SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

|X|   Annual Report  Pursuant to Section 13 or 15(d) of the Securities  Exchange
      Act of 1934

For the fiscal year ended: December 31, 2005

|_|   Transition  Report  Pursuant  to  Section  13 or 15(d)  of the  Securities
      Exchange Act of 1934

For the transition period from ______________to ______________

                        Commission File Number 000-51431

                   CHARDAN NORTH CHINA ACQUISITION CORPORATION
                 (Name of Small Business Issuer in Its Charter)

          Delaware                                            20-2479743
  (State of Incorporation)                              (Small Business Issuer
                                                        Employer I.D. Number)

625 Broadway, Suite 1111, San Diego, California                  92101
   (Address of principal executive offices)                    (zip code)

                                 (619) 795-4627
                (Issuer's Telephone Number, Including Area Code)

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
 (1) Units consisting of one share of Common Stock, par value $.0001 per share,
            and two Warrants Common Stock, $.0001 par value per share
                  (2) Common Stock, $0.0001 par value per share
                 (3) Warrants to purchase shares of Common Stock

Check whether the issuer is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act. |_|

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirement for the past 90 days. Yes |X| No |_|

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of the  registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. |_|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule12b-2 of the Exchange Act). Yes |X| No |_|

Issuer's revenues for the fiscal year ended December 31, 2005 were $0.

As of March 17,  2006,  the aggregate  market value of the common stock held by
non-affiliates of the Registrant was approximately $68,712,500.
<PAGE>

As of March 17, 2006,  there were 7,000,000  shares of Common Stock,  $.0001 par
value per share, outstanding.

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

      Chardan North China Acquisition  Corporation is a blank check company that
was formed on March 10, 2005 to effect a merger,  capital stock exchange,  asset
acquisition or other similar  business  combination  with an operating  business
that has its primary  operating  facilities  located in the People's Republic of
China in any city or province north of the Yangtze River.

      In August 2005, we closed our initial public offering of 5,750,000  units,
including 750,000 units issued upon exercise of the underwriters' over-allotment
option,  with each unit  consisting  of one  share of our  common  stock and two
warrants, each to purchase one share of our common stock at an exercise price of
$5.00 per  share.  The units were sold at an  offering  price of $6.00 per unit,
generating  gross  proceeds of  $34,500,000.  After  deducting the  underwriting
discounts and commissions and the offering  expenses,  the total net proceeds to
us from the offering were  approximately  $30,946,000,  of which $29,835,000 was
deposited  into  a  trust  fund  and  the  remaining   proceeds   (approximately
$1,111,000)  became  available  to be used to provide  for  business,  legal and
accounting due diligence on  prospective  business  combinations  and continuing
general and  administrative  expenses.  Through  December 31, 2005, we have used
approximately  $408,000 of the net  proceeds  that were not  deposited  into the
trust  fund  to pay  general  and  administrative  expenses.  The  net  proceeds
deposited  into the trust  fund  remain on  deposit  in the trust  fund  earning
interest. As of December 31, 2005, there was $30,260,861 held in the trust fund.

      We are  not  presently  engaged  in,  and  we  will  not  engage  in,  any
substantive  commercial business until we consummate a business combination.  We
intend to utilize our cash,  including the funds held in the trust fund, capital
stock,  debt  or  a  combination  of  the  foregoing  in  effecting  a  business
combination.  A business  combination  may involve the acquisition of, or merger
with, a company  which does not need  substantial  additional  capital but which
desires to establish a public trading market for its shares, while avoiding what
it may deem to be adverse  consequences of undertaking a public offering itself.
These include time delays, significant expense,  compliance with various Federal
and state securities laws and the uncertainty of being able to raise the desired
capital after expending  considerable  resources on the public offering process.
In the  alternative,  we may seek to  consummate a business  combination  with a
company that may be  financially  unstable or in its early stages of development
or growth.

      Opportunities  for market  expansion  have  emerged  for  businesses  with
operations in China due to changes in the PRC's  political,  economic and social
policies  as well  as  certain  fundamental  changes  affecting  the PRC and its
neighboring  countries.  We  believe  that  China  represents  both a  favorable
environment for making acquisitions and an attractive operating  environment for
a target business for several reasons, including:

      o     prolonged economic expansion within China,  including gross domestic
            product growth of approximately 9% on average over the last 25 years
            with  forecasted  continued  growth  for at least  the next  several
            years;

      o     attractive valuations for target businesses within China;

      o     increased  government  focus  within  China on  privatizing  assets,
            improving  foreign  trade  and  encouraging  business  and  economic
            activity;

      o     favorable   labor  rates  and  efficient,   low-cost   manufacturing
            capabilities;

      o     the recent  entry of China into the World  Trade  Organization,  the
            sole global  international  organization  dealing  with the rules of
            trade between nations,  which may lead to a reduction on tariffs for
            industrial  products,  a  reduction  in  trade  restrictions  and an
            increase in trading with the United States; and

      o     the  fact  that  China's  public  equity  markets  are  not as  well
            developed and active as the equity  markets within the United States
            and are  characterized  by companies  with  relatively  small market
            capitalizations and low trading volumes.

      We believe  that these  factors and others  should  enable us to acquire a
target business with growth potential on favorable terms.


<PAGE>

Recent Developments

Purchase Agreement for Proposed Business Combination

      On February 2, 2006 we entered into a Stock  Purchase  Agreement  with the
stockholders  of Gifted Time Holdings Ltd. for the  acquisition of that company,
which is a holding company owning two Chinese  companies  (Beijing  HollySys and
Hangzhou  HollySys) engaged in the production and sale of industrial  automation
and control  systems.  For a more complete  discussion of our proposed  business
combination,  including the risks that are  applicable to us with respect to our
acquisition  of HollySys,  see our Current  Report on Form 8-K dated February 2,
2006 and filed with the SEC on February 3, 2006.

      We expect that the  transaction  will be consummated in the second quarter
of 2006,  after the  required  approval  by our  stockholders.  However,  unless
otherwise indicated,  the remainder of this Annual Report on Form 10-KSB assumes
that the  foregoing  transaction  is not  consummated  and  that we must  seek a
different business combination.

Selection of a target business and structuring of a business combination

      We  anticipate  that  target  business  candidates  will be brought to our
attention  from various  unaffiliated  sources,  including  investment  bankers,
venture capital funds, private equity funds, leveraged buyout funds,  management
buyout  funds and other  members of the  financial  community,  who may  present
solicited or unsolicited proposals.  Our officers and directors as well as their
affiliates may also bring to our attention target business  candidates.  We have
engaged, and may again in the future engage,  professional firms that specialize
in business acquisitions to assist us in our search for a target business. If we
do, we may be required to pay such firm a finder's fee or other compensation. In
no  event,  however,  will  we pay any of our  initial  officers,  directors  or
stockholders  (collectively,  our  "Founders") or any entity with which they are
affiliated any finder's fee or other  compensation  for services  rendered to us
prior to or in connection with the consummation of a business combination.

      Subject to the requirement  that the target business must have its primary
operating  facilities  located  in China in any  city or  province  north of the
Yangtze  River,  our  management  has  virtually  unrestricted   flexibility  in
identifying  and  selecting a  prospective  target  business.  In  evaluating  a
prospective target business, our management considers,  among other factors, the
following:

      o     financial condition and results of operation;

      o     growth potential;

      o     experience  and skill of management and  availability  of additional
            personnel;

      o     capital requirements;

      o     competitive position;

      o     stage of development of the products, processes or services;

      o     degree of current or potential  market  acceptance  of the products,
            processes or services;

      o     proprietary  features and degree of  intellectual  property or other
            protection of the products, processes or services;

      o     regulatory environment of the industry; and

      o     costs associated with effecting the business combination.

      These criteria are not intended to be exhaustive.  Any evaluation relating
to the merits of a particular business  combination will be based, to the extent
relevant,  on the above factors as well as other considerations  deemed relevant
by our  management  in  effecting  a business  combination  consistent  with our
business  objective.  In evaluating a prospective  target  business,  we conduct
extensive due diligence  reviews which encompass,  among other things,  meetings
with incumbent  management  and  inspection of facilities,  as well as review of
financial and other information which will be made available to us.


                                       4
<PAGE>

Fair Market Value of Target Business

      The initial target  business that we acquire must have a fair market value
equal to at least  80% of our net  assets at the time of such  acquisition.  The
fair market value of such  business will be determined by our board of directors
based upon  standards  generally  accepted by the financial  community,  such as
actual and potential sales,  earnings and cash flow and book value. If our board
elects,  it may obtain an opinion from an unaffiliated,  independent  investment
banking firm with respect to the satisfaction of such criteria.

Opportunity for stockholder approval of business combination

      We  will  submit  any  initial  business  combination  transaction  to our
stockholders  for  approval,  even if the nature of the  acquisition  is such as
would not ordinarily require stockholder approval under applicable state law. In
connection  with the  approval,  we will  furnish  our  stockholders  with proxy
solicitation  materials prepared in accordance with the Securities  Exchange Act
of  1934,  which,  among  other  matters,  will  include  a  description  of the
operations of the target business and audited historical financial statements of
the business.

