chpc10k123109.htm

10-K 1 chpc10k123109.htm CHINA PROSPEROUS CLEAN ENERGY CORP. chpc10k123109.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

x	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File Number: 000-53224

CHINA PROSPEROUS CLEAN ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		27-0141061
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification Number)

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

Tel: 212-219-7783

Fax: 212-219-3604

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.00001 par value per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No x

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

Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

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 Act).

Yes o No x

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant, as of March 29, 2010, was approximately $ 16,108. All executive officers and directors of the registrant have been deemed, solely for the purpose of the foregoing calculation, to be "affiliates" of the registrant.

As of March 29, 2010, there were 12,000,000 shares of the issuer's common stock, $ 0.00001 par value per share, issued and outstanding.

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009

INDEX

		Page
PART I
ITEM 1.	DESCRIPTION OF BUSINESS	4
ITEM 1A	RISK FACTORS	14
ITEM 2.	DESCRIPTION OF PROPERTY	19
ITEM 3.	LEGAL PROCEEDINGS	21
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	21

PART II
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES	21
ITEM 6.	SELECTED FINANCIAL DATA	23
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT	23
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	40
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	61
ITEM 9A.	CONTROLS AND PROCEDURES	61
ITEM 9B.	OTHER INFORMATION	62

PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPERATE GOVERNANCE	62
ITEM 11.	EXECUTIVE COMPENSATION	64
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	66
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	67
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	67
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	67

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

In this annual report, references to "China Prosperous Clean Energy Corporation," "CHPC," "the Company," "we," "us," and "our" refer to China Prosperous Clean Energy Corporation.

Except for the historical information contained herein, some of the statements in this Report contain forward-looking statements that involve risks and uncertainties. These statements are found in the sections entitled "Business," "Management's Discussion and Analysis or Plan of Operation," and "Risk Factors." They include statements concerning: our business strategy; expectations of market and customer response; liquidity and capital expenditures; future sources of revenues; expansion of our proposed product line; and trends in industry activity generally. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expect," "plan," "could," "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal," or "continue" or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including, but not limited to, the risks outlined under "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to: our ability to successfully develop and market our products to customers; our ability to generate customer demand for our products in our target markets; the development of our target markets and market opportunities; our ability to manufacture suitable products at competitive cost; market pricing for our products and for competing products; the extent of increasing competition; technological developments in our target markets and the development of alternate, competing technologies in them; and sales of shares by existing shareholders. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Unless we are required to do so under US federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Organizational History

Prior to the Share Exchange Transaction, we were an exploration stage corporation. We were incorporated in the State of Nevada on March 24, 2006. Initially we engaged in the mineral exploration business.

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, under the terms and conditions of Affiliate Agreements and Non-Affiliate Agreement, 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 Development 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 through Origin Orbit. Upon the acquisition of Origin Orbit, we ceased all the mineral exploration business and operations.

The following diagram depicts our current structure subsequent to the acquisition of Origin Orbit.

Upon the acquisition, Anyang Top acquired the minority interests in the subsidiaries in Weifang, Xuchang, Linying, Heze, Fuyang, which accounts for 5% of the capital stock in 2009, respectively. Origin Orbit holds 100% of the capital stock through Anyang Top and Anyang Prosperous.

Anyang Prosperous has various ownership interests in a number of companies in PRC. Set forth below are Anyang Prosperous’ subsidiaries and associated companies and its shareholding percentage in each company:

Name of the company	Registered Capital (USD$)	Shareholding Percentage of Anyang Top	Shareholding Percentage of Anyang Prosperous
SUBSIDIARIES:
Pingdingshan City Zhenyuan Energy Technology Developing Co., Ltd.	724,343.74	-	100%
Jiaozuo City Prosperous Energy Technology Development Co., Ltd.)	724,343.74	-	100%
Fuyang Prosperous Energy Technology Development Co., Ltd.	1,448,687.49	5%	95%
Ji’nan Zhenyuan Green Resource Co. Ltd.	1,448,687,49	-	99%
Weifang Prosperous Energy Technology Development Co., Ltd.	1,448,687,49	5%	95%
Changzhi City Zhenyuan Energy Technology Development Co., Ltd.	724,343.74	-	100%
Yangquan Zhenyuan Energy Science & Technology Co., Ltd	724,343.74	-	100%
Shijiazhuang Prosperous Energy Technology Development Co., Ltd.	1,448,687.49	-	100%
Xuchang Zhenyuan Green Resource Technology Development Co., Ltd.	1,448,687.49	5%	95%
Heze Prosperous Energy Technology Development Co., Ltd.	724,343.74	5%	95%

Yantai Prosperous Energy Technology Development Co., Ltd.	72,434.37	-	100%
Hengshui Prosperous Energy Technology Development Co., Ltd	289,737.50	-	100%
Handan City Prosperous Car-used Green Resource Co., Ltd.	108,651.56	-	98%
Taiyuan Zhenyuan Green Resource Technology Development Co., Ltd.	1,448,687.49	-	100%
Jiangsu Hengrun Clean Energy Co., Ltd.	4,398,000.00	-	100%
Henan Prosperous Clean Energy Corporation	2,934,000.00	-	100%
Linying Anyang Prosperous Energy Tech Development Co., Ltd.	1,448,687.49	5%	95%
ASSOCIATED COMPANIES:
Anyang PetroChina Marketing Company Limited.	8,548,704.87	-	34%

Organizational History of Origin Orbit, Anyang Prosperous and Anyang Top

Origin Orbit was a limited liability company organized under the laws of British Virgin Islands (“BVI”) on December 13, 2006.

Anyang Prosperous was a limited liability company organized under the laws of PRC on December 14, 2005. Anyang Top was a limited liability company organized under the laws of PRC on February 15, 2007.

On April 4, 2007, Origin Orbit acquired 100% of the capital stock of Anyang Prosperous and Anyang Top and thus caused Anyang Prosperous and Anyang Top to become its directly wholly owned subsidiaries.

As the result, Anyang Prosperous and Anyang Top were changed to wholly foreign owned entities (“WFOE”) pursuant to the PRC laws.

Since their founding, Anyang Prosperous and Anyang Top have been engaged in the business of wholesale and retail sales of CNG and LPG, construction and operation of CNG and LPG filling stations.

Overview of the Business

We are engaged in the business of wholesale and retail sales of CNG and LPG, construction and operation of CNG and LPG filling stations.

Our Products, Services and Customers

Our primary products include Compressed Natural Gas (“CNG”) and Liquefied Petroleum Gas (“LPG”).

Compressed Natural Gas is a substitute for gasoline, diesel, or propane fuel. It is considered to be an environmentally "clean" alternative to those fuels and it is much safer than other motor fuels in the event of a fuel spill: natural gas is lighter than air, so it disperses quickly when leaked or spilled. It is made by compressing natural gas (which is mainly composed of methane (CH4)), to less than 1% of its volume at standard atmospheric pressure. It is stored and distributed in hard containers, at a normal pressure of 200–220 bar (20–22 MPa), usually in cylindrical or spherical shapes to maintain equal pressure on the walls of the containers. Typically CNG can be transported at normal temperatures to distances of up to 300 kilometers.

Liquefied Petroleum Gas is a mixture of hydrocarbon gases used as a fuel in heating appliances and vehicles, and increasingly replacing chlorofluorocarbons as an aerosol propellant and a refrigerant to reduce damage to the ozone layer. LPG is manufactured during the refining of crude oil, or extracted from oil or gas streams as they emerge from the ground.

Our Primary Operations

We carry out three types of primary operations:

(1) Retail sales of CNG and operation of CNG filling stations.

(2) Retail sales of LPG and operation of LPG filling stations.

(3) Wholesale of LPG and CNG.

We are currently operating 9 gas filling stations, including 6 CNG stations and 3 LPG stations. Of the 6 LPG stations, we have ceased 3 LPG stations in Jinan city due to the regional policy encouraging CNG vehicles.

In addition, we plan to construct another 11 filling stations including 1 hub (mother) station and 10 CNG filling stations. Our stations, including those under construction and planning, are located in 13 cities of 5 provinces. In order to better manage and operate these stations, we have formed 17 subsidiary companies in Shanxi, Shandong, Hebei and Anhui provinces, including Jiangsu Hengrun Clean Energy Co., Ltd., and Henan Prosperous Clean Energy Corporation which incorporated in 2009.

We continue expanding our CNG filling station base by constructing new stations as well as acquiring existing stations. It usually take us 120 days to get authorities approvals, and construct a CNG filling station in approximately another 60 days for a cost of approximately US$900,000. We are evaluating additional sites for CNG filling stations in neighborhood provinces as well as Henan province.

We wholesale LPG to customers located in Anyang, Xinxiang and many other cities in northern Henan Province, as well as the cities in Guangdong, Hebei, Hunan, and Shanxi provinces.

Overview of CNG/LPG Industry and Market in China

China’s rapidly growing economy causes the fast increase in demand for energy sources. China’s overall consumption of LPG was increased from 14.843 million ton in 2000 to 21.337 million ton in 2006 (data source: 2007 Chinese LPG Global Conference), growing by 7.8% per year. The overall consumption of CNG was increased from 27.7 billion cubic meters in 2000 to 63.6 billion cubic meter in 2006, growing by 14.8% per year.

Natural gas accounts for 20%-30% of the primary energy consumption in most developed countries, among which the figures in Commonwealth of Independent States is 55%, Canada 29%, the U.S. 26%, and Germany 21%, and even in Japan, the country that is very poor in oil and gas resources, it is 12%. In China, however, the similar figure is only 3%, far lower than the world average, and even far lower than 8.8%, the Asian average, to say nothing of comparing with those in developed countries.

Accompanying the stronger desire for more sustainable economic development and the heightened level of environmental consciousness, the use of CNG and LPG, which are viewed as sources of “clean energy”, has been highly encouraged by Chinese government. PRC’s 11th Five-Year Plan called for the strategic planning on the development of natural gas industry. It is predicated that China’s demand for LPG will continue to grow at the rate of 9.3% annually and reaches 30.5 million ton in year 2010. The domestic production of LPG products is anticipated to reach approximately 20 million ton which is still 10 million ton in short of demand. The demand for CNG will grow at 12% per year and will reach 100 billion cubic meters in year 2010.

According to China Oil News Center, from 2000 to 2008, the consumption of natural gas is growing at an averaged rate of 14.4% over the years, from 24.5 billion cubic meters in 2000 to 72 billion cubic meters in 2008. Data from the National Development and Reform Commission (NDRC) show that demand for natural gas would be 166 billion M3 in China by 2010, up by 176% from 60 billion M3, the similar figure in 2006. That is to say, the compound annual growth rate of natural gas demand in China 2007 through 2010 would be 29%. Compared to consumption in other countries, there are still great rooms for broader utilization of natural gas in China.

