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

FORM 10-Q

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

For the quarterly period ended March 31,June 30, 2010

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

For the transition period from _______ to _________

Commission File No. 000-12561

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
 
Nevada 95-3819300
(State or other jurisdiction of incorporation) I.R.S. Employer Identification Number

Building 3
No. 28 Feng Tai North Road,
Beijing China 1000071100071
(Address of principal executive offices)

(011) 86-10-63860500
(Registrant's telephone number, including area code)

Deli Solar (USA), Inc.
(Former name, former address and former fiscal year, if changed since last report)

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. xYes¨  oNo

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    oNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filero Accelerated filero
     
Non-accelerated filero
           (Do not check if a smaller reporting company)
Smaller reporting companyx

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

The number of shares of the issuer’s common stock, $.001 per share, outstanding as at May 12,August 16, 2010 was 15,233,652.


 
TABLE OF CONTENTS

INDEX

   Page
PART 1 - FINANCIAL INFORMATION  
    
 Item 1.  Financial Statements  
    
 Condensed Consolidated Balance Sheets as at March 31,June 30, 2010 (unaudited) and December 31, 2009 3
 Condensed Consolidated Statements of Operations for the Threesix Months March 31,Ended June 30, 2010 and 2009 (unaudited) 4
 Condensed Consolidated Statements of Cash Flows for the Threesix Months Ended March 31,June 30, 2010 and 2009 (unaudited) 5
 Condensed Consolidated Statements of Stockholders' Equity and Comprehensiveother comprehensive Income for the Threesix Months Ended March 31,June 30, 2010 (unaudited) and 2009 6
 Notes to Condensed Consolidated Financial Statements (unaudited) 7
    
 Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations 15
    
 Item 3.  Quantitative and Qualitative Disclosures About Market Risk 1819
    
 Item 4T.  Controls and Procedures 1819
    
PART 2 - OTHER INFORMATION  
    
 Item 1.  Legal Proceedings 1920
 Item 1A. Risk Factors 19
20
 Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 19
20
 Item 3.  Defaults Upon Senior Securities 19
20
 Item 4.  Submission of Matters to a Vote of Security HoldersRemoved and Reserved 19
20
 Item 5.  Other Information 19
20
 Item 6.  Exhibits 1921
    
 Signatures 2022

2

 
Item 1.  Financial Statements
   
CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS

 
As of March
31,2010
  
As of December
31,2009
  
As of 
June 30,
2010
 
As of 
December 31,
2009
 
        (Unaudited)   
ASSETS           
Current assets:           
Cash and cash equivalents $3,438,258  $4,980,717  $3,596,126  $4,980,717 
Accounts receivable, net  6,448,108   8,067,944   9,982,618   8,067,944 
Inventories  6,416,927   4,547,170   5,122,077   4,547,170 
Other receivables and prepayments  3,151,989   1,733,695   3,119,287   1,733,695 
Deferred tax assets  588,016   588,016   587,932   588,016 
Total current assets  20,043,298   19,917,542   22,408,040   19,917,542 
             
Property and equipment, net  13,709,943   13,775,554   13,646,414   13,775,554 
Goodwill  1,967,545   1,967,153   1,977,652   1,967,153 
Land use rights  1,583,578   1,592,140   1,583,016   1,592,140 
Investment in Trueframe International Limited  3,812,972   3,812,806   3,740,972   3,812,806 
TOTAL ASSETS $41,117,336  $41,065,195  $43,356,094  $41,065,195 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY             
Current liabilities:             
Accounts payable, trade $1,979,026  $1,601,002  $1,602,749  $1,601,002 
Taxes payable  998,937   1,278,974   1,459,445   1,278,974 
Other payables and accrued liabilities  10,211,109   9,977,178   9,794,925   9,977,178 
Loan payable-employee  1,304,799   1,266,747   1,998,277   1,266,747 
Short-term loans  736,279    
Total current liabilities  14,493,871   14,123,901   15,591,675   14,123,901 
             
Long-term liabilities:        
Deferred tax liabilities  -   - 
Long-term liabilities  156,410   156,410                                 -   156,410 
Total liabilities  14,650,281   14,280,311   15,591,675   14,280,311 
             
Stockholders’ equity             
Common stock, $0.001 par value, 66,666,667 shares authorized, 15,233,652 and 15,233,652 shares issued and outstanding, respectively  15,233   15,233 
Common stock, $0.001 par value, 66,666,667 shares authorized, 15,233,652 shares issued and outstanding  15,233   15,233 
Additional paid-in capital  22,611,909   22,611,909   22,611,909   22,611,909 
Accumulated other comprehensive income  697,848   693,016   801,018   693,016 
Retained earnings  2,772,634   3,100,294   3,847,460   3,100,294 
Profit earning reserves  -   - 
Total stockholders’ equity-China Solar  26,097,624   26,420,452   27,275,620   26,420,452 
Non-controlling interest in subsidiary  369,431   364,432   488,799   364,432 
Total Stockholder’s Equity  26,467,055   26,784,884   27,764,419   26,784,884 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $41,117,336  $41,065,195  $43,356,094  $41,065,195 

See accompanying notes to condensed consolidated financial statements.