      In  connection  with the vote required for any business  combination,  our
Founders  have agreed to vote their  respective  shares of common stock owned by
them  ("Founder  Shares")  in  accordance  with the vote of the  majority of the
shares of our common stock sold in the initial public  offering ("IPO  Shares").
We  will  proceed  with  the  business  combination  only if a  majority  of the
outstanding  shares  are  voted  in  favor  of  the  business   combination  and
stockholders  holding less than 20% of the IPO Shares exercise their  conversion
rights.

Conversion rights

      At  the  time  we  seek  stockholder  approval  of  the  initial  business
combination,  we will  offer the  holders  of IPO Shares the right to have those
shares  converted  to  cash  if  the  stockholder  votes  against  the  business
combination,  requests  conversion and the business  combination is approved and
completed.  The actual per-share conversion price will be equal to the amount in
the  trust  fund,  inclusive  of  any  interest,  as  of  the  record  date  for
determination  of  stockholders  entitled to vote on the  business  combination,
divided by the total  number of IPO Shares.  Any request  for  conversion,  once
made, may be withdrawn at any time up to the date of the meeting.  We anticipate
that the funds to be  distributed  to  stockholders  entitled  to convert  their
shares who elect  conversion will be distributed  promptly after completion of a
business  combination.   We  will  not  complete  any  business  combination  if
stockholders  owning 20% or more of the IPO  Shares  exercise  their  conversion
rights.

Liquidation if no business combination

      If we do not  complete a business  combination  by  February  10, 2007 (or
August 10, 2007 if we have  executed a letter of intent,  agreement in principle
or definitive  agreement by February 10, 2007 and the business  combination  has
not been  consummated by that date), we will be dissolved and will distribute to
all holders of IPO  Shares,  in  proportion  to the number of IPO Shares held by
them, an aggregate  sum equal to the amount in the trust fund,  inclusive of any
interest,  plus any remaining net assets.  The Founders have waived their rights
to participate  in any  liquidation  distribution  with respect to their Founder
Shares.  There will be no  distribution  from the trust fund with respect to our
warrants.  Upon  notice  from us, the  trustee  of the trust fund will  commence
liquidating the investments  constituting  the trust fund and will turn over the
proceeds to our transfer agent for distribution to our stockholders.

      The  proceeds  deposited  in the trust  fund could  become  subject to the
claims  of our  creditors  which  could  be prior to the  claims  of our  public
stockholders.  Dr.  Richard D.  Propper,  our  chairman of the board,  and Kerry
Propper,  our executive  vice  president and a member of our board of directors,
has each agreed that, if we liquidate  prior to the  consummation  of a business
combination,  each will be  personally  liable to pay debts and  obligations  to
vendors or other  entities  that are owed money by us for  services  rendered or
products sold to us, or to any target business, in excess of the net proceeds of
our initial public offering not held in the trust account.

Competition

      In identifying,  evaluating and selecting a target business,  we expect to
encounter and have encountered competition from other entities having a business
objective  similar to ours. Many of these entities are well established and have
extensive experience identifying and effecting business combinations directly or
through affiliates.  Many of these competitors possess greater technical,  human
and other  resources  than us and our  financial  resources  will be  relatively
limited  when  contrasted  with  those  of many of these  competitors.  While we
believe there are numerous  potential  target  businesses that we could acquire,
our ability to compete in acquiring  certain  sizable target  businesses will be
limited  by  our  available  financial  resources.   This  inherent  competitive
limitation  gives others an advantage  in pursuing the  acquisition  of a target
business. Further:


                                       5
<PAGE>

      o     our   obligation  to  seek   stockholder   approval  of  a  business
            combination may delay the completion of a transaction;

      o     our  obligation  to convert into cash shares of common stock held by
            our  public   stockholders  in  certain  instances  may  reduce  the
            resources available to us for a business combination; and

      o     our outstanding  warrants and options,  and the future dilution they
            potentially represent, may not be viewed favorably by certain target
            businesses.

Any of these factors may place us at a competitive  disadvantage in successfully
negotiating a business combination.  Our management believes,  however, that our
status as a public  entity  and  potential  access to the United  States  public
equity markets may give us a competitive advantage over privately-held  entities
having a similar  business  objective as us in acquiring a target  business with
significant growth potential on favorable terms.

      If we succeed in effecting a business  combination,  there will be, in all
likelihood,  intense  competition from competitors of the target business in the
PRC  and  elsewhere.  We  cannot  assure  you  that,  subsequent  to a  business
combination, we will have the resources or ability to compete effectively.

Government regulations

Government regulations relating to foreign exchange controls

      In the  PRC,  the  State  Administration  for  Foreign  Exchange  ("SAFE")
regulates  the  conversion  of the  Renminbi,  China's  currency,  into  foreign
currencies.  Over the past several years, China has relaxed its foreign exchange
controls  over account  transactions.  As a result of this  relaxation,  foreign
investment  enterprises  (FIEs) are no longer  required to obtain prior approval
before entering into certain  transactions but are required to apply to the SAFE
for "Foreign Exchange Registration  Certificates for FIEs." Following a business
combination,  we will likely be an FIE as a result of our  ownership  structure.
With such registration certificates, which need to be renewed annually, FIEs are
allowed to open  foreign  currency  accounts  including  a "basic  account"  and
"capital account." Currency translation within the scope of the "basic account,"
such as  remittance  of foreign  currencies  for  payment of  dividends,  can be
effected  without  requiring  the approval of the SAFE.  However,  conversion of
currency  in the  "capital  account,"  including  capital  items  such as direct
investment, loans and securities, still require approval of the SAFE. This prior
approval  may delay or impair  our  ability  to  operate  following  a  business
combination.

Government regulations relating to taxation

      Under the PRC's  current  tax laws,  regulations  and  rulings,  companies
providing  certain  services,  assigning  intangible assets or selling immovable
property  are subject to a business  tax at a rate ranging from 3% to 20% of the
charges of the  services  provided,  intangible  assets  assigned  or  immovable
property  sold,  as  the  case  may  be.  According  to the  Applicable  Foreign
Enterprises Tax Law, income such as dividends and profits  distribution from the
PRC derived from a foreign  enterprise  which has no establishment in the PRC is
subject to a 10%  withholding  tax,  subject to  reduction  as  provided  by any
applicable  double taxation  treaty,  unless the relevant income is specifically
exempted from tax under the Applicable  Foreign  Enterprises Tax Law. The profit
derived by a foreign  investor from a PRC enterprise is currently  exempted from
PRC tax according to the Applicable  Foreign  Enterprises Tax Law.  However,  if
this exemption were to be removed in the future,  we might be required to deduct
certain  amounts  from  dividends  we may pay to our  stockholders  following  a
business combination to pay corporate withholding taxes.

Employees

      We have four executive officers,  each of whom is a member of our board of
directors. These individuals are not obligated to contribute any specific number
of hours to our  matters  and  intend to  devote  only as much time as they deem
necessary to our affairs. The amount of time they devote in any time period will
vary based on the availability of suitable target businesses to investigate.  We
do not intend to have any full time  employees  prior to the  consummation  of a
business combination.


                                       6
<PAGE>

                       Risks associated with our business

      In addition to other  information  included in this report,  the following
factors should be considered in evaluating our business and future prospects.

We are a development  stage  company with no operating  history and very limited
resources.

      We are a recently incorporated development stage company with no operating
results to date.  Since we do not have an  operating  history,  you will have no
basis upon which to  evaluate  our ability to achieve  our  business  objective,
which  is to  acquire  an  operating  business  that has its  primary  operating
facilities  located  in the PRC in any city or  province  south  of the  Yangtze
River.  We will not generate  any revenues  until,  at the  earliest,  after the
consummation of a business combination.

If third  parties  bring claims  against us, the proceeds held in trust could be
reduced and the per-share  liquidation  price received by  stockholders  will be
adversely affected.

      Our placing of funds in trust may not protect those funds from third party
claims  against us. The proceeds  held in trust could be subject to claims which
could take priority over the claims of our public stockholders.  If we liquidate
before the completion of a business  combination,  Dr.  Richard D. Propper,  our
chairman of the board,  and Kerry  Propper,  our executive  vice president and a
member  of our board of  directors,  will be  personally  liable  under  certain
circumstances  to ensure that the  proceeds in the trust fund are not reduced by
the claims of various  vendors or other  entities  that are owed money by us for
services  rendered or products  sold to us.  However,  we cannot assure you that
these individuals will be able to satisfy those obligations.

We may  incorrectly  ascertain the merits or risks of the  business'  operations
with which we enter into an acquisition agreement.

      To the  extent we  complete  a  business  combination  with a  financially
unstable  company or an entity in its  development  stage, we may be affected by
numerous risks inherent in the business  operations of those entities.  Although
our  management  will  endeavor to evaluate  the risks  inherent in a particular
target  business  or  industry,  we  cannot  assure  you  that we will  properly
ascertain or assess all of the significant  risk factors.  We also cannot assure
you that an investment in our securities  will not  ultimately  prove to be less
favorable than a direct  investment,  if an  opportunity  were  available,  in a
target business.

We may issue  shares of our  common  stock and  preferred  stock to  complete  a
business combination, which would reduce the equity interest of our stockholders
and likely cause a change in control of our ownership.