At the same time, the scope and scale of natural gas utilization are both promoted by the massive construction of natural gas pipelines and support facilities in China, which improved our potential source of natural gas. The country's first west-to-east natural gas pipelines were already put into commercial operation at the end of 2004. In addition, China has also been making more effort to increase natural gas pipelines: (1) In August 2007, the construction of the pipeline project started to send natural gas from Puguang natural gas field, Sichuan Province to Yangtze Delta. (2) The construction of the second west-to-east natural gas pipelines, which has the transport capacity of 30 billion M3 per year and is supposed to be put into operation in 2010, started allover the line to send natural gas, which is from Middle Asia originally, from Xinjiang to Yangtze and Zhujiang Deltas. As pipelines are being completed, the consumption of natural gas in China would increase drastically, with the growth rate of about 20%, far higher than 2%-3%, the world average.

Chinese Market for Clean Energy-Powered Vehicles

Clean energy-powered vehicles, including CNG/LPG-powered vehicles and hybrid (natural gas/gasoline) powered vehicles are the end customers of our CNG/LPG retail business and filling stations. The rapidly growing number of automobiles running in Chinese urban areas has caused serious air pollution which forced the Chinese government and industries to seek alternatives to the conventional gas-powered vehicles. Natural gas-powered and hybrid powered vehicles, given their advantage in reducing emission and saving energy, have been viewed as clean energy vehicles and are highly favored by Chinese central and local policy makers. Chinese central government adopted various policies, including subsidy programs and tax incentive programs, to encourage the use of clean energy vehicles. At the local level, by the end of 2006, 19 cities have been designated as the key trial cities for the popularization of clean energy vehicles. These 19 cities are Beijing, Shanghai, Tianjin, Chongqing, Sichuan Province, Hainan Province, Xi’an, Urumchi, Changchun, Harbin, Guangzhou, Jinan, Qingdao, Yinchuan, Langfang, Puyang, Shenyang, Lanzhou and Dandong. As a result, more and more natural-gas filling stations were constructed to facilitate the rising demand for natural gas. From 1999 to 2004, the number of natural gas filling stations rose from 130 to 712, representing the annual growth rates at 34.3% and 32.2% for LPG filling stations and CNG filling stations, respectively.

Our Main Customers and Suppliers

As stated above, our primary operations include: (1) retail sales of CNG and operation of CNG filling stations; (2) retail sales of LPG and operation of LPG filling stations and (3) wholesale of LPG and CNG.

The customers of our retail CNG/LPG filling stations are the CNG and LPG powered vehicles and hybrid powered vehicles.

The main customers of our LPG and CNG wholesale business are LPG/CNG retailers.

The following table lists the main customers of our LPG/CNG wholesale business, as of December 31, 2009 (in US Dollar):

Name of Client	2009
Zhenyuan Gas Company Ltd. of Anyang	2,369,027
Wuhan Wumei Panva Gas Company Ltd.	1,742,052
Xinyang Xingran LPG Company Ltd.	801,891
Anyang Public Transportation Corporation	641,920
Liuzhou railway Service Corporation	457,870
China Wanxiang Corporation of Xuchang	368,060
Qingdao Chuangda Energy Company Ltd.	203,664
Guangzhou Rongxin Gas Company Ltd.	170,994
Xinyang Hudong Gas Company Ltd.	128,407
Anyang Iron and Steel Group subsidiary Company Ltd.	124,317
Total	7,008,202

We had contractual relationship with a number of large and medium-scaled petroleum and chemical companies which secured the stable supply for our CNG and LPG. The price of natural gas is strictly controlled by the government and has remained stable comparing to petroleum over the past 3 years. We do not expect any difficulty in continuing to renew our supply contracts during the next 12 months.

The following table lists the main suppliers of our CNG and LPG (in US Dollar):

Name of Supplier	2009
China Petroleum & Chemical Corporation, Shijiazhuang Refining-Chemical company	4,588,586
LPG Branch of PetroChina Kunlun Gas Ltd	3,432,763
Jia Neng Energy Development Ltd. of Anyang	2,276,863
Peng Ye Trading Co., Ltd. of Shijiazhuang	1,169,666
Yanchang New Energy Co., Ltd. of Shaanxi	1,120,049
Hua Xin Natural Gas Development Co., Ltd. of Handan	653,168
Zhongyuan Green Energy Hi-Tech Co., Ltd.of Henan	523,878
Ancai Hi-Tech Co., Ltd. of Henan	349,945
Hualong Petrochemical Co., Ltd. of Huojia County	304,221
Blue Flame CBM Co., Ltd. of Qinshui	210,794
Total	14,626,933

Our Competitors

The main competitors of our CNG and LPG retail business include Xin’Ao Gas Corporation, Xi’an Xilan CNG Co, Ltd., Sino Gas Group and Zhengzhou Gas Co.

Xin’Ao Gas Co., listed on Hong Kong Stock Exchange, is currently our strongest competitor. As of 2008, it has constructed and operated 98 natural gas filling stations located in a number of provinces and regions nationwide, such as Beijing, Guangdong, Guangxi, Hebei, Henan, Anhui, and Hunan, etc.

Xi’an Xilan CNG Co, Ltd., listed in US OTCBB market, has established 32 CNG filling stations, which mainly served Shaanxi Province.

Sino Gas Group Ltd, listed on Hong Kong Stock Exchange, operates 60 filling stations in Beijing, Qingdao, Changchun, and Zhengzhou, etc.

Zhengzhou Gas Co., listed on Hong Kong Stock Exchange, operates 7 filling stations which serve Zhengzhou of Henan Province.

Most of our main competitors have been listed on international stock exchanges. Our current operations were mainly located in second-tier cities in Henan, Hebei, Shanxi, and Shandong provinces.

Insurance

Except that Public Transportation Gas Station, Zhonghua Road Gas Station, and South Middle-Ring Road Gas Station of Anyang Prosperous are under insurance policies, and that the vehicles of Ji’nan Company and the properties of Anyang Top are under insurance policies, no any other properties including gas stations and equipments of Anyang Prosperous and any of its other subsidiaries are under the protection of any insurance policies.

Government Regulations

Fuel service station standards are subject to regulation by the Ministry of Construction, the General Administration of Quality Supervision, and the Bureau of Inspection and Quarantine of the People’s Republic of China. Upon satisfactory inspection of service stations, certificates will be issued.

Various standards must be met for filling stations, including the handling and storage of CNG, tanker handling, and compressor operation. The Local Ministry of Construction and the Gas Field Operation Department of the Municipal Administration Committee regulates these standards. The Municipal Development and Reform Commission, which issues certificates for the handling of dangerous chemical agents, carries out inspections.

Standards for the design and construction of filling stations must conform to GB50156-2202 and technology standard BJJ84-2000.

License, Permit and Approval

The businesses of Anyang Prosperous are subject to the administration and supervision of such governmental agencies as Ministry of Construction, the General Administration of Quality Supervision, and State Administration of Work Safe, and their local offices. To date, Anyang Prosperous and Anyang Top have received the following licenses, permits and approvals or otherwise from the aforementioned governmental agencies necessary for their business operations: Business License, Operating Permit for Hazardous Chemicals, Operating Permit of Gas Enterprise, Permit for Installation, Alteration and Maintenance of Special Equipments, Operating Permit of Gas Enterprise, Special Equipment Usage Registration Certificate and Gas Cylinder Filling License.

Transportation and Turnover Volume Capability

We have five LPG storage cans, each with 1,000 cubic meter storage capacity and the annual total turnover volume can reach 65,000 tons.

Quality Control Standards and Procedures

Anyang Prosperous has obtained ISO 9000 quality system certification. Pursuant to the National Standard of the People’s Republic of China for LPG (GB11174-1997), we created our own LPG Quality Standard, standard for store-tank and vehicle carrying gas, Measures for LPG Quality Control, and Quality Services Standard.

We attach importance to quality control and ring-to-ring control. We maintain strict quality control and management standards and procedures including “Measures for Calculation”, “Duties and Conference Rules of Gas Quality Analysis Group”, “In-Storeroom Procedure”, “Out-Storeroom Procedure”, “Assay Report Distributing Procedure”, “De-sulfur and Purifying Procedure” and “Gas Company Distributing Procedure”.

Intellectual Property

We do not own any intellectual property rights except for the following trademarks pending registration:

Trade mark	Class	Application No.	Application date	Acceptance date
神州万象 (word)	1	5843576	Jan 12, 2007	Jul 17, 2007
神州万象 (word)	4	5843563	Jan 12, 2007	Jul 19, 2007
神州万象 (word)	6	5843582	Jan 12, 2007	Jul 19, 2007
神州万象 (word)	11	5843581	Jan 12, 2007	Jul 19, 2007
神州万象 (word)	35	5843577	Jan 12, 2007	Jul 26, 2007
神州万象 (word)	36	5843575	Jan 12, 2007	Aug 14, 2007
神州万象 (word)	37	5843568	Jan 12, 2007	Jun 26, 2007
神州万象 (word)	39	5843569	Jan 12, 2007	Aug 14, 2007
神州万象 (word)	40	5843570	Jan 12, 2007	Jun 19, 2007
神州万象 (word)	41	5843571	Jan 12, 2007	Jun 19, 2007

神州万象 (word)	42	5843578	Jan 12, 2007	Aug 14, 2007
神州万象 (figure & word)	1	6107239	Jun 13, 2007	Sep 18, 2007
神州万象 (figure & word)	4	6107238	Jun 13, 2007	Sep 18, 2007
神州万象 (figure & word)	6	6107237	Jun 13, 2007	Sep 18, 2007
神州万象 (figure & word)	11	6107236	Jun 13, 2007	Sep 18, 2007
神州万象 (figure & word)	35	6107235	Jun 13, 2007	Sep 18, 2007
神州万象 (figure & word)	34	6107234	Jun 13, 2007	Sep 18, 2007

Employees

We have in total 260 staff at present, over 10% of them have Bachelor or higher degree and many are experts and technicians specialized in different areas. We have not experienced any industrial actions and we have excellent relationships with our employees. We are not a party to any collective bargaining agreements.

Management and Technicians

We heavily rely on the skills, abilities and expertise of our management members, executives and top technicians to carry out our operations. Currently, more than 25% of our management personnel have Master or higher degree or medium to higher professional titles.

Management

Wei Wang, Director and Chairman of the Board, Chief Executive Officer, graduated from Henan Provincial Party School. He has worked in petrochemical industry for fifteen years. He had worked successively as the Chairman of the board in Handan, Jinan petrochemical industry and joined Anyang Top in 2007. He is in charge of the integrated business development, management and strategic planning of the company.

Ben Wang, Chief Financial Officer, earned his Ph.D. from the Department of Decisions, Risk & Operations Management at Columbia Business School in New York City, 2003. He was awarded M.E. from Tsinghua University in Beijing and B.E. in Electronic Engineering from University of Electronic Science & Technology of China. He is also charter holder of CFA and FRM. Most recently he serviced as Chief Financial Officer at New Oriental Energy & Chemical Corporation, and was an equity research analyst at Brean Murray Carret Co., Ltd., risk solutions consultant in Standard and Poor's.

