The following is management's discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Generally, the words "believes," "anticipates," "may," "will," "should," "expect," "intend," "estimate," "continue," and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the SEC from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be place on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K.

Our Company engages in the business of manufacturing and selling urea, liquefied ammonium, methanol, ammonium bicarbonate, dimethyl ether ("DME") products. The Company's products are primarily marketed and sold in the PRC.

Our Company currently has the capacity to produce 150,000 tons of ammonia per year, 150,000 tons of DME per year, 150,000 tons of urea per year, 60,000 tons of ammonium bicarbonate per year and 100,000 tons of methanol per year. During the second quarter of fiscal year ended March 31, 2009, we expanded the Company's annual DME capacity to 150,000 ton per year. For the year end of March 31, 2009, the Company's total revenues were $52,545,647.

Forward Looking Statements

We are including the following discussion to inform our existing and potential security holders generally of some of the risks and uncertainties that can affect us and to take advantage of the "safe harbor" protection for forward-looking statements that applicable federal securities law affords. From time to time, our management or persons acting on our behalf make forward-looking statements to inform existing and potential security holders about our Company. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, included or incorporated by reference in this report that address activities, events or developments that we expect or anticipate may occur in the future, including such things as future capital expenditures, business strategy, competitive strengths, goals, growth of our business and operations, plans and references to future successes may be considered forward-looking statements. Also, when we use words such as "anticipate," "believe," "estimate," "intend," "plan," "project," "forecast," "may," "should," "budget," "goal," "expect," "probably" or similar expressions, we are making forward-looking statements. Many risks and uncertainties may impact the matters addressed in these forward-looking statements. Our forward-looking statements speak only as of the date made and we will not update such forward-looking statements unless the securities laws require us to do so.

Some of the key factors which could cause our future financial results and performance to vary from those expected include:

† The loss of primary customers;

† Our ability to implement productivity improvements, cost reduction initiatives or facilities expansions;

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

† Availability or increases in the price of our primary raw materials or active ingredients;

† The timing of planned capital expenditures;

† Our ability to identify, develop or acquire, and market additional product lines and businesses necessary to implement our business strategy and our ability to finance such acquisitions and development;

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

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

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

† Other People's Republic of China ("PRC") or foreign regulatory or legislative developments which affect the demand for our products generally or increase the environmental compliance cost for our products or impose liabilities on the manufacturers and distributors of such products.

The information contained in this report, identifies additional factors that could cause our results or performance to differ materially from those we express in our forward-looking statements. Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements which are included in this report and the exhibits and other documents incorporated herein by reference, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved.

SIGNIFICANT ACCOUNTING POLICIES AND MANAGEMENT ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon 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 judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The policies discussed below are considered by management to be critical to an understanding of our financial statements.

Revenue recognition

Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to the customers. We generally recognize product revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price fee is fixed or determinable, and collectibility is reasonably assured.

Income taxes

Provision for income and other related taxes have been provided in accordance with the tax rates and laws in effect in the PRC.

Income tax expense is computed based on pre-tax income included in the consolidated statements of operations. Deferred income 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 there is a strong likelihood the items will expire before its benefits are realized or if its future utilization is uncertain.

In June 2006, the Financial Accounting Standards Board ("FASB") issued FIN 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109," which seeks to reduce the diversity in practice associated with the accounting and reporting for uncertainty in income tax positions. This Interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in an income tax return. FIN 48 presents a two-step process for evaluating a tax position. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, based on the technical merits of the position. The second step is to measure the benefit to be recorded from tax positions that meet the more likely than not recognition threshold, by determining the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement, and recognizing that amount in the financial statements. At the date of adoption, and as of March 31, 2009, the Company does not have a liability for unrecognized tax benefits.

The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for years after 2006. During the periods open to examination, the Company has net operating loss ("NOL") and tax credit carry forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs and tax credit carry forwards may be utilized in future periods, they remain subject to examination. The Company also files certain tax returns in China. As of March 31, 2009 the Company was not aware of any pending income tax examinations by China tax authorities.

