CHINA PROSPEROUS CLEAN ENERGY 10Q 2009 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009

OR

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

Commission file number 000-53224

CHINA PROSPEROUS CLEAN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)

Nevada
(State or other jurisdiction of incorporation or organization)

West Side, Public Transportation Gas Filling Center,
Angang Avenue-Middle Part, Yindu District,
Anyang, Henan Province,
Postal code: 455000
The People’s Republic of China

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

86-372-3166864
(telephone number, including area code)

Copy of Communication to:
Bernard & Yam, LLP
Attention: Bin Zhou, Esq.
401 Broadway Suite 1708
New York, NY 10013

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES x NO ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

YES ¨ NO x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 12,000,000 as of May 14, 2009.

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

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHINA PROSPEROUS CLEAN ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009 AND 2008

Table of Contents

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

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
China Prosperous Clean Energy Corporation and Subsidiaries:

     We have reviewed the accompanying consolidated balance sheet of China Prosperous Clean Energy Corporation and Subsidiaries (the “Company”) as of March 31, 2009, and the related consolidated statements of operations and other comprehensive income, and cash flows for the three months ended March 31, 2009 and 2008. These consolidated financial statements are the responsibility of the company’s management.

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

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

/s/ Patrizio & Zhao, LLC

Parsippany, New Jersey

May 11, 2009

China Prosperous Clean Energy Corporation and Subsidiaries

Consolidated Balance Sheets

		March 31,		December 31,
		2009		2008
		(Unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	1,442,218	$	1,034,387
Accounts receivable		813,303		747,985
Inventories		668,769		709,679
Advance payments		2,791,576		2,389,907
Dividend receivable		411,394		333,508
Prepaid expenses		--		12,550
Other receivables		2,069,125		1,879,264

Total current assets:		8,196,385		7,107,280

Property, plant and equipment, net:		4,352,923		4,086,364

Other assets:
Deferred income taxes		50,328		50,397
Goodwill		60,248		60,330
Investment in non-consolidated entities		4,106,408		3,877,294
Other non current assets		5,476		5,483
Total other assets:		4,222,460		3,993,504

Total assets:	$	16,771,768	$	15,187,148

Liabilities and stockholders’ equity:
Current liabilities:
Short term bank loan	$	439,500	$	733,500
Accounts payable and accrued expenses		330,228		480,539
Trade notes payable		439,500		--
Customer advance		358,981		458,737
Due to former shareholders		1,578,481		1,580,636
Income taxes payable		61,415		48,737
Due to related parties		--		493,019
Other payables		2,369,413		269,701
Total current liabilities:		5,577,518		4,064,869

Long-term liabilities:
Long-term bank loan		146,500		146,700
Long-term payables		789		--

Total long-term liabilities		147,289		146,700

Total liabilities:		5,724,807		4,211,569

Minority interest:		247,238		213,511

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		7,949,880		7,949,880
Statutory reserve		225,893		225,893
Retained earnings		2,223,405		2,175,342
Accumulated other comprehensive income		400,425		410,833

Total stockholders’ equity:		10,799,723		10,762,068

Total liabilities and stockholders' equity:	$	16,771,768	$	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 Income and Comprehensive Income

(Unaudited)

		For The Three Months Ended March 31,
		2009			2008

Revenue:	$	4,005,438		$	12,231,674

Cost of goods sold:		3,340,998			10,713,634

Gross profit:		664,440			1,518,040

Selling expenses:		502,477			774,497
General and administrative expenses:		170,464			181,461

Income (loss) from operations:		(8,501	)		562,082

Other income (expenses):
Investment income		78,346			74,590
Finance costs, net		--			(5,175	)
Interest expenses		(14,677	)		--
Other income (expenses)		4,507			766
Total other income (expenses)		68,176			70,181

Income before income tax and minority Interest:		59,675			632,263

Provision for income taxes:		10,857			148,862

Income before minority interest:		48,818			483,401

Minority interest:		756			(706	)

Net income:		48,062			484,107

Other comprehensive income:
Foreign currency translation adjustment		100,318			62,352

Comprehensive income:	$	148,380		$	546,459

Weighted average number of shares:
Basic and diluted		12,000,000			10,389,231

Earnings per share:
Basic and diluted	$	0.00		$	0.05

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

China Prosperous Clean Energy Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