      Our  certificate  of  incorporation  authorizes  the  issuance  of  up  to
20,000,000  shares of common  stock,  par value $.0001 per share,  and 1,000,000
shares  of  preferred  stock,  par  value  $.0001  per  share.  We will,  in all
likelihood,  issue a substantial number of additional shares of our common stock
or preferred  stock, or a combination of common and preferred stock, to complete
a business  combination and have to increase our capitalization as a result. The
issuance of additional shares of our common stock or any number of shares of our
preferred stock:

      o     may significantly reduce the equity interest of stockholders;

      o     will likely cause a change in control if a substantial number of our
            shares of common  stock are issued,  which may  affect,  among other
            things, our ability to use our net operating loss carry forwards, if
            any,  and most likely also result in the  resignation  or removal of
            our present officers and directors; and

      o     may adversely affect prevailing market prices for our common stock.

Similarly, if we issue debt securities, it could result in:

      o     default  and  foreclosure  on our assets if our  operating  revenues
            after a  business  combination  were  insufficient  to pay our  debt
            obligations;

      o     acceleration of our obligations to repay the indebtedness even if we
            have made all principal  and interest  payments when due if the debt
            security contains  covenants that require the maintenance of certain
            financial  ratios or  reserves  and any such  covenant  is  breached
            without a waiver or renegotiation of that covenant;


                                       7
<PAGE>

      o     our immediate payment of all principal and accrued interest, if any,
            if the debt security is payable on demand; and

      o     our inability to obtain additional financing,  if necessary,  if the
            debt security contains  covenants  restricting our ability to obtain
            additional financing while such security is outstanding.

It is likely that most or all of our current  officers and directors will resign
upon  consummation  of a  business  combination  and we will have  only  limited
ability to evaluate the management of the target business.

      Our ability to successfully effect a business  combination will be totally
dependent  upon the  efforts of our key  personnel.  The future  role of our key
personnel in the target  business,  however,  cannot  presently be  ascertained.
Although it is possible that some of our key personnel will remain associated in
various capacities with the target business following a business combination, it
is likely that the management of the target business at the time of the business
combination will remain in place.  Although we intend to closely  scrutinize the
management of a prospective  target  business in connection  with evaluating the
desirability of effecting a business combination,  we cannot assure you that our
assessment of management will prove to be correct.

Our officers and directors may allocate their time to other  businesses  thereby
causing  conflicts  of  interest in their  determination  as to how much time to
devote to our  affairs.  This  could have a  negative  impact on our  ability to
consummate a business combination.

      Our officers and  directors  are not required to commit their full time to
our affairs, which may result in a conflict of interest in allocating their time
between our operations and other  businesses.  We do not intend to have any full
time employees prior to the consummation of a business  combination.  All of our
executive  officers are engaged in several other business  endeavors and are not
obligated  to  contribute  any specific  number of hours to our affairs.  If our
executive   officers'  other  business  affairs  require  them  to  devote  more
substantial  amounts of time to such  affairs,  it could limit their  ability to
devote time to our  affairs  and could have a negative  impact on our ability to
consummate a business combination.

Our officers and directors  are  affiliated  with  entities  engaged in business
activities similar to those intended to be conducted by us and, accordingly, may
have  conflicts of interest in  determining  which entity a particular  business
opportunity should be presented to.

      Our officers and directors are affiliated  with entities,  including other
"blank  check"  companies,  engaged  in  business  activities  similar  to those
intended to be conducted by us.  Additionally,  our officers and  directors  may
become aware of business opportunities which may be appropriate for presentation
to us as well as the other  entities to which they have  fiduciary  obligations.
Accordingly,  they may have conflicts of interest in determining to which entity
a particular business opportunity should be presented. We cannot assure you that
these conflicts will be resolved in our favor.

All of our officers and  directors own shares of our common stock which will not
participate in liquidation  distributions and therefore they may have a conflict
of interest in determining  whether a particular  target business is appropriate
for a business combination.

      All of our  officers  and  directors  own stock in our  company,  but have
waived their right to receive distributions upon our liquidation. The shares and
warrants  owned by our  directors  and  officers  will be worthless if we do not
consummate a business  combination.  The personal and financial interests of our
directors  and  officers may  influence  their  motivation  in  identifying  and
selecting  a target  business  and  completing  a business  combination  timely.
Consequently,  our  directors'  and  officers'  discretion  in  identifying  and
selecting a suitable  target  business may result in a conflict of interest when
determining  whether the terms,  conditions and timing of a particular  business
combination are appropriate and in our stockholders' best interest.

      It is  probable  that we will  consummate  a business  combination  with a
single operating business. Accordingly, the prospects for our success may be:

      o     solely dependent upon the performance of a single business, or

      o     dependent upon the  development or market  acceptance of a single or
            limited number of products, processes or services.

      In this case, we will not be able to diversify  our  operations or benefit
from the  possible  spreading  of risks or  offsetting  of losses,  unlike other
entities which may have the resources to complete several business  combinations
in different industries or different areas of a single industry.


                                       8
<PAGE>

Because of our limited  resources and the  significant  competition for business
combination  opportunities,  we  may  not  be  able  to  consummate  a  business
combination with growth potential.

      We expect to encounter  competition  from other entities having a business
objective  similar to ours,  including  venture capital funds,  leveraged buyout
funds and operating  businesses  competing for  acquisitions in the PRC. Many of
these entities are well established and have extensive experience in identifying
and effecting  business  combinations  directly or through  affiliates.  Many of
these competitors  possess greater technical,  human and other resources than we
do and our financial  resources will be relatively  limited when contrasted with
those of many of these  competitors.  While we believe  that there are  numerous
potential  target  businesses  that we could acquire,  our ability to compete in
acquiring  certain  sizable target  businesses  will be limited by our available
financial  resources.  This  inherent  competitive  limitation  gives  others an
advantage in pursuing the acquisition of certain target businesses. Further, the
obligation we have to seek  stockholder  approval of a business  combination may
delay the consummation of a transaction, and our obligation to convert into cash
the shares of common stock held by public  stockholders in certain instances may
reduce the resources  available for a business  combination.  Additionally,  our
outstanding warrants,  and the future dilution they potentially  represent,  may
not be viewed favorably by certain target  businesses.  Any of these obligations
may  place  us at a  competitive  disadvantage  in  successfully  negotiating  a
business combination.

We may be unable to obtain  additional  financing,  if  required,  to complete a
business  combination  or to  fund  the  operations  and  growth  of the  target
business,  which could compel us to  restructure  the  transaction  or abandon a
particular business combination.

      Although we believe our current  assets will be  sufficient to allow us to
consummate a business  combination,  if we require further funds, either because
of the size of the business  combination  or the depletion of our available cash
in search of a target  business,  or because we become obligated to convert into
cash a significant  number of shares from  dissenting  stockholders,  we will be
required to seek additional financing.  We cannot assure you that such financing
would be available on acceptable terms, if at all. To the extent that additional
financing  proves to be  unavailable  when  needed to  consummate  a  particular
business  combination,  we would be compelled to restructure  the transaction or
abandon that  particular  business  combination  and seek an alternative  target
business candidate. In addition, if we consummate a business combination, we may
require  additional  financing  to fund the  operations  or growth of the target
business.  The  failure  to secure  additional  financing  could have a material
adverse effect on the continued  development  or growth of the target  business.
None of our  officers,  directors  or  stockholders  is  required to provide any
financing to us in connection with or after a business combination.

Our existing  stockholders,  including  our officers  and  directors,  control a
substantial  interest in us and thus may  influence  certain  actions  requiring
stockholder vote.

      Our board of directors is divided into three  classes,  each of which will
generally serve for a term of three years with only one class of directors being
elected in each year.  It is  unlikely  that there will be an annual  meeting of
stockholders  to elect new  directors  prior to the  consummation  of a business
combination,  in which case all of the current directors will continue in office
at least until the  consummation  of the  business  combination.  If there is an
annual meeting,  as a consequence of our "staggered" board of directors,  only a
minority of the board of  directors  will be  considered  for  election  and our
existing   stockholders,   because  of  their  ownership  position,   will  have
considerable  influence  regarding  the  outcome.   Accordingly,   our  existing
stockholders  will  continue  to exert  considerable  control at least until the
consummation of a business combination.

Our  outstanding  warrants  may have an adverse  effect on the  market  price of
common stock and make it more difficult to effect a business combination.

      We currently have outstanding  warrants to purchase  11,500,000  shares of
common stock and an option to purchase a total of 250,000 shares of common stock
and warrants to purchase an additional  500,000  shares of common stock.  To the
extent we issue  shares of common  stock to effect a business  combination,  the
potential  for the issuance of  substantial  numbers of  additional  shares upon
exercise  of  these  warrants  and  options  could  make  us a  less  attractive
acquisition  vehicle in the eyes of a target business as such  securities,  when
exercised,  will  increase  the number of issued and  outstanding  shares of our
common stock and reduce the value of the shares  issued to complete the business
combination. Accordingly, our warrants and options may make it more difficult to
effectuate a business  combination or increase the cost of the target  business.
Additionally,  the  sale,  or  even  the  possibility  of  sale,  of the  shares
underlying  the warrants and options could have an adverse  effect on the market
price for our securities or on our ability to obtain future public financing. If
and to the extent  these  warrants  and  options  are  exercised,  there will be
dilution to the holders of the common stock.


