SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the quarterly period ended ~~June~~September 30, 2009

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _________

(Exact name of registrant as specified in its charter)

~~Building 3~~3/F West Wing Dingheng Plaza,

~~No. 28 Feng Tai~~45A North Fengtai Road,

Beijing, China, ~~1000071~~100071

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). oYes o No

Large accelerated filer	o		Accelerated filer	o

Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

Item 1. Financial Statements

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Currency expressed in United States Dollars (“US$”), except for number of shares)

See accompanying notes to condensed consolidated financial statements.

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Currency expressed in United States Dollars (“US$”), except for number of shares)

Three months ended June 30, Six months ended June 30,
2009 2008 2009 2008
Revenue, net $ 9,659,248 $ 15,843,782 $ 14,775,569 $ 24,143,858
Cost of revenue 7,787,925 11,896,829 11,729,756 17,741,845
Gross profit 1,871,323 3,946,953 3,045,813 6,402,013
Operation Expenses
Depreciation and amortization 103,028 132,216 191,906 281,383
Selling and distribution 480,587 1,097,814 1,040,072 1,600,377
General and administrative 651,166 1,012,727 1,550,535 1,614,380
Total operating expenses 1,234,781 2,242,757 2,782,513 3,496,140
Income from operations 636,542 1,704,196 263,300 2,905,873
Other income (expenses):
Other income 6,559 25,741 43,837 66,831
Interest income 2,451 1,638 2,456 1,638
Other expense (41,438 ) 6,839 (50,869 ) 6,839
Reversal of reserve for bad debts 127,245 - 127,245 -
Interest expense (39,490 ) (77,975 ) (86,649 ) (111,813 )
Total other (expense) income 55,327 (43,757 ) 36,020 (36,505 )
Income from continued operation before income taxes 691,869 1,660,439 299,320 2,869,368
Income tax expenses 173,135 343,764 198,738 690,027
Net income from continued operation including non controlling interest 518,734 1,316,675 100,582 2,179,341
Less: Net income attributable to non controlling interest 76,543 386,016 86,549 859,031
Net income from continued operation attributable to common shareholder $ 442,191 $ 930,659 $ 14,033 $ 1,320,310
Net income (loss) from discontinued operation net of tax - 165,555 (512,390 ) 165,555
Gain on sale of discontinued operation net of tax 652,753 - 652,753 -
Net income 1,094,944 1,096,214 154,396 1,485,865
Basic
Continued operation 0.03 0.07 0.00 0.12
Discontinued operation 0.00 0.01 (0.04 ) 0.01
Gain on sale of discontinued operation 0.05 0.00 0.05 0.00
0.08 0.08 0.01 0.13
Diluted
Continued operation 0.03 0.06 0.00 0.10
Discontinued operation 0.00 0.01 (0.03 ) 0.01
Gain on sale of discontinued operation 0.04 0.00 0.04 0.00
0.07 0.07 0.01 0.11
Weighted average shares outstanding – basic
14,173,016 13,075,468 14,125,984 10,612,185
Weighted average shares outstanding – diluted
16,073,016 15,584,542 16,199,637 13,006,396

	Three months ended September 30,						Nine months ended September 30,
	2009			2008			2009			2008
Revenue, net	$	5,344,923		$	17,349,436		$	20,120,492		$	41,493,294
Cost of revenue		4,032,539			13,152,373			15,762,295			30,894,218
Gross profit		1,312,384			4,197,063			4,358,197			10,599,076
Operation Expenses
Depreciation and amortization		69,294			183,216			261,200			464,599
Selling and distribution		526,874			1,408,844			1,566,946			3,649,866
General and administrative	��	594,489			983,896			2,145,024			1,957,631
Total operating expenses		1,190,657			2,575,956			3,973,170			6,072,096
Income from operations		121,727			1,621,107			385,027			4,526,980
Other income (expenses):
Other income		40,691			210,275			60,937			277,106
Interest income		664			-			3,120
Other expense		(3,366	)		(42,662	)		(30,644	)		(34,186	)
Reversal of reserve for bad debts		3			-			127,248
Interest expense		(77,792	)		(69,192	)		(164,441	)		(181,005	)
Total other (expense) income		(39,800	)		98,421			(3,780	)		61,915
Income from continuing operations before income taxes		81,927			1,719,528			381,247			4,588,895
Income tax expense		8,042			458,820			206,780			1,148,847
Net income from continuing operation including non controlling interest		73,885			1,260,708			174,467			3,440,048
Net income (loss) from discontinued operation net of tax		-			448,362			(512,390	)		613,917
Gain on sale of discontinued operations net of tax					-			652,753
Net income		73,885		$	1,709,070		$	314,830		$	4,053,965
Less: Net income attributable to non controlling interest		28,239			69,869			93,015			928,900
Net income attributable to controlling interest	$	45,646		$	1,639,201		$	221,815		$	3,125,065
Basic
Continued operation		0.00		$	0.09		$	0.01		$	0.22
Discontinued operation		0.00		$	0.03		$	(0.04	)	$	0.05
Gain on sale of discontinued operation		0.00		$	0.00		$	0.05		$	0.00
		0.00			0.13			0.02			0.27
Diluted
Continued operation		0.00		$	0.08		$	0.01		$	0.18
Discontinued operation		0.00		$	0.03		$	(0.03	)	$	0.04
Gain on sale of discontinued operation		0.00		$	0.00		$	0.04		$	0.00
		0.00			0.11			0.01			0.23
Weighted average shares outstanding – basic		14,652,826			13,586,827			14,300,013			11,651,656
Weighted average shares outstanding –diluted		16,552,826			15,173,016			16,232,563			13,800,196

See accompanying notes to condensed consolidated financial statements.

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

	Six months ended June 30,						Nine months ended September 30,
	2009			2008			2009			2008
Cash flows from operating activities:
Net effect of discontinued operation	$	(3,245,825	)	$	453,020		$			$	(76,168	)
Net cash provided by operating activities		3,249,424			(3,690,958	)		705,573			(2,919,100	)
Net cash provided by(used in) operating activities								705,573			(2,995,268	)
		3,599			(3,237,938	)
Cash flows from investing activities:
Acquisition of subsidiaries, net of cash acquired		-			(3,916,212	)
Proceeds from non-controlling shareholder											(3,916,212	)
Disposal subsidiary		439,122			-			1,390,593
Purchase of property, plant and equipment		(231,528	)		(2,033,562	)		(450,019	)		(3,269,871	)
Payment for other intangible assets											(852,163	)
Net effect of discontinued operation		(8,420	)		-						(80,606	)
Net cash provided by investing activities		199,174			(5,949,774	)
Net cash provided by/used in investing activities								940,575			(8,118,852	)

Cash flows from financing activities:
Proceeds from non-controlling shareholder		51,231			-
Acquisition of an investment								51,532
Proceeds from private placement sale of stock		-			9,995,156						9,995,156
Proceeds from warrants exercised		-			107,500						312,430
Net effect of discontinued operation											(204,930	)
Net cash provided by financing activities		51,231			10,102,656			51,532			10,102,656

Effect of exchange rate on cash		(10	)		307,592
Effect of exchange rate on cash and cash equivalents								69,102			192,214

NET CHANGE IN CASH AND CASH EQUIVALENTS		253,994			1,222,536			1,766,482			(819,250	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		2,405,644			5,466,637			1,820,882			5,466,637

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,659,638		$	6,689,173		$	3,587,364		$	4,647,387

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes	$	129,318		$	199,025		$	221,970		$	441,015
Cash paid for interest expense	$	39,490		$	143,696		$	118,921		$	-
NONCASH INVESTING AND FINANCING TRANSACTIONS:
Issuance of common stock for acquisition of SZPSP		-			2,839,458						2,839,458
Issuance of warrants for the acquisition of SZPSP		-			92,193						92,193
Preferred share converted		373			1.136			373,000			1,201