Shiming Yu, Director of the Board, a Chinese Certified Public Accountant, graduated from Changchun Taxation College, Industrial Accounting major. He has worked for more than six years in first-grade large state-owned chemical enterprise concerning the management of cost, investment and financing. Later, he worked as chief financial director for five years in a domestic manufacturing enterprise and also worked in a large-scale domestic accounting firm for five years in auditing. He joined Origin Obit Company in 2007 and is in charge of the integrated financial planning, management, investment and financing work of the company.

Li Wang, Director of the Board, Secretary, Graduated from China Politics and Law University and holding dual Bachelors in Law and Literature. Ms. Wang is the president of Zhenyuan (Canada) International Holding Inc. Meanwhile, Ms. Wang has also acted as the president of Greater Montreal Sino-Canadian Business Centre since 2006. In 2003, Ms. Wang became the president assistant in Zhenyuan Group China, when she participated all oversea cooperation projects, including the cooperation with Australian Forster securities company and the establishment of long-term cooperation relationship with technical and financial companies; the management and participation in financial consultation with Canada Investpro Securities Inc.; and the reorganization of the stocks, the assets of the Chinese private enterprise according to the Canadian financial system. She previously held oversea department manager at China Century Huayu Investment Co., Ltd. (subsidiary of Zhenyuan Group) in 2002, where she managed and participated in all international cooperation projects, such as World Bank EMC project on several enterprises’ loan operation in China Beijing and Wuhan.

None of Wei Wang, Ben Wang, Shiming Yu and Li Wang has been involved in any of the following proceeding during the past five years:

1.	any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2.	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3.	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4.	Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Research and Development

We do not have our own R&D department. We contracted with Xin-He Science and Technological Institution to carry out the R&D for us. The institution was established in September 2004, with focus on the development of cleaning energy resource and CNG/LPG powered automobile technology, introducing the advanced technological achievement from foreign countries, and conducting trials and tests.

Xin-He Science and Technological Institution has a team of young and devoted, high-level R&D professionals specialized in areas of chemistry, electronics and automobile, etc. Currently, the institution has twenty staffs, including two Senior Engineers and ten medium or senior title holders. After three years’ development, this institution has gradually grown to be a full-functional research and development institution which supports the sustainable development of our business and operations.

Ever since its establishment, Xin-He Science and Technological Institution has obtained many awards for its six significant break-through research and six national patents. It also receives funds from Anyang local Government, Henan provincial Government and Denmark National Government. The institution established the core laboratory which successfully introduced the improved technique for home-use of LPG and also invented the fast replacing system for LPG automobile steel cylinders, home and vehicular use of dimethyl ether (DME). Other technologies have been developed includes retrofitting of automobile injection, bio-gas technology, coal-based LPG technology.

Available Information

We file quarterly and annual reports, proxy statements and other information with the SEC. You may read and copy any document that we file at the public reference facilities of the SEC in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from the SEC’s website at http://www.sec.gov.

ITEM 1A. RISK FACTORS

RISK FACTORS

An investment in our common stock is speculative and involves a high degree of risk and uncertainty. You should carefully consider the risks described below, together with the other information contained in this prospectus, including the consolidated financial statements and notes thereto of our Company, before deciding to invest in our common stock. The risks described below are not the only ones facing our Company. Additional risks not presently known to us or that we presently consider immaterial may also adversely affect our Company. If any of the following risks occur, our business, financial condition and results of operations and the value of our common stock could be materially and adversely affected.

Risks Related to Our Business

We are dependent on outside suppliers.

We do not own any natural gas field and reserve. We obtain our supplies of natural gas from outside supplier. The ability to deliver our product is dependent on a sufficient supply of natural gas and if we are unable to obtain a sufficient natural gas supply, it could prevent us making deliveries to our customers. While we have supply contracts with our suppliers, we do not control the government owned or other suppliers, nor are we able to control the amount of time and effort they put forth on our behalf. It is possible that our suppliers will not perform as expected, and that they may breach or terminate their agreements with us. Any failure to obtain supplies of natural gas could prevent us from delivering such to our customers and could have a material adverse affect on our business and financial condition.

Changes in the regulatory atmosphere could adversely affect our business.

The distribution of natural gas and operations of filling stations are highly regulated requiring registrations for the issuance of licenses required by various governing authorities in China. In addition, various standards must be met for filling stations including handling and storage of natural gas, tanker handling, and compressor operation which are regulated. The costs of complying with regulations in the future may harm our business. Furthermore, future changes in environmental laws and regulations could result in stricter standards and enforcement, larger fines and liability, and increased capital expenditures and operating costs, any of which could have a material adverse effect on our financial condition or results of operations.

Our business operations are subject to a high degree of risk and insurance may not be adequate to cover liabilities resulting from accidents or injuries that may occur.

Our operations are subject to potential hazards incident to the gathering, processing, separation and storage of natural gas, such as explosions, product spills, leaks, emissions and fires. These hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, and pollution or other environmental damage, and may result in curtailment or suspension of our operations.

The occurrence of a significant event for which we are not fully insured or indemnified, and/or the failure of a party to meet its indemnification obligations, could materially and adversely affect our operations and financial condition. Moreover, no assurance can be given that we will be able to maintain adequate insurance in the future at rates it considers reasonable. To date, however, we have maintained adequate coverage at reasonable rates and have experienced no material uninsured losses.

We depend on our senior management’s experience and knowledge of the industry and would be adversely affected by the loss of any of our senior managers.

We are dependent on the continued efforts of our senior management team. We do not currently have employment contracts with our senior executives, though we are under effort to establish contractual relationship therewith. If, for any reason, our senior executives do not continue to be active in management, our business, or the financial condition of our Company, our results of operations could be adversely affected. In addition, we do not maintain life insurance on our senior executives and other key employees.

Our inability to fund our capital expenditure requirements may adversely affect our growth and profitability.

Our continued growth is dependent upon our ability to generate more revenue from our existing distribution systems and raise capital from outside sources. We believe that in order to continue to capture additional market share, we will have to raise more capital to fund our business operations. In the future we may be unable to obtain the necessary financing on a timely basis and on acceptable terms, and our failure to do so may adversely affect our financial position, competitive position, growth and profitability. Our ability to obtain acceptable financing at any time may depend on a number of factors, including: Our financial condition and results of operations, the condition of the PRC economy and the natural gas industry in the PRC, and conditions in relevant financial markets in the United States, the PRC and elsewhere in the world.

Risks Related to the People’s Republic of China

China’s economic policies could affect our business.

Substantially all of our assets are located in China and substantially all of our revenue is derived from our operations in China. Accordingly, our results of operations and prospects are subject, to a significant extent, to the economic, political and legal developments in China.

While China’s economy has experienced a significant growth in the past twenty years, growth has been irregular, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall economy of China, but may also have a negative effect on us. For example, our operating results and financial condition may be adversely affected by the government control over capital investments or changes in tax regulations.

The economy of China has been transitioning from a planned economy to a more market-oriented economy. In recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform and the reduction of state ownership of productive assets and the establishment of corporate governance in business enterprises; however, a substantial portion of productive assets in China are still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

Capital outflow policies in the People’s Republic of China may hamper our ability to remit income to the United States.

The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency outside of the PRC. We receive substantially all of our revenues in Renminbi. Under the existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate government authorities is required in those cases in which Renminbi is to be converted into foreign currency and remitted out of the PRC to pay capital expenses, such as the repayment of bank loans denominated in foreign currencies. The PRC government also may at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.

Although we do not import goods into or export goods out of the People’s Republic of China, fluctuation of the RMB may indirectly affect our financial condition by affecting the volume of cross-border money flow.

The value of the RMB fluctuates and is subject to changes in the People’s Republic of China political and economic conditions. Since July 2005, the conversion of RMB into foreign currencies, including USD, has been based on rates set by the People’s Bank of China which are set based upon the interbank foreign exchange market rates and current exchange rates of a basket of currencies on the world financial markets. As of December 31, 2008, the exchange rate between the RMB and the United States dollar was 6.8166RMB to every one USD.

We may face obstacles from the communist system in the People’s Republic of China.

Foreign companies conducting operations in the People’s Republic of China face significant political, economic and legal risks. The Communist regime in the People’s Republic of China, including a stifling bureaucracy may hinder Western investment.

We may have difficulty establishing adequate management, legal and financial controls in The People’s Republic of China.

The People’s Republic of China historically has been deficient in Western style management and financial reporting concepts and practices, as well as in modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in The People’s Republic of China. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards.

Because our assets and operations are located in the P.R.China, you may have difficulty enforcing any civil liabilities against us under the securities and other laws of the United States or any state.

We are a holding company, and all of our assets are located in the P.R.China. In addition, our directors and officers are non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon these non-residents, or to enforce against them judgments obtained in United States courts, including judgments based upon the civil liability provisions of the securities laws of the United States or any state.

There is uncertainty as to whether courts of the P.R.China would enforce:

Judgments of United States courts obtained against us or these non-residents based on the civil liability provisions of the securities laws of the United States or any state; or

In original actions brought in the P.R.China, liabilities against us or non-residents predicated upon the securities laws of the United States or any state. Enforcement of a foreign judgment in the P.R.China also may be limited or otherwise affected by applicable bankruptcy, insolvency, liquidation, arrangement, moratorium or similar laws relating to or affecting creditors’ rights generally and will be subject to a statutory limitation of time within which proceedings may be brought.

The PRC legal system embodies uncertainties, which could limit law enforcement availability.

The PRC legal system is a civil law system based on written statutes. Unlike common law systems, decided legal cases have little precedence. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past 27 years has significantly enhanced the protections afforded to various forms of foreign investment in China. Each of our PRC operating subsidiaries and affiliates is subject to PRC laws and regulations. However, these laws and regulations change frequently and the interpretation and enforcement involve uncertainties. For instance, we may have to resort to administrative and court proceedings to enforce the legal protection that we are entitled to by law or contract. However, since PRC administrative and court authorities have significant discretion in interpreting statutory and contractual terms, it may be difficult to evaluate the outcome of administrative court proceedings and the level of law enforcement that we would receive in more developed legal systems. Such uncertainties, including the inability to enforce our contracts, could affect our business and operation. In addition, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the PRC legal system, particularly with regard to the industries in which we operate, including the promulgation of new laws. This may include changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the availability of law enforcement, including our ability to enforce our agreements with the government entities and other foreign investors.

The admission of China into the World Trade Organization could lead to increased foreign competition.

Provincial and central government authorities regulate the natural gas industry for safety and ensure that all areas receive natural gas service. However, as a result of China becoming a member of the World Trade Organization (WTO), restrictions on foreign investment in the industry may be reduced. With China’s need to meet growth in natural gas demand and the WTO’s requirement for a reduction of restrictions on foreign investment as a condition of membership, such events could lead to increased competition in the natural gas industry.

