------|---------|
|                              |   | **2008**                                            |    | **2007** |   |
|                              |   | **(Unaudited)**                                     |    | **(Unaudited)** |   |
| Current:                          |   |                                                |    |   |   |   |   |
| CIT                               |   | $                                                   | 423,984 |   | $ | 604,686 |   |
| Deferred:                         |   |                                                |    |   |   |   |   |
| CIT                               |   |                                                | (10,629 | ) |   | (20,871 | ) |
|                              |   |                                                |    |   |   |   |   |
| Income                tax expense |   | $                                                   | 413,355 |   | $ | 583,815 |   |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

**12.         **
**TAXES      (CONTINUED)**

|                                                   |   | **Three Months Ended June 30,** |    |
|--------------------------------------------------------|--------|-----------------------------------------------------|---------|
|                                                   |   | **2008**                                            |    | **2007** |   |
|                                                   |   | **(Unaudited)**                                     |    | **(Unaudited)** |   |
| Computed                “expected” expense |   | $                                                   | 310,344 |   | $ | 529,634 |   |
| Permanent                differences                   |   |                                                | 103,011 |   |   | 54,181 |   |
|                                                   |   |                                                |    |   |   |   |   |
| Income                tax expense                      |   | $                                                   | 413,355 |   | $ | 583,815 |   |

|                                          |   | **June                30, 2008** |           | **March                31, 2008** |   |
|-----------------------------------------------|--------|----------------------------------|----------------|-----------------------------------|--------|
| **Deferred                tax assets:**       |   |                             | **(Unaudited** | **)**                             |   |   |   |
| Non-current                portion:           |   |                             |           |                              |   |   |   |
| Cost                of sales                  |   | $                                | 37,612         |                              | $      | 73,207 |   |
| Financial                expense              |   |                             | 13,509         |                              |   | 11,840 |   |
| Welfare                                       |   |                             | 29,431         |                              |   | 11,893 |   |
| Provision                for notes receivable |   |                             | 36,448         |                              |   | 35,618 |   |
| Other                expense                  |   |                             | 66,245         |                              |   | 46,983 |   |
| Total                deferred tax assets      |   |                             | 183,245        |                              |   | 179,541 |   |
|                                          |   |                             |           |                              |   |   |   |
| **Deferred                tax liabilities:**  |   |                             |           |                              |   |   |   |
| Non-current                portion:           |   |                             |           |                              |   |   |   |
| Depreciation                                  |   |                             | 337,747        |                              |   | 353,039 |   |
| Amortization                                  |   |                             | 23,262         |                              |   | 21,330 |   |
| Cost                of sales                  |   |                             | 328,230        |                              |   | 314,511 |   |
| Government                grant               |   |                             | 58,681         |                              |   | 57,344 |   |
| Investment                income              |   |                             | 17,176         |                              |   | 16,785 |   |
| Other                expense                  |   |                             | 15,149         |                              |   | 10,440 |   |
| Total                deferred tax liabilities |   |                             | 780,245        |                              |   | 773,449 |   |
|                                          |   |                             |           |                              |   |   |   |
| Net                deferred tax liabilities   |   | $                                | (597,000       | )                                 | $      | (593,908 | ) |