		For the Three Months Ended March 31,
		2009			2008
Cash flows from operating activities:
Net income	$	48,062		$	484,107
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization		56,128			75,182
Investment Income		--			(74,590	)
Minority interest		756			(706	)
Changes in assets and liabilities:
Accounts receivable, net		373,188			(90,124	)
Trade notes receivable		(439,530	)		--
Inventories		39,945			(291,654	)
Advance payments		(404,954	)		--
Dividend receivable		(78,346	)		--
Other receivables		(192,437	)		(278,600	)
Other non current assets		--			--
Prepaid expenses		12,533			--
Accounts payable and accrued expenses		(34,815	)		21,754
Trade notes payable		439,530			--
Customer advances		(99,137	)		--
Income taxes payable		12,745			90,477
Other payables		--			--

Total adjustments:		(314,394	)		(548,261	)

Net cash used in operating activities:		(266,332	)		(64,154	)

Cash flows from investing activities:
Acquisition of property and equipment		(328,277	)		(288,473	)
Proceeds from investment income		--			298,465
Settlement for acquisition of Anyang and Top		--			(3,441,226	)
Investment deposit paid		(234,416	)		(139,486	)
Capital contributions from minority shareholders		--			14,247
Net cash used in investing activities:		(562,693	)		(3,556,473	)

Cash flows from financing activities:
Additional paid-in capital from shareholders		--			3,441,226
Proceeds from short-term bank loan		(293,020	)		712,352
Proceeds from related party loans		(492,380	)		284,551
Proceeds from other entity loans		1,990,429			--
Increase in restricted cash		--			(712,352	)
Proceeds from minority interest		34,021			--
Net cash provided by financing activities:		1,239,050			3,725,777

Effect of foreign currency translation on cash		(2,194	)		44,658

Net increase in cash and cash equivalents:		407,831			149,808

Cash and cash equivalents, beginning of period:		1,034,387			1,049,768

Cash and cash equivalents, end of period:	$	1,442,218		$	1,199,576

Supplemental disclosure information:
Interest paid	$	14,677			--
Income taxes paid	$	10,857		$	148,862

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

China Prosperous Clean Energy Corporation and Subsidiaries

Notes to Consolidated Financial Statements
March 31, 2009 and 2008
(Unaudited)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

China Prosperous Clean Energy Corporation (the "Company" or “CHPC”) was incorporated in the State of Nevada on March 24, 2006. On June 30, 2008, the Company entered a share exchange agreement ("Share Exchange Agreement”) under which the Company issued 5,865,000 shares of its common stock, par value $ 0.00001, to Oracular Dragon Capital Company, Ltd (“Oracular Dragon”), the sole shareholder of Origin Orbit Green Resource Company, Ltd (“Origin Orbit”) in exchange for all the issued and outstanding shares of Origin Orbit (the “Share Exchange”). The Share Exchange is the final part of a series of consecutive transactions including the stock purchase transactions consummated on June 19, 2008 in which the sole shareholder of Origin Orbit purchased 4,524,231 shares of common stock of CHPC from the affiliate and non-affiliate shareholders of CHPC at a total consideration of $ 346,586 (the “Stock Purchase”). Immediately following the Share Exchange and Stock Purchase, Oracular Dragon owned 10,389,231 shares of the common stock of CHPC, representing approximately 86.6% of CHPC’s total issued and outstanding share capital. As a result, the Share Exchange has been accounted for as a reverse acquisition using the purchase method of accounting, whereby Origin Orbit is deemed to be the accounting acquirer and CHPC to be the accounting acquires. 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 transactions and acquisitions, CHPC has become the holding company of the group comprising Origin Orbit, Anyang Prosperous and Anyang Top and their subsidiaries. The Company is principally engaged in the wholesale and retail sales of compressed natural gas and liquefied petroleum gas through its subsidiaries in the People’s Republic of China (“PRC” or “China”).

As of March 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

Yangquan Zhenyuan Energy Science & Technology Co. Ltd (“Yangquan Zhenyuan”)	PRC	RMB5,000,000	84% (c)	Construction of gas stations
Fuyang Prosperous Energy Technology Development Co. Ltd. (“Fuyang Prosperous”)	PRC	RMB10,000,000	95% (c) (d)	Energy technology research and development
Weifang Prosperous Energy Technology Development Co. Ltd. (“Weifang Prosperous”)	PRC	RMB10,000,000	95% (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	95% (c)	Gas energy technology research and development
Heze Prosperous Energy Technology Development Co. Ltd. (“Heze Prosperous”)	PRC	RMB5,000,000	95% (c) (d)	Construction of LPG and CNG station, and sales of vehicle components
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	95% (c) (d)	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
Changzhi City Zhenyuan Energy Technology Development Co. Ltd (“Changzhi City”)	PRC	RMB4,400,000	100% (c) (d)	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
Linyi Prosperous Energy Technology Development Co. Ltd. (“Linyi Prosperous”)	PRC	RMB10,000,000	95% (c)	Sales of natural gas and vehicle components.