PRC laws and regulations governing our businesses and the validity of certain of our contractual arrangements are uncertain. If we are found to be in violation, we could be subject to sanctions. In addition, changes in such PRC laws and regulations may materially and adversely affect our business.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business. We are considered a foreign person or foreign invested enterprise under PRC law. As a result, we are subject to PRC law limitations on foreign ownership of Chinese companies. These laws and regulations are relatively new and may be subject to change, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively.

The PRC government has broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses and requiring actions necessary for compliance. In particular, licenses and permits issued or granted to us by relevant governmental bodies may be revoked at a later time by higher regulatory bodies. We cannot predict the effect of the interpretation of existing or new PRC laws or regulations on our businesses. We cannot assure you that our current ownership and operating structure would not be found in violation of any current or future PRC laws or regulations. As a result, we may be subject to sanctions, including fines, and could be required to restructure our operations or cease to provide certain services. Any of these or similar actions could significantly disrupt our business operations or restrict us from conducting a substantial portion of our business operations, which could materially and adversely affect our business, financial condition and results of operations.

We may be adversely affected by complexity, uncertainties and changes in PRC regulation of natural gas business and companies, including limitations on our ability to own key assets.

The PRC government regulates the natural gas industry including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the natural gas industry. These laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainty. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be a violation of applicable laws and regulations. The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, natural gas businesses in China, including our business.

Risks Related to Corporate and Stock Matters

Risks related to our common stock

The market price for our common stock may be volatile.

The market price for our common stock is likely to be highly volatile and subject to wide fluctuations in response to factors including the following:

¾	Actual or anticipated fluctuations in our quarterly operating results,

¾	Announcements of new services by us or our competitors,

¾	Changes in financial estimates by securities analysts,

¾	Conditions in the energy recycling and saving services market,

¾	Changes in the economic performance or market valuations of other companies involved in the same industry,

¾	Announcements by our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments,

¾	Additions or departures of key personnel,

¾	Potential litigation, or

¾	Conditions in the market.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

Shareholders could experience substantial dilution.

We may issue additional shares of our capital stock to raise additional cash for working capital. If we issue additional shares of our capital stock, our shareholders will experience dilution in their respective percentage ownership in the company.

We have no present intention to pay dividends.

Neither during the preceding two fiscal years nor during the year ended December 31, 2009, did we pay dividends or make other cash distributions on our common stock, nor do we expect to declare or pay any dividends in the foreseeable future. We intend to retain any future earnings for working capital and to finance current operations and expansion of our business.

A large portion of our common stock is controlled by a small number of shareholders.

A large portion of our common stock is held by a small number of shareholders. As a result, these shareholders are able to influence the outcome of shareholder votes on various matters, including the election of directors and extraordinary corporate transactions including business combinations. In addition, the occurrence of sales of a large number of shares of our common stock, or the perception that these sales could occur, may affect our stock price and could impair our ability to obtain capital through an offering of equity securities. Furthermore, the current ratios of ownership of our common stock reduce the public float and liquidity of our common stock which can in turn affect the market price of our common stock.

We may be subject to "penny stock" regulations.

The Securities and Exchange Commission, or SEC, has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and our sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. These additional sales practice and disclosure requirements could impede the sale of our securities. Whenever any of our securities become subject to the penny stock rules, holders of those securities may have difficulty in selling those securities.

ITEM 2. DESCRIPTION OF PROPERTY

Properties

Land:

We do not own any land except that Anyang Prosperous (by its subsidiary located in Shijiazhuang, Hebei Province, PRC) is under the process to acquire a piece of land with an area of 8192 square meters in Yuanshi County, Hebei Province. We have paid the consideration therefore and are going through in the procedure to obtain the ownership title therefore.

Land leased by Anyang Prosperous:

	GAS STATION
Location	Area (Square Meter)	Period	Rental (US Dollar)
South Xinnanhuan Road, Pingdingshan City, Henan Province (Xinnanhuan Road Gas Station)	5 Mu (3335 square meter)	Sep 20, 2006 – Sep 20, 2021	4,243.28 per year

North Zhonghuan Road, Anyang City , Henan Province (Nanzhonghuan Road Gas Station)	10 Mu (6667 square meter)	Aug 11, 2008 – Nov 22, 2020	9,759.55 per year

South Airport Road, Anyang City, Henan Province (South Airport Road Gas Station)	N/A	Aug 01, 2007 – Jul 30, 2017	21,216.41 per year

Mid East Zhonghuan Road, Anyang City, Henan Province (ZhongHua Road Gas Station)	4 Mu (2668 square meter)	Apr 10, 2006 – Apr 10, 2011	19,094.77 per year

Henan Wanli Group, West Passenger Gas Station, Anyang City, Henan Province	N/A	Jun 01, 2007 – Jun 01, 2017	19,094.77 per year

Mid Anlin Avenue, Anyang City, Henan Province (Public Transportation Gas Station)	N/A	Dec 01, 2005 – Nov 30, 2014	10,870.58 per year

Hanshan District, Handan City, Hebei Province (Hanshan Gas Station )	N/A	Feb 25, 2005 – Feb 24, 2011	16,973.13 per year

Changzi Gate, Changzhi city, Shangxi Province (Changzi Gate Gas station)	N/A	Jun 01, 2010 – May 31, 2011	7,072.14 per year

Beihuan Road, Xuchang City, Henan Province (Beihuan Gas Station)	N/A	Sep 15, 2008 – Sep 15, 2018	8,486.56 per year

Wenfeng Road, Xuchang City, Henan Province (Wenfeng Gas station)	N/A	Mar 01, 2009 – Feb 28, 2021	12,729.84 per year

Feng Jia Zhuang, Yangquan City, Shanxi Province (Yangquan Gas Station)	N/A	Aug 01, 2006 – Jul 31, 2011	6,364.92 per year

Linying city, Henan Province,(Linying Hub Gas Station)	N/A	Apr 01, 2008 – Dec 31, 2023	7,072.14 per year

West Jiefang Road, Jiaozuo City, Henan Province (Jiefang Road Gas Station)	N/A	Aug 01, 2008 – Jul 31, 2028	14,144.27 per year

Changsong Road, Wefang city, Shandong Province (Changsong Road Gas Station)	N/A	May 01, 2007 – Apr 30, 2017	18,387.55 per year

North Qinghe Road, Jinan City, Shandong Province (Huangtai Gas Station)	N/A	Apr 01, 2006 – Sep 20, 2013	11,315.42 per year

Jiqi Road, Jinan City, Shangdong Province (Jiqi Gas Station)	N/A	Sep 02, 2004 – Sep 01, 2009	11,315.42 per year

Houses and spaces:

We do not own any house title. We rent spaces for our business operation. Details about the spaces we rent for our business are listed below:

Houses rented by Anyang Prosperous:

	Office
Location 地点	Area (Square Meter)	Period	Rental (US Dollar)
Hanshan District, Handan City, Hebei Province (Hanshan Gas Station Office)	N/A	Feb 01, 2009 – Jan 31, 2010	1,527.58 per year

Feng Jia Zhuang, Yangquan City, Shanxi Province (Yangquan Gas Station Office)	N/A	Aug 1, 2007 – Jul 31, 2017	707.21 per year

Linying city, Henan Province (Linying Hub Gas Station Office)	N/A	Apr 10, 2008 – Apr 09, 2011	282.89 per year

Changsong Road, Weifang city, Shandong Province (Changsong Road Gas Station Office)	N/A	May 21, 2009 –May 20, 2010	1,188.12 pear year

South Pin’an Street, Qiaodong District, Shijiazhuang City, Hebei Province	N/A	Aug 01, 2007 – Aug 01, 2008	9,358.56 per year

South Zhonghua Street, Qiaoxi District, Shijiazhuang City, Hebei Province (Shijiazhuang Office, new)	N/A	Mar 01,2008 – Feb 28, 2013	28,288.54 per year

Jingqi Road, Huaiyin District, Jinan City, Shandong Province	N/A	Oct 16, 2007 – Oct 16, 2009	8,486.56 per year

House rented by Anyang Top:

Location	Area (Square Meter)	Period	Rental (US Dollar)
Xiliang Village, Anyang, Henan Province	N/A (17 rooms)	Mar 01, 2007 – Mar 01, 2017	14,144.27 per year

Insurance

ITEM 3. LEGAL PROCEEDINGS

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

None

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock was currently listed on the Over-the-Counter Bulletin Board under the symbol "CHPC" and our current fiscal year end is December 31. The following table contains information about the range of high and low bid prices for our common stock for each full quarterly period for 2009 and 2008 based upon reports of transactions on the OTC Bulletin Board. The source of this information is the OTC Bulletin Board. The quotations represent inter-dealer prices without retail markup, markdown or commission, and may not necessarily represent actual transactions.

	COMMON STOCK MARKET PRICE
	HIGH	LOW

FISCAL YEAR ENDED DECEMBER 31, 2009:
Fourth Quarter	$0.01	$0.01
Third Quarter	$1.01	$1.01
Second Quarter	$1.01	$1.01
First Quarter	$1.01	$1.01
FISCAL YEAR ENDED DECEMBER 31, 2008:
Fourth Quarter	$1.01	$1.01
Third Quarter	$1.01	$1.01
Second Quarter	$1.01	$1.01
First Quarter	$0	$0

As of December 31, 2009, there were 7 holders of record of our common stock.

Dividends

We have not declared any cash dividends, nor do we intend to do so. We are not subject to any legal restrictions respecting the payment of dividends, except that they may not be paid to render us insolvent. Dividend policy will be based on our cash resources and needs and it is anticipated that all available cash will be needed for our operations in the foreseeable future.

Section Rule 15(g) of the Securities Exchange Act of 1934

Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended, and Rules 15g-1 through 15g-6, and 15g-9 promulgated thereunder. They impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses).

Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.

Rule 15g-2 declares unlawful broker/dealer transactions in penny stocks unless the broker/dealer has first provided to the customer a standardized disclosure document.

Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.

Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.

Rule 15g-5 requires that a broker/dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the salesperson’s compensation.

Rule 15g-6 requires broker/dealers selling penny stocks to provide their customers with monthly account statements.

Rule 15g-9 requires broker/dealers to approve the transaction for the customer’s account; obtain a written agreement from the customer setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his rights and remedies in cases of fraud in penny stock transactions; and, the NASD's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.

The application of the penny stock rules may affect your ability to resell your shares.

Securities Authorized for Issuance under Equity Compensation Plan

There has been no common stock authorized for issuance with respect to any equity compensation plan as of the fiscal year ended December 31, 2009.

Recent Sales of Unregistered Securities

The following securities were issued within fiscal year 2008 and the subsequent interim period and were not registered under the Securities Act of 1933.

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.

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”).

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.

Following the acquisition of Origin Orbit, we ceased all the metal exploring business. 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.

On October 14, 2008, we changed our legal name from “Acropolis Precious Metals, Inc.” to “China Prosperous Clean Energy Corporation”.

ITEM 6.SELECTED FINANCIAL DATA

Not required for smaller reporting companies.

ITEM 7. 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.