3

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)
  Three months ended March 31, 
  2010  2009 
     
（restated）
 
Revenue, net $3,896,414  $3,653,794 
         
Cost of revenue  2,735,004   2,767,980 
         
Gross profit  1,161,410   885,814 
         
Operating expenses:        
Depreciation and amortization  122,513   88,621 
Selling and distribution  627,069   559,485 
General and administrative  596,661   899,626 
         
Total operating expenses  1,346,243   1,547,732 
         
Income(Loss) from operations  (184,833)  (661,918)
Other income (expenses):        
Other income(expenses)  (104)  27,847 
Interest income  628   5 
Interest expense  (72,175)  (47,159)
Total other income (expenses)  (71,651)  (19,307)
         
Income(Loss) From Continuing Operations Before Income Taxes  (256,484)  (681,225)
         
Income tax expense  66,177   25,603 
         
Income(Loss) From Continuing Operations  (322,661)  (706,828)
         
Income(Loss) From Discontinued Operation (net of tax)  -   (512,390)
         
Net Income(Loss)  (322,661)  (1,219,218)
Less: Net Income Attributable To Non-controlling Interest  4,999   10,006 
Net Income(Loss) Attributable To China Solar Shareholders $(327,660) $(1,229,224)
         
Basic Earning Per Share        
Continuing operations $(0.02) $(0.04)
Discontinued operation  -   (0.03)
  $(0.02) $(0.07)
Weighted average shares outstanding – basic and diluted  15,815,125   16,125,984 

  
Three months ended
June 30,
  
six months ended
June 30,
 
  2010  2009  2010  2009 
     (restated)     (restated) 
Revenue, net $10,705,927  $13,306,863  $14,602,341  $16,960,658 
Cost of revenue  7,713,567   10,023,837   10,448,571   12,791,818 
Gross profit  2,992,360   3,283,026   4,153,770   4,168,840 
                 
Operating expenses                
Depreciation and amortization  104,311   103,285   226,824   191,906 
Selling and distribution  729,260   480,587   1,356,329   1,040,072 
General and administrative  695,125   650,909   1,291,786   1,550,535 
Total operating expenses  1,528,696   1,234,781   2,874,939   2,782,513 
Income from operations  1,463,664   2,048,245   1,278,831   1,386,327 
Other income (expenses):      0         
Other income  146   6,559   161   43,837 
Interest income  139   2,451   767   2,456 
Other expense  (3,682)  (41,438)  (3,801)  (50,869)
Reversal of reserve for bad debts  -   127,245   -   127,245 
Interest expense  (88,165)  (39,490)  (160,340)  (86,649)
Loss from non-consolidated subsidiries  (72,000)    -   (72,000)   - 
Total other  income (expenses)  (163,562)  55,327   (235,213)  36,020 
gain on sale of discontinued operation net of tax  -   652,753   -   652,753 
                 
Income(Loss) From Continuing Operations Before Income Taxes  1,300,102   2,756,325   1,043,618   2,075,100 
                 
Income tax expense  105,908   173,135   172,085   198,738 
                 
Income(Loss) From Continuing Operations  1,194,194   2,583,190   871,533   1,876,362 
                 
Income(Loss) From Discontinued Operations(net of tax)  -   -  　-   (512,390)
                 
Net Income(Loss)  1,194,194   2,583,190   871,533   1,363,972 
Less:Net Income Attributable To Non-controlling interest  119,368  
　76,543
   124,367   86,549 
Net Income(Loss) Attributable To China Solar Shareholders $1,074,826  $2,506,647  $747,166  $1,277,423 
Basic and Diluted                
continuing operations $0.08  $0.16  $0.06  $0.12 
discontinued operations $0.00  $0.00  $0.00  $(0.03)
   0.08   0.16   0.06   0.09 
Weighted average shares outstanding – Basic and Diluted  15,233,652   16,173,016   15,233,652   16,123,921 
See accompanying notes to condensed consolidated financial statements.

4

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”))
(Unaudited)

 
six months ended
June 30,
 
 Three months ended March 31,  2010  2009 
 2010  2009     (restated) 
Cash flows from operating activities:            
Net cash provided by operating activities $(1,433,190) $(366,734)
Net effect of discontinued operation      (462,855)
Net effect of discontiuned operation $-  $3,249,424 
Net cash used in operating activities  (2,143,894)  (3,245,825)
  (1,433,190)  (829,589)  (2,143,894)  3,599 
Cash flows from investing activities:                
Acquisition of companies,net of cash acquired        
Disposal of subsidiary  -   439,122 
Purchase of property, plant and equipment  (110,255)  (185,122)  (117,516)  (231,528)
Net effect of discontinued operation      (95,086)
Net cash provided by investing activities  (110,255)  (280,208)
payment for other intangible assets        
Net effect of discontiuned operation  -   (8,420)
Net cash used in investing activities  (117,516)  199,174 
                
Effect of exchange rate on cash  986   66,643 
Cash flows from financing activities:        
Proceeds from non-controlling shareholder  -   51,231 
Cash received from borrowings  732,732     
Proceeds from warrants exercised        
Net effect of discontiuned operation          
Net cash provided by financing activities  732,732   51,231 
        
        
Foreign currency translation adjustment  144,087   (10)
                
NET CHANGE IN CASH AND CASH EQUIVALENTS  (1,542,459)  (1,043,154)  (1,384,591)  253,994 
                
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD  4,980,717   2,404,996   4,980,717   2,405,644 
                
CASH AND CASH EQUIVALENTS, END OF PERIOD $3,438,258  $1,361,842  $3,596,126  $2,659,638 
                
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                
Cash paid for income taxes $95,658  $63,014  $132,453  $129,318 
Cash paid for interest expense $72,535  $47,159 
Cash paid for interest expenses $101,715  $86,649 

See accompanying notes to condensed consolidated financial statements

5

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND OTHER COMPREHENSIVE INCOME
(Currency expressed in United States Dollars (“US$”), except for number of shares)
  Preferred stock  Common stock  Additional  
Accumulated
other
        Non-controlling  Total 
  
No. of
shares
  
Par
value
  
No. of
shares
  
Par
value
  
paid-in
Capital
  
comprehensive
income
  
Retained
Earnings
  
Earnings
reserve
  
interest
in subsidiary
  
stockholders’
equity
 
Balance as of January 1, 2009
  373,566   373   13,799,450   13,799   23,073,258   1,615,082   2,025,949   963,106   194,542   27,886,109 
Disposal subsidiary
                  (460,288)          (963,106)      (1,423,394)
Preferred share converted  (373,566)  (373)  373,566   373                       - 
Net income                          1,074,345       131,636   1,205,981 
Foreign currency translation adjustment                      (922,066)              (922,066)
Appropriation of dividents                                  (12,986)  (12,986)
Appropriation of statutory surplus reserves                                      - 
Capital contribution from non-controlling shareholder                                  51,240   51,240 
Cancellaction common stock          (939,364)  (939)  939                   - 
Shares released and to be released from escrow          2,000,000   2,000   (2,000)                  - 
Balance as of December 31, 2009  -  $-   15,233,652  $15,233  $22,611,909  $693,016  $3,100,294  $-  $364,432  $26,784,884 
Net income                          (327,660)      4,999   (322,661)
Foreign currency translation adjustment                      4,832               4,832 
Balance as of March 31, 2010  -  $-   15,233,652  $15,233  $22,611,909  $697,848  $2,772,634  $-  $369,431  $26,467,055 
(Unaudited)
 