The Company's policy is to record interest and penalties on uncertain tax positions as income tax expense. As of March 31, 2009, the Company has no accrued interest or penalties related to uncertain tax positions.

Inventories

Inventories are stated at the lower of cost or net realizable value, which is based on estimated selling prices less any further costs expected to be incurred for completion and disposal. Cost of raw materials is calculated using the weighted average method. Finished goods costs are determined using the weighted average method and comprise direct materials, direct labor and an appropriate proportion of overhead.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements SFAS No. 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No.160 is effective for the Company's fiscal year beginning April 1, 2009. Management is currently evaluating the effect of this pronouncement on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations. SFAS No. 141(R) replaces SFAS No. 141, Business Combinations. SFAS No. 141(R) retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination.

SFAS No. 141(R) also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree ; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) will apply prospectively to business combinations for which the acquisition date is on or after Company's fiscal year beginning December 15, 2008. While the Company has not yet evaluated this statement for the impact, if any, that SFAS No. 141(R) will have on its consolidated financial statements, the Company will be required to expense costs related to any acquisitions after September 30, 2009.

In March 2008, FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company are currently evaluating the impact of adopting SFAS No.161 on our consolidated financial statements.

In June 2008, the FASB ratified EITF Issue No. 07-05, "Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock" ("EITF 07-05"). EITF 07-05 mandates a two-step process for evaluating whether an equity-linked financial instrument or embedded feature is indexed to the entity's own stock. It is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company do not expect the adoption of EITF 07-05 will have a material impact on results of operations, financial position, or cash flows.

KNOWN TRENDS OR UNCERTAINTIES

The fertilizer production segment is the traditional business of the Company. The market for this segment is stable and rigid. China is one of the largest agricultural producing countries, so the demand for such products are strong. We believe the market demands for the alternative energy products segment, which includes Methanol and DME, will continually increase. We will focus our efforts on fertilizer production, but there will not be any significant expansion plan in the near future. We have put more effort in alternative energy production by building a new 200,000 tons/year methanol production line, which is expected to be completed by the first quarter of calendar year 2010.

All the Company's current products are manufactured using coal as the raw material. As the market price of feed coal has shown a significant increasing trend, production costs have increased as well. The selling prices of some of our fertilizer products have increased correspondingly. For example, the current market selling price for Urea is about 1,700 RMB/Ton. Recently, the National Development and Reform Committee of People's Republic of China have announced to increase the price for refined oil and electricity. This might stimulate further growth in such a trend of increasing prices.

CAPITAL EXPENDITURES

Capital expenditures are mainly related to the on-going project of 200,000 tons/year Methanol, which is expected to be completed around the first quarter of calendar year 2010. The funding for those projects mainly comes from bank debt.

OFF BALANCE-SHEET FINANCING ARRANGEMENTS

The Company does not have any off-balance sheet financing arrangements.

RESULTS OF OPERATION

Our operating results are presented on a consolidated basis for the year ended March 31, 2009, as compared to the year ended March 31, 2008.

The following table sets forth the amounts and the percentage relationship to revenues of certain items in our consolidated statements of income (loss) for the 12 months ended March 31, 2009 and 2008.

                                                     The year Ended March 31,                 The year Ended March 31,
                                                               2009                                     2008                                Comparisons
                                                                     Percentage of                             Percentage          Change in          Increase
                                                   Amount              Revenues              Amount            of Revenues          Amount          (Decrease) in
                                                                                                                                                     Percentage
Item                                                US $                  (%)                 US $                 (%)               US $                (%)