OVERVIEW

We were incorporated in the State of Nevada on March 24, 2006. From March 24, 2006 to June 19, 2008, we did not own any interest in any property, but merely had the right to conduct exploration activities on one property, which consisted of 20 cells containing 169.029 hectares located in the Nicola Mining Division District of British Columbia, Canada. We intended to explore for gold on the property. Our exploration program should take approximately 365 days, weather permitting. We did not own any subsidiary company.

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.

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”).

On October 14, 2008, we changed our legal name from “Acropolis Precious Metals, Inc.” to “China Prosperous Clean Energy Corporation”.

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 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.

Basis of Consolidation

These condensed consolidated financial statements include the financial statements of CHPC and its subsidiaries. All significant inter-company balances or transactions have been eliminated on consolidation.

Basis of Preparation

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. These condensed consolidated financial statements for the interim periods are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these condensed consolidated financial statements are not necessarily indicative of the results that may be reported for the entire year. The accompanying condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with accounting principles generally accepted in the United States.

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of these condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of nine months or less. Because of the short maturity of these investments, the carrying amounts

Restricted Cash

Restricted cash represented time deposits pledged against short-term bank facilities. Restricted cash is classified as current assets as the maturity of the short-term bank facilities was within one year.

Accounts Receivable

Accounts receivable are stated at cost, net of 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.

Inventories

Inventories are stated at the lower of cost, determined on a weighted average basis, or market. Costs of inventories include purchase and related costs incurred in bringing the products to their present location and condition. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. The management will write down the inventories to market value if it is below cost. The management also regularly evaluates the composition of its inventories to identify slow-moving and obsolete inventories to determine if valuation allowance is required.

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.

Buildings, Machinery and Equipment

Buildings, machinery and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of buildings, machinery and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows:

	Useful Life
Buildings	20-40 years
Machinery, gas storage vehicles and motor vehicles	5-10 years
Office equipment	5 years

The carrying value of buildings, machinery and equipment is assessed annually and when factors indicating impairment is present, the carrying value of the fixed assets is reduced by the amount of the impairment. The Company determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the net asset carrying value. An impairment loss, if exists, is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Construction in Progress

Construction in progress includes direct costs of construction of buildings, equipment and others. Interest incurred during the period of construction, if material, is capitalized. Construction in progress is not depreciated until such time as the assets are completed and put into service.

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. The 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.

Financial Instruments

The Company values its financial instruments as required by SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”. The estimated fair value amounts have been determined by the Company, using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented due to the short maturities of these instruments and that the interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profile at respective year ends.

The Company’s financial instruments primarily consist of cash and cash equivalents, trade accounts receivable, other current assets; trade accounts payable, accrued expenses, short-term bank loans and other current liabilities. As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented due to the short maturities of these instruments and that the interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profile at respective year ends.

Value Measurement and Financial Instruments

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”) on January 1, 2008. SFAS 157 has been codified as ASC 820-10, “Fair Value Measurements.” ASC 820-10, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

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.

Comprehensive Income

SFAS No.130, “Reporting Comprehensive Income,” establishes standards for reporting and displaying comprehensive income and its components in the condensed consolidated financial statements. Accumulated other comprehensive income includes foreign currency translation adjustments.

Earnings per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed similarly to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

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.

	December 31, 2009	December 31, 2008
Balance sheet items, except for paid-in capital and retained earnings as of the end of period	US$1:RMB6.8166	US$1:RMB6.8542

Amounts included in the statements of income, statements of stockholders’ equity and statements of cash flows for the period	US$1:RMB6.8208	US$1:RMB6.96225

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:

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.

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:

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

Commitments and Contingencies

The Company follows SFAS No. 5, “Accounting for Contingencies,” in determining its accruals and disclosures with respect to loss contingencies. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable that a liability could be incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.

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 year ended December 31, 2009 and 2008.

Profit & Loss for the year ended December 31, 2009 and 2008.

	For the year ended December 31, 2009		For the year ended December 31, 2008		Changes
	Amount	Percentage of Revenue	Amount	Percentage of Revenue	Amount			Percentage
	$	(%)	$	(%)	$			(%)
REVENUES	23,784,437	100%	41,661,322	100.00%		(17,876,885	)	(42.91%)

COGS	20,894,107	87.85%	37,085,144	89.02%		(16,191,037	)	(43.66%)

GROSS PROFIT	2,890,330	12.15%	4,576,178	10.98%		(1,685,848	)	(36.84%)

Operating Expenses	3,154,632	13.26%	3,419,987	8.21%		(265,356	)	(7.76%)

Selling and distribution expenses	2,037,586	8.57%	2,544,350	6.11%		(506,764	)	(19.92%)

General & administrative expenses	1,117,045	4.70%	875,637	2.10%		241,408		27.57%

Income from Operations	(264,301)	（1.11%）	1,156,191	2.78%		(1,420,492	)	(122.86%)

Total Other Income (Expenses)	155,733	0.65%	263,648	0.63%		(107,916	)	(40.93%)

Investment income	313,709	1.32%	308,337	0.74%		5,372		1.74%

Interest expenses	(88,444)	（0.37%）	(34,931)	(0.08%)		(53,513	)	153.20%

Other income (Expenses)	(69,532)	（0.29%）	(9,758)	(0.02%)		(59,774	)	612.56%

Income before Income Taxes and Minority Interest	(108,568)	（0.46%）	1,419,839	3.41%		(1,582,407	)	(107.65%)

Provision for Income Taxes	136,696	（0.57%）	369,920	0.89%		(233,224	)	(63.05%)

Income before minority interest	(245,264)	（1.03%）	1,049,919	2.52%	（1,295,183		)	(123.36%)

Minority Interest	(1,874)	0.01%	(3,899)	(0.01%)		(2,025	)	(51.94%)

NET INCOME	(247,138)	（1.04%）	1,053,818	2.53%		(1,300,956	)	123.45%

Foreign currency translation adjustment	（1,611）	0.46%	372,194	0.89%		(373,805	)	(100.43%)

TOTAL COMPREHENSIVE INCOME	(248,749)	（0.58%）	1,426,012	3.42%		(1,674,761	)	(117.44%)

The Company’s consolidated revenue dropped to $23,784,437 for the year ended December 31, 2009, a 42.91% decrease from $41,661,322 reported for the year ended December 31, 2008. The decrease in revenue resulted primarily from the following factors:

(a) Due to the impact of global economic crisis, some of our LPG clients began to limit or stop their production capacity, such as Guangming Gas Corporation of Guangzhou, Tianyuan Gas Corporation of Shuiye, Foshan Gas Company of Guangdong, etc, which led to the demand drop by 48.44%;

(b) Along with the decrease of international crude oil price, the unit sales price of LPG dropped by 32%;

(c) Since LPG tax cabs has been out of market in a large number of cities, the Government has approved a lot of CNG taxis, which, resulted in retail sales of liquefied petroleum gas drop by 65.03%.

Our consolidated net income decreased by 123.45% to $(247,138) for the year ended December 31, 2009, as compared to $1,053,818 for the year ended December 31, 2008. This decrease was attributable to:

1）	The decrease in sales revenue; Due to the impact of global economic crisis, the wholesale of LPG dropped by 48.44%; Along with the decrease of international crude oil price, the unit sales price of LPG dropped by 32%;

2)	The increase in the costs

a. Affected by the national energy policy, the LPG market is gradually shrinking. The business is under transition in Jinan city. Therefore, we gradually stopped our LPG stations operation and are planning to convert them into CNG stations; the cost of transition and maintenance of the company led to the decreased income;

b. which involved the relevant listing activities, such as audit fees, legal fees after our OTCBB listing on September 30, 2008.

c. Along with the increase in loans, interest expense increased.

Taking all these factors into consideration, our consolidated net income decreased by 123.45% for the year ended December 31, 2009.

Revenues Breakdown by Products for the year ended December 31, 2009 and 2008:

Items	For the year ended December 31, 2009		Percentage			For the year ended December 31, 2008		Percentage			Change in Amount			Change In Percentage (%)
CNG retail		3,938,599		16.56	%		3,190,609		7.66	%		747,990			23.44	%
LPG retail		947,065		3.98	%		2,708,421		6.50	%		(1,761,355	)		(65.03	%)
CNG /LPG wholesale		17,904,095		75.28	%		34,725,063		83.35	%		(16,820,968	)		(48.44	%)
Others		994,678		4.18	%		1,037,229		2.49	%		(42,551	)		(4.10	%)
TOTAL		23,784,437		100	%		41,661,322		100	%

The revenue from CNG retail for the year ended December 31, 2009, increased by 23.44% as compared to that for the year ended December 31, 2008. This was mainly due to:

National Development and Reform Commission (NDRC) issued "The Guideline Catalog of Industrial Structure Adjustment (2007)". New energy vehicle is officially encouraged in production list, where CNG/petroleum dual-fuel automobile is in its fully promoted stage by NDRC, which led to the dramatic increase of our CNG retail business;

2)	West Jiefang Road gas station in Jiaozuo city was put into operation since Jan 2009, and Pingdingshan station was put into operation in March, 2009 and as such, the Company has six CNG operating gas stations at the moment, which led to the increase in CNG retail;

Comparing to last year, LPG business fell by 65.03% in retail sales, CNG/LPG business fell by 48.44% in wholesale. The decrease was mainly due to:

In 2008, both the central and local governments changed their policies from encouraging the development of LPG dual-fuel vehicles to promote CNG dual-fuel vehicles. As a result, our main customers, tax cabs and city buses, have been converted to CNG dual-fuel vehicles, which pressured our existing LPG of retail sales downward;

2)	The global financial crisis in 2008 adversely impacted the Chinese economy. Some of our clients limited or even

3)	stopped their production capacity, which led to the decline in our wholesale business.

“Others” decreased by 4.10% comparing to last year. 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 decrease of LPG sales, the sales of DME dropped.

COST OF GOODS SOLD (COGS)

COGS for the year ended December 31, 2009 was $20,894,107 which is 87.85% of total revenues and represents a 43.66% decrease as compared to $37,085,144 and 89.02% of total revenues for the year ended December 31, 2008. The decrease in COGS as a percentage of total revenue was primarily due to:

1)	The decrease of Revenue led to the same ratio of COGS decreased ;

2)	Along with the decrease of international crude oil price, the LPG purchasing cost dropped.

COGS 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 COGS. The Company will adopt proper measures to reduce fluctuations in the COGS. 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; to solving gas supply problems and reduce the cost of sales by the way of joint venture and self-built CNG mother stations, to reduce fluctuations in the COGS.

GROSS MARGIN

Gross Margin of major products for the year ended December 31, 2009 and 2008:

Gross Margin	2009			2008			Comparisons
TOTAL		12.15	%		10.98	%		1.17	%
CNG Retail		28.61	%		32.46	%		(3.85	%)
LPG Retail		29.64	%		5.34	%		24.30	%
CNG/LPG Wholesale		5.50	%		6.23	%		(0.73	%)

Gross profit margin of CNG retail decreased, which was mainly because: along with the increasing demand in CNG, furious market competition, and the impact of the domestic petroleum retail price, CNG retail price decreased slightly, which caused the corresponding slight gross margin decrease.