  Preferred stock  Common stock  Additional  
Accumulated
other
     Non-controlling  Total 
  
No. of
shares
  
Par
value
  
No. of
shares
  
Par
value
  
paid-in
Capital
  
comprehensive
income
  
Retained
Earnings
  
interest in 
subsidiary
  
stockholders’
equity
 
Balance as of Jan 1, 2010  -   -   15,233,652   15,233   22,611,909   693,016   3,100,294   364,432   26,784,884 
Net income                          747,166   124,367   871,533 
Foreign currency translation adjustment                      108,002           108,002 
Balance as of June 30, 2010  -   -   15,233,652   15,233   22,611,909   801,018   3,847,460   488,799   27,764,419 
See accompanying notes to condensed consolidated financial statements

6

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the interim reporting requirements of Regulation S-X. They do not include all of the information and footnotes for complete consolidated financial statements as required by GAAP. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2009.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates that are particularly susceptible to change include assumptions used in determining the fair value of securities owned and non-readily marketable securities.

The results of operations for the threesix months ended March 31,June 30, 2010 are not necessarily indicative of the results to be expected for the entire fiscal year endedending December 31, 2010 or for any future period.

NOTE 2 - ORGANIZATION AND BUSINESS

China Solar & Clean Energy Solutions, Inc. (“China Solar”), formerly known as Deli Solar (USA) Inc. was incorporated in the State of Nevada on March 21, 1983 as Meditech Pharmaceuticals, Inc. (“Meditech”). In late 2004, the Board of Directors of Meditech contemplated a strategic reorganization with Deli Solar Holding Ltd., a corporation organized in the British Virgin Islands (“Deli Solar (BVI)”). The acquisition of Deli Solar (BVI) was accounted for as a recapitalization of Deli Solar (BVI).

On August 1, 2004, Deli Solar (BVI) purchased Bazhou Deli Solar Energy Heating Co., Ltd. (“Deli Solar (Bazhou)”), a corporation duly organized under the laws of the People’s Republic of China (“PRC”). As a result of this transaction, Deli Solar (Bazhou) became a wholly-foreign owned enterprise (“WFOE”) under PRC law on March 30, 2005. This acquisition was accounted for as a transfer of entities under common control.

Deli Solar (Bazhou) was incorporated on August 19, 1997 under the laws of the PRC. In the PRC, Ltd, or Limited, is equivalent to Inc, or Incorporated, in the United States (“US”).

On November 21, 2005 Deli Solar (Bazhou) acquired Ailiyang Solar Energy Technology Co., Ltd. (“Ailiyang”), an entity formerly controlled by the owners of Deli Solar (Bazhou). The transaction was accounted for as a transfer of entities under common control.

7

Beijing Deli Solar Technology Development Co., Ltd. (“Deli Solar (Beijing)”) was founded in 2006 and is principally engaged in solar power heater integrated construction projects in major cities in the PRC.

Deli Solar (Beijing) ownes 91.82% of Tianjin Huaneng Energy Equipment Company (“Tianjin Huaneng”), which manufactures energy saving boilers and environmental protection equipment for industrial customers.

On April 1, 2008, Beijing Deli Solar Technology Development Co., Ltd (“Deli Solar (Beijing)”) acquired 100% of Shenzhen Pengsangpu Solar Industrial Products Corporation (“SZPSP”), which is engaged in the re-sale of energy-saving related heating products such as heat pipes, heat exchangers, pressure water boilers, solar energy heaters and radiators. On July 6, 2009, Deli Solar (Beijing) entered into a termination agreement (the "Termination Agreement") with the three shareholders of SZPSP. The Termination Agreement terminates the equity purchase and complementary agreements. We accounted for SZPSP as a wholly-owned subsidiary from March 31, 2008 until March 31, 2009.

China Solar, Deli Solar (BVI), Deli Solar (Bazhou), Ailiyang, Deli Solar (Beijing) and Tianjin Huaneng are hereinafter referred to as the “Company”.

NOTE 3 - RECENTLY ISSUED ACCOUNTING STANDARDS

In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, “improving Disclosures about Fair Value Measurements,” which clarifies certain existing requirements in ASC 820 “Fair Value Measurements and Disclosures,” and required disclosures related to significant transfers between each level and additional information about Level 3 activity.  FASB ASU 2010-06 begins phasing in the first fiscal period beginning after December 15, 2009.  The Company is currently assessing the impact on its consolidated results of operations and financial conditions.
In June 2009, the FASB issued additional guidance under ASC 860 “Accounting for Transfer of financial Assets and Extinguishment of Liabilities” which improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial asset; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets.  This additional guidance requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferor's beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. Enhanced disclosures are required to provide financial statement users with greater transparency about transfers of financial assets and a transferor's continuing involvement with transferred financial assets. This additional guidance must be applied as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This additional guidance must be applied to transfers occurring on or after the effective date. The adoption of this ASC 860 is not expected to have a material impact on the Company's financial statements and disclosures.
In February 2010, the FASB issued FASB ASU 2010-09, “Subsequent Events, Amendments to Certain Recognition and Disclosure Requirements,” which clarifies certain existing evaluation and disclosure requirements in ASC 855 “Subsequent Events” related to subsequent events. FASB ASU 2010-09 requires SEC filers to evaluate subsequent events through the date in which the financial Statements are issued and are effective immediately. The new guidance does not have an effect on the Company’s consolidated results of operations and financial condition.
In June 2009, the FASB issued a pronouncement amending previous topic guidance, and changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. This pronouncement is effective for financial statements issued for fiscal years beginning after December 15, 2009 and interim periods within those fiscal years. The Company is evaluating the impact that this pronouncement will have on the Company’s consolidated financial statements.