See accompanying notes to condensed consolidated financial statements

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

	Preferred stock						Common stock				Additional					Accumulated other								Total			Preferred stock					Common stock						Additional			Accumulated other								Total
	No. of			Par			No. of		Par		paid-in		treasury			comprehensive			Retained		Earnings			stockholders’			No. of			Par		No. of			Par			paid-in			comprehensive			Retained		Earnings			stockholders’
	shares			value			shares		value		capital		stock			income			earnings		reserve			equity			shares			value		shares			value			capital			income			earnings		reserve			equity
Balance as of December 31, 2008		373,566		$	373			13,799,450	$	13,799	$	22,966,404	$			$	1,615,081		$	3,365,788	$	963,106		$	28,924,551			373,566		$	373		13,799,450		$	13,799		$	22,966,404		$	1,615,081		$	3,365,788	$	963,106		$	28,924,551
Disposal subsidiary														(460,288	)							(963,106	)		(1,423,394	)
Cancel 939,364 shares of disposal subsidiary																																	(939,364	)		(939	)		(459,349	)							(963,106	)		(1,423,394	)
Preferred share converted		(373,566	)		(373	)		373,566		373															-			(373,566	)		-373		373,566			373														0
Net income																				154,396					154,396																				221,815					221,815
Foreign currency translation adjustment																	(798,085	)							(798,085	)																(918,380	)							(918,380	)

Balance as of March 31, 2009		0		$	0			14,173,016	$	14,172	$	22,966,404	$	(460,288	)	$	816,996		$	3,520,184	$	-		$	26,857,468
Issue 1,000,000 contingent shares outstanding																																	1,000,000			1,000			(1,000	)
Balance as of September 30, 2009																												0		$	0		14,233,652		$	14,233		$	22,506,055		$	696,701		$	3,587,603	$	-		$	26,804,592

See accompanying notes to condensed consolidated financial statements

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

NOTE 2 - ORGANIZATION AND BUSINESS

Bazhou Deli Solar ~~(BVI) was formed in June 2004.~~ Energy Heating Co Ltd (“Deli Solar (Bazhou)”)

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

~~CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Currency expressed in United States Dollars (“US$”))~~

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

In April 2009, the FASB issued Financial Staff Position SFAS 107-1 and Accounting Principles Board (APB) Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP SFAS 107-1 and APB 28-1). The FSP statement amends FASB Statement No. 107, “Disclosures about Fair Values of Financial Instruments,” to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. The statement also amends APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures in all interim financial statements. This statement is effective for interim periods ending after June 15, 2009, but early adoption is permitted for interim periods ending after March 15, 2009. We are evaluating the impact of this FSP on our financial statements.

~~CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Currency expressed in United States Dollars (“US$”)~~

On July 6, 2009, we entered into the Termination Agreement with the three former shareholders of Shenzhen ~~PSP~~Pengsangpu (“SZPSP”) to terminate “The Equity Purchase Agreement” and “Complementary Agreement to the Equity Purchase Agreement” signed on January 9th, 2008 and “The Supplementary Agreement on Terms, Pricing and Payment” signed on March 25, 2008. We accounted for SZPSP as a wholly-owned subsidiary from March 31, 2008 up to March 31, 2009.

The key terms of the Termination Agreement are:

We have already received RMB12,960,486.30 (US$1.89 million) from the SZPSP Shareholders prior to the execution of the Termination Agreement, the SZPSP ~~Shareholders~~shareholders to pay to Deli-Solar (Beijing) the remaining RMB15,839,513.70 (US$2.32 million) from the RMB28.8 million (US$4.22 million) purchase price specified in the Supplementary Agreement in two installments (RMB8,000,000 (US$1.17 million) within 10 days from the execution date of the Termination Agreement and the remaining balance within two months from the execution date of the Termination Agreement)

The SZPSP ~~Shareholders~~shareholders to return to us an aggregate of 939,364 shares in our Company they received pursuant to the Supplementary Agreement

The SZPSP ~~Shareholders~~shareholders will also pay to us a portion of SZPSP's net profit for the period from April 1, 2008 to March 31, 2009, an amount which will be determined at a future date by the SZPSP ~~Shareholders~~shareholders and Deli-Solar (Beijing)

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”)

(1)	The pending amount of receivable from SZPSP as part of the disposal ~~of subsidiary~~ is ~~$2,318,463.93,which will be settled in September in accordance with the Termination Agreement;~~US$928,322.40 (RMB 6,339,513.70)

(2)	The amount of loans to Fuwaysun is ~~$3,000,000~~US$3,000,000 and RMB6,550,000 ($(US$958,737)~~, please refer to~~. See Note ~~11 for details.~~11.

	September 30, 2009		December 31, 2008
	(Unaudited)

Customer deposit	$	2,124,069	$	2,827,620
Salary payable		289,251		506,936
Accrued expenses		539,763		715,256
Other payables		1,298,267		2,109,673
Deferred revenue		939,158		1,136,809
Totals	$	5,190,508	$	7,296,294

June 30, 2009
December 31,
2008

(Unaudited)

Customer deposit $ 2,080,291 $ 2,827,620
Salary payable 288,392 506,936
Accrued expenses 592,056 715,256
Other payables 1,196,003 2,109,673
Deferred revenue 992,267 1,136,809
Totals $ 5,149,009 $ 7,296,294

1110

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”)

(Unaudited)

NOTE 6 - STOCKHOLDERS’ EQUITY

Authorized Capital

The Company’s authorized capital stock consists of 66,666,667 shares of common stock at $0.001 par value per share ~~common stock~~ and 25,000,000 shares of preferred stock at $0.001 par value per ~~share preferred stock.~~share.

Class A Preferred stock

The Company has designated 3,500,000 of its Preferred Shares as Class A Convertible Preferred Shares. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the corporation, Class A Convertible Preferred Shareholders shall be entitled to receive out of the assets of the Corporation, an amount equal to $1.55 per share. Each share of Series A Preferred Stock shall be initially convertible into one (1) share of Common Stock subject to adjustment for stock dividend and stock splits, sale or issuance of common stock at a price which is less than $1.55, at the option of the investors, at any time after the original issue date.

Sale of Units

On June 13, 2007, the Company entered into a Securities Purchase Agreement with Barron Partners L.P., and two accredited investors in a private placement (“Private Placement") providing for the sale of: (i) 1,774,194 shares of our Series A Convertible Preferred Stock; (ii) stock purchase warrants to purchase an aggregate of 1,774,194 shares of common stock at a price of $1.90 per share; and (iii) stock purchase warrants to purchase an aggregate of 1,774,194 shares of common stock at a price of $2.40 per share. Net proceeds of $2,581,000 were used to finance business acquisitions.

During the ~~six~~nine months ended ~~June~~September 30, 2009, 373,566 shares of preferred stock were converted to the same number of shares of common stock.

1211

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

Registration Rights

In connection with the private placement on June 13, 2007, the Company deposited 900,000 shares of Series A Convertible Preferred Stock into escrow as security. If the Company’s consolidated pre-tax income for the year ended December 31, 2007 was less than $3,000,000 (or pretax income per share of $0.22 on a fully diluted basis), the Company was required to deliver to the investors (pro rata according to the relative size of their investment) a number of the escrow shares to be determined based on the shortfall by which the Company failed to achieve the 2007 earnings target. If the Company’s consolidated pre-tax income for the year ending December 31, 2008 is less than $5,500,000 (or pretax income per share of $0.40 on a fully diluted basis) the investors were entitled to receive (pro rata according to the relative size of their investment) a number of the remaining escrow shares to be determined based on the shortfall by which the Company failed to achieve 2008 earnings target. The agreement with the investors further provided that the investors will not be entitled to any of the remaining escrow shares and all remaining escrow shares shall be returned to the Company if the Company did not receive at least $4,000,000 from the investors, either through the exercise of warrants, or additional equity financing, within 90 days after the effectiveness of the first registration statement filed pursuant to a certain registration rights agreement entered into with the investors concurrently.