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED)

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 Anyang Prosperous holds 95% ownership interest in Fuyang Prosperous, it is required to contribute $1,300,550 into the capital of Fuyang Prosperous. Up to March 31, 2009, Anyang Prosperous had only contributed $260,110 leaving $1,040,440 as outstanding.

Heze Prosperous was incorporated with a registered capital of $684,500. As Anyang Prosperous holds 95% ownership interest in Heze Prosperous, it is required to contribute $650,275 into the capital of Heze Prosperous. Up to March 31, 2009, Anyang Prosperous had only contributed $260,110 leaving $390,165 as outstanding.

Xuchang Zhenyuan was incorporated with a registered capital of $1,369,000. As Anyang Prosperous holds 95% ownership interest in Xuchang Zhenyuan, it is required to contribute $1,300,550 into the capital of Xuchang Zhenyuan. Up to March 31, 2009, Anyang Prosperous had only contributed $260,110 leaving $1,040,440 as outstanding.

Changzhi City was incorporated with a registered capital of $684,500. As Anyang Prosperous holds 100% ownership interest in Changzhi City, it is required to contribute $684,500 into the capital of Changzhi City. Up to March 31, 2009, Anyang Prosperous had only contributed $616,050 leaving $68,450 as outstanding.

Linyi Prosperous was incorporated with a registered capital of $1,380,872. As Anyang Prosperous holds 95% ownership interest in Linyi Prosperous, it is required to contribute $1,311,828 into the capital of Linyi Prosperous. Up to March 31, 2009, Anyang Prosperous had only contributed $262,366 leaving $1,049,462 as outstanding.

NOTE 2– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company’s Consolidated Financial Statements include the accounts of its direct wholly-owned subsidiaries and of its indirect proportionate share of subsidiaries owned by the wholly-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and with the requirements of Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INTERIM FINANCIAL STATEMENTS

These interim financial statements should be read in conjunction with the audited financial statements for the years ended December 31, 2008 and 2007, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the years ended December 31, 2008 and 2007.

RECLASSIFICATION

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

NOTE 3 – INVENTORIES

Inventories by major categories are summarized as follows:

		March 31,		December 31,
		2009		2008

Compressed natural gas	$	107,032	$	48,926
Liquefied petroleum gas		216,361		373,001
Dimethyl ether		141,609		47,421
Vehicle modification components and others		203,767		240,331

	$	668,769	$	709,679

NOTE 4 – DIVIDEND RECEIVABLE

Dividend receivable as of March 31, 2009 and December 31, 2008 were $411,394 and $333,508, respectively, representing income receivable from Anyang PetroChina.

NOTE 5 – DEFERRED INCOME TAXES

Deferred income tax assets of $50,328 and $50,397 as of March 31, 2009 and December 31, 2008, respectively, arose from unused tax loss carry-forwards that management considers more likely than not that it will be realized through future operations. The tax loss carry-forwards are available for offset against future taxable income over the next five years. No valuation allowance was recorded as of March 31, 2009 and December 31, 2008.

NOTE 6 – GOODWILL

Balance as of March 31, 2009	$	60,330
Foreign currency exchange adjustment		(82	)

Adjusted balance as of March 31, 2009	$	60,248

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 potential impairment 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 SFAS No 141, “Business Combinations”. As of December 31, 2008, no impairment was provided on the goodwill.

NOTE 7 – INVESTMENT IN NON CONSOLIDATED ENTITIES

As of March 31, 2009, available-for-sale securities consisted of the following:

Name of investees	Place of operation	Percentage of ownership	Principal activities

Anyang PetroChina Marketing Company	PRC	34%	Sales of crude oil, refined oil
Limited (“Anyang PetroChina”)			and LPG

Taiyuan Zhenyuan Green Resource	PRC	20%	Sales of vehicle components
Technology Development Co. Ltd.			and construction of gas
			stations

Whilst the above companies are private companies whose shares are not quoted or traded in an active market, management has determined that it is not practicable to estimate their fair value reliably. Therefore, the investments in the above companies are stated at cost less any impairment losses. No events or changes in circumstances have been identified that potentially would have a significant adverse effect on the fair value of investments in the above companies. As of March 31, 2009 and 2008, there was no allowance for impairment losses.

