UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x	QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ~~ACT OF 1934~~
	FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010
	ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010
OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ~~EXCHANGE ACT OF 1934~~
	EXCHANGE ACT OF 1934
Commission file number 000-53224

CHINA PROSPEROUS CLEAN ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

West Side, Public Transportation Gas Filling Center,

Angang Avenue-Middle Part, Yindu District,

Anyang, Henan Province,

Postal code: 455000

The People’s Republic of China

(Address of principal executive offices, including zip code.)

86-372-3166864

(telephone number, including area code)

Copy of Communication to:

Bernard & Yam, LLP

Attention: Bin Zhou, Esq.

401 Broadway Suite 1708

New York, NY 10013

Phone: 212-219-7783

Facsimile: 212-219-3604

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days. YES x NO ¨

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ¨ NO x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 12,000,000 as of ~~May~~August 1213, 2010.

On this Form 10Q quarterly report, the registrant, China Prosperous Clean Energy Corporation, is hereinafter referred as "we", or "Company", or "CHPC".

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHINA PROSPEROUS CLEAN ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~JUNE 3130, 2010 AND 2009

Table of Contents

Consolidated Financial Statements	Page
Report of Independent Registered Public Accounting Firm	3
Consolidated Balance Sheets	4
Consolidated Statements of Income and Comprehensive Income	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

China Prosperous Clean Energy Corporation and Subsidiaries

We have reviewed the accompanying consolidated balance sheet of China Prosperous Clean Energy Corporation (the “Company”) as of ~~March~~June 3130, 2010, and the related consolidated statements of operations and comprehensive income for the three months and six months ended June 30, 2010 and 2009, and consolidated statements of cash flows for the ~~three~~six months ended ~~March~~June 3130, 2010 and 2009. These consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the balance sheet of China Prosperous Clean Energy Corporation as of December 31, 2009, and the related consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated March 25, 2010, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2009, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

/s/ Patrizio & Zhao, LLC

Parsippany, New Jersey

~~May~~August 510, 2010

China Prosperous Clean Energy Corporation and Subsidiaries

Consolidated Balance Sheets

	March 31,		December 31,
	June 30,		December 31,
	2010		2009
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	~~770~~727,~~075~~759	$	694,620
Restricted cash		~~293~~295,~~967~~446		294,807
Accounts receivable		~~292~~325,~~190~~914		360,581
Inventories		~~732~~791,~~812~~537		553,187
Advance payments		9,~~461~~223,~~304~~999		15,284,156
Dividend receivable		~~411~~177,~~955~~223		333,508
Other receivables		34,~~716~~026,~~937~~446		2,300,314
Total current assets		15,~~679~~568,~~240~~324		19,821,173
Property, plant and equipment, net		4,~~571~~634,~~665~~246		4,541,763
Other assets:
Deferred income taxes		50,~~397~~603		50,397
Goodwill		60,~~330~~577		60,330
Investment in non-consolidated entities		9,~~309~~347,~~375~~451		3,818,615
Other non-current assets		15,~~146~~207		16,055
Total other assets		9,~~435~~473,~~248~~838		3,945,397
Total assets	$	29,~~686~~676,~~153~~408	$	28,308,333
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	1783,~~214,974~~520	$	833,375
Short-term bank loan		~~440~~441,~~100~~900		880,200
Trade notes payable		~~586~~589,~~800~~200		586,800
Customer advances		~~646~~830,~~761~~797		233,486
Due to former shareholders		1,~~580~~587,~~636~~101		1,580,636
Loans from third parties		14,~~402~~371,~~376~~772		13,300,170
Current portion of long-term debt and other current liabilities		~~244~~380,~~842~~511		218,651
Total current liabilities		1918,~~116~~984,~~489~~801		17,633,318
Long-term liabilities:
Long-term bank loan		~~18,227~~-		146,700
Total long-term liabilities		~~18,227~~-		146,700
Total liabilities		1918,~~134~~984,~~716~~801		17,780,018
Equity
Stockholders’ equity:
Common stock, $0.00001 par value, 75,000,000 shares authorized,
12,000,000 shares issued and outstanding		120		120
Additional paid-in capital		8,055,262		8,055,262
Statutory reserve		260,836		260,836
Retained earnings		1,~~811~~917,~~054~~836		1,787,879
Accumulated other comprehensive income		~~409~~443,~~231~~898		409,222
Total stockholders’ equity		10,~~536~~677,~~503~~952		10,513,319
Noncontrolling interest		1413,~~934~~655		14,996
Total equity		10,~~551~~691,~~437~~607		10,528,315
Total liabilities and equity	$	29,~~686~~676,~~153~~408	$	28,308,333

The accompanying notes are an integral part of these consolidated financial statements.

China Prosperous Clean Energy Corporation and Subsidiaries

Consolidated Statements of Income and Comprehensive Income (Unaudited)

	For The Three Months Ended March 31,
	For the Three Months						For the Six Months
	2010			2009
	Ended June 30,						Ended June 30,
Sales	$	4,672,996		$	4,005,438
	2010			2009			2010			2009
Cost of sales		3,979,668			3,340,998
Sales	$	5,311,443		$	5,416,252		$	9,984,439		$	9,421,115
Gross profit		693,328			664,440
Cost of sales		4,674,824			4,673,606			8,654,492			8,014,060
Operating expenses:
Gross profit		636,619			742,646			1,329,947			1,407,055
Selling expenses		420,150			502,477
Operating expenses:
General and administrative expenses		181,605			170,464
Selling expenses		391,739			449,393			811,889			951,891
Total operating expenses		601,755			672,941
General and administrative expenses:		170,349			200,136			351,954			370,588
Income (loss) from operations		91,573			(8,501	)
Total operating expenses		562,088			649,529			1,163,843			1,322,479
Other income (expenses):
Income from operations		74,531			93,117			166,104			84,576
Investment income		78,421			78,346
Other income (expenses):
Interest expense		(32,013	)		(14,677	)
Investment income		78,464			78,630			156,885			156,976
Other income (expenses)		(96,162	)		4,507
Interest expense		(217	)		(16,532	)		(32,231	)		(31,209	)
Total other income (expenses)		(49,754	)		68,176
Other income (expenses)		(7,625	)		6,369			(103,786	)		10,876
Income before provision for income taxes		41,819			59,675
Total other income (expenses)		70,622			68,467			20,868			136,643
Provision for income taxes		18,706			10,857
Income before provision for income taxes		145,153			161,584			186,972			221,219
Income before noncontrolling interest		23,113			48,818
Provision for income taxes		39,704			39,861			58,410			50,707
Less: Net income (loss) attributable to noncontrolling interest		(62	)		756
Income before noncontrolling interest		105,449			121,723			128,562			170,512
Net income attributable to CHPC		23,175			48,062
Less: net income attributable to noncontrolling interest		(1,333	)		474			(1,395	)		1,235
Other comprehensive income
Net income attributable to CHPC		106,782			121,249			129,957			169,277
Foreign currency translation adjustment		9			100,318
Other comprehensive income (loss)
Comprehensive income	$	23,184		$	148,380
Foreign currency translation adjustment		34,667			(41,380	)		34,676			58,938
Weighted average number of shares
Comprehensive income	$	141,449		$	79,869		$	164,633		$	228,215
Basic and diluted		12,000,000			12,000,000
Weighted average number of shares
Earnings per share
Basic and diluted		12,000,000			12,000,000			12,000,000			12,000,000
Basic and diluted	$	0.00		$	0.00
Earnings per share
Basic and diluted	$	0.01		$	0.01		$	0.01		$	0.01

The accompanying notes are an integral part of these consolidated financial statements.

China Prosperous Clean Energy Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

	For the Three Months Ended March 31,
	For the six Months Ended June 30,
	2010			2009
Cash flows from operating activities:
Net income	$	23129,~~175~~957		$	48169,~~062~~277
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Depreciation		17109,~~900~~940			56161,~~128~~556
Noncontrolling interest		(621,395	)		~~756~~1,235
Changes in assets and liabilities:
Accounts receivable		6835,~~367~~970			~~373~~374,~~188~~185
Trade notes receivable		-			(439,530	)
Inventories		(234,965	)		(20,418	)
Inventories		(179,563	)		39,945
Advance payments		1,401,028			(3,767,700	)
Advance payments		1,126,723			(404,954	)
Dividend receivable		156,899			156,648
Dividend receivable		(78,421	)		(78,346	)
Other receivables		(1,708,566	)		96,819
Other receivables		(1,416,140	)		(179,904	)
Other non current assets		909			(10	)
Other non-current assets		909			-
Accounts payable and accrued expenses		(53,010	)		102,517
Accounts payable and accrued expenses		381,469			(34,815	)
Trade notes payable		-			439,710
Trade notes payable		-			439,530
Customer advances		593,522			175,566
Customer advances		413,134			(99,137	)
Current portion of long-term debt and other current liabilities		160,201			(35,370	)
Other current liabilities		44,402			12,745
Total adjustments		460,533			(2,315,262	)
Total adjustments		378,718			(314,394	)
Net cash provided by (used in) operating activities:		590,490			(2,145,985	)
Net cash provided by (used in) operating activities		401,893			(266,332	)
Cash flows from investing activities:
Acquisition of property and equipment		(47,790	)		(328,277	)
Advance payments for purchase of fixed assets		(785,898	)		-
Advance payments for purchase of fixed assets		(786,166	)		-
Acquisition of property and equipment		(183,496	)		(389,130	)
Advance payments – investment deposit paid		-			(234,416	)
Investment in non-consolidated entities		(8,576	)		58,628
Investment in non-consolidated entities		(8,579	)		-
Net cash used in investing activities:		(977,970	)		(330,502	)
Net cash used in investing activities		(842,535	)		(562,693	)
Cash flows from financing activities:
Repayment of short-term bank loan		(439,950	)		(293,020	)
Repayment of short-term bank loans		(439,800	)		(293,140	)
Repayment of related party loans		-			(492,~~380~~582	)
Proceeds from third party loans		1,~~101~~012,~~831~~371			13,~~990~~378,~~429~~271
Repayment of loan-term loan		(146,650	)		-
Repayment of long-term bank loan		(146,600	)		-
Proceeds from minority shareholders		-			34,021
Payments to noncontrolling interest for ownership buyback		-			(202,468	)
Net cash provided by financing activities		515,231			1,239,050
Net cash provided by financing activities:		425,971			2,390,081
Effect of foreign currency translation on cash		26(4,713	)		(226,~~194~~958	)
Net increase in cash and cash equivalents and restricted cash		74,615			407,831
Net increase (decrease) in cash and cash equivalents and
restricted cash		33,778			(113,364	)
Cash and cash equivalents and restricted cash – beginning		989,427			1,034,387
Cash and cash equivalents and restricted cash – ending	$	1,~~064~~023,~~042~~205		$	1921,~~442,218~~023
Supplemental schedule of non cash activities
Advance payments for investment in non-consolidated entity	$	5,~~480~~478,~~311~~442		$	-

The accompanying notes are an integral part of these consolidated financial statements.