                                       9
<PAGE>

If we are unable to effect a business  combination  and are forced to liquidate,
our warrants will expire worthless.

      If we do not complete a business combination by February 10, 2007, we will
be dissolved and will distribute to all holders of IPO Shares,  in proportion to
the number of IPO Shares held by them,  an aggregate  sum equal to the amount in
the trust fund,  inclusive of any interest,  plus any  remaining net assets.  In
such  event,  there will be no  distribution  with  respect  to our  outstanding
warrants. Accordingly, the warrants will expire worthless.

If our  Founders  exercise  their  registration  rights,  it may have an adverse
effect on the market price of our common stock and the existence of these rights
may make it more difficult to effect a business combination.

      Our  Founders  are entitled to demand that we register the resale of their
shares of common  stock at any time  after the date on which  their  shares  are
released from escrow.  If our Founders exercise their  registration  rights with
respect to all of their shares of common stock, then there will be an additional
1,250,000 shares of common stock eligible for trading in the public market.  The
presence  of this  additional  number of shares of  common  stock  eligible  for
trading in the public  market may have an adverse  effect on the market price of
our common  stock.  In addition,  the existence of these rights may make it more
difficult  to  effectuate  a business  combination  or increase  the cost of the
target  business,  as the stockholders of the target business may be discouraged
from entering into a business combination with us or will request a higher price
for their securities as a result of these registration  rights and the potential
future  effect  their  exercise  may have on the  trading  market for our common
stock.

Our securities are quoted on the OTC Bulletin Board,  which limits the liquidity
and price of our securities.

      Our securities are traded on the OTC Bulletin Board, an NASD-sponsored and
operated  inter-dealer  automated  quotation  system for equity  securities  not
included on The Nasdaq  Stock  Market.  Quotation of our  securities  on the OTC
Bulletin Board limits the liquidity and price of our securities more than if our
securities  were  quoted or  listed on The  Nasdaq  Stock  Market or a  national
exchange.

If we are deemed to be an  investment  company,  we may be required to institute
burdensome compliance  requirements and our activities may be restricted,  which
may make it difficult for us to complete a business combination.

      If we are deemed to be an investment  company under the Investment Company
Act of 1940, our activities may be restricted, including:

      o     restrictions on the nature of our investments; and

      o     restrictions on the issuance of securities,

which may make it difficult for us to complete a business combination.

      In  addition,  we  may  have  imposed  upon  us  burdensome  requirements,
including:

      o     registration as an investment company;

      o     adoption of a specific form of corporate structure; and

      o     reporting, record keeping, voting, proxy and disclosure requirements
            and other rules and regulations.

      We do not believe that our anticipated  principal  activities will subject
us to the  Investment  Company Act of 1940.  To this end, the  proceeds  held in
trust may only be invested by the trust agent in  "government  securities"  with
specific  maturity dates. By restricting the investment of the proceeds to these
instruments,  we intend to meet the requirements  for the exemption  provided in
Rule 3a-1  promulgated  under the  Investment  Company  Act of 1940.  If we were
deemed to be subject to that act,  compliance with these  additional  regulatory
burdens would require additional expense that we have not budgeted.


                                       10
<PAGE>

Risks associated with our acquisition of a target business in the PRC.

If the PRC does not continue  its policy of economic  reforms,  it could,  among
other  things,  result in an  increase  in  tariffs  and trade  restrictions  on
products we ultimately produce or sell following a business combination.

      The PRC government  has been reforming its economic  system since the late
1970s.  The economy of the PRC has historically  been a nationalistic,  "planned
economy," meaning it has functioned and produced according to governmental plans
and pre-set targets or quotas.  However, in recent years, the PRC government has
implemented  measures  emphasizing the utilization of market forces for economic
reform and the reduction of state ownership in business  enterprises.  We cannot
predict  the  timing  or  extent  of any  future  economic  reforms  that may be
proposed.

If relations  between the United States and the PRC deteriorate,  it could cause
potential  target   businesses  or  their  goods  or  services  to  become  less
attractive.

      The  relationship  between  the  United  States  and the PRC is subject to
sudden  fluctuation and periodic  tension.  In the recent past the United States
has announced its intention to impose quotas on various Chinese  imports,  which
may be extended  for several  years.  Such import  quotas may  adversely  affect
political  relations  between  the  two  countries  and  result  in  retaliatory
countermeasures  by the PRC in  industries  that may affect our ultimate  target
business.  Relations may also be  compromised  if the U.S.  becomes a more vocal
advocate of Taiwan or proceeds to sell certain  military  weapons and technology
to Taiwan.  Changes in political  conditions in the PRC and changes in the state
of Sino-U.S.  relations are difficult to predict and could adversely  affect our
operations or cause potential  target  businesses or their goods and services to
become less  attractive.  Because we are not limited to any  specific  industry,
there is no basis for investors in this offering to evaluate the possible extent
of any impact on our ultimate  operations if relations are strained  between the
PRC and the United States.

If the PRC imposes  restrictions to reduce inflation,  future economic growth in
the PRC could be severely curtailed,  which could lead to a significant decrease
in our profitability following a business combination.

      While the economy of the PRC has experienced rapid growth, this growth has
been uneven among various  sectors of the economy and in different  geographical
areas of the country.  Rapid economic growth can lead to growth in the supply of
money and rising  inflation.  If prices for the products of our ultimate  target
business rise at a rate that is  insufficient  to compensate for the rise in the
costs of supplies,  it may have an adverse effect on profitability.  In order to
control  inflation in the past,  the PRC has imposed  controls on bank  credits,
limits on loans for fixed  assets and  restrictions  on state bank  lending.  If
similar  restrictions are imposed,  it may lead to a slowing of economic growth.
Because we are not limited to any specific industry,  the ultimate industry that
we operate  in may be  affected  more  severely  by such a slowing  of  economic
growth.

Any devaluation of currencies used in the PRC could negatively impact our target
business'  results  of  operations  and cause the cost of a target  business  as
measured in dollars to increase.

      Because our objective is to acquire a target  business  having its primary
operating facilities located in the PRC, and because  substantially all revenues
and income would be received in a foreign  currency  such as Renminbi,  the main
currency  used  in the  PRC,  the  dollar  equivalent  of  our  net  assets  and
distributions, if any, would be adversely affected by reductions in the value of
the  Renminbi.  The value of the Renminbi  fluctuates  and is affected by, among
other  things,  changes in the PRC's  political  and  economic  conditions.  The
conversion  of  Renminbi  into  foreign  currencies  such as the dollar has been
generally based on rates set by the People's Bank of China,  which are set daily
based on the previous day's interbank  foreign exchange market rates and current
exchange rates on the world  financial  markets.  However,  any  devaluation may
materially and adversely affect a target business.  If the Renminbi  appreciates
in value against the dollar prior to the consummation of a business combination,
the cost of a target business as measured in dollars will increase.

Because  Chinese  law will  govern  almost all of any target  business  material
agreements,  we may  not be  able  to  enforce  our  rights  within  the  PRC or
elsewhere,  which  could  result in a  significant  loss of  business,  business
opportunities or capital.

      Chinese  law will  govern  almost  all of our  target  business'  material
agreements,  many of which may be with Chinese governmental  agencies. We cannot
assure you that the target  business will be able to enforce any of its material
agreements or that remedies will be available  outside of the PRC. The system of
laws and the  enforcement  of existing  laws in the PRC may not be as certain in
implementation and interpretation as in the United States. The Chinese judiciary
is relatively  inexperienced in enforcing  corporate and commercial law, leading
to a  higher  than  usual  degree  of  uncertainty  as to  the  outcome  of  any
litigation.  The inability to enforce or obtain a remedy under any of our future
agreements   could  result  in  a   significant   loss  of  business,   business
opportunities or capital.


                                       11
<PAGE>

      After the consummation of a business combination, substantially all of our
assets and most of our  directors  and officers  will be located  outside of the
United States.  As a result,  it may not be possible for investors in the United
States to enforce  their legal  rights,  to effect  service of process  upon our
directors or officers or to enforce judgments of United States courts predicated
upon civil  liabilities  and criminal  penalties of our  directors  and officers
under Federal securities laws. Moreover,  we have been advised that the PRC does
not have treaties  providing for the reciprocal  recognition  and enforcement of
judgments  of  courts  with  the  United  States.  Further,  it  is  unclear  if
extradition  treaties now in effect  between the United States and the PRC would
permit  effective  enforcement of criminal  penalties of the Federal  securities
laws.

Many  industries  in China are subject to government  regulations  that limit or
prohibit foreign  investments in such industries,  which may limit the potential
number of acquisition candidates.

      The Chinese government has imposed  regulations in various industries that
would limit foreign investors' equity ownership or prohibit foreign  investments
altogether in companies that operate in such industries. As a result, the number
of potential acquisition candidates available to us may be limited.

If the United  States  imposes  trade  sanctions  on the PRC due to its  current
currency policies,  our target business' ability to succeed in the international
markets may be diminished.