Gross profit margin of LPG retail increased, which was mainly because: along with the decrease of international crude oil price, the purchasing cost of LPG decreased, but retail price remain stable as before, which led to the great increase of gross margin.

Raw Material Procurement

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

Average Price of Raw Material for the year ended December 31, 2008 and 2009 (net of tax)

For the year ended December 31,	Retail LPG (per ton)	Wholesale LPG (per ton)	CNG (per cube)
2008	722.39	673.17	0.28
2009	561.88	455.88	0.31

SELLING AND DISTRIBUTION EXPENSES

Selling expenses for the year ended December 31, 2009 mainly included the salary of sales personnel and transportation cost. For the year ended December 31, 2009, selling expenses amounted to $2,037,586, representing 8.57% 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 selling expenses in 2009 decreased by 19.92% as compare to $2,544,350 for the year

ended December 31, 2008. For the year ended December 31, 2009, the transportation cost decreased by 31.58% to approximately $1,060,698 compared with approximately $1, 550,300 in 2008.

The main reason was that along with the sales decreased, the transportation cost decreased. The major component of selling expenses is transportation cost. The company mainly uses tank trucks to transport its products.

GENERAL AND ADMINISTRATIVE EXPENSES

The general and administrative expenses for the year ended December 31, 2009, mainly included the salary and welfare of the management personnel and office related expenses. The total of $1,117,046 represented 4.70% of total revenue.The main reason is that: although the sales decreased, the fixed costs such as salary, welfare and office related expenses did not decrease.

FINANCE COSTS

The financial expenses mainly consisted of interest expenses and bank charges. For fiscal year 2009, it was $88,444 representing 0.37% of total revenue. For fiscal year 2008, it was $34,931 representing 0.08% of total revenue. As of December 31, 2009, Origin Orbit did not borrow money from any financial institution in China.

The reason for the increase was that Anyang Prosperous, as one of its subsidiaries took a one-year loan of $440,110 from Bank of China in Anyang with an interest rate of 6.372%. It was mainly used for working capital in the normal operation of the company, and it will solve the company's temporary funding requirements for purchasing of goods. The loan will make the company's cash flow more flexible, as well as providing sufficient funds to carry out more activities.

OPERATING INCOME

The Company's consolidated operating income for the year ended December 31, 2009 decreased by 122.86% to ($264,301) from $1,156,191 reported for the year ended December 31, 2008. This was mainly due to:

1) The business of LPG retails was shrinking as a result of the global financial crisis, which led to the decline of our revenue.

2) The increase in purchasing costs. Along with the increasing demand for natural gas, suppliers’ mark-up lead to an increase in CNG purchasing cost compared with 2008;

3) Operating expense stayed consistent from period to period.

We are positive about the future increase in the operating income as we will continue building new CNG filling stations as 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 goods sold, increase of sales and expanding market share. Thus while management expects this factor to favorably benefit gross and operating income, we also anticipate that further improvements in the internal management, enhance the management efficiency and reducing management costs, that will also improve margins.

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

a)	We will continue building new CNG filling stations as to expand our market share, such as Linying mother station will be completed and put into operation in June 2010, the second gas station in Changzhi is being in approval, which will be built up by the end of 2010;

Prudent cost controls on both the production and operating components of our business. Through the measures of centralized purchasing to obtain lower prices of raw materials; to maintain long-term stable cooperative relations with the existing gas source supplier; to increase the development of new gas source suppliers; to solve gas supply problems and reduce cost of sales by the way of equity participation and self-built CNG mother station, so as to reduce fluctuations in the COGS;

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

NET INCOME

The net income for the year ended December 31, 2009 was ($247,138) or (1.04%) of revenues, comparing to $1,053,818 and 2.53% for the year ended December 31, 2008. The net income decreased by123.45% compared with 2008. The main reasons of the decrease in the net income were:

1)	Although the sales decreased, the fixed costs in general and administration expenses remained consistent , which caused the decrease of profit margin;

2)	The low profit margin of the LPG wholesale business which accounted for 75.28% of the revenues.

LIQUIDITY AND CAPITAL RESOURCES

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

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 believe 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 December 31, 2009 and 2008, the Company had cash and cash equivalents of approximately $ 989,427 and $1,034,387 respectively.

The following is a summary of cash provided by or used in each of the indicated types of activities for the year ended December 31, 2009 and 2008:

Cash provided by (used in):	for the year ended December 31,		Change
Cash provided by (used in):	2009	2008	Amount	Percentage
	($)	($)	($)	(%)
Operating Activities	(4,609,569)	2,290,961	（6,900,530）	(301.21%)

Investing Activities	(8,036,167)	(3,577,333)	（4,458,834）	124.64%

Financing Activities	12,608,405	1,081,558	11,526,847	1065.76%

Net cash flow used in operating activities was (4,609,569) for the year ended December 31, 2009, as compared to net cash flow provided by operating activities of $2,290,961 for the year ended December 31,2008, representing a decrease of $6,900,530 or 301.21%. 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; to solve gas supply problems and reduce cost of sales by the way of joint venture and self-built CNG mother stations, so as to reduce fluctuations in the COGS; so that cash flow used in operating activities will meet our liquidity requirements.

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

1)	Revenue decreased, which lead to the net income decreased,

2)	New CNG stations were building to expand in the market, the company prepaid for the equipment according to the related contracts.

3)	As the liquefied petroleum gas prices fluctuating, the company reduced inventory volume, thereby it affected the cash flow generated from operating activities.

Net cash flow used in investing activities was ($8,036,167) for the year ended December 31, 2009, as compared to net cash used in investing activities of ($3,577,333) for the year ended December 31, 2008, representing an increase of $4,458,834 or 124.64%. The increase of net cash flow used in investing activities was mainly due to: On December 9, 2009, Anyang Prosperous acquired 15% of the shares Henan Ancai Energy Co., Ltd. through a public auction and paid 5, 478,816 to Henan Zhen Ye Auction Co., Ltd. equivalent to the auction price as investment deposit on December 14, 2009.

Net cash flow provided by financing activities was $12,608,405 for the year ended December 31, 2009 as compared to net cash provided by financing activities of $1,081,558 for the year ended December 31, 2008, representing an increase of $11,526,847 or 1065.76%. This is mainly due to increased borrowing of the short-term bank loans from financial institutions and loans from other third entities.

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

As of December 31, 2009, our total assets were $28,308,333 and our total liabilities were $17,780,019. Our debt to asset ratio, calculated as total liabilities (including short-term debt and payables) over total assets, was 0.63:1.

As of December 31, 2008, our total assets were $15,187,148 and our total liabilities were $4,211,569. Our debt to asset ratio, calculated as total liabilities (including short-term debt and payables) over total assets, was 0.28:1.

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 31, 2007 and thereafter.

The Company’s provision for income taxes consists of:


	For the Years Ended December 31,
	2009			2008
Computed tax @ statutory rate of 25%
($(146,985)25% and $1, 419,83925% for December 31, 2009
and 2008, respectively)	$	(36,746	)	$	354,960

Computed tax @ statutory rate of 20%
($38,41720% and $-0-20% for December 31, 2009
and 2008, respectively)		7,683			-

Loss carryforward		-			(7,528	)
Non taxable loss (income)		78,427			(77,269	)
Tax catch up for 2007		-			3,639
Overpaid tax carryforward from 2008		1,101			-
Current year losses		86,231			96,118

Total provision for income taxes	$	136,696		$	369,920

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 7A. QUANTITIAVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting issuers.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CHINA PROSPEROUS CLEAN ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009 AND 2008

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of operations and Comprehensive Income (loss)

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

China Prosperous Clean Energy Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of China Prosperous Clean Energy Corporation and subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of China Prosperous Clean Energy Corporation and subsidiaries as of December 31, 2009 and 2008, and the consolidated results of their operations and their consolidated cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Patrizio & Zhao, LLC

Parsippany, New Jersey

March 25, 2010

CHINA PROSPEROUS CLEAN ENERGY CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

	December 31,		December 31,
	2009		2008
Assets
Current assets:
Cash and cash equivalents	$	694,620	$	1,034,387
Restricted cash		294,807		-
Accounts receivable		360,581		747,985
Inventories		553,187		709,679
Advance payments		15,284,156		2,389,907
Dividend receivable		333,508		333,508
Prepaid expenses		-		12,550
Other receivables		2,300,314		1,879,264
Total current assets		19,821,173		7,107,280

Property, plant and equipment, net		4,541,763		4,086,364

Other assets:
Deferred income taxes		50,397		50,397
Goodwill		60,330		60,330
Investment in non-consolidated entity		3,818,615		3,877,294
Other non-current assets		16,055		5,483
Total other assets		3,945,397		3,993,504

Total assets	$	28,308,333	$	15,187,148

Liabilities
Current liabilities:
Short-term bank loan	$	880,200	$	733,500
Accounts payable and accrued expenses		833,375		480,539
Trade notes payable		586,800		-
Customer advances		233,486		458,737
Due to former shareholders		1,580,636		1,580,636
Income taxes payable		64,418		48,737
Due to related parties		-		493,019
Loans from third party		13,300,170		-
Other current liabilities		154,233		269,701
Total current liabilities		17,633,318		4,064,869

Long-term liabilities:
Long-term bank loan		146,700		146,700
Total long-term liabilities		146,700		146,700

Total liabilities		17,780,018		4,211,569
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		225,893
Retained earnings		1,787,879		2,069,960
Accumulated other comprehensive income		409,222		410,833
Total stockholders’ equity		10,513,319		10,762,068

Noncontrolling interest		14,996		213,511

Total equity		10,528,315		10,975,579

Total liabilities and equity	$	28,308,333	$	15,187,148

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

CHINA PROSPEROUS CLEAN ENERGY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Income (loss)

	For the Years Ended December 31,
	2009			2008

Sales	$	23,784,437		$	41,661,322

Cost of sales		20,894,107			37,085,144

Gross profit		2,890,330			4,576,178

Operating expenses:
Selling expenses		2,037,586			2,544,350
General and administrative expenses		1,117,045			875,637
Total operating expenses		3,154,631			3,419,987

Income (loss) from operations		(264,301	)		1,156,191

Other income (expenses):
Investment income		313,709			308,337
Interest expense, net		(88,444	)		(34,931	)
Other expenses		(69,532	)		(9,758	)
Total other income		155,733			263,648

Income (loss) before provision for income tax		(108,568	)		1,419,839

Provision for income taxes		136,696			369,920

Income before noncontrolling interest		(245,264	)		1,049,919

Noncontrolling interest		1,874			(3,899	)

Net income (loss)		(247,138	)		1,053,818

Other comprehensive income (loss)
Foreign currency translation adjustment		(1,611	)		372,194