8

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

NOTE 4-INVESTMENT4-INVESTMENT IN TRUEFRAME INTERNATIONAL LTD.

Trueframe International Limited

In October, 2009 we acquired 28% of the outstanding equity of Truefame International Limited ("Truefame"), which is a holding company that owns 55.78 % of the outstanding common stock of AgriSolar Solutions, Inc. ("AGSO"), which holds Shengzhen Fuwaysun Technology Co., Ltd. ("Fuwaysun") for approximately $3,813,000.$3,741,000. Fuwaysun is a PRC company primarily engaged in the development and production of solar pest killing lamps and transportable solar generators.generators.The investment is accounted for under the equity method of accounting.

NOTE 5– BUSINESS DISPOSAL

On July 6, 2009, we entered into the Termination Agreement with the three former shareholders of SZPSP to terminate “The Equity Purchase Agreement” and “Complementary Agreement to the Equity Purchase Agreement”

The key terms of the Termination Agreement are:

Pursuant to the terms of the agreements the Company received RMB 28,800,000 and 939,364 shares of its common stock in exchange for its ownership of SZPSP.  In addition, the Company will receive a portion of the net profit, if any, of SZPSP for the year ended March 31, 2009.  No effect has been given to the profit distribution in the accompanying financial statements.

The operations of SZPSP have been presented as discontinued operations in the accompanying financial statements from the date of acquisition to the date of disposition, for the appropriate periods.

As summary of the operations of SZPSP is follows:

  
March 31,，
2009
 
Revenues  $1,024,103 
Income before provision for income taxes from discontinued operations  (501,120) 
Income tax provision  11,270 
Income(loss) from discontinued operation, net of tax  $(512,390)

NOTE 6 - BALANCE SHEET COMPONENTS

Accounts receivable, net

The majority of the Company’s sales are on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on the aging of accounts receivable that management believes to be reasonable.

9

 
March 31,
2010
  
December 31,
2009
 
 (Unaudited)     
June 30,
2010
 
December 31,
2009
 
       (Unaudited)   
Accounts receivable, cost $8,001,605  $9,621,122  $11,544,327  $9,621,122 
Less : allowance for doubtful accounts  (1,553,497)  (1,553,178)  (1,561,709)  (1,553,178)
        
AAccounts receivable, net $6,448,108  $8,067,944 
Accounts receivable, net $9,982,618  $8,067,944 

Inventories:

 
March 31,
2010
  
December 31,
2009
 
 (Unaudited)     
June 30,
2010
 
December 31,
2009
 
       (Unaudited)   
Raw materials $2,202,518  $1,186,188  $      2,265,357  $1,186,188 
Consumables  15,174   16,358            16,844   16,358 
Work-in-process  1,399,537   57,357            73,018   57,357 
Finished goods  2,799,698   3,287,267         2,766,858   3,287,267 
Inventories $6,416,927  $4,547,170  $      5,122,077  $4,547,170 

Other receivables and prepayments:

 
March 31,
2010
  
December 31,
2009
 
 
(Unaudited)
     
June 30,
2010
 
December 31,
2009
 
       (Unaudited)   
Advance to suppliers $1,231,456  $555,781  $1,201,129  $555,781 
Other receivables    1,920,533     1,177,914     1,918,158     1,177,914 
Other receivables and prepayments(1) $3,151,989  $1,733,695  $3,119,287  $1,733,695 

(1) The amount includes the loan of RMB2, 000,000 for Xiongri. In 2006, we entered into a series of agreements with the three shareholders of Shenzhen Xiongri Solar Co., Ltd. (“Xiongri”) to purchase 60% of the entire equity interests of Xiongri for RMB2, 000,000. The three shareholders agreed to loan RMB2, 000,000 to Xiongri as working capital. We have not completed the transfer of the 60% equity interests. However，the parties came to consensus after negotiation on October 23, 2009 that the agreement shall be revoked and the three shareholders need to return RMB2, 000,000 in following two years after signed.

Other payables and accrued liabilities:

  
June 30,
2010
  
December 31,
2009
 
  (Unaudited)    
Customer deposit $3,895,096  $4,488,561 
Salary payable  420,544   521,951 
Accrued expenses  221,430   226,430 
Other payables  2,905,996   2,551,978 
Warranty provision  1,022,132   1,016,549 
Current portion of investment payable(1)  1,329,727   1,171,709 
Totals $9,794,925  $9,977,178 
  
March 31,
2010
  
December 31,
2009
 
  (Unaudited)    
       
Customer deposit $4,742,974  $4,488,561 
Salary payable  425,057   521,951 
Accrued expenses  220,846   226,430 
Other payables  2,632,158   2,551,978 
Warranty provision  1,016,757   1,016,549 
Current portion of investment payable(1)  1,173,317   1,171,709 
Totals $10,211,109  $9,977,178 

(1) Represents liability in connection with the acquisition of Tianjin Huaneng,

10

NOTE 7 - STOCKHOLDERS’ EQUITY

Common stock

During the year ended December 31, 2009, 373,566 shares of preferred stock were converted to the same number of shares of common stock.
.
During the year ended December 31, 2009, 939,364 shares of common stock were cancelled due to termination with SZPSP.