The registration statement ~~in question~~ was declared effective on February 7, 2008. The earnings target for the year ended December 31, 2007 was met, thus 900,000 escrow shares remained in escrow at the beginning of the year ending December 31, 2008. However, the 900,000 shares held in escrow were not included in the diluted earnings per share calculation for the twelve months ended December 31, 2008 as the escrow shares were to be returned to the Company since the investors did not provide at least $4,000,000 in additional equity financing within 90 days after the effectiveness of the first registration statement and the diluted earnings per share were the same as basic earnings per share due to the net loss result in 2008.

~~Common stock~~

On February 29, 2008, the Company completed a private placement of 4,691,499 shares of common stock for an aggregate purchase price of approximately $11,300,000. The Company received $9,995,156 as net proceeds from this financing.

~~During the twelve months ended December 31, 2008, the Company issued 1,400,628 shares of common stock as part of the conversion of Series A Preferred Stock.~~

~~During the twelve months ended December 31, 2008, certain investors exercised their warrants to purchase an aggregate of 75,000 shares of common stock totaling $107,500.~~

During the twelve months ended December 31, 2008, the Company granted 7,304 shares of common stock to a former Board member in exchange for services. The shares were valued at $2.08 per share or an aggregate total of $15,192.

~~During the six months ended June 30, 2009, the Company issued 373,566 shares of common stock as part of the conversion of Series A Preferred Stock.~~

~~CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Currency expressed in United States Dollars (“US$”))~~

~~(Unaudited)~~

~~Common Stocks Held in Escrow~~

In connection with the private placement on February 29, 2008, the Company deposited 2,000,000 shares of common stock (“Make Good Shares”) into escrow and we are required to deliver (i) 1,000,000 of the Make Good Shares to the investors on a pro rata basis for no additional consideration in the event that the Company’s after-tax net income for the fiscal year ending December 31, 2008 is less than $4.8 million; and (ii) 1,000,000 of the Make Good Shares to the investors on a pro rata basis for no additional consideration in the event that the Company’s after-tax net income for the fiscal year ending December 31, 2009 is less than $8 million. As of December 31, 2008, the after-tax net income target of $4.8 million has not been met. The registration statement of 1,000,000 of the Make Good Shares to the investors was declared effective on July 20, 2009.

~~Warrants for services~~

On June 13, 2007, in connection with the Private Placement, the Board of Directors granted to consultants and agents warrants to purchase an aggregate of 181,452 shares of the Company’s common stock, of which 75,000 warrants are exercisable at US$2.90 per share and 106,452 warrants are exercisable at US$2.71 per share, or on a cashless exercise basis. The warrants vested immediately and expire on June 13, 2012. The market price of the stock was US$2.10 per share on the grant date. The Company valued the 75,000 warrants at US$0.74 per share and the 106,452 warrants at US$0.78 per share, or $138,338 in aggregate in accordance with SFAS 123R, which were recorded as offering cost in additional paid-in capital in the accompanying consolidated financial statements for the year ended December 31, 2007.

~~The fair value of the warrants was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:~~

~~Risk free interest rate (%)~~		~~5.00~~	%
~~Dividend yield (%)~~		~~0.00~~	%
~~Expected life of warrant grants (years)~~	~~2.96 years~~
~~Expected volatility of warrant grants (%)~~		~~135~~	%

On March 30, 2005, in conjunction with a private placement sale of common stock the Company issued five year warrants to purchase 1,714,290 shares of common stock at a price of $3.85 per share to investors. Concurrently, the Company issued five year warrants to purchase 171,429 common shares at $3.85 per share to financial advisers and others. No share-based compensation expense was recorded, as management determined this transaction to be a cost of issuance.

The Company issued a warrant (the "Warrant") to its placement agent in connection with its private placement in February 2008. The Warrant authorizes the agent to purchase 469,150 shares of its common stock at a fixed price ($2.88 per share), for a five-year period. The Warrant contains a cashless exercise provision which permits the placement agent, at its option, to exercise the Warrant without tendering the exercise price, in exchange for a reduced number of shares. The number of shares will be calculated according to a formula should the placement agent decide to opt to exercise the Warrant under the cashless provision. If the Company is sold during the exercise period (referred to as a "fundamental transaction" in the Warrant), the placement agent has the right to exercise its Warrant and thus participate in the proceeds from the sale to the same extent as any other shareholder. These warrants are immediately exerciseable. The fair value of the warrants was estimated at the date of grant using the Black-Scholes option-pricing model. In calculating the fair value of the warrants, management used the closing price of the common stock on February 29, 2008, of $2.71 per share, plus the following assumptions:

~~Risk fee interest rate (%)~~		~~5.00~~	%
~~Dividend yield (%)~~		~~0.00~~	%
~~Expected life of warrant grants (years)~~	~~3.67 years~~
~~Expected volatility of warrant grants (%)~~		~~135~~	%

~~A summary of the status of the Company’s outstanding common stock warrants:~~

Number of
Shares

Weighted-
average
Exercise Price

Weighted-
average
Remaining
Contractual
Term

Aggregate
Intrinsic
Value

Outstanding at December 31, 2005 1,825,719 $ 3.85 — $ —
Granted — — — —
Exercised — — — —
Forfeited — — — —
Expired — — — —
Outstanding at December 31, 2006 1,825,719 3.85 2.25 years —
Granted 3,729,840 2.18 4.50 years 354,839
Exercised — — — —
Forfeited — — — —
Expired — — — —
Outstanding and Exercisable at December 31, 2007 5,555,559 $ 2.73 3.76 years $ 354,839
Granted 611,123 2.79 4.75 years 633,888
Exercised (75,000 ) — — —
Forfeited — — — —
Expired — — — —
Outstanding and Exercisable at December 31, 2008 6,091,682 $ 2.76 3.53 years $ 988,727
Granted

— — — —
Exercised — — — —
Forfeited — — — —
Expired — — — —
Outstanding and Exercisable at June 30, 2009 6,091,682 $ 2.76 2.54 years 988,727

~~Registration Rights Agreement~~

In connection with the private placement, the Company entered into a registration rights agreement with the investors on February 25, 2008 which requires us to file with the SEC a “resale” registration statement providing for the resale of (i) all of the 4,691,499 shares of common stock sold to the investors, (ii) the 2,000,000 “make good shares” and (iii) the 469,150 shares underlying the placement agent warrants (collectively, the “registrable securities”) for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act of 1933, as amended.

The Company agreed, among other things, to prepare and file an initial registration statement within 45 days of the closing ~~date~~dates (i.e. April 14, 2008) to register for ~~resale part of~~ the registrable securities (other than the 2,000,000 make good shares and the 469,150 shares underlying the placement agent warrants) and to cause ~~that~~the registration ~~statement~~statements to be declared effective by ~~July 28, 2008.~~SEC.

The Company is required to file additional registration statements covering all of the remaining registrable securities (or such lesser number as the SEC deems appropriate) ~~if any registrable securities could not be registered in the initial registration statement, by the 15th day following the date on which we are able~~. Failure to ~~effect~~have the registration ~~of such securities in accordance with any SEC restrictions.~~

~~The Company’s failure~~declared effective by due date may lead to ~~meet this schedule and other timetables provided in the registration rights agreement could result in the~~an imposition of liquidated ~~damages. No liquidated~~ damages ~~will accrue in respect of any registrable securities which~~for the SEC has requested (due to the application of Rule 415) the Company to remove from the registration statement and the required effectiveness date for such registrable securities will be tolled until such time as the Company is able to effect the registration of those securities in accordance with any SEC restrictions.Company.