      Trade  groups in the United  States  have  blamed  the cheap  value of the
Chinese currency for causing job losses in American factories,  giving exporters
an unfair advantage and making its imports expensive.  If Congress deems this to
be the case,  tariffs  would be imposed on Chinese  imports in addition to those
already in force.  If an  additional  tariff is  imposed,  it is  possible  that
China-based  companies will no longer maintain significant price advantages over
foreign companies, including the United States, on their goods and services.

ITEM 2. DESCRIPTION OF PROPERTY

      We maintain our executive offices at 625 Broadway,  Suite 1111, San Diego,
California  pursuant to an agreement with Chardan  Ventures LLC, an affiliate of
Dr. Richard D. Propper,  our chairman of the board, and Jiangnan Huang and Zhang
Li, each a member of our board of directors.  We pay Chardan  Ventures a monthly
fee of $7,500 which is for general and administrative  services including office
space,  utilities and secretarial  support. We believe,  based on rents and fees
for similar services in the San Diego metropolitan area, that the fee charged by
Chardan  Ventures is at least as  favorable  as we could have  obtained  from an
unaffiliated  person.  We consider  our current  office  space  adequate for our
current operations.

ITEM 3. LEGAL PROCEEDINGS

      None.

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

      None.


                                       12
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

      Our units,  common stock and  warrants are traded on the  Over-the-Counter
Bulletin  Board  under  the  symbols  CNCAU,  CNCA and CNCAW  respectively.  The
following  table sets forth the range of high and low closing bid prices for the
units,  common  stock and warrants  for the periods  indicated  since such units
commenced  public  trading  on August 3, 2005 and since  such  common  stock and
warrants  commenced  public  trading on August 31,  2005.  The  over-the-counter
market quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not necessarily reflect actual transactions.

<TABLE>
<CAPTION>
                                               Common Stock       Warrants         Units
                                               -------------   -------------   -------------
                                                High    Low     High    Low     High    Low
                                               -----   -----   -----   -----   -----   -----
<S>                                            <C>     <C>     <C>     <C>     <C>     <C>
2004:
    Third Quarter (beginning August 3, 2005)   $6.00   $5.17   $1.15   $0.70   $7.50   $6.15
    Fourth Quarter                             $5.75   $5.15   $1.86   $1.01   $9.30   $7.20
</TABLE>

      As of February 13, 2006,  there was one holder of record of our units, six
holders of record of our common stock and one holders of record of our warrants.
We believe the beneficial holders of the units,  common stock and warrants to be
in excess of 400 persons each.

Dividends

      We have not  paid any  dividends  on our  common  stock to date and do not
intend to pay dividends prior to the completion of a business  combination.  The
payment of  dividends  in the future will be  contingent  upon our  revenues and
earnings,   if  any,  capital   requirements  and  general  financial  condition
subsequent to completion of a business combination. The payment of any dividends
subsequent to a business  combination  will be within the discretion of our then
board of  directors.  It is the present  intention  of our board of directors to
retain  all  earnings,   if  any,  for  use  in  our  business  operations  and,
accordingly,  our board  does not  anticipate  declaring  any  dividends  in the
foreseeable future.

Initial Public Offering

      In August 2005, we closed our initial public offering of 5,750,000  units,
including 750,000 units issued upon exercise of the underwriters' over-allotment
option,  with each unit  consisting  of one  share of our  common  stock and two
warrants, each to purchase one share of our common stock at an exercise price of
$5.00 per  share.  The units were sold at an  offering  price of $6.00 per unit,
generating gross proceeds of $34,500,000. The representative of the underwriters
in the offering was  EarlyBirdCapital,  Inc. The securities sold in the offering
were registered under the Securities Act of 1933 on a registration  statement on
Form S-1 (No. 333-125016).

      We paid a total of $3,035,000 in underwriting  discounts and  commissions,
and  approximately  $519,257  was paid for costs  and  expenses  related  to the
offering.  After  deducting the  underwriting  discounts and commissions and the
offering  expenses,  the  total  net  proceeds  to us  from  the  offering  were
approximately $30,946,000,  of which $29,835,000 was deposited into a trust fund
and the remaining  proceeds  (approximately  $1,111,000)  became available to be
used to provide for business,  legal and accounting due diligence on prospective
business  combinations and continuing general and administrative  expenses.  The
net  proceeds  deposited  into the  trust  fund and the  interest  earned on the
proceeds remain on deposit in the trust fund.

      Information  regarding other expenses incurred for the year ended December
31, 2005 appears following Item 6 of this Report.


                                       13
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      We were formed on March 10, 2005 to serve as a vehicle to effect a merger,
capital stock exchange,  asset acquisition or other similar business combination
with an operating business that has its primary operating  facilities located in
the People's  Republic of China north of the Yangtze River. We intend to utilize
cash derived from the proceeds of our recently  completed public  offering,  our
capital  stock,  debt or a  combination  of cash,  capital  stock and  debt,  in
effecting a business combination.

      We consummated  our initial public offering on August 10, 2005. All of our
activity  from March 10, 2005 through  August 10, 2005 related to our  formation
and our initial public offering.

      We incurred a net loss of $101,742  for the year ended  December 31, 2005.
Our total  costs and  expenses,  all of which  were  related  to our  formation,
maintenance  of our  corporate  status and efforts to find and  evaluate  target
businesses, were just over approximately $454,000, consisting principally of the
following:  travel and entertainment  expenses,  consulting fees,  directors and
officers  liability  insurance,  amounts paid to a related party under a monthly
administrative services agreement,  professional fees, state franchise taxes and
miscellaneous expenses.

      Those  expenses  were offset by  interest  income of $348,000 on the trust
fund investments and funds outside the trust fund, excluding deferred interest.

      Consulting  expenses  of $66,700  were paid  pursuant to an  agreement  we
entered into with  Greatace,  Ltd., a China-based  consulting  firm,  during the
quarter ended September 30, 2005, to assist in our search for prospective target
companies in the northern  portion of China.  Greatace  has also  performed  due
diligence on prospective  target  businesses and assisted us in structuring  our
business  combination  with  Gifted Time  Holdings,  Limited,  a British  Virgin
Islands company that holds a controlling interest in Beijing HollySys Co., Ltd.,
Hangzhou  HollySys  Automation Co., Ltd. and their  respective  subsidiaries and
affiliates. In the event that we consummate our transaction with Gifted Time (or
another target), we are obligated to pay Greatace an additional $133,300.

      $29,835,000 of the net proceeds of our initial public  offering was placed
in trust,  reserved for the following:  (a)  distribution to the persons holding
stock issued in our initial  public  offering upon their exercise of dissenter's
rights in connection  with a proposed  transaction  or upon  liquidation  of our
company in the event that we do not conclude a business  combination  within the
time  allowed by our  certificate  of  incorporation;  (b) as  consideration  in
completing  a business  combination;  or (c) as working  capital  for use by the
acquired business.

      The  balance  of the  funds  raised  in our  public  offering,  net of the
offering expenses,  was approximately  $1,111,000.  This amount was available to
pay for  business,  legal,  accounting  and due diligence  expenses  relating to
prospective acquisitions and for continuing general and administrative expenses.
We expect to use most,  if not all, of the net  proceeds  of our initial  public
offering  not held in trust to identify  and  evaluate  prospective  acquisition
candidates,  select  the  target  business  and  to  structure,   negotiate  and
consummate  the  business  combination.  To the extent that we do not use all of
those funds for those purposes, they will remain available for the same purposes
as the funds held in trust.

      At December 31, 2005, the trust fund contained $30,261,000, which included
interest earned on the funds since the date of our public  offering.  Outside of
the  trust  fund we had  current  assets  of  $1,093,000  consisting  of cash of
$856,000,  prepaid expenses of $59,000 and deferred taxes of $177,000, offset by
total  current  liabilities  of  $484,000,  leaving us with  working  capital of
$608,000.  If we are unable to consummate our proposed business combination with
Gifted Time,  discussed above, we may or may not have sufficient funds available
outside of the trust fund to operate until we consummate a business combination.
In the event that we do not, we intend to supplement our working capital through
borrowings.

      Commencing in August 2005, we became obligated to pay to Chardan Ventures,
LLC a monthly  fee of $7,500 for general and  administrative  services.  We will
remain  obligated to pay that fee until we consummate a business  combination or
until we liquidate the company.

      We borrowed $80,000 from two of our initial stockholders on a non-interest
bearing basis to cover certain of our offering  expenses that we were  obligated
to pay prior to the time that proceeds of our public  offering  were  available.
These  amounts were repaid in August 2005 out of proceeds of our initial  public
offering.

Critical Accounting Policies


                                       14
<PAGE>

Cash and Cash Equivalents

      For  financial  statement  purposes,  we consider  all highly  liquid debt
instruments  with a maturity of three  months or less when  purchased to be cash
equivalents.  We maintain our cash in bank deposit accounts in the United States
of America which, at times, may exceed applicable  insurance limits. We have not
experienced  any losses in such  accounts.  We believe we are not exposed to any
significant credit risk on cash and cash equivalents.