China Prosperous Clean Energy Corporation and Subsidiaries

Notes to Consolidated Financial Statements

~~March~~June 3130, 2010 and 2009

(Unaudited)

Note 1 – Organization and Description of Business

China Prosperous Clean Energy Corporation (the "Company" or “CHPC”) was incorporated in the State of Nevada on March 24, 2006. On June 30, 2008, the Company entered a share exchange agreement ("Share Exchange Agreement”) under which the Company issued 5,865,000 shares of its common stock, par value $ 0.00001, to Oracular Dragon Capital Company, Ltd (“Oracular Dragon”), the sole shareholder of Origin Orbit Green Resource Company, Ltd (“Origin Orbit”) in exchange for all the issued and outstanding shares of Origin Orbit (the “Share Exchange”). The Share Exchange is the final part of a series of consecutive transactions including the stock purchase transactions consummated on June 19, 2008 in which the sole shareholder of Origin Orbit purchased 4,524,231 shares of common stock of CHPC from the affiliate and non-affiliate shareholders of CHPC at a total consideration of $ 346,586 (the “Stock Purchase”). Immediately following the Share Exchange and Stock Purchase, Oracular Dragon owned 10,389,231 shares of the common stock of CHPC, representing approximately 86.6% of CHPC’s total issued and outstanding share capital. As a result, the Share Exchange has been accounted for as a reverse acquisition using the purchase method of accounting, whereby Origin Orbit is deemed to be the accounting acquirer and CHPC to be the accounting acquiree. The financial statements before the date of Share Exchange are those of Origin Orbit with the results of CHPC being condensed consolidated from the date of Share Exchange. No goodwill has been recorded.

Origin Orbit is a holding company that, on April 4, 2007, acquired 100% of the capital stock of Anyang Prosperous Energy Technology Developing Co., Ltd. (“Anyang Prosperous”) and Anyang Top Energy Green Resources Co., Ltd. (“Anyang Top”), both of which were organized under the laws of the People’s Republic of China (“PRC”). Anyang Top does not have any subsidiary. Anyang Prosperous has various ownership interests in a number of companies in PRC.

As a result of these share exchange transaction and acquisitions, CHPC has become the holding company of the group comprising Origin Orbit, Anyang Prosperous and Anyang Top and their subsidiaries. The Company is principally engaged in the wholesale and retail sales of compressed natural gas and liquefied petroleum gas through its subsidiaries in the People’s Republic of China (“PRC” or “China”).

As of ~~March~~June 3130, 2010, details of the subsidiaries of the Company are as follows:

	Place of	Registered and	Percentage of
Subsidiaries’ names	operation	paid-up capital	effective ownership	Principal activities

Origin Orbit Green Resource Company, Ltd (Origin Orbit”)	British Virgin Islands	US$7,950,000	100% (a)	Holding company of the other subsidiaries
Anyang Prosperous Energy Technology Developing Co., Ltd. (Anyang Prosperous”)	PRC	US$5,000,000	100% (b)	Wholesale and retail sales of compressed natural gas and liquefied petroleum gas(“LPG”)
Anyang Top Energy Green Resources Co., Ltd. (Anyang Top”)	PRC	US$2,500,000	100% (b)	Wholesale of compressed natural gas, liquefied petroleum gas and Dimethyl Ether
Jinan Zhenyuan Green Resource Co. Ltd. (Jinan Green Resource”)	PRC	RMB10,000,000	99% (c)	Sales of LPG for domestic and vehicles usage and related vehicles components
Handan City Prosperous Car-used Green Resource Co. Ltd. (Handan Green Resource”)	PRC	RMB750,000	98% (c)	Sales of LPG, vehicles components, and new energy research and development

Note 1 – Organization and Description of Business (continued)

	Place of	Registered and	Percentage of
Subsidiaries’ names	operation	paid-up capital	effective ownership	Principal activities

Henan Prosperous Clean Energy Corporation	PRC	RMB30,000,000	100%(c)	Investing in and constructing gas filling stations and selling compressed natural gas ("CNG"), liquefied petroleum gas ("LPG"), coal-bed methane, dimethyl ether ("DME") and methane.
Yangquan Zhenyuan Energy Science & Technology Co. Ltd (Yangquan Zhenyuan”)	PRC	RMB5,000,000	100% (c)	Construction of gas stations
Fuyang Prosperous Energy Technology Development Co. Ltd. (Fuyang Prosperous”)	PRC	RMB10,000,000	100% (c) (d)	Energy technology research and development
Weifang Prosperous Energy Technology Development Co. Ltd. (Weifang Prosperous”)	PRC	RMB10,000,000	100% (c)	Energy technology research and development, and sales vehicles components and gas equipment
Hengshui Prosperous Energy Technology Development Co. Ltd. (Hengshui Prosperous”)	PRC	RMB2,000,000	100% (c)	Gas energy technology research and development
Heze Prosperous Energy Technology Development Co. Ltd. (Heze Prosperous”)	PRC	RMB5,000,000	100% (c)	Construction of LPG and CNG station, and sales of vehicle components LPG and CNG
Shijiazhuang Prosperous Energy Technology Development Co. Ltd. (Shijiazhuang Prosperous”)	PRC	RMB10,000,000	100% (c)	Gas energy technology research, development and advisory services, and sales of gas energy product
Xuchang Zhenyuan Green Resource Technology Development Co. Ltd. (Xuchang Zhenyuan”)	PRC	RMB10,000,000	100% (c)	Investment in natural gas business
Yantai Prosperous Energy Technology Development Co. Ltd. (Yantai Prosperous”)	PRC	RMB500,000	100% (c)	Gas energy technology research and development, and sales vehicle components and gas energy equipment

Note 1 – Organization and Description of Business (continued)

	Place of	Registered and	Percentage of
Subsidiaries’ names	operation	paid-up capital	effective ownership	Principal activities

Changzhi City Zhenyuan Energy Technology Development Co. Ltd (Changzhi City”)	PRC	RMB4,400,000	100% (c)	Sales of crude oil, natural gas, LPG and related vehicle components, and construction of gas stations
Jiaozuo City Prosperous Energy Technology Development Co. Ltd. (Jiaozuo City”)	PRC	RMB5,000,000	100% (c)	Sales of natural gas, liquefied petroleum gas and vehicle components, construction and operation of gas stations
Pingdingshan City Zhenyuan Energy Technology Developing Co. Ltd. (Pingdingshan City”)	PRC	RMB5,000,000	100% (c)	Energy technology development, sales of natural gas, LPG and vehicle components, and construction and operation of gas stations
Linying Prosperous Energy Technology Development Co. Ltd. (Linyi Prosperous”)	PRC	RMB10,000,000	100% (c)	Sales of natural gas and vehicle components.
Jiangsu Hengrun Clean Energy Co., Ltd. ("Jiangsu Hengrun ")	PRC	RMB20,000,000	100% (c)	Research and development of clean energy technology, promotion and application of clean energy technology.

Notes:

(a)	Held directly by CHPC.

(b)	Held indirectly by CHPC through Origin Orbit.

(c)	Held indirectly by CHPC through Origin Orbit and Anyang Prosperous.

(d) According to the Companies Law of the PRC, at the incorporation of the investee, shareholders are only required to pay up 20% of the capital contribution requirement as a minimum and can make up the remaining payment in two years~~’ time~~.

Fuyang Prosperous was incorporated with a registered capital of $1,369,000. As the Company holds 100% ownership interest in Fuyang Prosperous, it is required to contribute $1,369,000 into the capital of Fuyang Prosperous. Up to ~~March~~June 3130, 2010, the Company had only contributed $273,800 leaving $1,095,200 remained outstanding.

Note 2– Summary of Significant Accounting Policies

Basis Of Presentation

The Company’s consolidated financial statements include the accounts of its ~~direct~~ wholly-owned subsidiaries ~~and of its indirect proportionate share of subsidiaries owned by the wholly-owned subsidiaries~~. All intercompany balances and transactions are eliminated in consolidation. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and ~~footnotes~~disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included.

In preparing the accompanying unaudited consolidated financial statements, the Company evaluated the period from ~~March~~June 3130, 2010 through the date the financial statements were issued for material subsequent events requiring recognition or disclosure. No such events were identified for this period.

Interim Financial Statements

These interim financial statements should be read in conjunction with the audited financial statements for the years ended December 31, 2009 and 2008, as not all disclosures required by generally accepted accounting principles (“GAAP”) for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the years ended December 31, 2009 and 2008.