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

**12.         **
**TAXES      (CONTINUED)**

**13.        CONTINGENCIES**

**Pending      litigation:**

----

**NEW      ORIENTAL ENERGY & CHEMICAL CORP.**

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

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

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

**14.        SUBSEQUENT EVENTS**

----

** 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 *

*Foreign      currency transactions and comprehensive income (loss)*

**Recent      Accounting Pronouncements**

----

**Overview**

----

**RESULT      OF OPERATIONS**

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

**Three      Months Ended June 30, 2007**

|                                                                     |   | **Three Months Ended June 30, 2008** |        | **Three Months Ended June 30, 2007** |   | **Comparisons** |   |
|--------------------------------------------------------------------------|--------|---------------------------------------------------------------|-------------|---------------------------------------------------------------|--------|-----------------|--------|
|                                                                     |   |                                                          |        |                                                          |   |            |   |   |   |   |   | **Increase** |   |
|                                                                     |   |                                                          |        | **Percentage**                                                |   |            |   | **Percentage** |   | **Growth in** |   | **(Decrease) in** |   |
|                                                                     |   | **Amount**                                                    |        | **of Revenues**                                          |   | **Amount**      |   | **of Revenues** |   | **Amount** |   | **Percentage** |   |
| **Item**                                                                 |   | **US $**                                                 |        | **(%)**                                                       |   | **US $**   |   | **(%)** |   | **US                    $** |   | **(%)** |   |
| Revenues                                                                 |   |                                                          | 15,965,093  |                                                          |   | 100.00          | %      |   | 14,727,290 |   |   | 100.00 | % |   | 1,237,803 |   |   | 8.40 | % |
| Cost                    of Goods Sold                                    |   |                                                          | (13,257,214 | )                                                             |   | (83.04          | )%     |   | (12,118,023 | ) |   | (82.28 | )% |   | (1,139,191 | ) |   | 9.40 | % |
| Gross                    Profit                                          |   |                                                          | 2,707,879   |                                                          |   | 16.96           | %      |   | 2,609,267 |   |   | 17.72 | % |   | 98,612 |   |   | 3.78 | % |
| Research                    and development                              |   |                                                          | 20,433      |                                                          |   | 0.13            | %      |   | 51,662 |   |   | 0.35 | % |   | (31,229 | ) |   | (60.45 | )% |
| Selling                    and distribution                              |   |                                                          | 277,989     |                                                          |   | 1.74            | %      |   | 435,049 |   |   | 2.95 | % |   | (157,060 | ) |   | (36.10 | )% |
| General                    & administrative                          |   |                                                          | 949,161     |                                                          |   | 5.95            | %      |   | 428,226 |   |   | 2.91 | % |   | 520,935 |   |   | 121.65 | % |
| Income                    from operations                                |   |                                                          | 1,460,296   |                                                          |   | 9.15            | %      |   | 1,694,330 |   |   | 11.5 | % |   | (234,034 | ) |   | (13.81 | )% |
| Interest                    expense, net                                 |   |                                                          | (186,755    | )                                                             |   | (1.17           | )%     |   | (99,834 | ) |   | (0.68 | )% |   | (86,921 | ) |   | 87.07 | % |
| Other,                    net                                            |   |                                                          | (32,167     | )                                                             |   | (0.20           | )%     |   | 10,456 |   |   | 0.07 | % |   | (42,623 | ) |   | (407.64 | )% |
| Income                    before tax                                     |   |                                                          | 1,241,374   |                                                          |   | 7.78            | %      |   | 1,604,952 |   |   | 10.90 | % |   | (363,578 | ) |   | (22.65 | )% |
| Income                    tax                                            |   |                                                          | 413,355     |                                                          |   | 2.59            | %      |   | 583,815 |   |   | 3.96 | % |   | (170,460 | ) |   | (29.20 | )% |
| Income                    from continuing operation                      |   |                                                          | 828,019     |                                                          |   | 5.19            | %      |   | 1,021,137 |   |   | 6.93 | % |   | (193,118 | ) |   | (18.91 | )% |
| Discontinued                    operation                                |   |                                                          | -           |                                                          |   | 0.00            | %      |   | 1,761 |   |   | 0.01 | % |   | (1,761 | ) |   | (100.00 | )% |
| Net                    income (loss)                                     |   |                                                          | 828,019     |                                                          |   | 5.19            | %      |   | 1,022,898 |   |   | 6.95 | % |   | (194,879 | ) |   | (19.05 | )% |
| Foreign                    currency translation gain                     |   |                                                          | 440,034     |                                                          |   | 2.76            | %      |   | 341,582 |   |   | 2.32 | % |   | 98,452 |   |   | 28.82 | % |
| Other                    comprehensive income, net                       |   |                                                          | 440,034     |                                                          |   | 2.76            | %      |   | 228,860 |   |   | 1.55 | % |   | 211,174 |   |   | 92.27 | % |
| Comprehensive                    income                                  |   |                                                          | 1,268,053   |                                                          |   | 7.94            | %      |   | 1,251,758 |   |   | 8.50 | % |   | 16,295 |   |   | 1.30 | % |
| Weighted                    average shares outstanding basic and diluted |   |                                                          | 12,640,000  |                                                          |   |            |   |   | 12,640,000 |   |   |   |   |   |   |   |   |   |   |
| Net                    income per share, basic and diluted               |   |                                                          | 0.07        |                                                          |   |            |   |   | 0.08 |   |   |   |   |   |   |   |   |   |   |