Revenues                                            52,545,647               100.00 %         67,832,920             100.00 %      (15,287,273 )            (22.54 )%
Cost of Goods Sold                                  54,038,734               102.84 %         56,978,425              84.00 %       (2,939,691 )             (5.16 )%
Gross (loss) profit                                 (1,493,087 )              (2.84 )%        10,854,495              16.00 %      (12,347,582 )           (113.76 )%
General & administrative                             2,626,115                 5.00 %          3,088,184               4.55 %         (462,069 )            (14.96 )%
Selling and distribution                             1,147,596                 2.18 %          1,171,737               1.73 %          (24,141 )             (2.06 )%
Research and development                               141,029                 0.27 %             75,961               0.11 %           65,068               85.66 %
(Loss) income from operations                       (5,407,827 )             (10.29 )%         6,518,613               9.61 %      (11,926,440 )           (182.96 )%
Interest expense, net                               (1,095,716 )              (2.09 )%          (516,032 )            (0.76 )%        (579,684 )            112.33 %
Government grants                                    1,437,748                 2.74 %             85,405               0.13 %        1,352,343             1583.45 %
Other (expenses) income, net                           (98,206 )              (0.19 )%          (115,016 )            (0.17 )%          16,810              (14.62 )%
(Loss) income before tax                            (5,164,001 )              (9.83 )%         5,972,970               8.81 %      (11,136,971 )           (186.46 )%
Income tax benefit (expense)                         1,434,994                 2.73 %         (1,932,695 )            (2.85 )%       3,367,689             (174.25 )%
(Loss) income from continuing operations            (3,729,007 )              (7.10 )%         4,040,275               5.96 %       (7,769,282 )           (192.30 )%
Income from discontinued operation                           -                    -                1,760               0.00 %           (1,760 )           (100.00 )%
Gain from disposition of discontinued
operation                                                    -                    -               20,906               0.03 %          (20,906 )           (100.00 )%
Net (loss) income                                   (3,729,007 )              (7.10 )%         4,062,941               5.99 %       (7,791,948 )           (191.78 )%
Foreign currency translation gain                      457,781                 0.87 %          1,618,430               2.39 %       (1,160,649 )            (71.71 )%
Other comprehensive income                             457,781                 0.87 %          1,618,430               2.39 %       (1,160,649 )            (71.71 )%
Comprehensive (loss) income                         (3,271,226 )              (6.23 )%         5,681,371               8.38 %       (8,952,597 )           (157.58 )%
Weighted average shares outstanding basic
and diluted                                         12,640,000                                12,640,000                                     0                0.00 %
Net (loss) income per share, basic and
diluted                                                  (0.30 )                  ?                 0.32                  ?              (0.62 )           (191.78 )%

REVENUE

The Company's consolidated revenue for the year ended March 31, 2009 was $52,545,647, which represented a decrease of 22.54% from the same period in the prior year. This decrease was mainly due to the decrease in the selling price and sales volume of DME product and the increase of the price of raw materials, which resulted in higher production costs. As a result, the gross profit of DME decreased accordingly. The Company adjusted its product structure and reduced the production volume of DME.

                                         2009                              2008                             Comparisons
                                               Percentage                        Percentage        Change in          Increase
                                Amount         of Revenue         Amount         of Revenue         Amount          (Decrease) in
         Products                US $             (%)              US $             (%)              US $          Percentage (%)
Urea                           34,490,637            65.65 %     30,774,271            45.37 %       3,716,366               12.08 %
Ammonium bicarbonate            3,716,301             7.07 %      2,320,609             3.42 %       1,395,692               60.14 %
Methanol                        1,813,959             3.45 %        417,180             0.62 %       1,396,779              334.81 %
Liquefied Ammonia                 972,655             1.85 %      1,468,603             2.17 %        (495,948 )            (33.77 )%
DME                            11,160,655            21.24 %     32,626,266            48.10 %     (21,465,611 )            (65.79 )%
Ammonia Water                     391,440             0.74 %        225,991             0.33 %         165,449               73.21 %
Total                          52,545,647           100.00 %     67,832,920           100.00 %     (15,287,273 )            (22.54 )%

The sales of Urea increased 12.08% to $34,490,637 for the year ended March 31, 2009 from $30,774,271 for the year ended March 31, 2008. This increase was mainly due to the increase in the selling price of Urea as compared to the same period of last year.