Note 3 – Inventories

Inventories by major categories are summarized as follows:

	March 31,		December 31,
	June 30,		December 31,
	2010		2009
Compressed natural gas	$	~~162~~202,~~720~~951	$	65,600
Liquefied petroleum gas		~~266~~350,~~783~~224		150,384
Dimethyl ether		7752,~~325~~136		140,660
Vehicle modification components and other		~~225~~186,~~984~~226		196,543
Total	$	~~732~~791,~~812~~537	$	553,187

Note 4 – Advance Payments

Advance payments at ~~March~~June 3130, 2010 and June 30, 2009 consist of the following:

	March 31,		December 31,
	June 30,		December 31,
	2010		2009
Raw material	$	4,~~772~~010,~~859~~998	$	6,950,996
Property and equipment		45,~~688~~213,~~445~~001		2,850,981
Investment in non-consolidated entity		-		5,482,179
Total	$	9,~~461~~223,~~304~~999	$	15,284,156

Note 5 – Dividend Receivable

Dividend receivable as of ~~March~~June 3130, 2010 and December 31, 2009 were $~~411~~177,~~955~~223 and $333,508, respectively, representing income receivable from Anyang PetroChina.

Note 6 – Other Receivables

Other receivables primarily consist of goodfaith non-interest bearing ~~loans~~advances given to third parties and payable on demand. Other receivables outstanding as of ~~March~~June 3130, 2010 and December 31, 2009 were $34,~~716~~026,~~937and~~446 and $2,300,314, respectively.

Note 7 – Property, Plant and Equipment

Property, plant and equipment consist of the following:

	March 31,			December 31,
	June 30,			December 31,
	2010			2009
Buildings	$	1,~~121~~126,~~501~~089		$	1,106,703
Machinery		3,~~073~~083,~~081~~568			3,050,621
Office equipment		7377,~~410~~930			72,880
Gas storage vehicles and motor vehicles		123,~~153~~657			123,153
Construction in progress		1,~~285~~425,~~543~~031			1,275,523
		5,676,688			5,628,880
		5,836,275			5,628,880
Less: Accumulated depreciation		(1,~~105~~202,~~023~~029	)		(1,087,117	)
Total	$	4,~~571~~634,~~665~~246		$	4,541,763

Depreciation expenses for the three months ended ~~March~~June 3130, 2010 and 2009 were $1792,~~900~~040 and $56,128, respectively. Depreciation expenses for the six months ended June 30, 2010 and 2009 were $109,940 and $105,353, respectively.

Note 8 – Deferred Income Taxes

Deferred income tax asset of $50,~~397~~603 and $50,397 as of ~~March~~June 3130, 2010 and December 31, 2009 arose from unused tax loss carry-forwards that management considers more likely than not that it will be realized through future operations. The tax loss carry-forwards are available for offset against future taxable income over the next five years. No valuation allowance was recorded as of ~~March~~June 3130, 2010 and December 31, 2009.

Note 9 – Goodwill

Goodwill arose from the Company’s acquisition of Anyang Prosperous and Anyang Top on April 4, 2007. Impairment of goodwill is tested at least annually at the reporting unit. The test consists of two steps. First, the identification of potential impairment is performed by comparing the fair value of the reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired. Second, if there is impairment identified in the first step, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with ASC 450-10 (formerly SFAS No 141(R)), “Business Combinations”. As of ~~March~~June 3130, 2010, no impairment was noted or recorded.

Note 10 – Investment in Non-consolidated Entities

As of ~~March~~June 3130, 2010, available-for-sale securities consisted of the following:

Name of investee	Place of operation	Percentage of ownership	Principal activities

Anyang PetroChina Marketing Company Limited (“Anyang PetroChina”)	PRC	34%	Sales of crude oil and refined oil and LPG
Ancai Energy Co.Ltd	PRC	15%	Investment in the construction of long-distance pipeline and delivery networks for natural gas, and pipeline LPG and CNG filling stations.

Whilst the above companies are private companies whose shares are not quoted or traded in an active market, management has determined that it is not practicable to estimate their fair value reliably. Therefore, the investments in the above companies are stated at cost less any impairment losses. No events or changes in circumstances have been identified that potentially would have a significant adverse effect on the fair value of investments in the above companies. As of ~~March~~June 3130, 2010 and 2009, there was no allowance for impairment losses.

Although the Company held 34% ownership interest in Anyang PetroChina, the Company did not have significant influence over Anyang PetroChina. According to an agreement between the Company and the other shareholder of Anyang PetroChina, namely China National Petroleum Corporation (“China National Petroleum”), the Company has assigned the full power and right of management of Anyang PetroChina to China National Petroleum for the period until December 31, 2009. In return, the Company has been entitled to 10% of the cost of its investment in Anyang PetroChina in the form of a fixed “dividend” each year regardless of the actual performance of Anyang PetroChina for the period until ~~March~~June 3130, 2010. Therefore, Anyang PetroChina has been accounted for using the cost method instead of the equity method. For the ~~three~~six months ended ~~March~~June 3130, 2010 and 2009, dividend income of $~~411~~156,~~955~~885 and $~~333~~156,~~508~~976, respectively, from Anyang Petrol China were included in other income.

The Company acquired 15% of the shares of Ancai Energy Co., Ltd (“Ancai”), which was established on April18, 2008 and was registered with capital of 80 million RMB. Ancai is mainly engaged in the investment in the construction of long-distance pipeline and delivery networks for natural gas, and pipeline LPG and CNG filling stations. The Jiaozuo-Anyang branch of the West-East natural gas transmission project had been built and put into operation in December 2003, which supplies natural gas to users in the cities of Jiaozuo, Xinxiang, Hebi, Anyang as well as industrial users. The project is not just an industrial project, but also a state key infrastructural project for clean energy. Almost 15 million people in Northern Henan can benefit from the project, which plays an important role in local industry and ecological environment. The investment made on Ancai will provide steady and qualified natural gas for the network of CNG filling stations that belong to the company and Henan Transport Authority, developing a stable market of filling stations which takes Ancai mother station as its center.

As of ~~March~~June 3130, 2010, Ancai Group Inc, the 70% shareholder of Ancai, is responsible for the management of Ancai.

Note 11 – Accounts Payable and Accrued Expenses

	March 31, 2010		December 31, 2009
	June 30, 2010		December 31, 2009
Accounts payable	$	~~700~~398,~~342~~589	$	820,868
Accrued expenses		~~514~~384,~~632~~931		12,507
Total	$	1783,~~214,974~~520	$	833,375

The carrying values of accounts payable and accrued expenses approximate their fair values due to the short-term nature of these obligations.

Note 12 – Short Term Bank Loan

Short-term bank loan consists of the following:

	March 31,		December 31,
	June 30,		December 31,
	2010		2009
6.372% one-year term loan from Bank of China, maturing on
August 30, 2010 and secured by the company's property and
equipment. Interest is to be paid monthly; and 6.372% one-year
term loan from Bank of China, maturing on March 24, and secured
by the company's Warehouse receipts	$	~~440~~441,~~100~~900	$	880,200
Total	$	~~440~~441,~~100~~900	$	880,200

Note 13 – Due to Former Shareholders

Balances due to the former shareholders relate to a series of mergers and acquisitions of the Company in 2008. As of ~~March~~June 3130, 2010 and December 31, 2009, the outstanding balance due to the former shareholders was$1,587,101 and $1,580,636, respectively.

Note 14 – Loans From Third Parties

The balance of loans from third parties as of ~~March~~June 3130 2010 consists primarily of a loan from Anyang Zhenyuan Group of $12,~~644~~612,~~319~~390 for funding the investments in certain subsidiaries. The remaining balance of $1,~~758~~759,~~057~~382 as of ~~March~~June 3130, 2010 consists of various loans from third parties that are non-interest bearing and payable on demand. The balance of loans from third parties as of December 31 2009 consists of a loan from Anyang Zhenyuan Group of $13,300,170, $11,056,779 of which was for the development and construction of gasoline stations. This loan is to be paid in full by August 24, 2010. Interest is to be calculated using an annual fixed interest rate of 6% and to be paid with principal at end of the term of the loan. The remaining balance of $2,243,391 was for working capital needs which is unsecured and non-interest bearing.

Note 15 – Income Taxes

The Company incorporated in the State of Nevada is not subject to any income tax according to the rules and regulations of the State of Nevada. Before January 1, 2008, the Company’s subsidiaries in the PRC were generally subject to PRC enterprise income tax at 33%. On March 16, 2007, the PRC government promulgated a new tax law, China’s Unified Corporate Income Tax Law (“New CIT Law”), which took effect from January 1, 2008. Under the New CIT Law, foreign-owned enterprises as well as domestic companies are subject to a unified tax rate of 25%.

Note 15 – Income Taxes (continued)

Accordingly, the Company’s subsidiaries in the PRC have been subject to the PRC corporate income tax at a rate of 25% on their taxable income arising in the PRC commencing from January 1, 2008. Meanwhile, according to Rule 28 of New CIT Law, income tax of small low-profit enterprises is subject to the reduced rate of 20%. Changzhi Company as one of the Company’s subsidiaries meets the conditions of small low-profit enterprises, so Changzhi Company’s income tax rate of 20% in 2009.~~The effect of this change in tax rate has been reflected in the calculation of deferred income tax assets as of December 31, 2007 and thereafter.~~

The Company’s provision for income taxes consists of:

	For the Three Months Ended March 31,
	For the Six Months Ended June 30,
	2010		2009
Current – PRC	$	1858,~~706~~410	$	1050,~~857~~707
Deferred		-		-
Total	$	1858,~~706~~410	$	1050,~~857~~707

Note 16 – Earnings Per Share

The Company presents earnings per share on a basic and diluted basis. Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding. Diluted earnings per share have been computed by dividing net earnings plus convertible preferred dividends and interest expense (after-tax) on convertible debt by the weighted average number of common shares outstanding including the dilutive effect of equity securities. The weighted average number of common shares calculated for diluted EPS excludes the potential common stock that would be exercised under the options and warrants granted to officers because the inclusion of the potential shares from these options and warrants would cause an anti-dilutive effect by increasing the net earnings per share.