----

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

|                                  |   | **3 Months Ended****June 30, 2008** |       | **3 Months Ended****June 30, 2007** |   | **Comparisons**         |   |
|---------------------------------------|--------|---------------------------------------------------------|------------|---------------------------------------------------------|--------|-------------------------|--------|
| **Products**                          |   | **Amount****US $**                                 |       | **Percentage****of Revenues****(%)**               |   | **Amount****US $** |   | **Percentage****of Revenues****(%)** |   | **Growth in****Amount****US                  $** |   | **Increase                  (Decrease) in Percentage****(%)** |   |
| Urea                                  |   |                                                    | 9,917,995  |                                                    |   | 62.12                   | %      |   | 9,217,132 |   |   | 62.59 | % |   | 700,863 |   |   | 7.60 | % |
| Ammonium                  bicarbonate |   |                                                    | 661,044    |                                                    |   | 4.14                    | %      |   | 798,675 |   |   | 5.42 | % |   | (137,631 | ) |   | (17.23 | )% |
| Methanol                              |   |                                                    | 349,408    |                                                    |   | 2.19                    | %      |   | 58,210 |   |   | 0.40 | % |   | 291,198 |   |   | 500.25 | % |
| Liquefied                  Ammonia    |   |                                                    | 34,318     |                                                    |   | 0.22                    | %      |   | 174,821 |   |   | 1.19 | % |   | (140,503 | ) |   | (80.37 | )% |
| DME                                   |   |                                                    | 4,915,616  |                                                    |   | 30.79                   | %      |   | 4,424,938 |   |   | 30.05 | % |   | 490,678 |   |   | 11.09 | % |
| Ammonia                  Water        |   |                                                    | 86,712     |                                                    |   | 0.54                    | %      |   | 53,514 |   |   | 0.35 | % |   | 33,198 |   |   | 62.04 | % |
| Total                                 |   |                                                    | 15,965,093 |                                                    |   | 100.00                  | %      |   | 14,727,290 |   |   | 100.00 | % |   | 1,237,803 |   |   | 8.40 | % |

|                                  |   | **3 Months Ended****June 30, 2008** |       | **3 Months Ended****June 30, 2007** |   | **Comparisons**         |   |
|---------------------------------------|--------|---------------------------------------------------------|------------|---------------------------------------------------------|--------|-------------------------|--------|
| **Provinces**                         |   | **Amount****US $**                                 |       | **Percentage****of Revenues****(%)**               |   | **Amount****US $** |   | **Percentage****of Revenues****(%)** |   | **Growth in****Amount****US $** |   | **Increase                    (Decrease) in Percentage****(%)** |   |
|                                  |   |                                                    |       |                                                    |   |                    |   |   |   |   |   |   |   |
| Henan                    Province     |   |                                                    | 7,050,802  |                                                    |   | 44.16                   | %      |   | 4,905,987 |   |   | 33.31 | % |   | 2,144,815 |   |   | 43.72 | % |
| Guangdong                    Province |   |                                                    | 5,136,770  |                                                    |   | 32.18                   | %      |   | 6,672,907 |   |   | 45.31 | % |   | (1,536,137 | ) |   | (23.02 | )% |
| Hubei                    Province     |   |                                                    | 1,914,738  |                                                    |   | 11.99                   | %      |   | 1,550,274 |   |   | 10.53 | % |   | 364,464 |   |   | 23.51 | % |
| Anhui                    Province     |   |                                                    | 658,839    |                                                    |   | 4.13                    | %      |   | 708,940 |   |   | 4.82 | % |   | (50,101 | ) |   | (7.07 | )% |
| Hunan                    Province     |   |                                                    | 68,998     |                                                    |   | 0.43                    | %      |   | 249,298 |   |   | 1.69 | % |   | (180,300 | ) |   | (72.32 | )% |
| Hebei                    Province     |   |                                                    | 465,063    |                                                    |   | 2.91                    | %      |   | 0 |   |   | 0.00 | % |   | 465,063 |   |   | 100.00 | % |
| Jiangxi                    Province   |   |                                                    | 254,955    |                                                    |   | 1.60                    | %      |   | 596,795 |   |   | 4.05 | % |   | (341,840 | ) |   | (57.28 | )% |
| Shandong                    Province  |   |                                                    | 414,928    |                                                    |   | 2.60                    | %      |   | 24,061 |   |   | 0.16 | % |   | 390,867 |   |   | 1624.48 | % |
| Zhejiang                    Province  |   |                                                    | 0          |                                                    |   | 0.00                    | %      |   | 19,028 |   |   | 0.13 | % |   | (19,028 | ) |   | (100.00 | )% |
| Total                                 |   |                                                    | 15,965,093 |                                                    |   | 100.00                  | %      |   | 14,727,290 |   |   | 100.00 | % |   | 1,237,803 |   |   | 8.40 | % |

----

|                                |   | **3 Months Ended ****June 30, 2008** |        | **3 Months Ended ****June 30, 2007** |   | **Comparisons**         |   |
|-------------------------------------|--------|---------------------------------------------------------------|-------------|---------------------------------------------------------------|--------|-------------------------|--------|
| **Item**                            |   | **Amount****US $**                                       |        | **Percentage**** ****of Revenues****(%)**           |   | **Amount****US $** |   | **Percentage ****of Revenues****(%)** |   | **Growth in****Amount****US $** |   | **Increase****(Decrease) in****Percentage ****(%)** |   |
| Revenues                            |   |                                                          | 15,965,093  |                                                          |   | 100                     | %      |   | 14,727,290 |   |   | 100 | % |   | 1,237,803 |   |   | 8.40 | % |
| Cost                  of Goods Sold |   |                                                          | (13,257,214 | )                                                             |   | 83.04                   | %      |   | (12,118,023 | ) |   | 82.28 | % |   | 1,139,191 |   |   | 9.40 | % |
| Gross                  Profit       |   |                                                          | 2,707,879   |                                                          |   | 16.96                   | %      |   | 2,609,267 |   |   | 17.72 | % |   | 98,612 |   |   | 3.78 | % |