On ~~July 28,~~December 17, 2008, the ~~Company incurred liquidated damages equal to $112,596 which represents 1%~~Registration Statement covering 4,691,499 of ~~$11,259,587 (the aggregate of investment amount~~common shares in connection with the private placement on February 25, 2008 were declared effective by the ~~investors)~~Securities and Exchange Commission (“SEC”). On July 1, 2009, the Company filed another Registration Statement covering the 1,000,000 Make Good Shares due to the fact that the ~~Company failed to have~~Company’s after-tax income for the ~~registration statement~~fiscal year ended December 31, 2008 is less than $4.8 million. The Registration Statement for the 1,000,000 Make Good Shares was declared effective on or prior to that date. The liquidated damages continue to accrue per diem with respect to all investors at the monthly rate of 1% and pro rated for partial months. The registration statement did not go effective until December 17, 2008. Accordingly, as of December 17, 2008, the Company had incurred $523,026 in liquidated damages for failing to have the registration statement declared effective by July ~~28, 2008.~~20, 2009.

1412

Common stock

During the nine months ended September 30, 2009, the Company issued 373,566 shares of common stock as part of the conversion of Series A Preferred Stock.

On August 20, 2009, all the 939,364 shares received from SZPSP as part of the disposal of SZPSP were cancelled by the transfer agent. As a result, the number of common shares issued and outstanding as of September 30, 2009 was 15,233,652.

Common Stocks Held in Escrow

In connection with the private placement on February 29, 2008, the Company deposited 2,000,000 shares of common stock (“Make Good Shares”) into escrow and we are required to deliver (i) 1,000,000 of the Make Good Shares to the investors on a pro rata basis for no additional consideration in the event that the Company’s after-tax net income for the fiscal year ended December 31, 2008 is less than $4.8 million; and (ii) 1,000,000 of the Make Good Shares to the investors on a pro rata basis for no additional consideration in the event that the Company’s after-tax net income for the fiscal year ending December 31, 2009 is less than $8 million.

As the target of after-tax net income for the fiscal year ended December 31, 2008 was not met, the Company filed S-1 registration statement of 1,000,000 of the Make Good Shares to the investors on July 1. The S-1 was declared effective by the Securities and Exchange Commission (“SEC”) on July 20, 2009. As a result, the number of common stocks held in escrow is 1,000,000

A summary of the status of the Company’s outstanding common stock warrants:

	Number of Shares			Weighted- average Exercise Price		Weighted- average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding and Exercisable at January 1, 2008		5,555,559		$	2.73	3.76 years		$	354,839
Granted		611,123			2.79	4.75 years			633,888
Exercised		(75,000	)		—		—		—
Forfeited		—			—		—		—
Expired		—			—		—		—
Outstanding and Exercisable at December 31, 2008		6,091,682		$	2.76	3.53 years		$	988,727
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		—			—		—		—
Expired		—			—		—		—
Outstanding and Exercisable at September 30, 2009		6,091,682		$	2.76	2.14 years			1,040,651

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 7 - INCOME TAXES

The Company is registered in the United States of America (“USA”) and has operations in three tax jurisdictions: the ~~United States of America,~~USA, British Virgin Island (“BVI”) and the PRC. The operations in the United States of America and British Virgin Island have incurred net operating losses for income tax purposes. The Company generated substantially all of its net income from the operation of its subsidiary in the PRC and is subject to the PRC tax jurisdiction. The Company has recorded an income tax provision for the ~~six~~nine months ended ~~June~~September 30, 2009.

United States of America

China Solar was incorporated in the State of Nevada and is subject to the tax laws of United States of America. As of ~~June~~September 30, 2009, the operation in the United States of America incurred $362,933 of net operating losses available for federal tax purposes, which are available to offset future taxable income. The net operating loss carry forwards will expire through 2028, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of $54,440 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

British Virgin Island

Under the current BVI law, the Company is not subject to tax on income.

The PRC

The Company’s subsidiaries operating in the PRC are Deli Solar (Bazhou), Deli Solar (Beijing), Ailiyang and Tianjin Huaneng.

Ailiyang is domestically owned and subject to the Corporate Income Tax (“CIT”) governed by the Income Tax Law of the People’s Republic of China, at a statutory rate of 25%.

On November 4, 2008,Tianjin Huaneng was classified as an Advanced Technology Enterprise in the PRC, ~~then~~consequently, the CIT for Tianjin Huaneng is reduced to 15% for the years of 2008, 2009 and 2010.

In March 2005, ~~the~~ Deli Solar (Bazhou) ~~became~~was classified as a foreign investment enterprise. Hence, effective from the year ended 2005, Deli Solar (Bazhou) is entitled to a two-year exemption from enterprise income tax (which expired at the end of March 2007) and a reduced enterprise income tax rate of 15% for the following three years.

On July 25, 2006, SZPSP was classified as an Advanced Technology Enterprise in the PRC. The Company is exempted from CIT for the first two profit making years and then the CIT is reduced to 15% in the following three years. On July 6, 2009, ~~Deli-Solar~~Deli Solar (Beijing), entered into the Termination Agreement with SZPSP's shareholders. From April 1, 2008 up to March 31,2009 shares of SZPSP were held by ~~Deli-Solar~~Deli Solar (Beijing) and we accounted for SZPSP as a wholly-owned subsidiary. As of March 31, 2009, the operation in SZPSP incurred $461,641 of net operating losses.

In September 2006, the Deli Solar (Beijing) was ~~founded~~formed as a foreign investment enterprise. Hence, effective from the year ended 2006, Deli Solar (Beijing) is entitled to a two-year exemption from enterprise income tax and a reduced enterprise income tax rate of 15% for the following three years.

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

On March 16, 2007, the National People’s Congress approved the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”). The New CIT Law, among other things, imposes a unified income tax rate of 25% for both domestic and foreign invested enterprises with effect from January 1, 2008. However, as foreign invested enterprises, Deli Solar (Bazhou) and Deli Solar (Beijing) can continue to enjoy the lower CIT rate of 15% until their tax holiday expires.

NOTE 8 - SEGMENT REPORTING, GEOGRAPHICAL INFORMATION

(a) Business information

During the ~~six~~nine months ended ~~June~~September 30, 2009, the Company had two reportable segments, namely (i) ~~solar~~Solar heater/~~biomass~~Biomass stove/~~boiler related products, (ii) heat pipe related equipment/energy-saving~~Building integrated energy projects under the management of Deli Solar (Bazhou), Deli Solar (Beijing) and Ailiyang; and (ii) Industrial waste heat recovery/energy-saving projects under the management Tianjin ~~Huaneng, respectively.~~Huaneng.

An analysis of the Company’s revenue and total assets is as follows:

Revenue

Three months ended June 30, Six months ended June 30,
2009 2008 2009 2008

Revenue:
Solar heater/Biomass stove/Boiler related products
products
$ 1,464,143 9,996,713 $ 3,011,395 $ 12,826,528
Heat pipe related equipments/Energy-saving projects 8,195,105 5,847,069 11,764,174 11,317,330

$ 9,659,248 15,843,782 $ 14,775,569 $ 24,143,858

	Three months ended September 30,					Nine months ended September 30,
	2009			2008		2009			2008

Revenue:
Solar heater/Biomass stove/Building integrated energy projects		$	1,527,584		11,317,237		$	4,539,572		$	24,143,765
Industrial waste heat recovery/energy-saving projects			3,817,339		6,032,199			15,580,920			17,349,529
		$	5,344,923		17,349,436		$	20,120,492		$	41,493,294

Gross Profit

Three months ended June 30, Six months ended June 30,
2009 2008 2009 2008

Gross profit:
Solar heater/Biomass stove/Boiler related products $ 319,922 $ 2,045,428 $ 648,234 $ 2,620,321
Heat pipe related equipments/Energy-saving projects 1,551,401 1,901,525 2,397,579 3,781,692
$ 1,871,323 $ 3,946,953 $ 3,045,813 $ 6,402,013

	Three months ended September 30,					Nine months ended September 30,
	2009		2008			2009			2008