Although the Company held 34% ownership interest in Anyang PetroChina, the Company did not have significant influence over Anyang PetroChina. According to an agreement between the Company and the other shareholder of Anyang PetroChina, namely China National Petroleum Corporation (“China National Petroleum”), the Company has assigned the full power and right of management of Anyang PetroChina to China National Petroleum for the period until December 31, 2008. 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, 2008. Therefore, Anyang PetroChina has been accounted for using the cost method instead of the equity method. For the three months ended March 31, 2009 and 2008, dividend income of $308,337 and $214,290, respectively, from Anyang Petrol China were included in other income.

Note 8 – Property and Equipment

Property, plant and equipment consist of the following:

		March 31,			December 31,
		2009			2008

Buildings	$	733,305		$	225,543
Machinery		2,811,927			2,652,704
Office equipment		65,323			286,124
Gas storage vehicles and motor vehicles		160,523			147,931
Construction in progress		1,356,142			1,493,214
		5,127,220			4,805,516
Less: Accumulated depreciation		(774,297	)		(719,152	)

	$	4,352,923		$	4,086,364

Depreciation expenses for the three months ended March 31, 2009 and 2008 were $356,753 and $224,004, respectively.

NOTE 9 – SHORT TERM BANK LOAN

Short-term bank loan consists of the following:

		March 31,		December 31,
		2009		2008

8.217% one-year term loan granted by Jinan Commercial Bank,
matured on January 28, 2009 and secured by the Company’s
bank deposit of $731,500 and a corporate guarantee given -
by a third party entity	$	439,500	$	733,500

NOTE 10 – DUE TO RELATED PARTIES

Due to related parties are unsecured, non-interest bearing and have no fixed terms of repayment.

NOTE 11– LONG TERM LIABILITIES

Long-term liabilities consist of the following:

		March 31,		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, bank deposit of $731,500 and a corporate		146,500		146,700
guarantee given

Advances from other third parties, unsecured, non-interest
bearing, only repayable on demand after September 30, 2009		789		--

	$	147,289	$	146,700

NOTE 12 – 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 statutory surplus reserve is non-distributable.

NOTE 13 – 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 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. 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 consisted of:

		For the three months Ended March 31,
		2009		2008

Current – PRC	$	10,857	$	148,862
Deferred		--		--
	$	10,857	$	148,862

NOTE 14 – CONCENTRATION OF CREDIT RISK

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

As of December 31, 2008, no single customer accounted for more than 10% of the company’s accounts receivable. As of March 31, 2009, five customers accounted for 36%, 24%, 18%, 4% and 3% of the accounts receivable of the Company. There was no other single customer who accounted for more than 10% of the Company’s accounts receivable as of December 31, 2008 2007 respectively.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company has entered into several tenancy agreements for the lease of land and equipment for the purposes of its gas stations. The Company’s commitments for minimum lease payments under these operating leases for the next five years and thereafter as of December 31, 2008 are as follows:

Period ended December 31,
2009	$	294,507
2010		274,757
2011		271,294
2012		246,206
2013		153,482
Thereafter		468,477

	$	1,708,723

CAPITAL COMMITMENT

Contracted but not provided for:
Investment in Fuyang Prospectus as disclosed in Note 1(d)	$	1,040,440
Investment in Heze Prospectus as disclosed in Note 1(d)		390,165
Investment in Xuchang Zhenyuan as disclosed in Note 1(d)		1,040,440
Investment in Changzhi City as disclosed in Note 1(d)		68,450
Investment in Linyi Prospectus as disclosed in Note 1(d)		1,049,462
Purchases of fixed assets		697,985

	$	4,286,942

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

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

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

Unless otherwise noted, all currency figures in this filing are in U.S. dollars. References to "Yuan" or "RMB" are to the Chinese yuan (also known as the Renminbi). According to Bank of China, as of May 13, 2009, $1= 6.8235 Yuan.

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”).

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.

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”.

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 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 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. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups.

(b) Goodwill

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

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.

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.

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.

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

	March 31, 2009	March 31, 2008
Balance sheet items, except for paid-in capital and retained
earnings as of the end of period	US$1:RMB6.8259	US$1:RMB7.0190


	Three months ended	Three months ended
	March 31, 2009	March 31, 2008
Amounts included in the statements of income, statements of
stockholders’ equity and statements of cash flows for the
period	US$1:RMB6.8255	US$1:RMB7.1690

Segment Information

The Company follows SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”, which requires that companies disclose segment data based on how management makes decision about allocating resources to segments and evaluating their performance.

The Company believes that during the three months ended March 31, 2009 it operated in one business segment – research, development, and sales of LPG and other fuel for domestic and vehicle consumption, and in one geographical segment – China, as all of the Company’s operations were carried out in China.