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

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

 
Number of
Shares
 
Weighted-
average
Exercise Price
 
Weighted-
average
Remaining
Contractual
 
Number of
Shares
  
Weighted-
average
Exercise Price
  
Weighted-
average
Remaining
Contractual
 
Outstanding and Exercisable at January 1, 2009 7,091,682 $2.76 3.53 years 7,091,682  $2.76  3.53 years 
Granted - - - -  -   - 
Exercised - - - -  -   - 
Forfeited 469,150 - - 469,150  -   - 
Expired - - - -  -   - 
Outstanding and Exercisable at December 31, 2009 6,622,532 $2.48 2.25 years 6,622,532  $2.48  2.25 years 
Granted - - - -  -   - 
Exercised - - - -  -   - 
Forfeited - - - -  -   - 
Expired 1,825,719 - - 1,825,719  -   - 
Outstanding and Exercisable at March 31, 2010 4,769,813 1.95 2.76 years
Outstanding and Exercisable at June 30, 2010 4,796,813  1.95  2.3 years 

NOTE 8 - INCOME TAXES

The Company is registered in the United States of America and has operations in three tax jurisdictions: the United States of America, 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.

11

NOTE 9 - SEGMENT REPORTING, GEOGRAPHICAL INFORMATION

(a) Business information

During the threesix months ended March 31,June 30, 2010, the Company had primarily three reportable segments, (i) Solar Heater/Biomass Stove/Boiler related products, (ii) Heat pipe related products and (iii) Building integrated energy-saving projects, under the management of Bazhou, Tianjin Huaneng, and Deli Solar (Beijing), respectively.

The Company’s revenue, gross profit and total assets by reportable segment are as follows:

Sales Revenues
  Three months ended of March 31, 
  2010  2009 
Revenue:      
Solar Heater/Biomass Stove/Boiler related products $745,411  $1,547,847 
Heat pipe related products  3,151,003   2,105,947 
Building integrated energy-saving projects  -   - 
  $3,896,414  $3,653,794 
         
Gross profit:        
Solar Heater/Biomass Stove/Boiler related products $109,721  $328,312 
Heat pipe related products  1,051,689   557,502 
Building integrated energy-saving projects  -   - 
  $1,161,410  $885,814 
         
  March 31,2010  December 31,2009 
Total assets:        
Solar Heater/Biomass Stove/Boiler related products $16,799,273  $17,075,566 
Heat pipe related products  17,152,612   17,210,210 
Building integrated energy-saving projects  1,379,024   1,774,920 
Administration  5,786,427   5,004,499 
  $41,117,336  $41,065,195 
  
Three months ended 
June 30,
  
Six months ended 
June 30,
 
  2010  2009  2010  2009 
Revenue:            
Solar heater/Biomass stove/Boiler related products $1,786,423  $1,463,547  $2,531,834  $3,011,395 
Heat pipe related equipments/Energy-saving projects  8,920,032   11,843,316   12,071,035   13,949,263 
Building integrated energy saving projects  (528)  -   (528)  - 
  $10,705,927  $13,306,863  $14,602,341  $16,960,658 

Gross Profit

 
Three months ended 
June 30,
 
Six months ended 
SepteJune 30,
 
 2010 2009 2010 2009 
Gross profit:        
Solar heater/Biomass stove/Boiler related products $394,908  $319,922  $504,629  $648,234 
Heat pipe related equipments/Energy-saving projects  2,597,980   2,963,104   3,649,669   3,520,606 
Building integrated energy saving projects  (528)  -   (528)  - 
  $2,992,360  $3,283,026  $4,153,770  $4,168,840 

Total assets
  
June 30,
2010
  
December 31,
2009
 
Total assets 2010  2009 
Solar heater/Biomass stove/Boiler related products $20,036,244  $17,075,566 
Heat pipe related equipments/Energy-saving projects $19,198,609  $17,210,210 
Building integrated energy saving projects $1,394,158  $1,774,920 
Discontinued operation $   $- 
Other $2,727,083  $5,004,499 
  $43,356,094  $41,065,195 

 (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.

12

The Company’s operations are located in PRC, which is the main geographical area. The Company’s revenue, gross profit and total assets by geographical market for the threesix months ended March 31,June30, 2010 and 2009 are analyzed as follows:

Revenue

 
Three months ended 
June 30,
 
Six months ended 
SepteJune 30,
 
 2010 2009 2010 2009 
Revenue:        
PRC $9,840,185  $13,051,551  $13,165,686  $16,558,795 
Others  865,742   255,312   1,436,655   401,863 
  $10,705,927  $13,306,863  $14,602,341  $16,960,658 
Gross profit
 
Three months ended 
June 30,
 
Six months ended 
SepteJune 30,
 
 2010 2009 2010 2009 
Gross profit:        
PRC $2,764,919  $3,058,071  $3,667,269  $3,915,410 
Others  227,441   224,955   486,501   253,430 
  $2,992,360  $3,283,026  $4,153,770  $4,168,840 

Total assets

 June 30, December 31, 
 2010 2009 
Total assets:    
PRC $43,048,967  $37,720,553 
Others $307,127  $3,344,642 
  $43,356,094  $41,065,195 

  Three months ended of March 31, 
  2010  2009 
PRC $3,325,501  $3,507,243 
Other markets  570,913   146,551 
  $3,896,414  $3,653,794 
         
Gross profit:        
PRC $902,350  $857,339 
Other markets  259,060   28,475 
  $1,161,410  $885,814 
         
  March 31, 2010  December 31,2009 
Total assets:        
PRC $37,813,231  $36,645,349 
Other markets  3,304,105   4,419,846 
  $41,117,336  $41,065,195 

13

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
NOTE 10 –NET–NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income per share for the threesix months ended March 31,June 30, 2010 and 2009:

 Three months ended of March 31 
 2010  2009 
Three months ended 
June 30,
 
Six months ended 
SepteJune 30,
 
      2010  2009 2010  2009 
Basic and diluted net income per share calculation                
                
Numerator:                
Net income from continuing operations $(327,660) $(716,834) $1,074,826  $2,506,647  $747,166  $1,789,813 
Net (loss) income from discontinued operation  -   (512,390)  -   -   -   (512,390)
 $(327,660) $(1,229,224) $1,074,826  $2,506,647  $747,166  $1,277,423 
Denominator: - Weighted average ordinary shares outstanding  15,815,125   16,125,984 
Denominator: - Weighted average ordinary shares outstanding – Basic and Diluted  15,233,652   16,173,016   15,233,652   16,123,921 

NOTE 11 - SUBSEQUENT EVENT

The Company has evaluated subsequent events after the balance sheet date through the financial statements were issued , there are no subsequent events that are required to be recorded or disclosed in the accompanying interim financial statements.