Investments Held in Trust

      Investments  held in  trust  are  invested  in  United  States  government
securities  (Treasury  Bills)  with a  maturity  of 180 days or less  which  are
accounted  for  as a  trading  security  and  recorded  at  market  value  which
approximates amortized cost. The amount held in the Trust Fund was approximately
$30,260,861  at  December  31,  2005.  The  excess of market  value  over  cost,
exclusive  of the deferred  interest  described  below,  is included in interest
income in the accompanying Statement of Operations.

Deferred Interest

      Deferred  interest  consists  of  19.99%  of the  interest  earned  on the
investments held in trust.

Income Taxes

      We account  for income  taxes  using the asset and  liability  method,  as
prescribed by Statement of Financial  Accounting  Standards No. 109  "Accounting
for Income Taxes". Under the asset and liability method, deferred tax assets and
liabilities  are  recognized  for the future tax  consequences  attributable  to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  and their  respective  tax bases,  and operating  loss and tax
credit  carryforwards.  Deferred tax assets and  liabilities  are measured using
enacted  tax rates  expected  to apply to  taxable  income in the years in which
those temporary  differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Statutory taxes not based
on income are included in general and administrative expenses.

Off-Balance Sheet Arrangements

      Warrants and  representative's  unit purchase option issued in conjunction
with our initial public  offering are equity linked  derivatives and accordingly
represent off balance sheet arrangements. In addition, the conversion feature of
the  representative's  unit purchase option constitutes an embedded  derivative.
The  warrants,  unit  purchase  option  and  conversion  feature  meet the scope
exception in paragraph 11(a) of FAS 133 and are accordingly not accounted for as
derivatives  for purposes of FAS 133, but instead are  accounted  for as equity.
See Footnote 5 to the financial statements for more information.

ITEM 7. FINANCIAL STATEMENTS

      This  information  appears  following  Item  14  of  this  Report  and  is
incorporated herein by reference.

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

      None.

ITEM 8A. CONTROL AND PROCEDURES

      An  evaluation  of  the  effectiveness  of  our  disclosure  controls  and
procedures as of December 31, 2005 was made under the  supervision  and with the
participation of our management, including our chief executive officer and chief
financial officer. Based on that evaluation,  they concluded that our disclosure
controls and  procedures  are  effective as of the end of the period  covered by
this report to ensure that information required to be disclosed by us in reports
that we file or submit  under the  Securities  Exchange Act of 1934 is recorded,
processed,  summarized  and  reported  within  the  time  periods  specified  in
Securities and Exchange  Commission rules and forms. Since our inception through
December 31, 2005,  there were no significant  changes in our internal  controls
over financial reporting that has materially  affected,  or is reasonably likely
to materially affect our internal controls over financial reporting.


                                       15
<PAGE>


ITEM 8B. OTHER INFORMATION

      None.


                                       16
<PAGE>


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors and Executive Officers

         Our current directors and executive officers are as follows:

Name                      Age    Position
----------------------    ---    ----------------------------------------------
Dr. Richard D. Propper    58     Chairman of the Board of Directors
Li Zhang                  52     Chief Executive Officer and Director
Kerry Propper             30     Chief Financial Officer, Secretary and Director
Jiangnan Huang            55     Executive Vice President and Director

      Dr.  Richard D.  Propper has been our  chairman of the board of  directors
since our inception and has been the chief financial officer and a member of the
board of directors of Chardan China III since its inception.  He has also served
as the  chairman of the board of directors of Chardan  China  Acquisition  Corp.
since its inception in December 2003. In August 2003, he formed Chardan Capital,
LLC, a venture capital management and financial strategic  consulting firm based
in Southern  California,  and has been one of its managers  since its formation.
During this time, Dr. Propper has been focused  principally on building business
relationships  between Chinese and U.S. companies.  From June 2002 to July 2003,
Dr.  Propper  was chief  executive  officer  and  chairman  of the board of Mera
Pharmaceuticals,  Inc., a public  company that  produces  products  from aquatic
microorganisms.  In 1984, he founded Montgomery Medical Ventures Funds, an early
stage venture  capital  firm,  and was the managing  general  partner until July
1993.  He then pursued  private  investment  activities  from July 1993 until he
formed Chardan  Capital in August 2003. Dr. Propper  received a B.S. from McGill
University and an M.D. from Stanford University.  He also spent ten years on the
faculty  of  Harvard  medical  school  as a  research  fellow  and an  assistant
professor in pediatrics.  Dr. Propper is the father of Kerry Propper,  our chief
financial officer and secretary.

      Li Zhang has been our chief executive officer and a member of our board of
directors  since our inception and has been the executive  vice  president and a
member of the board of directors of Chardan  China III since its  inception.  He
has also  served  as  chief  financial  officer  and a  member  of the  board of
directors of Chardan  China  Acquisition  Corp.  since its inception in December
2003. Mr. Zhang has also served as a member and manager of Chardan Capital,  LLC
since its inception in August 2003.  Since  September 2001, Mr. Zhang has been a
principal and president of Pacific Asia  Ventures,  LLC, a company that provides
strategic  consulting services for Chinese-U.S.  business  relationships.  Since
September 2002, he has been an advisor to Mera  Pharmaceuticals,  Inc. Mr. Zhang
has also been an advisor for Parentech,  Inc., a company that produces  products
that enhance the  development  and  well-being of infants,  since December 2002.
From  January  1994 until  September  2001,  Mr.  Zhang  served as  chairman  of
Sino-American  Investment,  Inc., an investment  consulting firm. From September
1996 until  September  1998,  Mr. Zhang also served as a consultant to the China
Retail Fund, a venture capital fund that invests in retail ventures with backing
from American  International  Group.  Mr. Zhang has two decades of experience in
establishing  commercial and financial  relationships between Chinese companies,
government  agencies and Western investors.  Among his other affiliations during
that time, he was chairman of Sino-American  Power, Ltd., an organization formed
for the purpose of building electric power generating plants in China, from 1994
through 1996. Mr. Zhang received a B.A. from the Shenyang  Teacher's  University
in the PRC.

      Kerry Propper has been our chief financial officer, secretary and a member
of our board of directors  since our inception and has been the chief  executive
officer and a member of the board of  directors  of Chardan  China III since its
inception.  Mr.  Propper has also served as the executive  vice  president and a
member of the board of directors of Chardan China  Acquisition  Corp.  since its
inception in December 2003.  Mr. Propper has been the owner and chief  executive
officer of Chardan  Capital Markets LLC, a New York based  broker/dealer,  since
July  2003.  He has also been a managing  member of SUJG,  Inc.,  an  investment
company  since April 2005.  Mr.  Propper  also sits on the board of directors of
Source Atlantic Inc., a health care consulting firm based in Massachusetts.  Mr.
Propper was a founder,  and from  February  1999 to July 2003 owner and managing
director of Windsor Capital  Advisors,  a full service brokerage firm also based
in New York.  Mr.  Propper also founded The Private  Capital  Group LLC, a small
private  investment  firm  specializing  in hard  money  loans  and  convertible
preferred debt and equity offerings for small public companies,  in May 2000 and
was affiliated  with it until December 2003. From July 1997 until February 1999,
Mr.  Propper  worked at Aegis Capital  Corp., a broker dealer and member firm of
the  NASD.  Mr.  Propper  received  his B.A.  (with  honors)  in  Economics  and
International  Studies  from Colby  College and studied at the London  School of
Economics. Kerry Propper is Dr. Propper's son.


                                       17
<PAGE>

      Jiangnan  Huang has been our executive  vice president and a member of our
board of directors since our inception and has been the chairman of the board of
directors of Chardan China III since its inception. Mr. Huang has also served as
the chief  executive  officer and a member of the board of  directors of Chardan
China Acquisition Corp. since its inception in December 2003. Mr. Huang has also
served as a member and manager of Chardan  Capital,  LLC since August 2003.  Mr.
Huang has been a senior  advisor to CITIC  Securities,  a Chinese broker dealer,
with principal  responsibility  for its large  international  investment banking
projects,  since  October  2002.  He has  also  held a number  of  other  senior
positions in Chinese financial  companies,  including his tenure as president of
Hong Kong Southern  Capital  Financial Group and director and general manager of
Hong Kong Southern Capital  Securities Co., Ltd. from July 2000 to October 2002.
From October 1997 until July 2000, he also served in a number of capacities with
China  Everbright  Securities  Co., Ltd. (Hong Kong),  including a role as chief
investment  officer of the China  Everbright  Growth Fund. Mr. Huang received an
MBA from the China  Social  Sciences  University  in 1981,  where he  engaged in
advanced  study at The Regional  Economic  Research & Development  Center at the
United Nations.

      Our board of directors  is divided into three  classes with only one class
of  directors  being  elected in each year and each class  serving a  three-year
term. The term of office of the first class of directors, consisting of Jiangnan
Huang,  will expire at our first  annual  meeting of  stockholders.  The term of
office of the second  class of  directors,  consisting  of Kerry  Propper,  will
expire at the second  annual  meeting.  The term of office of the third class of
directors,  consisting  of Dr.  Propper  and Li Zhang,  will expire at the third
annual meeting.