		Three Months Ended March 31,
	Three Months Ended June 30,
	2010	~~2010~~		2009	~~2009~~
Net income	$	$106,782	~~23,175~~	$	$121,249	~~48,062~~
Weighted average common shares		12,000,000	~~12,000,000~~		12,000,000	~~12,000,000~~
(denominator for basic income per share)
Effect of dilutive securities		-	-		-	-
Weighted average common shares		12,000,000	~~12,000,000~~		12,000,000	~~12,000,000~~
(denominator for diluted income per share)
Basic earnings per share	$	$0.01	~~0.00~~	$	$0.01	~~0.00~~
Diluted earnings per share	$	$0.01	~~0.00~~	$	$0.01	~~0.00~~
	Six Months Ended June 30,
		2010			2009
Net income	$	129,957		$	169,277
Weighted average common shares		12,000,000			12,000,000
(denominator for basic income per share)
Effect of dilutive securities		-			-
Weighted average common shares		12,000,000			12,000,000
(denominator for diluted income per share)
Basic earnings per share	$	0.01		$	0.01
Diluted earnings per share	$	0.01		$	0.01

Note 17 – Risk Factors

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Note 18 – Concentration of Credit Risk

As of ~~March~~June 3130, 2010 and 2009, 100% of the Company’s cash included cash on hand and deposits in accounts maintained within the PRC where there is currently no rule or regulation in place for obligatory insurance to cover bank deposits in the event of bank failure. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

For the three months ended ~~March~~June 3130, 2010 and 2009, all of the Company’s sales arose in the PRC. In addition, all accounts receivable as of ~~March~~June 3130, 2010 and 2009 were due from customers located in the PRC.

As of ~~March~~June 3130, 2010 and December 31, 2009, no single customer accounted for more than 10% of the company’s accounts receivable.

Note 19 – Supplemental Cash Flow Disclosures

The following is supplemental information relating to the consolidated statements of cash flows:

	Three Months Ended March 31,
	Six Months Ended June 30,
	2010		2009
Cash paid for interest	$	32,~~013~~231	$	1431,~~677~~209
Cash paid for income taxes	$	1858,~~706~~410	$	1050,~~857~~707

Note 20 – Commitments and Contingencies

Lease commitments

The Company has entered into several tenancy agreements for the lease of land and equipment for the purposes of its gas stations. The Company’s commitments for minimum lease payments under these operating leases for the next five years and thereafter as of ~~March~~June 3130, 2010 are as follows:

Period ended March 31,
Period ended June 30,
2011	$	271,294
2012		246,206
2013		153,482
2014		145,334
2015		134,084
Thereafter		189,059
Total	$	1,139,459

Capital commitment

Contracted but not yet provided for:
Investment in Fuyang Prosperous as disclosed in Note 1(d)		$	1,095,200

Note 21 – Segment Information

ASC 280-10 (formerly SFAS 131), “Disclosure about Segments of an Enterprise and Related Information” requires that companies disclose segment data based on how management makes decision about allocating resources to segments and evaluating their performance.

The Company has re-evaluated the structure of its organization and has determined, based on the requirements of SFAS 131, that the Company has the following three reportable segments, identified based on the nature of products, the type or class of customers, and the methods used to distribute the Company’s products:

Note 21 – Segment Information (continued)

▪	Retail sales of Compressed Natural Gas (“CNG”) through operation of CNG filling stations;

▪	Retail sales of Liquefied Petroleum Gas (“LPG”) through operation of LPG filling stations; and

▪	Wholesale of CNG and LPG

During the ~~three~~six months ended ~~March~~June 3130, 2010, all of the Company’s operations were carried out in one geographical segment – China.

The following table sets out the Company’s segment information. The "Unallocated" column in the following table contains the reconciliation between the amounts for reportable segments and the consolidated amounts, which consists primarily of corporate items not allocated to the operating segments and intersegment eliminations. Intersegment sales are accounted for at fair value as if sales were to third parties.

	For the Six Months Ended June 30,
Revenue from external customers	2010			2009
CNG retail	$	2,762,495		$	1,888,399
LPG retail		297,955			535,890
CNG and LPG wholesale		5,066,256			5,550,076
Unallocated		1,857,733			1,446,750
Consolidated	$	9,984,439		$	9,421,115

	For the Six Months Ended June 30,
Net income		2010			2009
CNG retail	$	259,124		$	207,724
LPG retail		(24,121	)		35,282
CNG and LPG wholesale		(301,974	)		(163,966	)
Unallocated		196,928			90,237
Consolidated	$	129,957		$	169,277

For the three months ended March 31, 2010 and 2009

	For the Six Months Ended June 30,
Investment income from non-consolidated entities		2010			2009
Consolidated	$	156,885		$	156,976

	For the Six Months Ended June 30,
Interest expenses		2010			2009
Consolidated	$	(32,231	)	$	(31,209	)

	For the Six Months Ended June 30,
Income before noncontrolling interest and income taxes		2010			2009
Consolidated	$	186,972		$	221,219

	For the Six Months Ended June 30,
Segment assets		2010			2009
CNG retail	$	1,895,854		$	1,114,178
LPG retail		46,804			52,318
CNG and LPG wholesale		1,088,154			1,288,982
Unallocated		26,645,596			15,926,822
Consolidated	$	29,676,408		$	18,382,300

	For the Three Months Ended March 31,
Revenue from external customers	2010			2009
CNG Retail	$	1,319,449		$	1,003,824
LPG Retail		157,665			288,144
CNG and LPG Wholesale		2,342,933			2,195,162
Unallocated		852,949			518,308
Consolidated	$	4,672,996		$	4,005,438
	For the Three Months Ended March 31,
Net Income		2010			2009
CNG Retail	$	8,970		$	53,615
LPG Retail		(4,634	)		22,873
CNG and LPG Wholesale		(250,909	)		(104,529	)
Unallocated		269,748			76,103
Consolidated	$	23,175		$	48,062
	For the Three Months Ended March 31,
Investment income from non-consolidated entities		2010			2009
Consolidated	$	78,421		$	78,346
	For the Three Months Ended March 31,
Interest expenses		2010			2009
Consolidated	$	(32,013	)	$	(14,677	)
	For the Three Months Ended March 31,
Income before noncontrolling interest and income taxes		2010			2009
Consolidated	$	41,819		$	59,675
	For the Three Months Ended March 31,
Segment assets		2010			2009
CNG Retail	$	1,895,854		$	1,114,178
LPG Retail		46,804			52,318
CNG and LPG Wholesale		1,088,154			1,241,858
Unallocated		26,655,341			14,363,414
Consolidated	$	29,686,153		$	16,771,768

Note 22 – Subsequent Events

None.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains forward-looking statements. Forward looking statements are identified by words and phrases such as “anticipate”, “intend”, “expect” and words and phrases of similar import. We caution investors that forward-looking statements are only predictions based on our current expectations about future events and are not guarantees of future performance. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements due to risks, uncertainties and assumptions that are difficult to predict, including those set forth in Item 1A above. We encourage you to read those risk factors carefully along with the other information provided in this Report and in our other filings with the SEC before deciding to invest in our stock or to maintain or change your investment. We undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law.

You should read this MD&A in conjunction with the Consolidated Financial Statements and Related Notes in Item 1.

Unless otherwise noted, all currency figures in this filing are in U.S. dollars. References to "Yuan" or "RMB" are to the Chinese Yuan (also known as the Renminbi). According to Bank of China, as of ~~March~~June 3130, 2010, $1= 6.~~8166~~7889 Yuan.

OVERVIEW

Our new primary business operations include: retail sales of CNG and operation of CNG filling stations; retail sales of LPG and operation of LPG filling stations; and wholesale of LPG and CNG. Our primary business is carried out by Origin Orbit through Anyang Prosperous and Anyang Top. Along with the reform and opening up and China's sustained economic growth and rising consumption level, the gas industry as the basis of the energy industry, has been in a sustained and rapid development process, including LPG and CNG, and other clean gas consumption. With China's sustained and rapid economic growth, and increasing social environmental awareness, clean, renewable energy has been encouraging by industrial policy. "The People's Republic of China National Economic and Social Development of the ~~11th~~11 th Five-Year Plan" clearly declaim that optimizing the energy industry to accelerate the development of LPG, to expand cooperation with offshore LPG resources, and develop gas industry. Especially "implement clean energy car action plan, development of hybrid vehicles, and promote gas use on city buses, taxis and other industries”. LPG, CNG and other clean energy will play an important role in future, there will be immense room for development and a very good development prospects. We plan to add 85 stations in 2010, 20 new stations in 2011, which will be the highlights of the Company.

In the remainder of this filing and its exhibits, “we, us or our” refers to China Prosperous Clean Energy Corporation, Origin Orbit, Anyang Prosperous and Anyang Top, collectively. The results of operations discussed below are the consolidated results of reflect the results of China Prosperous Clean Energy Corporation, Origin Orbit, Anyang Prosperous and Anyang Top.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our management's discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

~~While~~We ~~our significant accounting policies are more fully described in Note 2 to our consolidated financial statements, we~~ believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management’s discussion and analysis.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the failure of customers to make required payments. The Company reviews the accounts receivable on a periodic basis and makes allowances where there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, the customer’s payment history, its current credit-worthiness and current economic trends. Up to June 30, 2010, there was no accounts receivable reserve.

If the balance of allowance for doubtful accounts increased or decreased by 5% on March 31, 2010, pre tax income would change by approximately $14,609 on March 31, 2010.

Available-for-sale Investments

Available-for-sale investments are equity securities which the Company does not intend to sell in the near term. The investees are private companies and do not have a quoted market price in an active market, so the fair value of available-for-sale investment cannot be practicably estimated are stated in the balance sheet using the cost method. Temporary impairments of costs of such available-for-sale investments are reported in other comprehensive income, where as other than temporary impairments are reflected in earnings.

Goodwill

The Company accounts for acquisitions of business in accordance with SFAS No. 141 “Business Combinations”, which may result in the recognition of goodwill. Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations accounted for under the purchase method. Goodwill is not subject to amortization but will be subject to periodic evaluation for impairment. Goodwill is stated in the condensed consolidated balance sheet at cost less accumulated impairment loss, if any.

Asset Impairment

(a) Long-lived Assets

The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups.