The revenue generated from Ammonium Bicarbonate increased 60.14% to $3,716,301 for the year ended March 31, 2009 from $2,320,609 for the year ended March 31, 2008. This increase was mainly due to the increase in sales volume and the selling price of Ammonium Bicarbonate as compared to the same period of last year.

The sales of Methanol increased 334.81% to $1,813,959 for the year ended March 31, 2009 from $417,180 for the year ended March 31, 2008. This increase was mainly due to the increase in sales volume of Methanol as compared to the same period of last year.

The revenue contribution from Liquefied Ammonia decreased 33.77% to $972,655 for the year ended March 31, 2009 from $1,468,603 for the year ended March 31, 2008. The Liquefied Ammonia is an intermediate product created during the synthetic ammonia production process and can be sold directly as finished product. Normally, Liquefied Ammonia is converted to Urea which results in a higher return for the Company. Therefore, we only sell Liquefied Ammonia to external buyers when: i) the Urea production line was unable to fully convert the Liquefied Ammonia (such as failure of the production line); or ii) the selling price of Liquefied Ammonia is relatively high due to market conditions.

The sales of DME decreased 65.79% to $11,160,655 for the year ended March 31, 2009 from $32,626,266 for the year ended March 31, 2008. This decrease was mainly due to the decrease in the selling price and sales volume of DME product. Additionally, the increase of the price of raw materials resulted in higher production costs. As a result, the gross profit of DME decreased accordingly. The Company adjusted its product structure and reduced the production volume of DME.

The sales of Ammonia Water increased 73.21% to $391,440 for the year ended March 31, 2009 from $225,991 for the year ended March 31, 2008. Ammonia Water is a by product created during the synthetic ammonia production process. During the year, we improved our technology and organized production more scientifically to enhance the recycle rate of Ammonia Water, which has resulted in higher output and sales of Ammonia Water. The increase of Ammonia Water output not only could increase income, but also could reduce environmental pollution.

The following is a breakdown of our revenues geographically:

                                         2009                                2008                              Comparisons
                                                                                                                         Increase
                                               Percentage                        Percentage of        Change in        (Decrease) in
                                Amount         of Revenue         Amount            Revenue            Amount           Percentage
        Provinces                US $             (%)              US $               (%)               US $                (%)
Henan Province                 19,284,127            36.71 %     23,858,024               35.17 %      (4,573,897 )            (19.17 )%
Guangdong Province             21,892,372            41.66 %     16,382,947               24.15 %       5,509,425               33.63 %
Anhui Province                  3,038,519             5.78 %      3,553,826                5.24 %        (515,307 )            (14.50 )%
Hubei Province                  4,672,991             8.89 %     13,857,085               20.43 %      (9,184,094 )            (66.28 )%
Hunan Province                    250,896             0.48 %        276,842                0.41 %         (25,946 )             (9.37 )%
Guangxi Province                        -                -          322,413                0.48 %        (322,413 )           (100.00 )%
Jiangxi Province                1,053,286             2.00 %      2,569,424                3.79 %      (1,516,138 )            (59.01 )%
Zhe Jiang Province                      -                -          179,288                0.26 %        (179,288 )           (100.00 )%
Shan Dong Province              1,855,865             3.53 %         24,604                0.04 %       1,831,261             7442.94 %
Hebei Province                    497,591             0.95 %      6,796,978               10.02 %      (6,299,387 )            (92.68 )%
Fujian Province                         -                -           11,489                0.02 %         (11,489 )           (100.00 )%
Total                          52,545,647           100.00 %     67,832,920              100.00 %     (15,287,273 )           (22.54? )%

For the year ended March 31, 2009, sales in Guangdong Province and Shandong Province increased by 33.63% and 7,442.94%, respectively, as compared to the same period last year. This was mainly attributable to the Company taking advantage of the increase in the selling price of fertilizer product in the domestic market, adjusting its product structure and enhancing its marketing efforts. The sales of Urea to these provinces increased as compared to the same period last year.

The sales for the year ended March 31, 2009 in other provinces decreased as . . .