Comprehensive income (loss)	$	(248,749	)	$	1,426,012

Weighted average number of shares
Basic and diluted		12,000,000			8,932,500

Earnings (loss) per share
Basic and diluted	$	(0.02	)	$	0.12

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

CHINA PROSPEROUS CLEAN ENERGY CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

													Accumulated
					Additional								other			Total
	Common Stock				Paid in			Statutory		Retained			Comprehensive			Stockholders’
	Shares		Amount		Capital			Reserve		Earnings			Income			Equity

Balance at December 31, 2007		5,865,000	$	59	$	(59	)	$	120,511	$	1,121,524		$	38,639		$	1,280,675

Common stock issued in
recapitalization with Acropolis
Precious Metals		6,135,000		60		(60	)		-		-			-			-

Additional paid-in capital
contributed by shareholders		-		-		8,055,381			-		-			-			8,055,381

Net income		-		-		-			-		1,053,818			-			1,053,818

Statutory reserve		-		-		-			105,382		(105,382	)		-			-

Other comprehensive income		-		-		-			-		-			372,194			372,194

Balance at December 31, 2008		12,000,000	$	120	$	8,055,262		$	225,893	$	2,069,960		$	410,833		$	10,762,068

Net loss		-		-		-			-		(247,138	)		-			(247,138	)

Statutory reserve		-		-		-			34,943		(34,943	)		-			-

Other comprehensive loss		-		-		-			-		-			(1,611	)		(1,611	)

Balance at December 31, 2009		12,000,000	$	120	$	8,055,262		$	260,836	$	1,787,879		$	409,222		$	10,513,319

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

CHINA PROSPEROUS CLEAN ENERGY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

	For the Years Ended December 31,
	2009			2008

Cash flows from operating activities:
Net income (loss)	$	(247,138	)	$	1,053,818
Adjustments to reconcile net income (loss) to cash provided by
(used in) operating activities:
Depreciation		367,739			356,753
Noncontrolling interest		1,874			3,899
Changes in assets and liabilities:
Accounts receivable		387,166			(187,323	)
Inventories		156,394			527,609
Advance payments for raw materials		(5,812,779	)		5,023,846
Dividend receivable		-			108
Prepaid expenses		12,542			(12,331	)
Other receivables		(420,792	)		(1,774,522	)
Other non-current assets		(10,565	)		(5,388	)
Accounts payable and accrued expenses		467,549			(1,046,933	)
Trade notes payable		586,440			-
Customer advances		(225,113	)		(1,030,588	)
Income taxes payable		15,671			(681,585	)
Other current liabilities		111,443			63,598
Total adjustments:		(4,362,431	)		1,237,143

Net cash provided by (used in) operating activities:		(4,609,569	)		2,290,961

Cash flows from investing activities:
Acquisition of property and equipment		(822,859	)		(652,881	)
Return on investment		58,644
Advance payments - investment deposit paid		(5,478,816	)		-
Advance payments for fixed assets		(1,594,743	)		2,209,279
Payments to noncontrolling interest for ownership buyback		(198,393	)		-
Repayment of loans for acquisition of subsidiaries		-			(5,133,731	)

Net cash used in investing activities:		(8,036,167	)		(3,577,333	)

Cash flows from financing activities:
Additional paid-in capital from shareholders		-			8,061,880
Proceeds from short-term bank loan		146,610			720,750
Repayment of/proceeds from related party loans		(492,717	)		484,449
Long-term payables		-			(8,185,521	)
Loans from third party		12,954,512			-

Net cash provided by financing activities:		12,608,405			1,081,558

Effect of foreign currency translation on cash		(7,629	)		189,433

Net decrease in cash and cash equivalents
and restricted cash		(44,960	)		(15,381	)

Cash and cash equivalents – beginning		1,034,387			1,049,768

Cash and cash equivalents and restricted cash – ending	$	989,427		$	1,034,387

Supplemental schedule of non cash activities
Advance payments exchanged for property and equipment	$	338,646		$	-

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

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 December 31, 2009, 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和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 December 31, 2009, the Company had only contributed $273,800 leaving $1,095,200 remained outstanding.

Note 2– Summary of Significant Accounting Policies

Basis Of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The consolidated financial statements include the financial statements of CHPC and its subsidiaries. All significant intercompany balances and transactions have been eliminated on consolidation.

The Company has evaluated subsequent events through the date these consolidated financial statements were filed with the U.S. Securities and Exchange Commission (SEC). No events requiring recognition or disclosures were identified for this period.

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the related disclosure of contingent liabilities at the date of these condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

In accordance with ASC 230-10 (formerly SFAS No. 95, “Statement of Cash Flows”), the Company considers all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carrying amounts approximate their fair value. Restricted cash is excluded from cash and cash equivalents.

Restricted Cash

Restricted cash represents time deposits pledged against short-term bank facilities. Restricted cash is classified as current assets as the maturity of the short-term bank facilities is within one year.

Accounts Receivable

Accounts receivable are stated at historical cost, net of 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. As of December 31, 2009, the company has evaluated each of the accounts receivable balances and determined that they are collectable. As such, no allowance for doubtful accounts was prepared.

Inventories

Note 2 – Summary of Significant Accounting Policies (continued)

Investment in Non Consolidated Entities

Investment in non consolidated entities represents 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 and 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 ASC 805-10 (formerly 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 consolidated balance sheet at cost less accumulated impairment loss, if any.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of buildings, machinery and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows:

	Useful Life
Buildings	20-40 years
Machinery, gas storage vehicles and motor vehicles	5-10 years
Office equipment	5 years

Construction in Progress

Note 2 – Summary of Significant Accounting Policies (continued)

Asset Impairment

3)	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.

Goodwill

Fair Value Measurement And Financial Instruments

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Note 2 – Summary of Significant Accounting Policies (continued)

Revenue Recognition

Income Taxes

The Company accounts for income taxes in accordance with ASC 740-10 (formerly SFAS No. 109), "Accounting for Income Taxes". ASC 740-10 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.

Comprehensive Income

ASC 220-10 (formerly SFAS No.130), “Reporting Comprehensive Income,” establishes standards for reporting and displaying comprehensive income and its components in the condensed condensed consolidated financial statements. Accumulated other comprehensive income includes foreign currency translation adjustments.

Earnings per Share

Foreign Currency

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

	December 31, 2009	December 31, 2008
Balance sheet items, except for paid-in capital
and retained earnings, as of the years ended	US$1:RMB 6.8166	US$1:RMB 6.8542

Amounts included in the statements of
income, statements of stockholders’ equity
and statements of cash flows for the years
ended	US$1:RMB 6.8208	US$1:RMB 6.96225

Note 2 – Summary of Significant Accounting Policies (continued)

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 ASC 280-10, 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:

▪	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

Commitments and Contingencies

The Company follows ASC 450-10 (formerly SFAS No. 5), “Accounting for Contingencies,” in determining its accruals and disclosures with respect to loss contingencies. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable that a liability could be been incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.

Recent Accounting Pronouncements

Note 2 – Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

Reclassification

Certain amounts as of December 31, 2008 were reclassified for presentation purposes.

Note 3 – Inventories

Inventories by major categories are summarized as follows:

	For the Years Ended December 31,
	2009		2008

Compressed natural gas	$	65,600	$	48,926
Liquefied petroleum gas		150,384		373,001
Dimethyl ether		140,660		47,421
Vehicle modification components and other		196,543		240,331

Total	$	553,187	$	709,679

Note 4 – Advance Payments

The Company makes advances to certain vendors for inventory and equipment. The advances for the purchase of inventory amounted to $6,950,996 and $187,509 as of December 31, 2009 and 2008, respectively. Additionally, the advances for the purchase of equipment amounted to $2,850,981 and $2,202,398, as of December 31, 2009 and 2008, respectively. The advance for the investment deposit amounted to $5,482,179 and $-0- as of December 2009 and 2008, respectively.

Note 5 – Dividend Receivable

Dividend receivable as of December 31, 2009 and 2008 was $333,508, respectively, representing income receivable from Anyang Petro China.

Note 6 – Property, Plant and Equipment

Property, plant and equipment consist of the following:

	For the Years Ended December 31,
	2009			2008

Buildings	$	1,106,703		$	225,543
Machinery		3,050,621			2,652,704
Office equipment		72,880			286,124
Gas storage vehicles and motor vehicles		123,153			147,931
Construction in progress		1,275,523			1,493,214
		5,628,880			4,805,516
Less: Accumulated depreciation		(1,087,117	)		(719,152	)

Total	$	4,541,763		$	4,086,364

Depreciation expense for the year ended December 31, 2009 and 2008 was $367,739 and $356,753, respectively.

Note 7 – Deferred Income Taxes

Deferred income tax asset of $50,397 as of December 31, 2009 and December 31, 2008 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 December 31, 2009 and December 31, 2008.

Note 8 – Goodwill

Balance as of December 31, 2009	$	60,330
Foreign currency exchange adjustment		-

Adjusted balance as of December 31, 2009	$	60,330

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 December 31, 2009, no impairment was noted or recorded.

Note 9 – Investment in Non-consolidated Entity

As of December 31, 2009, available-for-sale securities consist 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

Note 9 – Investment in Non-consolidated Entity (continued)

As the above company is a private company 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 investment in the above company is 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 investment in the above company. As of December 31, 2009 and 2008, there was no allowance for impairment loss.

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 December 31, 2009. Therefore, Anyang PetroChina has been accounted for using the cost method instead of the equity method. For the year ended December 31, 2009 and 2008, dividend income of $313,709 and $308,337, respectively, from Anyang Petro China was included in other income.

Note 10 – Short Term Bank Loan

Short-term bank loan consists of the following:

	For the Years Ended December 31,
	2009		2008
8.217% one-year term loan granted by Jinan Commercial Bank,
maturing on January 28, 2010 and secured by the Company’s
bank deposit of $731,500 and a corporate guarantee given
by a third party entity	$	-	$	733,500

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	$	880,200	$	-

Total	$	880,200	$	733,500

Note 11 – Due to Former Shareholders

Balances due to the former shareholders are mainly because of a series of mergers and acquisitions of the Company in 2008. As of December 31, 2009 and 2008, the outstanding balance due to the former shareholders was $1,580,636.

Note 12 – Loans From Third Party

As of December 31, 2009, the Company had loans from Anyang Zhenyuan Group of $13,300,170. The balance outstanding on the loan obtained for the development and construction of gasoline stations amounted to $11,056,779 as of December 31, 2009. 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. Additionally, the balance outstanding on the loan obtained for working capital needs amounted to $2,243,391. This loan is based on good-faith, unsecured, and non-interest bearing.