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 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

In September 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value instruments. SFAS No. 157 does not require any new fair value measurements, but applies under other accounting pronouncements that require or permit fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 5, 2007 (the Company’s fiscal 2008). It is believed that implementation of SFAS No. 157 will have little or no impact on the Company’s condensed consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)”. SFAS No. 158 requires plan sponsors of defined benefit pension and other postretirement benefit plans (collectively, “postretirement benefit plans”) to fully recognize the funded status of their postretirement benefit plans in the statement of financial position, measure the fair value of plan assets and benefit obligations as of the date of the fiscal year-end statement of financial position and provide additional disclosures. SFAS 158 is effective for financial statements issued for fiscal years ending after December 15, 2008, and is not expected to apply to the Company.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. Subsequent changes in fair value of these financial assets and liabilities would be recognized in earnings when they occur. SFAS No. 159 further establishes certain additional disclosure requirements. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007 (fiscal 2008 for the Company) where earlier adoption is permitted. Management is currently evaluating the impact, if any, and timing of the adoption of SFAS No. 159 on the Company’s financial statements.

In December, 2007, the FASB issued SFAS No. 141(R), “Business Combinations”, and SFAS No. 160, “Accounting and Reporting of Noncontrolling interest in Consolidated Financial Statements, an amendment of ARB No. 51” (SFAS No. 160). These new standards will significantly change the financial accounting and reporting of business combination transactions and noncontrolling (or minority) interests in consolidated financial statements. SFAS No. 141(R) and SFAS No. 160 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, fiscal 2009 for the Company). The Company has not yet determined the effect, if any, that the adoption of SFAS 141(R) and 160 will have on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51” (“SFAS No. 160”), which establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, fiscal 2009 for the Company). Management does not expect that this Statement will have an effect on the Company’s consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – An Amendment of FASB Statement No. 133” (“SFAS No. 161”), which changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This statement will be effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 (that is, fiscal 2009 for the Company). Management does not expect that this Statement will have an effect on the Company’s consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. Management does not expect that this Statement will have an effect on the Company’s consolidated financial statements.

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60”. This Statement interprets Statement 60, “Accounting and Reporting by Insurance Enterprises” and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of this Statement. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008 (that is, fiscal 2009 for the Company), and all interim periods within those fiscal years. Management does not expect that this Statement will have an effect on the Company’s consolidated financial statements.

RESULTS OF OPERATIONS

The following table sets forth the amounts and the percentage relationship to revenues of certain items in our consolidated statements of income for the three months ended March 31, 2009 and 2008.

Profit & Loss for the quarter ended March 31, 2009 and the quarter ended March 31, 2008

	For the quarter ended March 31, 2009		For the quarter ended March 31, 2008		Changes
	Amount	Percentage of Revenue	Amount	Percentage of Revenue	Amount	Percentage
	$	(%)	$	(%)	$	(%)
REVENUES	4,005,438	100.00%	12,231,674	100.00%	(8,226,236)	(67.25%)

COGS	3,340,998	83.41%	10,713,634	87.59%	(7,372,636)	(68.82%)

GROSS PROFIT	664,440	16.59%	1,518,040	12.41%	(853,600)	(56.23%)

Operating Expenses	672,941	16.80%	955,958	7.82%	(283,017)	(29.61%)

Selling and distribution expenses	502,477	12.54%	774,497	6.33%	(272,020)	(35.12%)

General & administrative expenses	170,464	4.26%	181,461	1.48%	(10,997)	(6.06%)

Income from Operations	(8,501)	(0.21%)	562,082	4.60%	(570,583)	(101.51%)

Other Income (Expenses)	68,176	1.70%	70,181	0.57%	(2,005)	(2.86%)

Investment income	78,346	1.96%	74,590	0.61%	3,756	5.04%

Interest expenses	(14,677)	(0.37%)	(5,175)	(0.04%)	9,502	183.61%

Other income (expenses)	4,507	0.11%	766	0.01%	3,741	0.03%

Income before Income Taxes and Minority Interest	59,675	1.49%	632,263	5.17%	(572,588)	(90.56%)

Provision for Income Taxes	10,857	0.27%	148,862	1.22%	(138,005)	(92.71%)

Income before minority interest	48,818	1.22%	483,401	3.95%	(434,583)	(89.90%)

Minority Interest	756	0.02%	(706)	(0.01%)	1,462	(207.06%)

NET INCOME	48,062	1.20%	484,107	3.96%	(436,045)	(90.07%)

Foreign currency translation adjustment	100,318	2.50%	62,352	0.51%	37,966	60.89%

TOTAL COMPREHENSIVE INCOME	148,380	3.70%	546,459	4.47%	(398,079)	(72.85%)

The “Results of Operations” discussed in this section merely reflect the information and results of Origin Orbit for the quarter ended March 31, 2009 and for the quarter ended March 31, 2008.