14
 
Item 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

OverviewOVERVIEW

We are engaged in the solar and renewable energy business in the PRC. Our business is conducted through our wholly-owned PRC based operating subsidiaries, Bazhou Deli Solar, Beijing Deli Solar, and our indirect subsidiary Tianjin Huaneng (majority owned).

The Company has three reportable segments: (i) Solar Heater/Biomass Stove/Boiler related products, (ii) Heat pipe related products and (iii) Building integrated energy-saving projects, under the management of Bazhou, Tianjin Huaneng, and Deli Solar (Beijing), respectively.

Deli Solar (Bazhou) designs, manufactures and sells renewable energy systems to produce hot water and for space heating in the PRC. Bazhou Deli Solar’s principal products are solar hot water heaters and multifunctional space heaters, including coal-fired boilers for residential use. Bazhou Deli Solar also sells component parts for its products and provides after-sales maintenance and repair services.

Deli Solar (Beijing) is principally engaged in building integrated energy-saving projects in major cities in the PRC, including Beijing.

Tianjin Huaneng manufactures heating products such as heating pipes, heat exchangers, specialty heating pipes and tubes, high temperature hot blast boilers, heating filters, normal pressure water boilers, solar energy water heaters and radiators.

Approximately 19.1%17.34% of our net revenue for the threesix months ended March 31,June 30, 2010 was derived from sales of our solar heater/biomass stove/boiler related products and 80.9%82.66% from sales of our heat pipe related equipment/energy-saving projects, respectively. Approximately 85.4%90.16% and 14.6%9.84% of our net revenues for the threesix months ended March 31,June 30, 2010, were derived from sales made inside the PRC and outside the PRC, respectively.

RESULTS OF OPERATIONS

Three months ended March 31,June 30, 2010 compared to three months ended March 31,June 30, 2009

Sales RevenueRevenues

 
Three months ended 
June 30,
 
 2010 2009 
Revenue:    
Solar heater/Biomass stove/Boiler related products $1,786,423  $1,463,547 
Heat pipe related equipments/Energy-saving projects  8,920,032   11,843,316 
Building integrated energy saving projects  (528)  - 
  $10,705,927  $13,306,863 
  
Three months ended
March 31
 
Revenue  2010 2009 
Solar heater/Biomass stove/Boiler related products $745,411  $1,547,847 
Heat pipe related equipments  3,151,003   2,105,947 
total $3,896,414  $3,653,794 


15

Overall: Sales revenue for the three months ended March 31,June 30, 2010 were $3,896,414$10,705,927 as compared to $3,653,794$13,306,863 for the three months ended March 31,June 30, 2009, an increasea decrease of $242,620$2,600,936 or 6.6%19.55%. The increasedecrease in sales was primarily attributable to the risedecline in revenue from our heat pipe related equipmentsequipments/Energy-saving projects under the management of Tianjin Huangneng. We expect overall sales revenue for heat pipe related equipments and energy-saving projects to keep growth momentum during the rest of the year with the recovery of finance crisis.Tian Jin Hua Neng.

Solar heater/Biomass stove/Boiler related products: Sales revenue for these products for the three months ended March 31,June 30, 2010 were $745,411$1,786,423 as compared to $1,547,847$1,463,547 for the three months ended March 31,June 30, 2009, a increase of $322,876 or 22.06%. The increase in sales revenue derived from solar heaters/biomass stove/boiler related products was due to the increasing demand for solar heater in the second quarter this year.
15
Heat pipe related equipments/Energy-saving projects: Sales revenue for the three months ended June 30, 2010 was $8,920,032 compared to $11,843,316 for the three months ended June 30, 2009, a decrease of $802,436$2,923,284 or 51.8%24.68%, because we pay little attention to small orders this year. No enough attention to mini-orders results in the decrease of sales in the past six months .However, we believe that new and large order clients will increase, which will lead to the increase of sales volume in the next half year.

Gross Profit

 
Three months ended 
June 30,
 
 2010 2009 
Gross profit:    
Solar heater/Biomass stove/Boiler related products $394,908  $319,922 
Heat pipe related equipments/Energy-saving projects  2,597,980   2,963,104 
Building integrated energy saving projects  (528)  - 
  $2,992,360  $3,283,026 
Overall: Gross profit margin for the three months ended June 30, 2010 increased by approximately 3.28% to 27.95%, as compared to 24.67% for the three months ended June 30, 2009. This was primarily due to the increase in sales prices of our heat pipe related equipments.
Solar heater/Biomass stove/Boiler related products: Gross profit margin for the three months ended June 30, 2010 was approximately 22.11%, a slight increase of 0.25% as compared to 21.86% for the three months ended June 30, 2009.

Heat pipe related equipments/Energy-saving projects: Gross profit margin for the three months ended June 30, 2010 was approximately 29.13%, a increase of 4.11% from 25.02% for the three months ended June 30, 2009 due to an increase in the sale prices.

Operating Expenses

Operating expenses for the three months ended June 30, 2010 were $ 1,528,696, as compared to $ 1,234,781 for the three months ended June 30, 2009, an increase of $ 293,915, or 23.80%. The overall increase in operating expenses was primarily due to the increase in the wages of the staff under the management of Tianjin Huaneng.

Depreciation and amortization expenses increased to $ 104,311 for the three months ended June 30, 2010, a increase of $ 1,026 or 0.99%, from $ 103,285 for the three months ended June 30, 2009, primarily as a result of the increase of our manufacturing equipment and building.

Selling and distribution expenses increased to $ 729,260 for the three months ended June 30, 2010, a increase of $ 248,673 or 51.74%, from $ 480,587 for the three months ended June 30, 2009, because we have improved the marketing personnel's wage level this year.