Note 13– Long Term Liabilities

Long-term liabilities consist of the following:

	For the Years Ended December 31,
	2009		2008
Non-interest bearing long-term loan from Anyang Municipality,
repayable on December 29, 2013, secured by the Company’s
future earnings.	$	146,700	$	146,700

Note 14 – Statutory Reserve

In accordance with the PRC Companies Law, the Company’s PRC subsidiaries were required to transfer 10% of their profits after tax, as determined in accordance with accounting standards and regulations of the PRC, to the statutory surplus reserve and a percentage of not less than 5%, as determined by management, of the profits after tax to the public welfare fund. With the amendment of the PRC Companies Law which was effective from January 1, 2006, enterprises in the PRC were no longer required to transfer any profit to the public welfare fund. Any balance of public welfare fund brought forward from December 31, 2005 should be transferred to the statutory surplus reserve. The company provided the statutory surplus reserve of $260,836 and $225,893 for the years ended December 31, 2009 and 2008, respectively.

Note 15 – Income Taxes

The Company’s provision for income taxes consists of:

	For the Years Ended December 31,
	2009		2008

Current – PRC	$	86,299	$	319,523
Deferred		50,397		50,397
Total provision for income taxes	$	136,696	$	369,920

A reconciliation of the provision for income taxes with amounts determined by applying the statutory income tax rate to income before income taxes is as follows:


	For the Years Ended December 31,
	2009			2008
Computed tax @ statutory rate of 25%
($(146,985)25% and $1, 419,83925% for December 31, 2009
and 2008, respectively)	$	(36,746	)	$	354,960

Computed tax @ statutory rate of 20%
($38,41720% and $-0-20% for December 31, 2009
and 2008, respectively)		7,683			-

Loss carryforward		-			(7,528	)
Non taxable loss (income)		78,427			(77,269	)
Tax catch up for 2007		-			3,639
Overpaid tax carryforward from 2008		1,101			-
Current year losses		86,231			96,118

Total provision for income taxes	$	136,696		$	369,920

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.

	For the Years Ended December 31,
	2009			2008

Net income	$	(247,138	)	$	1,053,818

Weighted average common shares		12,000,000			8,932,500

Effect of dilutive securities		-			-

Weighted average common shares		12,000,000			12,000,000

Basic earnings per share	$	(0.02	)	$	0.12
Diluted earnings per share	$	(0.02	)	$	0.12

Note 17 – Concentration of Credit Risk

As of December 31, 2009 and December 31, 2008, 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 year ended December 31, 2009 and 2008, all of the Company’s sales arose in the PRC. In addition, all accounts receivable as of December 31, 2009 and 2008 were due from customers located in the PRC.

As of December 31, 2009 and 2008, no single customer accounted for more than 10% of the company’s accounts receivable.

Note 18 – Commitments and Contingencies

Lease commitments

The Company has entered into several tenancy agreements for the lease of land and equipment for the purpose 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 December 31, 2009 are as follows:

Period ended December 31,
2010	$ 274,757
2011	271,294
2012	246,206
2013	153,482
2014	145,334
Thereafter	323,143

Total	$1,414,216

Capital commitment

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

Note 19 – Segment Information

▪	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 years ended December 31, 2009, 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, intersegment eliminations. Intersegment sales are accounted for at fair value as if sales were to third parties.

Note 19 – Segment Information (continued)

For the year ended December 31, 2009 and 2008

	For the Years Ended Sept 30,
Revenue from external customers	2009			2008
CNG Retail	$	3,938,599		$	3,190,609
LPG Retail		947,065			2,708,421
CNG and LPG Wholesale		17,904,095			34,725,063
Unallocated		994,678			1,037,229
Consolidated	$	23,784,437		$	41,661,322


	For the Years Ended Sept 30,
Net revenue		2009			2008
CNG Retail	$	3,938,599		$	3,190,609
LPG Retail		947,065			2,708,421
CNG and LPG Wholesale		17,904,095			34,725,063
Unallocated		994,678			1,037,229
Consolidated	$	23,784,437		$	41,661,322


	For the Years Ended Sept 30,
Investment income from non-consolidated entities		2009			2008
Consolidated	$	313,709		$	308,337


	For the Years Ended Sept 30,
Interest expenses		2009			2008
Consolidated	$	(88,444	)	$	(34,931	)


	For the Years Ended Sept 30,
Income before noncontrolling interest and income taxes		2009			2008
Consolidated	$	(108,568	)	$	1,419,839


	For the Years Ended Sept 30,
Segment assets		2009			2008
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		25,277,520			12,778,793
Consolidated	$	28,308,333		$	15,187,148

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. 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 Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) 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 CEO and CFO 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 that occurred during the last fiscal quarter of fiscal year 2009 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

CEO and CFO Certifications

Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on our assessment, we believe that, as of December 31, 2009, the Company’s internal control over financial reporting was effective.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Below are the names and certain information regarding our executive officers and directors:

Name	Age	Position	Held Position Since
Wei Wang	41	Chief Executive Officer	June 19,2008 to Present
Ben Wang	36	Chief Financial Officer	February 23, 2009 to Present
Shiming Yu	39	Director of the Board	June 19,2008 to February 23,2009
Li Wang	32	Secretary of the Board	June 19, 2008 to Present

Officers are elected annually by the Board of Directors, at our annual meeting, to hold such office until an officer's successor has been duly appointed and qualified, unless an officer sooner dies, resigns or is removed by the Board.

Background of Executive Officers and Directors

Executive Officers

Wei Wang, Chief Executive Officer, graduated from Henan Provincial Party School. He has worked in petrochemical industry for fifteen years. He had worked successively as the Chairman of the board in Handan, Jinan petrochemical industry and joined Anyang Top in 2007. He is in charge of the integrated business development, management and strategic planning of the company.

Ben Wang, Chief Financial Officer, earned his Ph.D. from the Department of Decisions, Risk & Operations Management at Columbia Business School in New York City, 2003. He was awarded M.E. from Tsinghua University in Beijing and B.E. in Electronic Engineering from University of Electronic Science & Technology of China in Chengdu. He is also charter holder of CFA and FRM. Most recently he serviced as Chief Financial Officer at New Oriental Energy & Chemical Corporation, and was an equity research analyst at Brean Murray Carret Co., Ltd., risk solutions consultant in Standard and Poor's.

Board of Directors

Li Wang, Director of the Board, Secretary, graduated from China Politics and Law University and holding dual Bachelors in Law and Literature. Ms. Wang is the president of Zhenyuan (Canada) International Holding Inc. Meanwhile, Ms. Wang has also acted as the president of Greater Montreal Sino-Canadian Business Centre since 2006. In 2003, Ms. Wang became the president assistant in Zhenyuan Group China, when she participated all oversea cooperation projects, including the cooperation with Australian Forster securities company and the establishment of long-term cooperation relationship with technical and financial companies; the management and participation in financial consultation with Canada Investpro Securities Inc.; and the reorganization of the stocks, the assets of the Chinese private enterprise according to the Canadian financial system. She previously held oversea department manager at China Century Huayu Investment Co., Ltd. (subsidiary of Zhenyuan Group) in 2002, where she managed and participated in all international cooperation projects, such as World Bank EMC project on several enterprises’ loan operation in China Beijing and Wuhan.

Corporate Governance Matters

Audit Committee

Currently we do not have an audit committee or committee performing similar functions.

Compensation Committee

Currently we do not have a compensation committee or committee performing similar functions.

Nominating Committee

Currently we do not have a nominating committee or committee performing similar functions.

Code of Ethics

We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is attached hereto.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10&percnt; of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10 percent; shareholders are required by the Securities and Exchange Commission regulations to furnish our Company with copies of all Section 16(a) reports they file.

To the Company's knowledge, based solely on a review of the copies of the reports furnished to the Company, all executive officers, directors and greater than 10 percent; shareholders filed the required reports in a timely manner, except that our former directors Balthes Horst and Brenner Walter did not timely file Form 4s when they resigned from the Board of Directors and disposed of the shares of common stock they owned in the Company.

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The following table sets forth all cash compensation paid by us to our principal executive officer for fiscal year 2009.

Summary Compensation Table

Name	Principal Position	Year	Salary ($)	Bonus ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
Wei Wang	Chief Executive Officer	12/31/08—12/31/09	554 per month	—	—	—	554 per month
Li Wang	Secretary	12/31/08—12/31/09	—	—	—	—	—
Shiming Yu	Director	12/31/08—12/31/09	554 per month	—	—	—	554 per month
Ben Wang	Chief Financial Officer	02/08/09—12/31/09	800,000 RMB (after tax) per year	—	—	—	800,000 RMB (after tax) per year

Stock-Based Compensation

During the fiscal year ended December 31, 2009, Ben Wang was granted 30,000 shares of common stock options. No other officers or other employees have been granted stock options or stock appreciation rights, or paid any other stock-based compensation, by our company or any of our subsidiaries.

Director Compensation

The following Director Compensation Table summarizes the compensation of our directors for services rendered to the Company during the year ended December 31, 2009 (all in US Dollar).

Name	Fees Earned or Paid in Cash	Stock Awards	Option Awards	All Other Compensation	Total
Wei Wang	—	—	—	—	—
Li Wang	—	—	—	—	—
Shiming Yu	—	—	—	—	—
Ben Wang	—	—	—	—	—

Our directors do not receive any compensation for serving as a member of the board of directors.

Outstanding Equity Awards at Fiscal Year End

There has been no outstanding equity awards at fiscal year ended December 31, 2009.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER

The following table sets forth certain information, as of March 31, 2010with respect to the beneficial ownership of the outstanding common stock by (i) any holder of more than five (5%) percent; (ii) each of our executive officers and directors; and (iii) our directors and executive officers as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned.

Name of Beneficial Owner	Number of Common Stock Beneficially Owned	Percentage Of Common Stock Outstanding

Executive Officers and Directors
Wei Wang	0	0
Li Wang	0	0
Shiming Yu	0	0
Ben Wang	0	0
All officers and directors as a group	0	0
5% holders
Oracular Dragon Capital Company, Ltd.	10,389,231	86.58%

Securities Authorized for Issuance under Equity Compensation Plans

The Company had no equity compensation plans as of the fiscal year ended December 31, 2009.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with related persons

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, the sole shareholder of Origin Orbit in exchange for all the issued and outstanding shares of Origin Orbit. Prior to the Share Exchange Transaction, Oracular Dragon was the shareholder of 4,524,231shares of the Company’s common stock, representing a controlling ownership of our issued and outstanding shares. Oracular Dragon acquired the 4,524,231 shares of Company from the former shareholders of the Company through the Affiliate and Non-Affiliate Stock Purchase Transactions consummated on June 19, 2008. The Share Exchange Transaction and Stock Purchase Transactions, combined together, were a series of transactions that ensured the Company to acquire 100% of the beneficial ownership interest in Origin Orbit.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

1) Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:

2009	$	80,000	Patrizio & Zhao, LLC
2008	$	72,500	Patrizio & Zhao, LLC
	$	32,000	Yu and Associates CPA Corporation

2) Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:

2009	$	Patrizio & Zhao, LLC
2008	$	Patrizio & Zhao, LLC
	$	Yu and Associates CPA Corporation

ITEM 15. 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

(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: March 29, 2010	CHINA PROSPEROUS CLEAN ENERGY CORPORATION.

	/s/ Ben Wang
	Ben Wang
	Chief Financial Officer