INVESTMENTS IN NON-CONSOLIDATED ENTITIES

9 Months Ended

Sep. 30, 2010

INVESTMENTS IN NON-CONSOLIDATED ENTITIES

INVESTMENTS IN NON-CONSOLIDATED ENTITIES

Note 11 - Investments in Non-consolidated Entities

As of September 30, 2011, available-for-sale securities consist of the following:

Name of investee	Place of operation	Percentage of ownership	Principal activities
Anyang Dingran Gas Co., Ltd	PRC	38%	Natural gas pipeline, investment and management in CNG filling station
Anyang PetroChina Marketing Company Limited ("Anyang PetroChina")	PRC	34%	Sales of crude oil and refined oil and LPG
Ancai Energy Corporation	PRC	15%	Long distance pipe network, LPG pipeline, operation of CNG filling station

As the above company is a private company whose shares are not quoted or traded in an active market, management has determined that it is not practicable to estimate their fair value reliably. Therefore, the investment in the above company is stated at cost less any impairment losses. No events or changes in circumstances have been identified that potentially would have a significant adverse effect on the fair value of investment in the above company. As of September 30, 2011, there was no allowance for impairment loss.

Anyang Dingran Gas Co., Ltd was incorporated on July 12, 2010, with a registered capital of $8 million, which was invested by Ancai Hi-tec Corporation, Antai Investment Co., Ltd., and Anyang Prosperous. Anyang Prosperous invested $3.04 million for its 38% equity interest in Anyang Dingran. It mainly engaged in the investment and operation in CNG and LNG stations. Through the CNG pipeline of branch of Henan, which can support 0.21billion M3 CNG per year, it will construct mother stations and standard stations, and now it was operated by the above three parties. Therefore, Anyang Dingran has been accounted for using the cost method instead of the equity method. For the nine months ended September 30, 2011 and 2010, no dividend income was distributed from Anyang Dingran.

Although the Company held 34% ownership interest in Anyang PetroChina, the Company did not have significant influence over Anyang PetroChina. According to an agreement between the Company and the other shareholder of Anyang PetroChina, namely China National Petroleum Corporation ("China National Petroleum"), the Company has assigned the full power and right of management of Anyang PetroChina to China National Petroleum for the period until December 31, 2009. In return, the Company has been entitled to 10% of the cost of its investment in Anyang PetroChina in the form of a fixed "dividend" each year regardless of the actual performance of Anyang PetroChina for the period until December 31, 2009. Therefore, Anyang PetroChina has been accounted for using the cost method instead of the equity method. For the nine months ended September 30, 2011 and 2010, dividend income of $247,279 and $235,343, respectively, from Anyang Petro China was included in other income.

The Company acquired 15% of the shares of Ancai Energy Co., Ltd ("Ancai"), which was established on April 18, 2008 and was registered with capital of approximate $1.17million. Ancai is mainly engaged in the investment in the construction of long-distance pipeline and delivery networks for natural gas, and pipeline LPG and CNG filling stations. The Jiaozuo-Anyang branch of the West-East natural gas transmission project had been built and put into operation in December 2003, which supplies natural gas to users in the cities of Jiaozuo, Xinxiang, Hebi, Anyang as well as industrial users. The project is not just an industrial project, but also a state key infrastructural project for clean energy. Almost 15 million people in Northern Henan can benefit from the project, which plays an important role in local industry and ecological environment. Theinvestment made on Ancai will provide steady and qualified natural gas for the network of CNG filling stations that belong to the company and Henan Transport Authority, developing a stable market of filling stations which takes Ancai mother station as its center. Ancai has been accounted for using the cost method instead of the equity method. For the nine months ended September 30, 2011 and 2010, dividend of $2,112 and $-0- respectively, from Ancai was included in other income.

As of September 30, 2011, Ancai Group Inc, the 70% shareholder of Ancai, is responsible for the management of Ancai.