REVENUES

Historical Financial Information for the quarter ended March 31, 2008 and for the quarter ended March 31, 2009 (in US Dollar):

	For the quarter ended March 31 2008	For the quarter ended March 31 2009	Change in Percentage (%)
Revenue	12,231,674	4,005,438	(67.25%)
Net (loss) income	484,107	48,062	(90.07%)
Net Income Margin	3.96%	1.20%	(69.68%)

The Company’s consolidated revenue dropped to $4,005,438 for the quarter ended March 31, 2009, a 67.25% decrease from $12,231,674 reported for the quarter ended March 31, 2008. The decrease in revenue resulted primarily from the following factors:

1	)	Due to the impact of global economic crisis, some of our LPG clients began to limit or stop their production capacity, which lead to the demand drop of 59%;

2	)	Along with the decrease of international crude oil price, the unit sales price of LPG dropped 42%;

3	)	With the decrease of international crude oil price, part of our south coast clients started to buy the imported LPG which has relatively lower price, and caused the loss of some clients.

Our consolidated net income decreased 90.07% to $48,062 for the quarter ended March 31, 2009, as compared to $484,107 for the quarter ended March 31, 2008. This decrease was attributable to:

1	)	The increase in purchasing costs. Along with the increasing demand for natural gas, suppliers’ mark-up lead to our increased CNG purchasing costs; while at the same time, our sell price to clients didn’ t increase that much;

2	)	The business model transition in Jinan city. As we gradually stopped our LPG stations operation and are planning to convert them to CNG stations; the cost of transition and the cost of running the maintenance of the company lead to the decreased income ;

3	)	The increase in the costs which involved for the relevant listing activities, such as auditors fees, lawyer fees after our OTCBB listing on June 30, 2008.

Revenues Breakdown by Products for the quarter ended March 31, 2008 and for the quarter ended March 31, 2009 (in US Dollar)

Items	For the quarter ended March 31, 2008	Percentage	For the quarter ended March 31, 2009	Percentage	Change in Amount	Change In Percentage (%)
CNG retail	656,170.74	5.36%	1,003,823.51	25.06%	347,652.77	52.98%
CNG wholesale	89,875.36	0.73%	3,371.60	0.08%	(86,503.76)	(96.25%)
LPG retail	1,845,801.05	15.09%	288,144.44	7.19%	(1,557,656.61)	(84.39%)
LPG wholesale	8,840,085.51	72.27%	2,191,790.01	54.72%	(6,648,295.50)	(75.21%)
Others	799,741.34	6.54%	518,308.53	12.94%	(281,432.81)	(35.19%)
TOTAL	12,231,674	100%	4,005,438.09	100.00%	(8,226,235.91)	(67.25%)

The CNG retail for the quarter ended March 31, 2009, increased 52.98% as compared to the quarter ended March 31, 2008. This was mainly due to:

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

	2)		West Jiefang Road gas station in Jiaozuo city was in operation since Jan 2009, so the company had five CNG operating gas stations at the moment, which lead to the increased CNG retail business;

	3)		Changzhi City made great efforts on regulation of this industry and set a unified retail price, which let our company in Changzhi to avoid vicious competition and in a healthy operation.

Comparing to last year, LPG business fell 84.35% in retail sales and 75.21% in wholesale. This was mainly due to:

	1		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, taxis 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 endangered the China economy. S ome of our clients limited or even stopped their production capacity, which lead to the decline of our wholesale business.

“Others” decreased 35.19% 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 quarter ended March 31, 2009 was $3,340,998 which is 83.41% of total revenues and represents a 68.82% decrease as compared to $10,713,634 and 87.59% of total revenues for the quarter ended March 31, 2008. The decrease in COGS as a percentage of total revenue was primarily due to: 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.