Gross profit:
Solar heater/Biomass stove/ Building integrated energy saving projects	$	375,792		$	2,281,451		$	1,024,025		$	4,901,773
Industrial waste heat recovery/energy-saving projects		936,592			1,915,612			3,334,171			5,697,302
	$	1,312,384		$	4,197,063		$	4,358,197		$	10,599,075

Total assets

	September 30,2009		December 31,2008
Total assets	2009		2008
Solar heater/Biomass stove/Building integrated energy projects	$	14,917,326		12,795,964
Industrial waste heat recovery/energy-saving projects	$	15,529,407		14,360,410
Discontinued operation	$			8,972,481
Other	$	8,194,952		10,440,068
	$	38,641,685		46,568,923

June 30,

December 31,

2009

2008

Total assets
Solar heater/Biomass stove/Boiler related products $ 15,058,506 12,795,964
Heat pipe related equipments/Energy-saving projects $ 15,660,681 14,360,410
Discontinued operation $ - 8,972,481
Other $ 8,495,223 10,440,068
$ 39,214,410 46,568,923

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

Other segment in total assets refers to solar lighting products and sales of spare parts components. The amount of other assets is less than 10% in each category and disclosed as an “all other” category in accordance with paragraph 21 of SFAS 131. There was no elimination or reversal of transactions between reportable segments.

(b) Geographic information

The Company operates in the PRC and all of the company’s long lived assets are located in the PRC. In respect of geographical segment reporting, sales are based on the country in which the customer is located and total assets and capital expenditure are based on the country where the assets are located.

The Company’s operations are located in PRC, which is the main geographical area. The Company’s sales and total assets by geographical market are analyzed as follows:

Three months ended June 30, Six months ended June 30,
2009 2008 2009 2008

Revenue:
PRC $ 9,403,936 $ 15,833,619 $ 14,373,706 $ 23,154,452
Others 255,312 10,163 401,863 989,406

$ 9,659,248 $ 15,843,782 $ 14,775,569 $ 24,143,858

	Three months ended September 30,					Nine months ended September 30,
	2009		2008			2009			2008

Revenue:
PRC	$	5,339,069		$	17,327,480		$	19,712,775		$	41,451,013
Others		5,854			21,956			407,717			42,281

	$	5,344,923		$	17,349,436		$	20,120,492		$	41,493,294

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,					Nine months ended September 30,
	2009		2008		2009		2008		2009		2008			2009			2008

Gross profit:
PRC	$	1,617,893	$	3,942,583	$	2,792,383	$	5,980,883	$	1,307,387		$	4,190,476		$	4,099,770		$	10,580,894
Others		253,430		4,370		253,430		421,130		4,997			6,587			258,427			18,181

	$	1,871,323	$	3,946,953	$	3,045,813	$	6,402,013	$	1,312,384		$	4,197,063		$	4,358,197		$	10,599,075

	June 30,		December 31,		September 30,		December 31,
	2009		2008		2009		2008
Total assets:
PRC	$	35,504,947	$	40,402,100	$	35,098,892	$	40,402,100
Others		3,709,463		6,166,823		3,542,793		6,166,823

	$	39,214,410	$	46,568,923	$	38,641,685	$	46,568,923

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

NOTE 10 –NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income per share for the three and ~~six~~nine months ended ~~June~~September 30, 2009 and 2008:

~~(a) Postponement of Acquisition of Shenzhen Fuwaysun Technology Co., Ltd.~~

(a)	Postponement of Acquisition of Shenzhen Fuwaysun Technology Co Ltd

~~(b) Postponement of Acquisition of Shenzhen Xiongri Solar Co., Ltd.~~

(b)	Postponement of Acquisition of Shenzhen Xiongri Solar Co Ltd

The subsequent events were evaluated as of November 12, 2009, the date the financial statements were issued.

Forward-Looking Information — This item includes “forward-looking statements”. All statements, other than statements of historical facts, included in this item regarding the Company's financial position, business strategy and plans and objectives of management of the Company for future operations are forward-looking statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside of the Company's control, which could cause actual results to materially differ from such statements. While the Company believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors, especially the timing and magnitude of technological advances; the prospects for future acquisitions; the competition in the solar water heaters and boilers industry and the impact of such competition on pricing, revenues and margins; uncertainties surrounding budget reductions or changes in funding priorities of existing government programs and the cost of attracting and retaining highly skilled personnel.

Deli Solar (Beijing) having already received RMB12,960,486.30 from the SZPSP Shareholders prior to the execution of the Termination Agreement, the SZPSP Shareholders to pay to ~~Beijing~~ Deli Solar (Beijing) the remaining RMB15,839,513.70 from the RMB28.8 million purchase price specified in the Supplementary Agreement in two installments (RMB8,000,000 within 10 days from the execution date of the Termination Agreement and the remaining balance within two months from the execution date of the Termination Agreement)

The SZPSP Shareholders to return to ~~Beijing~~ Deli Solar (Beijing) an aggregate of 939,364 shares in our Company they received pursuant to the Supplementary Agreement

The SZPSP Shareholders will also pay to Deli-Solar (Beijing) a portion of SZPSP's net profit for the period from April 1, 2008 to March 31, 2009, an amount which will be determined at a future date by the SZPSP Shareholders and ~~Deli-Solar~~Deli Solar (Beijing)

Overall: Sales revenue for the three months ended ~~June~~September 30, 2009 were ~~$9,659,248~~$5,344,923 as compared to ~~$15,843,782~~$17,349,436 for the three months ended ~~June~~September 30, 2008, a decrease of ~~$6,184,534~~$12,004,513 or ~~39.0%~~69.2%. The decrease in sales was primarily attributable to the decline in ~~revenue~~sales from ~~our~~single solar ~~heater/~~products such as solar heater and biomass ~~stove/boiler related products under the management of~~stove in Deli Solar (Bazhou). We expect overall sales revenue for ~~heat pipe related equipments and~~the single solar products to continue to face intensive competition in the PRC market, while the sales revenue for energy-saving projects is expected to increase during the rest of the year with the completion of ~~pending orders from the first quarter and the collection of account receivables corresponding to~~ these projects.

Solar heater/Biomass stove/~~Boiler related products~~Building integrated energy projects: Sales revenue for these products for the three months ended ~~June~~September 30, 2009 were ~~$1,464,143~~$1,527,584 as compared to ~~$9,996,713~~$11,317,237 for the three months ended ~~June~~September 30, 2008, a decrease of ~~$8,532,570~~$9,789,653 or ~~85.4%~~86.5%. The decrease in sales revenue derived from solar heaters/biomass stove/boiler related products was due to a weak market and strong competition. We expect the competition in solar heaters/biomass stove/boiler related products to continue for the remainder of 2009.

~~Heat pipe related equipments/Energy-saving~~Industrial waste heat recovery/energy-saving projects: Sales revenue for the three months ended ~~June~~September 30, 2009 was ~~$8,195,105~~$3,817,339 as compared to ~~$5,847,069~~$6,032,199 for the three months ended ~~June~~September 30, 2008, a ~~substantial increase~~decrease of ~~$2,348,036~~$2,214,860 or ~~40.2%~~36.7%. The ~~increase~~decrease in sales of industrial waste heat ~~pipe related equipments/~~recovery/energy-saving projects was due to ~~certain~~slowdown in industrial orders during the first quarter of 2009 as a result of a weakening economy. There is a time delay for the recognition of sales revenue for the industrial projects, which usually takes three to six months to complete. Certain large orders were placed in the third quarter of 2009, revenue from which we could recognize in the fourth quarter of ~~2008, revenue from which we recognized during the second~~2009 or first quarter of ~~2009.~~2010.