Audit Committee

      Because we do not have any  "independent"  directors,  the entire Board of
Directors  has acted as the  Audit  Committee.  In  connection  with a  business
combination,  the board of directors  intends to cause the  resulting  entity to
establish an appropriate  audit committee within the guidelines of NASDAQ or one
of the stock  exchanges  and the rules  and  regulations  of the SEC and adopt a
committee charter.

Code of Ethics

      We have not  adopted  a formal  code of  ethics  statement.  The  board of
directors  evaluated the business of the company and the number of employees and
determined  that since the business is largely  limited to maintaining  its cash
investments  while  its  searches  for  a  target  company  and  consummates  an
acquisition  and the only persons  acting for the company are the four directors
who are also the officers of the company,  general  rules of fiduciary  duty and
federal and state securities laws provide adequate ethical  guidelines for their
conduct.

      In connection with a business combination,  the board of directors intends
to cause the resulting  entity to establish an appropriate code of ethics within
the  guidelines  of  NASDAQ  or one of the  stock  exchanges  and the  rules and
regulations of the SEC.

Shareholder-Director Communication

      We have  neither a  nominating  committee  for  persons to be  proposed as
directors  for  election  to the  board  of  directors  nor a formal  method  of
communicating  the  names  of  nominees  from  shareholders.  We do not have any
restrictions on shareholder  nominations  under our certificate of incorporation
or by-laws other than advance notice to provide sufficient time for the board of
directors to prepare the appropriate  documentation under Delaware corporate law
and the federal proxy rules.  Currently the entire board of directors decides on
nominees, on the recommendation of one or more members of the board. None of the
members of the board of directors are "independent." The board of directors will
consider suggestions from individual shareholders,  subject to evaluation of the
person's merits.  Stockholders may communicate nominee  suggestions  directly to
any of the board members, accompanied by biographical details and a statement of
support for the nominees. The suggested nominee must also provide a statement of
consent  to being  considered  for  nomination.  Although  there  are no  formal
criteria for nominees,  the board of directors  believes that persons  should be
actively  engaged in business  endeavors,  have a financial  background,  and be
familiar with acquisition strategies and money management.

      Because the  management and directors of the company are the same persons,
the board of directors  has  determined  not to adopt a formal  methodology  for
communications  from shareholders on the belief that any communication  would be
brought to the boards' attention by virtue of the co-extensive employment.


                                       18
<PAGE>

      The board of  directors  does not have a formal  policy of  attendance  of
directors at the annual meeting. It does encourage such attendance.  The company
did not have an annual meeting in 2005.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section  16(a)  of the  Securities  Exchange  Act  of  1934  requires  our
officers,  directors  and persons who own more than ten percent of a  registered
class of our equity  securities  to file  reports of  ownership  and  changes in
ownership with the Securities and Exchange Commission.  Officers,  directors and
ten percent stockholders are required by regulation to furnish us with copies of
all Section 16(a) forms they file. Based solely on copies of such forms received
or written  representations  from certain reporting persons that no Form 5s were
required  for those  persons,  we believe  that,  during  the fiscal  year ended
December 31, 2005, all filing requirements applicable to our officers, directors
and greater than ten percent beneficial owners were complied with.

ITEM 10. EXECUTIVE COMPENSATION

      Commencing  August 10,  2005 and ending upon the  acquisition  of a target
business, we are committed to pay Chardan Ventures a fee of $7,500 per month for
providing  us with office  space and certain  office and  secretarial  services.
Other than this $7,500  per-month fee, no  compensation  of any kind,  including
finders and consulting fees, will be paid to any of our Founders or any of their
respective  affiliates,  for services  rendered prior to or in connection with a
business  combination.   However,  our  Founders  will  be  reimbursed  for  any
out-of-pocket expenses incurred in connection with activities on our behalf such
as  identifying  potential  target  businesses  and  performing due diligence on
suitable business combinations.

      Since  our  formation,  we have not  granted  any stock  options  or stock
appreciation rights or any awards under long-term incentive plans.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The  following  table  sets forth  information  regarding  the  beneficial
ownership of our common stock as of December 31, 2005 by:

      o     each person known by us to be the  beneficial  owner of more than 5%
            of our outstanding shares of common stock;

      o     each of our officers and directors; and

      o     all our officers and directors as a group.

Unless otherwise indicated,  we believe that all persons named in the table have
sole  voting and  investment  power with  respect to all shares of common  stock
beneficially owned by them.

                                         Amount and Nature
                                           of Beneficial           Percent of
Name and Address of Beneficial Owner        Ownership                Class
------------------------------------     -----------------        -----------
Richard D. Propper, M.D. (2)                  635,474                 9.1%
Jeffrey L. Feinberg (3)                       600,000                 8.6%
Amaranth Global Equities Master
  Fund Limited (4)                            535,000                 7.6%
Sapling, LLC (5)                              502,500                 7.2%
Jack Silver (6)                               400,000                 5.7%

(1)   Beneficial  ownership has been  determined  in accordance  with Rule 13d-3
      under the Securities  Exchange Act of 1934.  Unless  otherwise  noted,  we
      believe  that  all  persons  named  in the  table  have  sole  voting  and
      investment   power  with  respect  to  all  shares  of  our  common  stock
      beneficially  owned by them.  These amounts  exclude shares  issuable upon
      exercise of warrants that are not  exercisable  and are not expected to be
      exercisable within 60 days of December 31, 2005.


                                       19
<PAGE>

(2)   The business address of Dr. Propper is 625 Broadway, Suite 111, San Diego,
      California  92101.  These amounts do not include  110,000 shares of Common
      Stock  issuable  upon  exercise  of  warrants,  which  are  not  currently
      exercisable  and are not  expected  to be  exercisable  within  60 days of
      December 31, 2005.

(3)   The securities reported as held by Mr. Feinberg represent shares of Common
      Stock held (i) in a separately managed account managed by Mr. Feinberg and
      (ii) by JLF  Partners I, L.P.,  JLF  Partners  II, L.P.  and JLF Off Shore
      Fund,  Ltd.  to which JLF Asset  Management  LLC serves as the  management
      company.  Jeffrey  L.  Feinberg  is  the  managing  member  of  JLF  Asset
      Management,  LLC. The business  address of Mr. Feinberg and these entities
      is 2775 Via de la  Valle,  Suite  204,  Del Mar,  California  92014.  This
      information is derived from a Schedule 13d filed by the above persons with
      the SEC on August 17, 2005.

(4)   Amaranth  Advisors  LLC is  the  trading  advisor  for  Amaranth's  global
      equities  master fund limited and has been granted  investment  discretion
      over  portfolio  investments,  including the shares of Chardan held by it.
      Mr.  Nicholas M. Maounis is the managing  member of Amaranth  Advisors LLC
      and may, by virtue of his position as managing  member,  be deemed to have
      power to direct the vote and  disposition  of the shares of  Chardan.  The
      business address is 1 American Lane,  Greenwich,  Connecticut  06831. This
      information is derived from a Schedule 13G filed by the above persons with
      SEC on August 15, 2005.

(5)   The securities  reported  represent  shares owned by Sapling,  LLC and Fir
      Tree Recovery Master Fund, L.P. Fir Tree Value Master Fund, L.P., a Cayman
      Islands  exempted limited  partnership is the sole member of Sapling,  and
      Fir Tree, Inc., a New York corporation,  is the investment manager of both
      Sapling and Fir Tree Recovery.  The business  address of these entities is
      535 Fifth  Avenue,  31st Floor,  New York,  New York 10017.  The foregoing
      information is derived from a Schedule 13G filed by such entities with the
      Securities and Exchange Commission on September 23, 2005.

(6)   The business  address of Mr. Silver is c/o Sherleigh  Associates  LLC, 660
      Madison Avenue, New York, New York 10021. These shares include (i) 200,000
      shares held by Sherleigh Associates,  Inc. profit sharing plan, a trust of
      which Mr.  Silver is the  trustee,  and 200,000  shares held by  Sherleigh
      Associates,  Inc. defined benefit plan. Mr. Silver has the sole voting and
      despositve   power  with  respect  to  all  such  shares.   The  foregoing
      information  is derived  from a Schedule  13G filed with the SEC on August
      18, 2005.

      None of the above  stockholders  has any voting  rights that are different
from the voting rights of any other stockholders.

      All of the shares of our  outstanding  common  stock owned by our Founders
prior to our initial public offering have been placed in escrow with Continental
Stock Transfer & Trust Company, as escrow agent, pursuant to an escrow agreement
described below.

      Dr. Richard D. Propper, Kerry Propper,  Jiangnan Huang and Li Zhang may be
deemed to be our "parents" and "promoters," as these terms are defined under the
Federal securities laws.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In March 2005,  we issued  1,000,000  shares of our common stock to the
individuals  set forth below for $25,000 in cash, at a purchase  price of $0.025
per share, as follows:

Name                                                         Number of Shares
--------------------------------------------------------------------------------

Li Zhang......................................................   120,810
Kerry Propper.................................................   177,600
Jiangnan Huang................................................   120,810
Chardan Capital Partners......................................   508,380
SUJG, Inc.....................................................    72,400

      Effective  July 22,  2005,  our  board  of  directors  authorized  a stock
dividend of 0.25  shares of common  stock for each  outstanding  share of common
stock, effectively lowering the purchase price to $0.02 per share.