GROSS MARGIN

For the quarter ended March 31, 2008 and 2009, the relevant portions of the statements of income are presented below:

	For the quarter ended March 31 2008		For the quarter ended March 31 2009		Changes
	Amount $	Percentage of Revenue	Amount $	Percentage of Revenue	Amount $	Percentage
Revenues	12,231,674	100.00%	4,005,438	100.00%	(8,226,236)	(67.25%)
COGS	10,713,634	87.59%	3,340,998	83.41%	(7,372,636)	(68.82%)
Gross Profit	1,518,040	12.41%	664,440	16.59%	(853,600)	(56.23%)

Gross Margin of major products in 2008 and 2009 (for the quarter ended March 31):

*Gross Margin*	2008	2009	Comparisons
TOTAL	12.41%	16.59%	4.18%
CNG Retail	25.78%	33.32%	7.54%
CNG Wholesale	35.27%	37.12%	1.85%
LPG Retail	5.88%	38.65%	32.77%
LPG Wholesale	9.83%	4.55%	(5.28%)

The gross profit margin for the quarter ended March 31, 2009 was 16.59%.

Gross profit margin of CNG retail increased, this was mainly due to:

CNG retail price increased due to the increase of the domestic petroleum retail price, and caused gross margin increase.

We took appropriate internal control and management measures, such as reducing trasportation cost and using “VIP client” discount, to decrease the impact of the fluctuation of purchasing price, which lead to the decrease o f purchasing cost.

Gross profit margin of LPG retail increased, this was mainly due to: Along with the decrease of international crude oil price, the purchasing cost of LPG decreased, which lead to the increase of gross margin.

Raw Material Procurement

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

Average Price of Raw Material in the quarter ended March 31, 2008 and 2009 (net of tax, in US Dollar)

Quarter Ended March 31	Retail LPG (per ton)	Wholesale LPG (per ton)	CNG (per cube)
2008	725.83	643.61	0.29
2009	485.87	414.41	0.28

SELLING EXPENSES

Selling expenses for the quarter ended March 31, 2009 mainly included the salary of sales personnel and transportation cost. In the first quarter 2008, selling expenses amounted to $774,497, representing 6.33% of total revenue. The retail business sells its product through its own retail outlets whereas the wholesale business sells its product in the domestic market through direct distribution. The major component of selling expenses is transportation cost. The company mainly uses tank trucks to transport its products. In the first quarter 2009, the transportation cost decreased 49.63% to approximately $289,118 compared with approximately $574,030 in the same quarter 2008.

The selling expenses in 2009 decreased 35.12% as compare to $774,497 for the quarter ended March 31, 2008. The main reason is that: along with the decreased sales, the variable change such as transportation cost decreased.

GENERAL AND ADMINISTRATIVE EXPENSES

The general and administrative expenses for the quarter ended March 31, 2009, mainly included the salary and welfare of the management personnel and office related expenses, were $170,464, which accounted for 4.26% of total revenue. For the quarter ended March 31, 2008, the general and administrative expenses were $181,461, the reasons of the decrease were: along with the decreased sales, the variable costs such as travel or hospitality which associated with sales dropped.

FINANCE COSTS

The financial expenses mainly consisted of interest expenses and bank charges. For the quarter ended March 31, 2009, interest expenses was $14,677 representing 0.37% of total revenue. For quarter ended March 31, 2008, it was $5,175 representing 0.04% of total revenue.

The main reason caused the increase of the $9502 interest expenses, which accounted for 183.61% of total revenue, is that the long-term loans increased this year and the related monthly interest charge caused the increased interest expenses.

OPERATING INCOME

The Company's consolidated operating income for the quarter ended March 31, 2009 decreased 101.51% to $-8,501, from $562,082 reported for the quarter ended March 31, 2008. This was mainly due to: Along with the decreased sales, the fixed costs, such as depreciation in operating expenses, decreased. But, this drop is lower than the decrease of sales, which lead to the operating income dropped dramatically.

We believe operating income will show further improvements as we will continue building new CNG filling stations with further revenue source, aided by prudent cost controls on both the production and operating components of our business. We anticipate further improvements in cost of 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 increases in the internal management, enhance the management efficiency and reducing management costs, that will also improve margins.

OPERATING EXPENSES

Selling and distribution expenses

Selling and distribution expenses were $502,477 or 12.54% of revenues for the quarter ended March 31, 2009, as compared to $774,497, or 6.33% of revenues for the quarter ended March 31, 2008. The main reason of the decrease was: along with the decreased sales, the variable cost, such as transportation cost, decreased.

General and administrative expenses

General and administrative expenses were $170,464 or 4.26% of our revenue for the quarter ended March 31, 2009, as compared to $181,461 or 1.48% of revenues for the quarter ended March 31, 2008. The reason of the decrease was: along with the decreased sales, the variable costs, such as travel or hospitality which associated with sales, dropped.