Overall: Gross profit margin for the three months ended ~~June~~September 30, 2009 ~~decreased~~increased slightly by approximately ~~5.5%~~0.3% to ~~19.4%~~24.5%, as compared to ~~24.9%~~24.2% for the three months ended ~~June~~September 30, 2008. This was primarily due to the decrease in ~~sales of our heat pipe related equipment/energy-saving projects and the increase in~~ the cost of key raw materials. We ~~increased~~decreased our inventory of stainless steel while the price of stainless steel price was high, resulting in ~~higher~~lower production costs and a ~~lower~~higher gross profit.

Solar heater/Biomass stove/~~Boiler related products~~Building integrated energy projects: Gross profit margin for the three months ended ~~June~~September 30, 2009 was stable at approximately ~~21.9%~~24.6%, a slight increase of ~~1.4%~~4.4% as compared to ~~20.5%~~20.2% for the three months ended ~~June~~September 30, 2008.

~~Heat pipe related equipments/Energy-saving~~Industrial waste heat recovery/energy-saving projects: Gross profit margin for the three months ended ~~June~~September 30, 2009 was approximately ~~18.9%~~24.5%, a decrease of ~~13.6% from 32.5%~~7.2%, as compared to 31.8% for the three months ended ~~June~~September 30, ~~2008~~2008. The decrease in gross profit margin is primarily due to an increase in the cost of raw materials.

Operating expenses for the three months ended ~~June~~September 30, 2009 were ~~$1,234,781,~~$1,190,657, as compared to ~~$2,242,757~~$2,575,956 for the three months ended ~~June~~September 30, 2008, a decrease of ~~$1,007,976,~~$1,385,299, or ~~44.9%~~53.8%. The overall decrease in ~~operating~~the selling/distribution expenses and general/administrative expenses was primarily due to the decrease in sales ~~of our~~revenue from solar ~~heater/~~water heaters and biomass ~~stove/boiler related products and the resulting decrease in selling and distribution expenses and general and administrative expenses.~~stoves.

Depreciation and amortization expenses decreased to ~~$103,028~~$69,294 for the three months ended ~~June~~September 30, 2009, a decrease of $113,922 or ~~22.1%~~62.2%, from ~~$132,216~~$183,216 for the three months ended ~~June~~September 30, 2008, primarily as a result of the end of useful life for certain of our manufacturing ~~equipment~~equipments in the first quarter of 2009.

Selling and distribution expenses decreased to ~~$480,587~~$526,874 for the three months ended ~~June~~September 30, 2009, a decrease of $881,970 or ~~56.2%~~62.6%, from ~~$1,097,814~~$1,408,844 for the three months ended ~~June~~September 30, 2008, primarily due to the decrease in sales of ~~our~~ solar ~~heater/~~heaters and biomass ~~stove/boiler related products.~~stoves.

General and administrative expenses were ~~$651,166~~$594,489 for the three months ended ~~June~~September 30, 2009 (or approximately ~~6.7%~~11.1% of sales) compared to ~~$1,012,727~~$983,896 (or approximately ~~6.4%~~5.7% of sales) for the three months ended ~~June~~September 30, 2008, a decrease of ~~35.7%~~$389,407 or 39.6%. The decrease was primarily due to the decrease in sales of solar heaters and biomass stoves.

Net income was $45,646 for the three months ended September 30, 2009, compared to $1,639,201 for the three months ended September 30, 2008. The decrease was primarily due to the decrease in sales of solar heater/biomass stove/boiler related products.

Net income was $1,094,944 for the three months ended June 30, 2009, compared to $1,096,214 for the three months ended June 30, 2008. The net loss for the first quarter of 2009 was $940,548. The increase in net income as compared with the first quarter of this year was mainly due to the gain on disposal of SZPSP and increase in sales from heat pipe related equipments and energy-saving projects under the management of Tianjin Huaneng.

Overall: Sales revenue for the ~~six~~nine months ended ~~June~~September 30, 2009 were ~~$14,775,569~~$20,120,492 as compared to ~~$24,143,858~~$41,493,294 for the ~~six~~nine months ended ~~June~~September 30, 2008, a decrease of ~~$9,368,289~~$21,372,802 or ~~38.8%~~51.5% compared to the ~~six~~nine months ended ~~June~~September 30, 2008. The decrease in sales revenue was primarily attributable to the decline in revenue from the ~~solar~~Solar heater/~~biomass~~Biomass stove/~~boiler related products~~Building integrated energy projects under the management of Deli Solar (Bazhou).

Solar heater/Biomass stove/~~Boiler related products~~Building integrated energy projects: Sales revenue for these products for the ~~six~~nine months ended ~~June~~September 30, 2009 were ~~$3,011,395~~$4,539,572 as compared to ~~$12,826,528~~$24,143,765 for the ~~six~~nine months ended ~~June~~September 30, 2008, a decrease of ~~$9,815,133~~$19,604,193 or ~~76.5%~~81.2%. The decrease in sales revenue ~~derived from solar heater/biomass stove/boiler related products~~ was due to a weak market and ~~competition.~~competition for solar heater and biomass stove. We expect competition to continue for the remainder of 2009.

Heat pipe related equipments/Energy-savings projects: Sales revenue for the ~~six~~nine months ended ~~June~~September 30, 2009 were ~~$11,764,174~~$15,580,920 compared to ~~$11,317,330~~$17,349,529 for the ~~six~~nine months ended ~~June~~September 30, 2008, an increase of ~~$446,844~~$1,768,609 or ~~4.0%~~10.2%. The ~~increase~~decrease in sales of industrial waste heat ~~pipe related equipments/~~recovery/energy-saving projects was due to ~~completion~~slowdown in industrial orders during the first quarter of ~~certain~~2009 as a result of a weakening economy. There is a time delay for the recognition of sales revenue for the industrial projects, which usually takes three to six months to complete. Certain large orders were placed in the third quarter of 2009, revenue from which we could be recognized in the fourth quarter of ~~2008, revenue from which we recognized during the second~~2009 or first quarter of ~~2009.~~2010.

Overall: Gross profit margin for the ~~six~~nine months ended ~~June~~September 30, 2009 decreased by approximately ~~5.9%~~3.9% to ~~20.6%~~21.6% from ~~26.5%~~25.5% for the ~~six~~nine months ended ~~June~~September 30, 2008. This was primarily due to the decrease in sales of Industrial waste heat ~~pipe related equipment/~~recovery/energy-saving projects and increase in the cost of key raw materials. We increased our inventory of stainless steel while the price of stainless steel price was high, resulting in higher production costs and a lower gross profit.

Solar heater/Biomass stove/~~Boiler related products~~Building integrated energy projects: Gross profit margin remained fairly constant for the ~~six~~nine months ended ~~June~~September 30, 2009 at ~~21.5%~~22.6% compared to ~~20.4%~~20.3% for the ~~six~~nine months ended ~~June~~September 30, 2008.

~~Heat pipe related equipment/Energy-saving~~Industrial waste heat recovery/energy-saving projects: Gross profit margin for the ~~six~~nine months ended ~~June~~September 30, 2009 was approximately ~~20.4%~~21.4%, a decrease of ~~13.0%~~11.4% from ~~33.4%~~32.8% for the ~~six~~nine months ended ~~June~~September 30, 2009. The decrease in gross profit margin was due to the lower average product sales price and higher production costs.

Operating expenses for the ~~six~~nine months ended ~~June~~September 30, 2009 were ~~$2,782,513,~~$3,973,170, as compared to ~~$3,496,140~~$6,072,096 for the ~~six~~nine months ended ~~June~~September 30, 2008, a decrease of ~~$713,627~~$2,098,926 or ~~20.4%~~34.6%. The overall decrease in operating expenses was primarily due to the decrease in sales of ~~solar~~Solar heater/~~biomass~~Biomass stove/~~boiler related products~~Building integrated energy projects and the resulting decrease in selling and distribution expenses and general and administrative expenses.