(b) Goodwill

The Company evaluates, on at least an annual basis, the carrying amount of goodwill to determine whether current events and circumstances indicate that such carrying amount may no longer be recoverable. To accomplish this, the Company compares the estimated fair value of its reporting units to their carrying amounts. If the carrying value of a reporting unit exceeds its estimated fair value, the Company compares the implied fair value of the reporting unit’s goodwill to its carrying amount, and any excess of the carrying value over the fair value is charged to earnings. The Company’s fair value estimates are based on numerous assumptions and it is possible that actual fair value will be significantly different than the estimates.

Revenue Recognition

Revenue is recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured.

Sales revenue is recognized net of sales discounts and returns at the time when the merchandise is sold to the customer. Based on historical experience, management estimates that sales returns are immaterial and has not made allowance for estimated sales returns.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes". SFAS No. 109 requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

On January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This Interpretation also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. The adoption of FIN 48 has not resulted in any material impact on the Company’s financial position or results.

Foreign Currency

The Company uses the United States dollars (“US Dollar” or “US$” or “$”) for financial reporting purposes. The Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the primary currency of the economic environment in which its operations are conducted. In general, the Company translates its assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statement of income is translated at average exchange rates during the reporting period. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income.

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the condensed consolidated financial statements were as follows:

	March 31, 2010	March 31, 2009
	June 30, 2010	December 31, 2009
Balance sheet items, except for paid-in capital and retained earnings as of the end of period	US$1:RMB6.~~8166~~7889	US$1:RMB6.~~8259~~8166
	Three months ended March 31, 2010	Three months ended March 31, 2009
	Three months ended June 30, 2010	Three months ended June 30, 2009
Amounts included in the statements of income, statements of stockholders’ equity and statements of cash flows for the period	US$1:RMB6.~~8190~~8335	US$1:RMB6.~~8255~~8399
	Six months ended June 30, 2010	Six months ended June 30, 2009
Amounts included in the statements of income, statements of stockholders’ equity and statements of cash flows for the period	US$1:RMB6.8171	US$1:RMB6.8432

Segment Information

SFAS 131, “Disclosure about Segments of an Enterprise and Related Information” requires that companies disclose segment data based on how management makes decision about allocating resources to segments and evaluating their performance.

1. Retail sales of Compressed Natural Gas (“CNG”) through operation of CNG filling stations;

2. Retail sales of Liquefied Petroleum Gas (“LPG”) through operation of LPG filling stations; and

3. Wholesale of CNG and LPG

Recent Accounting Pronouncements

In January 2010, the FASB expanded the disclosure requirements for fair value measurements relating to the transfers in and out of Level 2 measurements and amended the disclosure for the Level 3 activity reconciliation to be presented on a gross basis. In addition, valuation techniques and inputs should be disclosed for both Levels 2 and 3 recurring and nonrecurring measurements. The new requirements are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about the Level 3 activity reconciliation which are effective for fiscal years beginning after December 15, 2010. Zhongte, Beiwei and Beichen adopted the new disclosure requirements on January 1, 2010 except for the disclosure related to the Level 3 reconciliation, which will be adopted on January 1, 2011. The adoption will not have an impact on its consolidated financial condition, results of operations or cash flows.

In October 2009, the FASB issued an amendment to the accounting and disclosure for revenue recognition. The amendment modifies the criteria for recognizing revenue in multiple element arrangements. Under the guidance, in the absence of vendor-specific objective evidence (“VSOE”) or other third party evidence (“TPE”) of the selling price for the deliverables in a multiple-element arrangement, this amendment requires companies to use an estimated selling price (“ESP”) for the individual deliverables. Companies shall apply the relative-selling price model for allocating an arrangement’s total consideration to its individual deliverables. Under this model, the ESP is used for both the delivered and undelivered elements that do not have VSOE or TPE of the selling price. The guidance is effective for the fiscal year beginning on or after June 15, 2010, and will be applied prospectively to revenue arrangements entered into or materially modified after the effective date. The Company intends to adopt the new guidance prospectively beginning January 1, 2011 and is currently evaluating the impact the adoption will have on its consolidated financial statements.

On July 1, 2009, the Financial Accounting Standards Board (“FASB”) officially launched the FASB Accounting Standards Codification (“ASC”), which has become the single official source of authoritative nongovernmental US GAAP, in addition to guidance issued by the Securities and Exchange Commission. The ASC is designed to simplify US GAAP into a single, topically ordered structure. All guidance contained in the ASC carries an equal level of authority. The ASC is effective for all interim and annual periods ending after September 15, 2009.

RESULTS OF OPERATIONS

The following table sets forth the amounts and the percentage relationship to revenues of certain items in our consolidated statements of income for the three months ended ~~March~~June 3130, 2010 and 2009.

Profit & Loss for the quarter ended ~~March~~June 3130, 2010 and 2009

	For the quarter ended March 31, 2010						For the quarter ended March 31, 2009						Changes
	For the quarter ended June 30, 2010						For the quarter ended June 30, 2009						Changes
	Amount			Percentage of Revenue			Amount			Percentage of Revenue			Amount			Percentage
	$			(%)			$			(%)			$			$(%)
SALES	$	4,672,996			100.00	%		4,005,438			100.00	%		667,558			16.67	%
Sales	$	5,311,443			100.00	%		5,416,252			100.00	%		(104,819	)		(1.94	%)
COST OF SALES		3,979,668			85.16	%		3,340,998			83.41	%		638,670			19.12	%
Cost of Sales		4,674,824			88.01	%		4,673,606			86.29	%		1,218			0.03	%
GROSS PROFIT		693,328			14.84	%		664,440			16.59	%		28,888			4.35	%
Gross Profit		636,619			11.99	%		742,646			13.71	%		(106,027	)		(14.28	%)
Operating Expenses		601,755			12.88	%		672,941			16.80	%		(71,186	)		(10.58	%)
Operating Expenses：		562,088			10.58	%		649,529			11.99	%		(87,441	)		(13.46	%)
Selling expenses		420,150			8.99	%		502,477			12.54	%		(82,327	)		(16.38	%)
Selling Expenses		391,739			7.38	%		449,393			8.30	%		(57,654	)		(12.83	%)
General & administrative expenses		181,605			3.89	%		170,464			4.26	%		11,141			6.54	%
General & Administrative Expenses		170,349			3.21	%		200,136			3.70	%		(29,787	)		(14.88	%)
Income (loss) from Operations		91,573			1.96	%		(8,501	)		(0.21	%)		100,074			1,177.20	%
Income from Operations		74,531			1.40	%		93,117			1.72	%		(18,586	)		(19.96	%)
Other Income (Expenses)		(49,754	)		(1.06	%)		68,176			1.70	%		(117,930	)		(172.98	%)
Other Income (Expenses)：		70,622			1.33	%		68,467			1.26	%		2,155			3.15	%
Investment income		78,421			1.68	%		78,346			1.96	%		75			0.10	%
Investment Income		78,464			1.48	%		78,630			1.45	%		(166	)		(0.21	%)
Interest expenses		(32,013	)		(0.69	%)		(14,677	)		(0.37	%)		(17,336	)		118.12	%
Interest Expense		(217	)		-	%		(16,532	)		(0.31	%)		(16,315	)		(98.69	%)
Other income (expenses)		(96,162	)		(2.06	%)		4,507			0.11	%		(100,669	)		(2,233.61	%)
Other Income (Expenses)		(7,625	)		(0.14	%)		6,369			0.12	%		(13,995	)		(219.07	%)
Income before provision for income taxes		41,819			0.89	%		59,675			1.49	%		(17,856	)		(29.92	%)
Income before Provision for Income Taxes		145,153			2.73	%		161,584			2.98	%		(16,432	)		(10.17	%)
Provision for Income Taxes		1839,~~706~~704			0.4075	%		1039,~~857~~861			0.2774	%		~~7,849~~(157	)		(720.2939	%)
Income before noncoltrolling interest		23,113			0.49	%		48,818			1.22	%		(25,705	)		(52.65	%)
Income before Noncontrolling Interest		105,449			1.99	%		121,723			2.25	%		(16,257	)		(13.37	%)
Noncontrolling interest		(62	)		-			756			0.02	%		1,180			156.08	%
NET INCOME		23,175			0.49	%		48,062			1.20	%		(26,885	)	（55.94%）
Foreign currency translation adjustment		9			-			100,318			2.50	%		(100,311	)	（99.99%）
TOTAL COMPREHENSIVE INCOME		23,184			0.49	%		148,380			3.70	%		(127,196	)	（85.72%）

The “Results of Operations” discussed in this section merely reflect the information and results of Origin Orbit for the quarter ended March 31, 2010 and for the quarter ended March 31, 2009.

Noncontrolling Interest	(1,333	)	(0.03	%)	474		0.01	%	(1, 808	)	(381.43	%)

Net Income	106,782		2.01	%	121,249		2.24	%	(14,467	)	(13.37	%)

Foreign Currency Translation Adjustment	34,667		0.65	%	(41,380	）	(0.76	%)	76,046		183.77	%

Total Comprehensive Income	141,449		2.66%	%	79,869		1.47	%	61,579		77.10	%

SALES

Historical Financial Information for the quarter ended March 31, 2010 and for the quarter ended March 31, 2009:

	For the quarter ended March 31 2010			For the quarter ended March 31 2009			Change in Percentage (%)
Sales	$	4,672,996		$	4,005,438			16.67	%
Net (loss) income	$	23,175		$	48,062		（51.78%）
Net Income (loss) as a percentage of revenue		0.49	%		1.20	%	（59.17%）

The Company’s consolidated revenue increased to $4,672,996 for the quarter ended March 31, 2010, a 16.67% increase from $4,005,438 reported for the quarter ended March 31, 2009. The increase in revenue resulted primarily from the following factors:

1) Accompanying the recovery of Chinese economy, some of our LPG clients affected by economic crisis in 2009 gradually started resuming production, which resulted in the increase of wholesale sales of LPG by 10.93% compared to the period ended March 31, 2009;

2) The new Pingdingshan station was opened for full operation in March, 2009, which led to the sales increase in CNG retail business by approximately 100% compared to the period ended March 31, 2009;

3) In year 2009, Jiaozuo City government approved the operation of CNG-driven taxi cabs. West Jiefang Road Station, one of our new operating CNG filling stations, is located in Jiaozuo and recorded a significant increase in sales, by approximately 98.2% compared to the period ended March 31, 2009, due to the increase in the number of CNG-driven taxi cabs in Jiaozuo City.