General and administrative expenses were $ 695,125 for the three months ended June 30, 2010 (or approximately 6.49% of sales) compared to $ 650,909 (or approximately 4.89% of sales) for the three months ended June 30, 2009, a increase of 6.79%, because we have improved the wages level of management staff this year.

Net Income

Net income was $ 1,074,826 for the three months ended June 30, 2010, compared to $ 2,506,647 for the three months ended June 30, 2009. The decrease in net income was mainly due to the gain on disposal of SZPSP last year and the increase in the wages of the staff under the management of Tianjin Huaneng.

Six months ended June 30, 2010 compared to six months ended June 30, 2009

Sales Revenue

 
Six months ended 
June 30,
 
 2010 2009 
Revenue:    
Solar heater/Biomass stove/Boiler related products $2,531,834  $3,011,395 
Heat pipe related equipments/Energy-saving projects  12,071,035   13,949,263 
building integrated energy saving projects  (528)  - 
  $14,602,341  $16,960,658 

16
Overall: Sales revenue for the six months ended June 30, 2010 were $14,602,341 as compared to $16,960,658 for the six months ended June 30, 2009, a decrease of $2,358,317 or 13.90%. The decrease in sales was primarily attributable to the decline in revenue from our heat pipe related equipments/Energy-saving projects under the management of Tian Jin Hua Neng.

Solar heater/Biomass stove/Boiler related products: Sales revenue for these products for the six months ended June 30, 2010 were $2,531,834 as compared to $3,011,395 for the six months ended June 30, 2009, a decrease of $479,561 or 15.92%. The decrease in sales revenue derived from solar heaters/biomass stove/boiler related products was due to strong competition. Moreover, we are foreign invested enterprise and can not get access to China favorable policy or “China’s Home Appliance Subsidy Program For Rual Areas” as is called for domestic enterprises.

Heat pipe related equipments/Energy-saving projects: Sales revenue for the threesix months ended March 31,June 30, 2010 was $3,151,003$ 12,071,035 compared to $2,105,947$13,949,263 for the threesix months ended March 31,June 30, 2009, a substantialdecrease of $1,878,228 or 13.46%. The decrease in sales was because we pay little attention to small orders this year. No enough attention to mini-orders results in the decrease of sales in the past six months .However, we believe that new and large order clients will increase, which will lead to the increase of $1,045,056 or 49.6%. The increasesales volume in sales of heat pipe related equipments/energy-saving projects was due to recovery from financial crisis which creates robust market for Huaneng.the next half year.

Gross Profit
 
 
Three months ended
March 31
 
Six months ended
 June 30,
 
Gross profit 2009  2008 
2010 2009 
Gross profit:    
Solar heater/Biomass stove/Boiler related products $109,721   328,312  $504,629  $648,234 
Heat pipe related equipments/Energy-saving projects $1,051,689   557,502   3,649,669   3,520,606 
building integrated energy saving projects  (528)  - 
 $1,161,410   885,814  $4,153,770  $4,168,840 

Overall: Gross profit margin for the threesix months ended March 31,June 30, 2010 increased by approximately 5.6%3.87% to 29.8%28.45%, as compared to 24.2%24.58% for the threesix months ended March 31,June 30, 2009. This was primarily due to the increase in sales volume and prices of our heat pipe related equipments.

Solar heater/Biomass stove/Boiler related products: Gross profit margin for the threesix months ended March 31,June 30, 2010 was approximately 14.7%19.93%, as compared to 21.2%21.53% for the threesix months ended March 31,June 30, 2009. This was primarily due to weak market in which we had to sell our products in lower price.

Heat pipe related equipments/Energy-saving projects: Gross profit margin for the threesix months ended March 31,June 30, 2010 was approximately 33.4%30.23% as compared to 26.5%25.24% from the threesix months ended March 31,June 30, 2009, an increase of 6.9%5.00%.The increase is mainly due to an increase in the sale prices.

Operating Expenses

Operating expenses for the threesix months ended March 31,June 30, 2010 were $1,346,243,$ 2,874,939, as compared to $1,547,732$ 2,782,513 for the threesix months ended March 31,June 30, 2009, a decreasean increase of $201,489,$ 92,426, or 13.0%3.32%. The overall decreaseincrease in operating expenses was primarily due to the compressionincrease of operation cost.

salary expense.
Depreciation and amortization expenses increased to $122,513$ 226,824 for the threesix months ended March 31, 2010,June 30, or 38.2%18.20%, from $88,621$ 191,906 for the threesix months ended March 31,June 30, 2009, primarily as a result of the increase of our manufacturing equipment and building.

Selling and distribution expenses increased to $627,069$ 1,356,329 for the threesix months ended March 31, 2010,June 30, or 12.1%30.41%, from $559,485$ 1,040,072 for the threesix months ended March 31,June 30, 2009, primarily due tobecause we have improved the increase in sales of our heat pipe related equipments.marketing personnel's wage level this year. 

1617

General and administrative expenses were $596,661$ 1,291,786 for the threesix months ended March 31,June 30, 2010 (or approximately 15.3%8.8% of sales) compared to $899,626$ 1,550,535 (or approximately 24.6%9.14% of sales) for the threesix months ended March 31,June 30, 2009, a decrease of 33.7%16.69%. The decrease was primarily due to the compression of operation cost.

Net Income (loss)

Net lossincome was $327,660$ 747,166 for the threesix months ended March 31,June 30, 2010, compared to $1,229,224the net income of $ 1,277,423 for the threesix months ended March 31,June 30, 2009, primarily due to the compressionincrease of operation costsalary expense and the increase in sales of our heat pipe related equipments.strong competition.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operating activities was $1,433,190$ 2,143,894 for the threesix months ended March 31,June 30, 2010, while net cash used inprovided by our operating activities was $829,589$ 3,599 for the threesix months ended March 31,June 30, 2009.

Net cash used by investing activities was $110,255$ 117,516 for the threesix months ended March 31,June 30, 2010, compared with net cash used inprovided by investing activities in the amount of $280,208$ 199,174 for the threesix months ended March 31,June 30, 2009.