Depreciation and amortization expense decreased to ~~$191,906~~$261,200 for the ~~six~~nine months ended ~~June~~September 30, 2009 from ~~$281,383~~$464,599 for the ~~six~~nine months ended ~~June~~September 30, 2008, primarily as a result of the end of useful life for certain manufacturing equipments in the first quarter of 2009.

Selling and distribution expense decreased to ~~$1,040,072,~~$1,566,946, for the ~~six~~nine months ended ~~June~~September 30, 2009, a decrease of $2,082,920 or ~~35.0%~~57.1%, from ~~$1,600,377~~$3,649,866 for the ~~six~~nine months ended ~~June~~September 30, 2008, primarily due to the decrease in sales of ~~solar~~Solar heater/~~biomass~~Biomass stove/~~boiler related products.~~Building integrated energy projects.

General and administrative expenses were ~~$1,550,535~~$2,145,024 (or approximately ~~10.5%~~10.7% of sales revenue) for the ~~six~~nine months ended ~~June~~September 30, 2009, compared to ~~$1,614,380~~$1,957,631 (or approximately ~~6.7%~~4.7% of sales revenue) for the ~~six~~nine months ended ~~June~~September 30, 2008, primarily due to the decrease in sales of ~~solar~~Solar heater/~~biomass~~Biomass stove/~~boiler related products.~~Building integrated energy projects.

Net income was ~~$154,396~~$221,815 for the ~~six~~nine months ended ~~June~~September 30, 2009, compared to ~~$1,485,865~~$3,125,064 for the ~~six~~nine months ended ~~June~~September 30, 2008, a decrease of ~~$1,331,469~~$2,903,249 or approximately ~~89.6%~~92.9%. The decrease in net income was due to primarily to a result of decrease in sales of ~~solar~~Solar heater/~~biomass~~Biomass stove/~~boiler related products.~~Building integrated energy projects.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was ~~$3,249,424~~$705,573 for the ~~six~~nine months ended ~~June~~September 30, 2009, while net cash used in our operating activities was ~~$3,690,958~~$(2,995,268) for the ~~six~~nine months ended ~~June~~September 30, 2008.

Net cash provided by investing activities was ~~$199,174~~$940,575 for the ~~six~~nine months ended ~~June~~September 30, 2009, compared with net cash used in investing activities in the amount of ~~$5,949,774~~$(8,118,852) for the ~~six~~nine months ended ~~June~~September 30, 2008.

Net cash provided by financing activities was ~~$51,231~~$51,532 for the ~~six~~nine months ended ~~June~~September 30, 2009, compared with $10,102,656 for the ~~six~~nine months ended ~~June~~September 30, 2008.

We believe that current cash flow is sufficient to meet anticipated working capital and capital expenditures for at least the next twelve months. We may require additional cash for further development of business, including any investments or acquisitions we may decide to pursue. However, we cannot assure you that such funding will be available.

Cash and cash equivalents increased to ~~$2,659,638~~$3,587,364 as of ~~June~~September 30, 2009, compared to $1,820,882 as at December 31, 2008, primarily as a result of ~~an increase in sales and collection of accounts receivable in the first quarter of 2009.~~receiving cash from disposal SZPSP

Accounts receivable increased to ~~$8,457,470~~$7,512,359 as at ~~June~~September 30, 2009, from $5,962,051 as at December 31, 2008, primarily due to an increase in accounts receivable in connection with an increase in the projects under construction by Tianjin Huaneng.

Inventory

Inventories decreased to ~~$2,701,654~~$2,892,074 as at ~~June~~September 30, 2009, as compared to $5,158,153 as at December 31, 2008. This substantial decrease was primarily due to strong sales and a sharp decrease in finished products inventory by Tianjin Huaneng.

Other Receivables and Prepayments

Other receivables and prepayments increased slightly to ~~$7,708,106~~$6,929,358 as at ~~June~~September 30, 2009, compared to $6,705,578 as at December 31, 2008.

Accounts payable increased to ~~$1,650,559~~$1,944,999 as at ~~June~~September 30, 2009, compared to $1,148,428 as at December 31, 2008. This increase was primarily due an increase in inventory of raw materials.

Other Payables and Accrued Liabilities

Other payables and accrued liabilities decreased to ~~$5,149,009~~$5,190,508 as at ~~June~~September 30, 2009 from $7,296,294 as at December 31, 2008, primarily due to a decrease in shareholder loans and customer deposits.

Off-Balance Sheet Arrangements

~~Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~We conducted~~Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”),of the effectiveness of the ~~design and operation of our ‘‘~~Company’s disclosure controls and ~~procedures’’ (‘‘Disclosure Controls’’)~~procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this ~~Quarterly Report on Form 10-Q. The Disclosure Controls~~report. Based upon that evaluation, ~~was conducted under~~ the ~~supervision and with the participation of management, including our~~Company’s CEO and ~~Acting CFO. Disclosure Controls are~~CFO concluded that the Company’s disclosure controls and procedures ~~designed~~are effective to ensure that information required to be disclosed by usthe Company in ~~our~~the reports ~~filed~~that the Company files or submits under the Exchange Act, ~~such as this Quarterly Report on Form 10-Q,~~ is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and ~~forms. Disclosure Controls are also designed to ensure~~forms, and that such information is accumulated and communicated to ~~our~~the Company’s management, including the Company’s CEO and ~~Acting~~ CFO, as appropriate, to allow timely decisions regarding required disclosure.

~~The evaluation of our Disclosure~~Changes in Internal Controls ~~included a review of the Disclosure Controls’ objectives and design,~~

There have been no changes in the Company’s ~~implementation of~~internal control over financial reporting during the ~~Disclosure Controls, and their effect on~~quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, the information generated for use in this Quarterly Report on Form 10-Q. Many of the components of our Disclosure Controls are also evaluated on an ongoing basis by other personnel in our finance department. The overall goals of these various evaluation activities are to monitor our Disclosure Controls, and to modify them as necessary. Our intent is to maintain the Disclosure Controls as dynamic systems that change as conditions warrant.Company's internal control over financial reporting.

Our board of directors was advised by Cordovano and Honeck LLP, our previous independent registered public accounting firm, that during their performance of audit procedures for 2008, they identified the following deficiencies which they considered to be material weaknesses in corporate governance and compliance with laws and regulations:

·	~~Lack of board of directors approval for contracts related to the following businesses: Fuwaysun, Lianyungang, Xiongri and Xiangnian;~~

·	~~Failure to obtain state approvals of several businesses: SZPSP, Fuwaysun and Xiongri; and~~

·	~~Failure to disclose information on the new businesses in Form 10-K or 10-Q.~~

~~The deficiencies were mainly related to inadequate staffing and supervision for timely disclosure of such information and the obtainment of the required notifications and approvals.~~

To address the deficiencies, our management including CEO and Acting CFO have taken remedial procedures to standardize accounting practices, train staff and strengthen supervision to ensure timely disclosure of financial results for the second quarter of 2009.

~~Changes in Internal Control over Financial Reporting~~

As far as we know, there was no major changes or weakness in our internal control over financial reporting that occurred during the second fiscal quarter of 2009 covered by this Quarterly Report on Form 10-Q that are reasonably likely to materially affect, our internal control over financial reporting. We are working to refine our internal controls over financial reporting.

~~Inherent Limitations on Effectiveness of Controls~~

The Company’s management, including the CEO and Acting CFO, does not expect that our Disclosure Controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include faulty judgments and breakdowns due to simple error or mistake. Controls can also be circumvented by individuals, by collusion, or by management override (whether such action is intentional or unintentional). The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Therefore, any current evaluation of controls cannot and should not be projected to future periods.

PART II — OTHER INFORMATION

~~Neither~~We are currently not involved in any litigation that we ~~nor~~believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, isthreatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a ~~party to any pending legal proceedings.~~material adverse effect.

~~Item 3.~~

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

~~Item4.~~ Item 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

Item 5.

OTHER INFORMATION

None.