----

|    |   |   |                                       | **DME** |   | **Methanol** |   | **Urea** |    | **Ammonium                  Bicarbonate** |   | **Liquefied                  Ammonia** |   | **Ammonia                  Water** |     |
|---------|--------|--------|--------------------------------------------|---------|--------|--------------|--------|----------|---------|-------------------------------------------|--------|----------------------------------------|--------|------------------------------------|----------|
| 2009Q1  |   |   | Revenues                                   |    |   | 4,915,616    |   |     | 349,408 |                                      |   | 9,917,995                              |   |                               | 661,044  |   |   | 34,318 |   |   | 86,712 |   |
|    |   |   | COGS                                  |    |   | 4,028,452    |   |     | 240,020 |                                      |   | 8,080,680                              |   |                               | 783,190  |   |   | 28,411 |   |   | 96,461 |   |
|    |   |   | Gross                  Profit         |    |   | 887,164      |   |     | 109,388 |                                      |   | 1,837,315                              |   |                               | (122,146 | ) |   | 5,907 |   |   | (9,749 | ) |
|    |   |   | Gross                  Profit %       |    |   | 18.05        | %      |     | 31.31   | %                                         |   | 18.53                                  | %      |                               | (18.48   | )% |   | 17.21 | % |   | (11.24 | )% |
| 2008Q1  |   |   | Revenues                                   |    |   | 4,424,938    |   |     | 58,210  |                                      |   | 9,217,132                              |   |                               | 798,675  |   |   | 174,821 |   |   | 53,514 |   |
|    |   |   | COGS                                  |    |   | 3,803,204    |   |     | 55,268  |                                      |   | 7,263,797                              |   |                               | 783,889  |   |   | 165,971 |   |   | 45,894 |   |
|    |   |   | Gross                  Profit         |    |   | 621,734      |   |     | 2,942   |                                      |   | 1,953,335                              |   |                               | 14,786   |   |   | 8,850 |   |   | 7,620 |   |
|    |   |   | Gross                  Profit %       |    |   | 14.05        | %      |     | 5.05    | %                                         |   | 21.19                                  | %      |                               | 1.85     | % |   | 5.06 | % |   | 14.24 | % |
| Changes |   |   | Revenues                                   |    |   | 490,678      |   |     | 291,198 |                                      |   | 700,863                                |   |                               | (137,631 | ) |   | (140,503 | ) |   | 33,198 |   |
|    |   |   | Revenue                  Growth       |    |   | 11.09        | %      |     | 500.25  | %                                         |   | 7.60                                   | %      |                               | (17.23   | )% |   | (80.37 | )% |   | 62.04 | % |
|    |   |   | Gross                  Margin Growth  |    |   | 4.00         | %      |     | 26.26   | %                                         |   | (2.66                                  | )%     |                               | (20.33   | )% |   | 12.15 | % |   | (25.48 | )% |

----

**Operating      Expenses**

**Income      from Operations**

----

**Income      Tax**

**Net      Income (Loss)**

**LIQUIDITY      AND CAPITAL RESOURCES**

*Cash      Flows*

|                                                                        |   | **Three                months ended June 30,**  |       |
|-----------------------------------------------------------------------------|--------|------------------------------------------------------|------------|
|                                                                        |   | **2008**                                             |       | **2007** |   |
| Net                cash provided by (used in)                               |   |                                                 |       |   |   |   |   |
| Operating                activities                                         |   | $                                                    | 282,598    |   | $ | (702,000 | ) |
| Investing                activities                                         |   |                                                 | (9,705,090 | ) |   | (2,591,948 | ) |
| Financing                activities                                         |   |                                                 | 3,414,516  |   |   | 3,776,085 |   |
| Net                change in cash and cash equivalents                      |   |                                                 | (6,007,976 | ) |   | 482,137 |   |
|                                                                        |   |                                                 |       |   |   |   |   |
| Effect                of exchange rate changes on cash and cash equivalents |   |                                                 | 156,402    |   |   | 183,149 |   |
|                                                                        |   |                                                 |       |   |   |   |   |
| Cash                and cash equivalents at beginning of period             |   |                                                 | 7,487,808  |   |   | 2,616,149 |   |
|                                                                        |   |                                                 |       |   |   |   |   |
| Cash                and cash equivalents at end of period                   |   | $                                                    | 1,636,234  |   | $ | 3,281,435 |   |

----

*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.                (4) |

----

**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.                (4)                                                                                                                                                                  |

----