Net cash provided by financing activities was $ 732,732 for the six months ended June 30, 2010, compared with net cash provided by financing activities in the amount of $ 51,231 for the six months ended June 30, 2009.

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

Cash and cash equivalents decreased to $3,438,258$ 3,596,126 as of March 31,June 30, 2010, compared to $4,980,717 as of December 31, 2009, primarily as a result of the increase in the operating activities in the firstsecond quarter of 2010.

Accounts Receivable

Accounts receivable decreasedincreased to $6,448,108$9,982,618 as of March 31,June 30, 2010, from $8,067,944 as of December 31, 2009, primarily due to the collection of accounts receivable of Tianjin Huaneng.Tian Jin Hua Neng.

Inventory

Inventories increased to $6,416,927$ 5,122,077 as of March 31,June 30, 2010, as compared to $4,547,170 as of December 31, 2009, primarily due to the increase of raw materials considering the rise of the domestic steel prices. 

Other Receivables and Prepayments

Other receivables and prepayments increased to $3,151,989$ 3,119,287 as of March 31,June 30, 2010, compared to $1,733,695 as of December 31, 2009, primarily due to the increase of temporary turnover.

1718

Accounts Payable

Accounts payable increased to $1,979,026$ 1,602,749 as of March 31,June 30, 2010, compared to $1,601,002 as of December 31, 2009. This increase was due to the increase in raw materials.

Other Payables and Accrued Liabilities

Other payables and accrued liabilities slightly increaseddecreased to $10,211,109$ 9,794,925 as of March 31,June 30, 2010 from $9,977,178 as of December 31, 2009.

Off-Balance Sheet ArrangementsOFF-BALANCE SHEET ARRANGEMENTS

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.
 
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.
 
Item 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

No change in our system of internal control over financial reporting occurred during the period covered by this report for the quarter ended March 31,June 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION
 
Item 1.LEGAL PROCEEDINGS

We are currently not involved in any litigation that we 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, threatened 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 material adverse effect.
 
Item 1A.RISK FACTORS
 
Not applicable.
 
Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
None.

Item 3. DEFAULTS UPON SENIOR SECURITIES
 
None.
 
Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSREMOVED AND RESERVED
 
None.
Item 5.OTHER INFORMATION
 
None.RESTATEMENT ON CONSOLIDATED FINANCIAL STATEMENTS

The following are the reasons the restatement is required.

The acquisition of the additional 29.97% interest in Tianjin Hua Neng Energy Equipment Company on October 27, 2009 was not properly recorded. As disclosed in Note 4 to the financial statements of 2008, the Registrant paid $515,026 at the completion of the agreement with the remainder, aggregating approximately $1,047,611 plus interest to be paid over the next three years. We only recorded the amount actually paid and did not record the corresponding debt. In addition there 1,000,000 warrants to purchase the company’s common stock were issued as part of the purchase price and were not valued and included as additional purchase price.

The using right of building of Deli Solar (Beijing) will expire in August, 2011. But the Company never depreciated for it. So the Company decided to correct it.

After further analysis of the Company’s revenue recognition policy, it has decided to change the revenue recognition of its consolidated subsidiary Tianjin Hua Neng. The Company will make the appropriate entries to properly record the revenue and associated costs of revenue.

The following is a summary of the effects of the restatement on the company’s consolidated financial statements.

  As of June 30, 2009 
  as previously reported  as restated 
ASSETS    
Accounts receivable, net $8,457,470  $8,457,470 
Inventories    2,701,654   2,701,654 
Total current assets    21,526,868   21,526,868 
Property, plant and equipment, net    14,108,704   13,891,893 
Goodwill    1,910,509   1,966,118 
Total assets    39,214,410   39,053,208 
 
20

  As of June 30, 2009 
  as previously reported  as restated 
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
Income tax payables    2,336,230   2,336,230 
Other payables and accrued liabilities    5,149,009   6,320,987 
Total current liabilities    10,513,980   11,685,958 
Long-term debt   -   286,483 
Minority interests    1,842,962   333,256 
Stockholders’ equity:        
Additional paid-in capital    22,966,404   23,073,258 
Retained earnings    3,520,184   3,303,373 
Total stockholders’ equity    26,857,468   26,747,511 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $39,214,410  $39,053,208 
  
For six months ended
June 30,2009
 
  as previously reported  as restated 
Revenue, net $14,775,569  $16,960,658 
Cost of revenue    11,729,756   12,791,818 
Gross profit    3,045,813   4,168,840 
Depreciation and amortization    191,906   191,906 
Total operating expenses    2,782,513   2,782,513 
Income from operations    263,300   1,386,327 
Income before income taxes    (392,550)  1,562,710 
Net income    353,134   1,363,972 
Net income available to common stockholders $154,396  $1,277,423 
Net income per share – basic and diluted $0.01  $0.08 
  
For three months ended
 June 30, 2009
 
  as previously reported  as restated 
Revenue, net $9,659,248   13,306,863 
Cost of revenue    7,787,925   10,023,837 
Gross profit    1,871,323   3,283,026 
Depreciation and amortization    103,285   103,285 
Total operating expenses    1,234,781   1,234,781 
Income from operations    636,542   2,048,245 
Income before income taxes    615,327   2,756,325 
Net income    442,192   2,583,190 
Net income available to common stockholders $1,094,945   2,506,647 
Net income per share – basic and diluted $0.07  $0.16 

Item 6.EXHIBITSEXHIBITS.
  
(b)    Exhibits
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.

1921
 
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.
 
May 14, 2010By: /s/ Deli Du
  Deli Du
  Chief Executive Officer and President
  (Principal Executive Officer)
   
May 14,
August 16, 2010
By:/s/ Yinan ZhaoDeli Du
    Yinan ZhaoDeli Du
  Chief Executive Officer and President
(Principal Executive Officer)
August 16, 2010
By:/s/ Fangsong Zheng
Fangsong Zheng
Acting Chief Financial Officer
   (Principal Financial Officer)

2022
 
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.

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