NET INCOME

The net income for the quarter ended March 31, 2009 was $48,062 and the net income rate was 1.20%, comparing to $484,107 and 3.96% in the same quarter in 2008. The main reasons of the decrease were:

1)		Although the sales decreased, the fixed costs in general and administration expenses had not decrease that much, which caused the decrease of net profit margin;

2	)	The low profit margin of the LPG wholesale business.

ACOUNT RECEIVABLE

Account receivable balance as of March 31, 2009 and December 31, 2008 was $813,303 and $747,985, respectively. The average turnover rate of account receivable is 5.1 times, or 71.6 days.

LIQUIDITY AND CAPITAL RESOURCES

The primary source of liquidity had been cash generated from operations, which included cash inflows from currency translation activities. 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. We have availability under our amended and restated credit facilities to assist, if required, in meeting our working capital needs and other contractual obligations.

We believe our current cash and cash equivalents and cash generated from operations will 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 March 31, 2009 and December 31, 2008, the Company had cash and cash equivalents of approximately $1,442,218 and $1,034,387 respectively.

The following is a summary of cash provided by or used in each of the indicated types of activities during the three months ended March 31, 2009 and 2008:

Cash provided by (used in):	Three months ended March 31,2009	Three months ended March 31,2008	Change
Cash provided by (used in):	Three months ended March 31,2009	Three months ended March 31,2008	Amount	Percentage
	($)	($)	($)	(%)
Operating Activities	(266,332)	(64,154)	(202,178)	(315.14%)

Investing Activities	(562,693)	(3,556,473)	2,993,780	84.18%

Financing Activities	1,239,050	3,725,777	(2,486,727)	(66.74%)

Net cash flow provided by operating activities was $-266,332 in the three months ended March 31, 2009, as compared to net cash flow provided by operating activities of $-64,154 in the three months ended March 31, 2008, representing a decrease of $202,178 or 315.14%. The decrease in net cash inflows from operating activities was mainly due to:

	1)		Net income decreased, and a slight loss of operation income

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

Net cash flow used in investing activities was $-562,693 for the three months ended March 31, 2009, as compared to net cash used in investing activities of $-3,556,473 for the three months ended March 31, 2008, representing an increase of $2,993,780 or 84.18%. The increase of net cash flow used in investing activities was mainly due to: offshore BVI entity acquired the mainland China entity on March, 2008.

Net cash flow provided by financing activities was $1,239,050 for the three months ended March 31, 2009 as compared to net cash provided by financing activities of $3,725,777 for the three months ended March 31, 2008, representing a decrease of $2,486,727 or 66.74%%. This is mainly due to:

	1)		Increased investment by shareholder during the BVI entity’s acquisition of mainland China entity during March, 2008.

	2)		Pay back some of the short-term bank loans.

We believe we have sufficient cash to continue our current business throughout 2009 due to increased sales and interest revenue. We do not believe that inflation had a significant negative impact on our results of operations during 2009.

As of March 31, 2009, our total assets were $16,771,768 and our total liabilities were $5,724,807. Our debt to asset ratio, calculated as total liabilities (including short-term debt and payables) over total assets, was 0.34:1.

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.

As of March 31, 2009, cash and bank balances were $1,442,218, which accounted for 9% of total assets. The inventories as of March 31, 2009 were $668,769. For the quarter ended March 31, 2009, the company generated net cash flow of $-266,332 from operating activities whereas net cash used in investing activities was $-562,693. Net cash provided from financing activities amounted to $1,239,050. As a result, net cash increased by $407,831 for the quarter ended March 31, 2009.

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’s provision for income taxes consisted of:

		For the Three Months
		Ended March 31,
		2009		2008

Current – PRC	$	10,857	$	148,862

Deferred	$	10,857	$	148,862

OFF-BALANCE SHEET ARRANGEMENTS

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

We have also evaluated our internal controls for financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

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

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

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.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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

Exhibit No.		Description

3.1		Articles of Incorporation (1)

3.2		Bylaws (1)

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

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

10.3		Non-Affiliate Stock Purchase Agreement (2)

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

31.1		Section 302 Certificate of Chief Executive Officer *

31.2		Section 302 Certificate of Chief Financial Officer *

32.1		Section 906 Certificate of Chief Executive Officer *

32.2		Section 906 Certificate of Chief Financial Officer *

* filed herewith

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

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

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

SIGNATURES

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

Date: May 14, 2009	CHINA PROSPEROUS CLEAN ENERGY CORPORATION.

	/s/Ben Wang
	Ben Wang
	Chief Financial Officer

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CHINA PROSPEROUS CLEAN ENERGY Inactive 10-Q2009 Q1 Quarterly report

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