Our consolidated net income decreased by 51.78% to $23,175 for the quarter ended March 31, 2010, as compared to $48,062 for the quarter ended March 31, 2009. This decrease was attributable to:

1) The increase in purchasing costs. In light of the increasing demand for natural gas, our suppliers increased CNG prices, which led to the increase in our CNG purchasing costs;

2) The increase in interest expense. In August, 2009, we obtained a one-year loan from Bank of China in Anyang, which increased our interest expenses by 118.12%, compared to the period ended March 31, 2009.

3) The increase in other expenses. The increased other expenses were due to that Anyang Top recorded a vaporization cost of $ 39,315 incurred in LPG transportation in the quarter ended March 31, 2010 and that Anyang Top made a charitable donation of $ 14, 665 to Chinese Language Education Foundation in the quarter ended March 31, 2010

~~Revenues~~ Profit ~~breakdown~~& byLoss ~~segments~~ for the ~~quarter~~Six months ended ~~March~~June 3130, 2010 and ~~for the quarter ended March 31,~~ 2009 ~~(in US Dollar)~~

Items	For the quarter ended March 31, 2010 ($)			Percentage (%)			For the quarter ended March 31, 2009 ($)			Percentage (%)			Change in Amount ($)			Change In Percentage (%)
	For the six months ended June 30, 2010						For the six months ended June 30, 2009						Changes
CNG retail		1,319,449			28.24	%		1,003,824			25.06	%		315,625			31.44	%
	Amount			Percentage of Revenue			Amount			Percentage of Revenue			Amount			Percentage
CNG wholesale		1,596			0.03	%		3,372			0.08	%		(1,776	)		(52.67	%)
	$			(%)			$			(%)			$			(%)
LPG retail		157,665			3.37	%		288,144			7.19	%		(130,479	)		(45.28	%)
Sales		9,984,439			100.00	%		9,421,115			100.00	%		563,324			5.98	%
LPG wholesale		2,341,337			50.10	%		2,191,790			54.72	%		149,547			6.82	%
Cost of Sales		8,654,492			86.68	%		8,014,060			85.06	%		640,432			7.99	%
Others		852,949			18.25	%		518,308			12.94	%		334,641			64.56	%
Gross Profit		1,329,947			13.32	%		1,407,055			14.94	%		(77,108	)	（5.48%）
TOTAL		4,672,996			100.00	%		4,005,438			100.00	%		667,558			16.67	%
Operating Expenses：		1,163,843			11.66	%		1,322,479			14.04	%		(158,636	)		(12.00	%)
Selling Expenses		811,889			8.13	%		951,891			10.10	%		(140,002	)		(14.71	%)
General & Administrative Expenses		351,954			3.53	%		370,588			3.93	%		(18,634	)		(5.03	%)
Income from Operations		166,104			1.66	%		84,576			0.90	%		81,528			96.40	%
Other Income (Expenses)：		20,868			0.21	%		136,643			1.45	%		(115,775	)		(84.73	%)
Investment Income		156,885			1.57	%		156,976			1.67	%		(91	)		(0.06	%)
Interest Expense		(32,231	)		(0.32	%)		(31,209	)		(0.33	%)		1,022			3.27	%
Other Income (Expenses)		(103,786	)	（1.04%）				10,876			0.12	%		(114,662	)		(1,054.27	%)
Income before Provision for Income Taxes		186,972			1.87	%		221,219			2.35	%		(34,247	)		(15.48	%)
Provision for Income Taxes		58,410			0.59	%		50,707			0.54	%		7,703			15.19	%
Income before Noncontrolling interest		128,562			1.29	%		170,512			1.81	%		(41,950	)		(24.60	%)
Noncontrolling Interest		(1,395	)	（0.01%）				1,235			0.01	%		(2,630	)		(212.96	%)
Net Income		129,957			1.30	%		169,277			1.80	%		(39,320	)		(23.23	%)
Foreign Currency Translation Adjustment		34,676			0.35	%		58,938			0.63	%		(24,262	)		(41.17	%)
Total Comprehensive Income		164,633			1.65	%		228,215			2.42	%		(63,582	)		(27.86	%)

~~The CNG retail for the quarter ended March 31, 2010 was increased by 31.44% as compared to the quarter ended March 31, 2009. This was mainly due to:~~24

The “Results of Operations” discussed in this section merely reflect the information and results of Origin Orbit for the three months and six months ended June 30, 2010 and 2009.

SALES

Historical Financial Information for the quarter ended June 30, 2010 and for the quarter ended June 30, 2009:

	For the quarter ended June 30 2010		For the quarter ended June 30 2009		Change in Percentage (%)
Sales	$	5,311,443	$	5,416,252		(1.94	%)
Net income	$	106,782	$	121,249		（11.93	%)
Net Income as a percentage of sales	$	2.01%	$	2.24%		（17.62	%)

The Company’s consolidated sales decreased to $5,311,433 for the quarter ended June 30, 2010, a 16.67% decrease from $5,416,252 reported for the quarter ended June 30, 2009. The decrease in revenue resulted primarily from the following factors:

1)	The sales of our three LPG stations decrease by 41.38%,which was affected by energy policies and the LPG taxis out of the market.

2)	In the First Half of the Year,a lot of LPG companies blend the LPG with a high cost and DME with a lower cost together to get a lower price, so the sale price decreased, which affected our LPG business very much and caused a decrease of 22.74%.

Our consolidated net income decreased by 11.93% to $106,782 for the quarter ended June 30, 2010, as compared to $121,249 for the quarter ended June 30, 2009. This decrease was attributable to:

The sales decreased. Affected by LPG business, the sales decreased by 1.94%. In light of the increasing demand for natural gas, our suppliers increased CNG prices, which led to the increase in our CNG purchasing costs. Because of the above two factors, the gross profit fell by 14.28%, and meanwhile the consolidated net income decreased

2)	The increase in interest expense. In August, 2009, we obtained some interest on deposit from Bank of China in Anyang,which counteracted the effect of increased interest expense.

Revenues breakdown by segments for the quarter ended June 30, 2010 and for the quarter ended June 30, 2009 (in US Dollar)

Items	For the quarter ended June 30, 2010 ($)		Percentage (%)			For the quarter ended June 30, 2009 ($)		Percentage (%)			Change in Amount ($)			Change In Percentage (%)
CNG retail		1,443,046		27.17	%		960,189		17.73	%		482,857			50.29	%
CNG wholesale		-		-	%		1,493		0.03	%		(1,493	)		(100.00	%)
LPG retail		140,290		2.64	%		239,318		4.42	%		(99,028	)		(41.38	%)
LPG wholesale		2,723,323		51.27	%		3,524,737		65.08	%		(801,414			(22.74	%)
Others		1,004,784		18.92	%		690,515		12.75	%		314,268			45.51	%
TOTAL		5,311,443		100.00	%		5,416,252		100.00	%		(104,809	)		(1.94	%)

The CNG retail for the quarter ended June 30, 2010 was increased by 50.29% as compared to the quarter ended June 30, 2009. This was mainly due to:

Pursuant to the "The Guideline Catalog of Industrial Structure Adjustment (2007)" issued by National Development and Reform Commission (NDRC) new and clean energy vehicles were officially listed among the “encouraged products” and CNG/petroleum dual-fuel automobiles, a major type of clean energy vehicles, are staged for full promotion by NDRC, which lead to the significant increase in our CNG retail sales;

2) In 2009, we have two new CNG fillings stations open for business, which were West Jiefang Road station open in Jiaozuo City in January 2009 and Pingdingshan station in Pingdingshan in March, 2009. In the quarter ended ~~March~~June 3130, 2010 these two new stations were in full operations and the Company has in total six fully operating CNG stations, which contributed to the increase in CNG retail sales;

3)	Changzi City, where our Changzhi CNG station is located, adopted a unified retail price for CNG products, which enabled our Changzhi CNG station to avoid unhealthy market competition and to maintain healthy operation that led to the increase in sales of Changzhi CNG station.

LPG retail sales fell by 4541.2838% compared to the ~~first~~same quarter of 2009. This was mainly due to the shift of favorable policy preference from LPG/gas dual-fueled vehicles to CNG/gas dual-fueled vehicles by central and local governments. As a result, our main LPG retail customers, taxis and city buses, have been converted to CNG dual-fuel vehicles, which caused the decrease in our existing LPG retail sales.

Other sales increased by 6445.5651% compared to the first quarter of 2009. This is mainly due to the blending of DME with LPG. DME is a colorless gas which can be mixed with LPG to improve the heating energy. Along with the recovery of Chinese economy, the use of DME arose along with the increase of LPG use and as such, the DME sales arose.

COST OF SALES (COS)

COS for the quarter ended ~~March~~June 3130, 2010 was $34,~~979~~674,~~668~~824 which is 8588.1601% of total revenues and represents a 190.1203% increase as compared to$34,~~340~~673,~~998~~606 and 8386.4129% of total revenues for the quarter ended ~~March~~June 3130, 2009. The increase in COS as a percentage of total revenue was primarily because along with the increasing demand for natural gas, suppliers increased CNG prices, which led to the increase in CNG purchasing costs.

COS as a percentage of revenue may fluctuate in the future. This fluctuation may primarily be due to changes in the price of our procurement price and selling price, which can have a significant impact on the COS. The Company will adopt proper measures to reduce fluctuations in the COS. These measures includes: centralized purchasing to obtain lower prices of raw materials, maintaining long-term stable cooperative relations with the existing gas source suppliers, increasing the development of new gas suppliers, and solving gas supply problems and reducing the cost of sales by way of joint venture and self-built CNG mother stations.