Item 6.

EXHIBITS

ExhibitNo.		Document Description
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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 thereunto duly authorized.

	China Solar & Clean Energy Solutions, Inc.

~~August 11,~~November 12, 2009	By:	/s/ Deli Du
		Deli Du
		Chief Executive Officer and President
		(Principal Executive Officer)

~~August 11,~~November 12, 2009	By:	/s/ Yinan Zhao
		Yinan Zhao
		Acting Chief Financial Officer
		(Principal Financial Officer)

Exhibit Index

Exhibit No.		Document Description
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Nevada		95-3819300
(State or other jurisdiction of incorporation)		I.R.S. Employer Identification Number

~~INDEX~~

		Page
PART 1 - FINANCIAL INFORMATION

	Item 1. Financial Statements	32

	Condensed Consolidated Balance Sheets as at ~~June~~September 30, 2009 (unaudited) and December 31, 2008	32
	Condensed Consolidated Statements of Operations for the Three Months and ~~Six Months~~Nine months Ended
	~~June~~September 30, 2009 and 2008 (unaudited)	43
	Condensed Consolidated Statements of Cash Flows for the ~~Six Months~~Nine months Ended ~~June~~September 30,
	2009 and 2008 (unaudited)	54
	Condensed Consolidated Statements of Stockholders' Equity and Comprehensive Income for the
	~~Six Months~~Nine months Ended ~~June~~September 30, 2009 (unaudited) and 2008	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7

	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	1819

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	2324

	Item 4T. Controls and Procedures	2324

PART 2 - OTHER INFORMATION

	Item 1. Legal Proceedings	2425
	Item 1A. Risk Factors	2425
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2425
	Item 3. Defaults Upon Senior Securities	25
	Item 4. Submission of Matters to a Vote of Security Holders	25
	Item 5. Other Information	25
	Item 6. Exhibits	25

	Signatures	26

	June 30, 2009			December 31, 2008		September 30, 2009		December 31, 2008
	(Unaudited)					(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,659,638		$	1,820,882	$	3,587,364	$	1,820,882
Accounts receivable, net		8,457,470			5,962,051		7,512,359		5,962,051
Inventories		2,701,654			5,158,153		2,892,074		5,158,153
Other receivables and prepayments		7,708,106			6,705,578		6,929,358		6,705,578
Total current assets		21,526,868			19,646,664		20,921,155		19,646,664

Property and equipment, net		14,108,704			13,955,691		14,145,114		13,955,691
Goodwill		1,910,509			2,284,903		1,911,320		2,284,903
Intangible assets, net		1,668,329			1,709,184		1,664,096		1,709,184
Assets of discontinued operations		-			8,972,481				8,972,481
TOTAL ASSETS	$	39,214,410		$	46,568,923	$	38,641,685	$	46,568,923
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade	$	1,650,559		$	1,148,428	$	1,944,999	$	1,148,428
Income tax payable		2,336,230			1,822,867
Tax payable							1,539,204		1,822,867
Other payables and accrued liabilities		5,149,009			7,296,294		5,190,508		7,296,294
Employee loan		1,378,182			1,474,085		1,324,879		1,474,085
Total current liabilities		10,513,980			11,741,674		9,999,590		11,741,674

Long-term liabilities:
Deferred tax liabilities		-			15,779				15,779
Liabilities of discontinued operations		-			4,182,671				4,182,671

Stockholders’ equity
Convertible preferred stock: par value $0.001, 25,000,000 shares authorized, zero and 373,566 shares issued and outstanding, respectively		-			373				373
Common stock, $0.001 par value, 66,666,667 shares authorized, 14,173,016 (unaudited) and 13,799,450 shares issued and outstanding, respectively		14,172			13,799
Common stock, $0.001 par value, 66,666,667 shares authorized, 14,233,652 and 13,799,450 shares issued and outstanding, respectively							14,233		13,799
Additional paid-in capital		22,966,404			22,966,404		22,506,055		22,966,404
Accumulated other comprehensive loss		816,996			1,615,081		696,701		1,615,081
Retained earnings		3,520,184			3,365,788		3,587,603		3,365,788
Profit earning reserves		-			963,106				963,106
Less: Treasury stock		(460,288	)		-
Total stockholders’ equity		26,857,468			28,924,551
Minority interests		1,842,962			1,704,248
Total china solar stockholders’ equity							26,804,592		28,924,551
Non-controlling interest in subsidiary							1,837,503		1,704,248
Total equity							28,642,095		30,628,799
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	39,214,410		$	46,568,923	$	38,641,685	$	46,568,923

	June 30, 2009			December 31, 2008			September 30, 2009				December 31, 2008
	(Unaudited)						(Unaudited)

Accounts receivable, cost	$	8,980,190		$	6,807,085			$	8,035,301			$	6,807,085
Less : allowance for doubtful accounts		(522,720	)		(845,034	)
L Less : allowance for doubtful accounts									(522,942	)			(845,034	)

Accounts receivable, net	$	8,457,470		$	5,962,051			$	7,512,359			$	5,962,051

		June 30, 2009	December 31, 2008		September 30, 2009			December 31, 2008
		(Unaudited)			(Unaudited)

Raw materials	$	914,083	$	1,261,714		$	887,964		$	1,261,714
Consumables		21,064		4,320			19,631			4,320
Work-in-process		1,032,419		21,269			126,511			21,269
Finished goods		734,088		3,870,850			1,857,967			3,870,850
Inventories	$	2,701,654	$	5,158,153		$	2,892,074		$	5,158,153

	Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
	2009		2008		2009			2008		2009		2008		2009			2008
Basic and diluted net income per share calculation

Numerator:
Net income	$	442,191	$	930,659	$	14,033		$	1,320,310
Net income from continued operation										$	45,646	$	1,190,839	$	81,452		$	2,511,146
Net income from discontinued operation		-		165,555		(512,390	)		165,555		-		448,362		(512,390	)		613,917
Gain on sale of discontinued operation		652,753		-		652,753			-		-		-		652,753			-
		1,094,944		1,096,214		154,396			1,485,865		45,646		1,639,201		221,815			3,125,064

Denominator: - Weighted average ordinary shares outstanding		14,173,016		13,075,468		14,125,984			10,612,185		14,652,826		13,586,827		14,300,013			11,651,656
- Weighted average preferred stock outstanding		900,000		1,509,074		1,073,653			1,383,593		900,000		586,189		932,550			1,126,801
- Weighted average contingent shares outstanding		1,000,000		1,000,000		1,000,000			692,308		1,000,000		1,000,000		1,000,000			795,620
- Weighted average warrant shares outstanding		-		-		-			318,310		-		-		-			226,119
		16,073,016		15,584,542		16,199,637			13,006,396
- Weighted average ordinary shares outstanding -diluted											16,552,826		15,173,016		16,232,563			13,800,196

	Three months ended June 30
	2009		2008		Three months ended September 30
Revenue					2009		2008
Solar heater/Biomass stove/Boiler related products	$	1,464,143		9,996,713
Heat pipe related equipments/Energy-saving projects	$	8,195,105		5,847,069
Solar heater/Biomass stove/Building integrated energy projects					$	1,527,584		11,317,237
Industrial waste heat recovery/energy-saving projects					$	3,817,339		6,032,199
total	$	9,659,248		15,843,782	$	5,344,923		17,349,436

	Six months ended June 30
	2009		2008
Revenue
Solar heater/Biomass stove/Boiler related products	$	3,011,395		12,826,528
Heat pipe related equipments/Energy-saving projects	$	11,764,174		11,317,330
	$	14,775,569		24,143,858

	Nine months ended September 30
Revenue	2009		2008
Solar heater/Biomass stove/Building integrated energy projects	$	4,539,572		$	24,143,765
Industrial waste heat recovery/energy-saving projects	$	15,580,920			17,349,529
	$	20,120,492		$	41,493,294