2426

GROSS PROFIT MARGIN

Gross Profit Margin of major products in 2010 and 2009 (for the quarter ended ~~March~~June 3130):

Gross Margin	2010			2009			Comparisons
TOTAL		1411.8499%	%		1613.5971%	%		(1.7572%)	%)
CNG Retail		23.1090%	%		3386.3210%	%		(1023.2260%)	%)
CNG Wholesale		~~20.00~~	%		3714.1204%	%		(17100.1200%)	%)
LPG Retail		3211.5888%	%		3886.6510%	%		(674.0722%)	%)
LPG Wholesale		2.1141%	%		45.5517%	%		(2.4476%)	%)

Gross profit margin of CNG retail decreased, which was mainly due to the decrease in CNG retail price caused by the furious competitions in CNG market.

Gross profit margin of LPG retail decreased, which was mainly due to the increase of LPG purchasing cost along with the increase of international crude oil price.

Raw Material Procurement

We were able to maintain relatively low purchase price even given the strong fluctuation of LPG price.

Average Price of Raw Material in the quarter ended ~~March~~June 3130, 2010 and 2009 (net of tax)

Quarter Ended March 31	Retail LPG (per ton)		Wholesale LPG (per ton)		CNG (per cube)
Quarter Ended June 30	Retail LPG (per ton)		Wholesale LPG (per ton)		CNG (per cube)
2009	$	~~485~~427.8798	$	~~414~~426.4112	$	0.2829
2010	$	~~638~~742.8804	$	~~599~~685.7169	$	0.32

SELLING EXPENSES

Selling expenses for the quarter ended ~~March~~June 3130, 2010 mainly included the salary of sales personnel and transportation cost. In the ~~first~~second quarter of 2010, selling expenses amounted to $ ~~420~~391,~~150~~739, representing 87.9938% of total revenue. The retail business sells its product through its own retail outlets whereas the wholesale business sells its product in the domestic market through direct distribution. The major component of selling expenses is transportation cost. The company mainly uses tank trucks to transport its products. In the ~~first~~second quarter of 2010, the transportation cost decreased 1120.9625% to approximately $~~254~~168,~~545~~374 compared with approximately $~~289~~211,~~118~~126 in the same quarter 2009.

The selling expenses for the quarter ended ~~March~~June 3130, 2010 was decreased by 1612.3883% as compared to $~~502~~449,~~477~~393 for the quarter ended ~~March~~June 3130, 2009. The main reason is that we were able to lower the transportation cost by directly transporting the products trough the distribution pipeline operated by Henan Ancai Energy Co., Ltd, of which we acquired 15% of the ownership on December 9, 2009.

GENERAL AND ADMINISTRATIVE EXPENSES

The general and administrative expenses for the quarter ended ~~March~~June 3130, 2010, mainly included the salary and welfare of the management personnel and office related expenses, $~~181~~170,~~605~~349, which accounted for 3.8921% of total sales. For the quarter ended ~~March~~June 3130, 2009, the general and administrative expenses ~~were~~was $~~170~~200,~~464~~136, ~~and~~accounted ~~the~~for 3.70% of total sales, which represents a 14.88% decrease. The reason of the ~~increase~~decrease was that ~~Pingdingshan~~the ~~station~~business ~~was~~of ~~open~~Jinan ~~for~~stations ~~operation~~were ~~in March~~ceased, ~~2009~~and the employee turnover, which resulted in ~~the~~a ~~increase~~79% decrease in the general and administrative expenses in Jinan.

2527

FINANCING COSTS

The financial expenses mainly consisted of interest expenses and bank charges. For the quarter ended ~~March~~June 3130, 2010, interest expenses was $~~32,013 representing 0~~217.~~69%~~ ~~of total sales.~~ For quarter ended ~~March~~June 3130, 2009, it was $1416,~~677~~532 representing 0.3731% of total sales.

The main reason for the ~~increase~~decrease of the $1716,~~366~~315interest ~~interest~~ expenses, which represents a ~~118~~98.1269% ~~increase~~decrease as compared to $1416,~~677~~532 for the quarter ended ~~March~~June 3130, 2009, is that we ~~obtained~~earned asome ~~one~~interest ~~year~~on ~~loan~~deposit from ~~Bank~~bank of China in ~~Anyang~~June ~~in August, 2009 and the related monthly interest charge caused the increased interest expenses~~2010.

INCOME ~~(LOSS)~~ FROM OPERATIONS

The Company's consolidated income ~~(loss)~~ from operations for the quarter ended ~~March~~June 3130, 2010 ~~increased~~decreased by ~~1,177~~19.2096% to $9174,~~573~~531, from ($893,~~501)~~117 reported for the quarter ended ~~March~~June 3130, 2009. This was mainly due to:

1) The ~~increase~~decrease in sales. Due to the ~~recovery~~effect of ~~Chinese~~LPG ~~economy~~business, ~~some~~the sales decreased by 1.94%, along with the demand of ~~our~~CNG, ~~LPG~~CNG ~~clients~~price ~~affected~~arises. byPurchasing ~~economic~~cost ~~crisis~~arised inby ~~2009~~0.03%. ~~gradually~~All ~~resumed~~of ~~production,~~the ~~which~~above reasons resulted in the ~~increase~~decrease in ~~wholesale~~income ~~sales~~from ofoperations ~~liquefied gas~~ by 1019.9396%;.

2) New acquisition. We were able to lower the transportation cost by directly transporting the products through the distribution pipeline operated by Henan Ancai Energy Co., Ltd.

We believe income from operations will show further improvements as we will continue building new CNG filling stations with further revenue source, aided by prudent cost controls on both the production and operating components of our business. We anticipate further improvements in cost of sales, increased sales and market share. Thus, while management expects this factor to favorably benefit gross and operating income, we also anticipate that with the addition of quality members to management, efficiency will be enhanced, which will also improve margins.

We are positive about the future increase in the net income as it will benefit from the following factors:

a) We will continue building new CNG filling stations as to expand our market share, such as Linying mother station that ~~will~~was be completed ~~and~~in ~~put~~June ~~into~~2010, ~~operation~~equipment ininstallation ~~June~~teating ~~2010~~for ~~and~~which ~~the~~is under way. The second gas station in Changzhi ~~that~~ is inbeing ~~the~~built ~~approval process~~ and will be completed by the end of 2010;

The Company will take proper measures to reduce fluctuations in the COS. These measures includes: centralized purchasing to obtain lower prices of raw materials, maintaining long-term stable cooperative relations with the existing gas source suppliers, increasing the development of new gas suppliers, and solving gas supply problems and reducing the cost of sales by way of joint venture and self-built CNG mother stations.

c)	We are also looking forward to reorganization and optimization of existing management processes, improvement of internal management, increase management efficiency and reduction of administrative costs, which will lead to the increase of our profits.

NET INCOME

The net income for the quarter ended ~~March~~June 3130, 2010 was $23106,~~175~~782 and 02.4901% of sales, comparing to $48121,~~062~~249 and 12.2024% in the same quarter in 2009. The main reason of the decrease was that although the sales ~~increased~~decreased, at the same time ~~other expenses also increased~~, ~~primarily~~the ~~due~~CNG tocost ~~that~~price ~~Anyang Top recorded a natural loss of $ 39~~inflation,~~315~~ ~~incurred~~and inthe ~~LPG~~gross ~~transportation~~profit indecrease. Although the ~~quarter~~related ~~ended~~expenses ~~March 31~~decreased, ~~2010~~which ~~and~~couldn’t ~~that~~counteract ~~Anyang~~the ~~Top~~effect ~~made a charitable donation~~ of $cost 14price inflation, ~~665 to Chinese Language Education Foundation in~~ the ~~quarter~~net ~~ended~~income ~~March~~decreased ~~31,~~by ~~2010~~11.93%.

2628

ACCOUNT RECEIVABLE

Account receivable balance as of ~~March~~June 3130, 2010 and December 31, 2009 was $~~292~~325,~~190~~914 and $360,581, respectively, ~~which decrease by 18.97%or $68,391. This was because account receivable of 2009 had been received.~~ The average turnover rate of account receivable is 1429 times, or 3212 days.

LIQUIDITY AND CAPITAL RESOURCES

The primary source of liquidity had been cash generated from operations. Historically, the primary liquidity requirements were for capital expenditures, and working capital and investments. Our contractual obligations, commitments and debt service requirements over the next several years are ~~non-significant~~insignificant.

Our primary source of liquidity will continue to be cash generated from operations as well as existing cash on hand. If our current cash and cash equivalents and cash generated from operations will not satisfy our expected working and other capital requirements for the foreseeable future based on current business strategy and expansion plan, we will have available resources to meet both our short-term and long-term liquidity requirements, including debt service. If our cash flow from operations is insufficient to fund our debt service and other obligations, we may choose to use other means available to us such as to increase our borrowings under our lines of credit, reduce or delay capital expenditures, seek additional capital or seek to restructure or refinance our indebtedness.

As of ~~March~~June 3130, 2010 and December 31, 2009, the Company had cash and cash equivalents of approximately $1,~~064~~023,~~042~~205 and $1989,~~442,218~~427 respectively.

The following is a summary of cash provided by or used in each of the indicated types of activities during the ~~three~~six months ended ~~March~~June 3130, 2010 and 2009:

Cash provided by (used in):	~~Three~~Six months ended ~~March~~June 3130, 2010	~~Three~~Six months ended ~~March~~June 3130, 2009	Change
			Amount	Percentage
	($)	($)	($)	(%)
Operating Activities	~~401~~590,~~893~~490	~~(266~~（2,~~332)~~145,985）	~~668~~2,~~225~~736,475	~~250.90~~128%
Investing Activities	（~~842~~977,~~535~~970）	~~(562~~（330,~~693)~~502）	~~(279~~647,~~842)~~468	~~(49.73~~196%)
Financing Activities	~~515~~425,~~231~~971	12,~~239~~390,~~050~~081	（~~723~~1,~~819~~964,110）	(~~58.42~~82%)

Net cash flow provided by operating activities was $~~401~~590,~~893~~490 in the ~~three~~six months ended ~~March~~June 3130, 2010, as compared to net cash flow provided by operating activities of ($~~266~~2,~~332~~145,985) in the ~~three~~six months ended ~~March~~June 3130, 2009, representing a increase of $~~668~~2,~~225or~~736,475or ~~250.90~~128%. Along with the recovery of Chinese economy, we will maintain long-term stable cooperative relations with our existing gas source suppliers, increase the development of new gas suppliers, solve gas supply problems and reduce cost of sales by way of joint venture and self-built CNG mother stations, so as to reduce fluctuations in the COGS and by doing so, cash flow used in operating activities will meet our liquidity requirements.

The increase in net cash inflows from operating activities was mainly due to:

1) Payment advances from customers;

1)	Payment advances from customers;

2)	The customers of payment in advance reduced. on December 9, 2009, Anyang Prosperous acquired 15% of the shares of Henan Ancai Energy Co., Ltd. Payment in advance of the purchasement was turned into the investment after finishing the acquire procedure in 2010.

2)Net ~~Because~~cash offlow ~~the~~used ~~recovery~~in ofinvesting ~~Chinese~~activities ~~economy~~was ($977,970) for the ~~sales~~six ofmonths ~~residential~~ended ~~and~~June ~~industrial~~30, ~~LPG~~2010, ~~wholesale~~as ~~gradually~~compared ~~increased;~~to net cash used in investing activities of ($330,502) for the ~~first~~six ~~quarter~~months ofended ~~2010~~June we30, ~~increased~~2009, ~~purchases~~representing toa ~~expand~~increase ~~markets~~of $647,468 ~~payment~~or 196%. The increase of net cash flow used in ~~advance~~investing toactivities ~~suppliers~~was ~~also~~mainly ~~increased~~because we prepaid $785,898 for fixed assets.

Net cash flow used in investing activities was ($842,535) for the three months ended March 31, 2010, as compared to net cash used in investing activities of ($562,693) for the three months ended March 31, 2009, representing a decrease of ($279,842) or (49.73%). The decrease of net cash flow used in investing activities was mainly because on December 9, 2009, Anyang Prosperous acquired 15% of the shares of Henan Ancai Energy Co., Ltd. through a public auction and paid $5,480,311 to Henan Zhen Ye Auction Co., Ltd., which was equivalent to the auction price as investment deposit on December 14, 2009.29

27 Net cash flow provided by financing activities was $425,971 for the six months ended June 30, 2010 as compared to net cash provided by financing activities of $2,390,081 for the six months ended June 30, 2009, representing a decrease of ($1,964,110)or (82%). This is mainly due to repayments of some of the loans from other third party.

Net cash flow provided by financing activities was $515,231 for the three months ended March 31, 2010 as compared to net cash provided by financing activities of $1,239,050 for the three months ended March 31, 2009, representing a decrease of ($723,819) or (58.42%). This is mainly due to repayments of some of the loans from other third party.

We do not believe that inflation had a significant negative impact on our results of operations during 2010.

As of ~~March~~June 3130, 2010, our total assets were $29,~~686~~676,~~153~~408 and our total liabilities were $1918,~~134~~984,~~716~~801. Our debt to total assets ratio, calculated as total liabilities (including short-term debt and payables) over total assets, was 0.64:1.

As of December 31, 2009, our total assets were $28,308,333 and our total liabilities were $17,780,018. Our debt to total assets ratio, calculated as total liabilities (including short-term debt and payables) over total assets, was 0.63:1.

As of ~~March~~June 3130, 2010, cash and bank balances were$1,~~064~~023,~~042~~205, which accounted for 3.6245% of total assets. The inventories as of ~~March~~June 3130, 2010 were $~~732~~791,~~812~~537. For the quarter ended ~~March~~June 3130, 2010, the company generated net cash flow of $~~401~~590,~~893~~490 from operating activities whereas net cash used in investing activities was ($~~842~~977,~~535~~970). Net cash provided from financing activities amounted to $~~661~~425,~~881~~971. As a result, net cash increased by $7433,~~616~~778 for the quarter ended ~~March~~June 3130, 2010.

Based on past performance and current expectations, we believe our cash and cash equivalents, cash generated from operations, as well as future possible cash investments, will satisfy our working capital needs, capital expenditures and other liquidity requirements associated with our operations for at least the next 12 months.

INCOME TAXES

The Company being incorporated in the State of Nevada is not subject to any income tax according to the rules and regulations of the State of Nevada. Before January 1, 2008, the Company’s subsidiaries in the PRC were generally subject to PRC enterprise income tax at 33%. On March 16, 2007, the PRC government promulgated a new tax law, China’s Unified Corporate Income Tax Law (“New CIT Law”), which took effect from January 1, 2008. Under the New CIT Law, foreign-owned enterprises as well as domestic companies are subject to a unified tax rate of 25%. Accordingly, the Company’s subsidiaries in the PRC have been subject to the PRC corporate income tax at a rate of 25% on their taxable income arising in the PRC commencing from January 1, 2008. Meanwhile, according to Rule 28 of New CIT Law, income tax of small low-profit enterprises is subject to the reduced rate of 20%. Changzhi Company as one of the Company’s subsidiaries meets the conditions of small low-profit enterprises, so Changzhi Company’s income tax rate of 20% in 2009.The effect of this change in tax rate has been reflected in the calculation of deferred income tax assets as of ~~December~~March, 31, ~~2007~~2008 and thereafter.

The Company’s provision for income taxes consisted of:

	For the Three Months
	Ended March 31,
	Ended June 30,
	2010		2009
Current – PRC	$	1839,~~706~~704	$	1039,~~857~~861
Deferred	$	039,704	$	039,861

OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our Disclosure Controls were effective as of the end of the period covered by this report.

Changes in Internal Controls

We have also evaluated our internal controls for financial reporting, and there have been no change in our internal control over financial reporting or in other factors that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting subsequent to the date of last evaluation.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Currently we are not involved in any pending litigation or legal proceeding.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On June 19, 2008, Walter Brenner and Horst Balthes (the "Affiliate Sellers"), two major shareholders and affiliates of the Company consummated two Affiliate Stock Purchase Agreements (the "Affiliate Agreements") with Oracular Dragon. Pursuant to the terms and conditions of the Affiliate Agreements, Oracular Dragon acquired from the Affiliate Sellers a total 3,100,000 shares of common stock of the Company for a total price of $ 75,000. Also on June 19, 2008, a group of non-Affiliate Stockholders ("Non-Affiliate Sellers") of the Company consummated a Non-Affiliate Stock Purchase Agreement ("Non-Affiliate Agreement") with Oracular Dragon. Pursuant to the terms and conditions of the Non-Affiliate Agreement, Oracular Dragon acquired from the Non-Affiliate Sellers a total 1,424,231 shares of common stock of the Company for a total price of $ 271,586. As the result, Oracular Dragon acquired from Affiliate and Non-Affiliate Sellers a total 4,524,231 shares of common stock of the Company, representing approximately 73.7% of the total issued and outstanding shares of the Company.

Oracular Dragon is a company organized under the laws of British Virgin Islands and has its principal place of business in the People’s Republic of China. Oracular Dragon is neither a U.S Person, as such term is defined in Rule 902(k) of Regulation S, nor is it located within the United States.

On June 30, 2008, the Company entered a share exchange agreement ("Share Exchange Agreement”) under which the Company issued 5,865,000 shares of its common stock, par value $ 0.00001, to Oracular Dragon in exchange for all the issued and outstanding shares that Oracular Dragon owned in Origin Orbit Green Resource Company, Ltd. (“Origin Orbit”), the wholly-owned subsidiary of Oracular Dragon (“Share Exchange Transaction”).

The Share Exchange Transaction is the final part of a series of consecutive transactions including the Affiliate and Non-Affiliate Stock Purchase Transactions consummated on June 19, 2008 (“Stock Purchase Transactions”). The Share Exchange Transaction and Stock Purchase Transactions, combined together, were to ensure that the Company was able to acquire 100% of the beneficial ownership interest in Origin Orbit.

Origin Orbit is a holding company that, on April 4, 2007, acquired 100% of the capital stock of Anyang Prosperous Energy Technology Developing Co., Ltd. (“Anyang Prosperous”) and Anyang Top Energy Green Resources Co., Ltd. (“Anyang Top”), both of which were organized under the laws of the People’s Republic of China (“PRC”). Upon the acquisition of Origin Orbit, Anyang Prosperous and Anyang Top became our subsidiaries that we own through Origin Orbit.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

3032

ITEM 6. EXHIBITS

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

Exhibit No.		Description

3.1		Articles of Incorporation (1)

3.2		Bylaws (1)

10.1		Affiliate Stock Purchase Agreement between Walter Brenner and Oracular Dragon Capital Company, Ltd. (2)

10.2		Affiliate Stock Purchase Agreement between Horst Balthes and Oracular Dragon Capital Company, Ltd.(2)

10.3		Non-Affiliate Stock Purchase Agreement (2)

10.4		Share Exchange Agreement, dated June 30, 2008, between Company and Oracular Dragon Capital Company, Ltd.(3)

31.1		Section 302 Certificate of Chief Executive Officer *

31.2		Section 302 Certificate of Chief Financial Officer *

32.1		Section 906 Certificate of Chief Executive Officer *

32.2		Section 906 Certificate of Chief Financial Officer *

* filed herewith

(1) Incorporated by reference to the Form SB-2 registration statement filed on June 29, 2007.

(2) Incorporated by reference to the Report on Form 8-K as filed on June 20, 2008

(3) Incorporated by reference to the Report on Form 8-K as filed on June 30, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 12, 2010	CHINA PROSPEROUS CLEAN ENERGY CORPORATION
Date: August 13, 2010	CHINA PROSPEROUS CLEAN ENERGY CORPORATION
	/s/Hongjie Zhou
	Hongjie Zhou
	Acting Chief Financial Officer

3133

Filing Compare · CHINA PROSPEROUS CLEAN ENERGY Corp