                                       20
<PAGE>

      The holders of the majority of these shares will be entitled to make up to
two demands that we register  these  shares  pursuant to a  registration  rights
agreement.  The holders of the  majority  of these  shares can elect to exercise
these registration  rights at any time commencing three months prior to the date
on which  these  shares  of common  stock are to be  released  from  escrow.  In
addition, these stockholders have certain "piggy-back"  registration rights with
respect to registration  statements  filed subsequent to the date on which these
shares of common  stock are  released  from  escrow.  We will bear the  expenses
incurred in connection with the filing of any such registration statements.

      Our directors and several  individuals  affiliated with companies they are
associated with entered into letter  agreements with the  representative  of the
underwriters  pursuant to which they agreed to purchase up to 1,000,000 warrants
at prices  not to exceed  $0.75 per  warrant  during the  40-trading  day period
following  separate  trading of the warrants.  A total of 220,000  warrants were
purchased pursuant to these agreements. We have agreed that these warrants shall
not be  redeemable  by us as long as such  warrants  continue to be held by such
individuals or their affiliates.  Because these individuals may be insiders,  or
affiliates of insiders,  at the time of the  redemption  call,  their ability to
sell our securities in the open market will be  significantly  limited.  If they
remain  insiders,  we will have  policies in place that  prohibit  insiders from
selling our  securities  except during  specific  periods of time.  Accordingly,
unlike public  stockholders who could, if we called the warrants for redemption,
either  sell their  warrants or exercise  such  warrants  and sell the shares of
common stock received upon such exercise freely in the open market, the insiders
would be significantly  restricted from selling such  securities.  Additionally,
even if the insiders could sell their  securities,  any sale by an insider would
require  him to  file a Form  4  disclosing  his  sale  and  that  would  have a
depressive  effect on the price of our stock during the redemption  period. As a
result, we believe this non-call feature is appropriate.

      Chardan Capital, LLC, an affiliate of Dr. Richard D. Propper, Li Zhang and
Jiangnan Huang,  has agreed that,  through the acquisition of a target business,
it will make  available to us a small amount of office space and certain  office
and secretarial services, as we may require from time to time. We have agreed to
pay Chardan  Capital,  LLC $7,500 per month for these  services.  Dr. Propper is
president,  a manager and 19.8% owner of Chardan Capital,  LLC. Each of Li Zhang
and Jiangnan  Huang is a manager and 16.1% owner of Chardan  Capital,  LLC. As a
result,  they will benefit from the transactions to the extent of their interest
in Chardan Capital, LLC. However,  these arrangements are solely for the benefit
of us and are not  intended to provide Dr.  Propper and Messrs.  Zhang and Huang
compensation  in lieu of a  salary.  We  believe,  based on  rents  and fees for
similar  services in the San Diego  metropolitan  area,  that the fee charged by
Chardan Capital,  LLC is at least as favorable as we could have obtained from an
unaffiliated person.  However, as our directors may not be deemed "independent,"
we  did  not  have  the  benefit  of  disinterested   directors  approving  this
transaction.

      Kerry  Propper  advanced to us $20,000 and Chardan  Capital  Partners  has
advanced to us $60,000 to cover expenses related to our initial public offering.
The loans were payable without  interest on the earlier of April 11, 2006 or the
consummation  of our initial  public  offering.  We repaid  these loans from the
proceeds of our initial public offering not placed in trust.

      We  will   reimburse  our  officers  and  directors  for  any   reasonable
out-of-pocket  business  expenses  incurred by them in  connection  with certain
activities on our behalf, such as identifying and investigating  possible target
businesses  and  business  combinations.  There  is no limit  on the  amount  of
out-of-pocket  expenses  reimbursable  by us, which will be reviewed only by our
board or a court of competent jurisdiction if such reimbursement is challenged.

      Other  than  the  $7,500  per-month  administrative  fee and  reimbursable
out-of-pocket expenses payable to our officers and directors, no compensation or
fees of any kind,  including finders and consulting fees, will be paid to any of
our  existing  stockholders,  officers or  directors  who owned our common stock
prior to this offering, or to any of their respective  affiliates,  for services
rendered to us prior to or with respect to the business combination.

      All ongoing and future transactions between us and any of our officers and
directors or their  respective  affiliates,  including loans by our officers and
directors,  will require  prior  approval in each  instance by a majority of our
uninterested  "independent" directors (to the extent we have any) or the members
of our board who do not have an interest in the transaction. These directors, if
they determine to be necessary or appropriate, will have access, at our expense,
to our attorneys or independent  legal counsel.  We will not enter into any such
transaction unless our disinterested  "independent"  directors (or, if there are
no "independent"  directors,  our  disinterested  directors)  determine that the
terms of such  transaction  are no less favorable to us than those that would be
available  to us with  respect to such a  transaction  from  unaffiliated  third
parties.

      Pursuant to an escrow  agreement  between us, the Founders and Continental
Stock  Transfer & Trust  Company,  all of the  Founders  Shares  were  placed in
escrow,  with  Continental  acting  as  escrow  agent,  pursuant  to  an  escrow
agreement, until the earliest of:


                                       21
<PAGE>

      o     March 16, 2007;

      o     our liquidation; or

      o     the consummation of a liquidation,  merger,  stock exchange or other
            similar  transaction which results in all of our stockholders having
            the  right to  exchange  their  shares  of  common  stock  for cash,
            securities  or  other  property  subsequent  to our  consummating  a
            business combination with a target business.

      During the escrow  period,  these shares cannot be sold,  but the Founders
will retain all other rights as stockholders, including, without limitation, the
right to vote  their  shares of  common  stock  and the  right to  receive  cash
dividends,  if  declared.  If  dividends  are  declared and payable in shares of
common stock,  such dividends will also be placed in escrow. If we are unable to
effect a business  combination and liquidate,  none of our Founders will receive
any portion of the  liquidation  proceeds  with respect to common stock owned by
them prior to our initial public offering.

      We also entered into a  registration  rights  agreement  with the Founders
pursuant to which the holders of the  majority  of the  Founders  Shares will be
entitled to make up to two demands that we register these shares. The holders of
the majority of these shares may elect to exercise these registration  rights at
any time after the date on which these shares of common stock are released  from
escrow. In addition,  these stockholders have certain "piggy-back"  registration
rights on registration  statements  filed  subsequent to the date on which these
shares of common  stock are  released  from  escrow.  We will bear the  expenses
incurred in connection with the filing of any such registration statements.

      Each of our  Founders  also entered  into a letter  agreement  with us and
EarlyBirdCapital pursuant to which, among other things:

      o     each agreed to vote all Founder  Shares  owned by him in  accordance
            with the  majority  of the IPO Shares if we solicit  approval of our
            stockholders for a business combination;

      o     if we fail to consummate a business  combination by August 10, 2007,
            each agreed to take all reasonable actions within his power to cause
            us to liquidate as soon as reasonably practicable;

      o     each  waived  any  and  all  rights  he  may  have  to  receive  any
            distribution  of cash,  property or other assets as a result of such
            liquidation with respect to his Founder Shares;

      o     each  agreed  to  present  to us for  our  consideration,  prior  to
            presentation to any other person or entity, any suitable opportunity
            to  acquire  an  operating  business,   until  the  earlier  of  our
            consummation  of a business  combination,  our  liquidation or until
            such time as he ceases to be an officer or director of ours, subject
            to any pre-existing fiduciary obligations he might have;

      o     each agreed that we could not  consummate  any business  combination
            which  involves  a  company  which  is  affiliated  with  any of the
            Founders unless we obtain an opinion from an independent  investment
            banking firm  reasonably  acceptable  to  EarlyBirdCapital  that the
            business  combination is fair to our  stockholders  from a financial
            perspective;

      o     each  agreed  that he and his  affiliates  will not be  entitled  to
            receive and will not accept any compensation  for services  rendered
            to us prior to the consummation of our business combination; and

      o     each  agreed  that he and his  affiliates  will not be  entitled  to
            receive or accept a finder's  fee or any other  compensation  in the
            event he or his affiliates originate a business combination.


                                       22
<PAGE>

ITEM 13. EXHIBITS

      The following Exhibits are filed as part of this report.

Exhibit No.        Description
-----------        -------------------------------------------------------------

    2.1             Stock Purchase  Agreement with  Stockholders  of Gifted Time
                    Holdings Ltd.

    3.1*            Certificate of Incorporation

    3.1.1.*         Certificate of Amendment to Certificate of Incorporation

    3.2*            Bylaws

    4.1*            Representative Unit Purchase Option

    4.2*            Warrant  Agreement with  Continental  Stock Transfer & Trust
                    Company

    10.1*           Investment Management Trust Agreement with Continental Stock
                    Transfer & Trust Company

    10.2*           Form  of  Stock  Escrow  Agreement  with  Continental  Stock
                    Transfer & Trust Company and the Initial Stockholders

    10.3*           Letter  Agreement  with  Chardan   Capital,   LLC  regarding
                    administrative  support

    10.4*           Form  of  Promissory  Note, dated April 11, 2005, issued  to
                    Kerry Propper and Chardan Capital Partners

    10.5*           Registration Rights Agreement with the Initial Stockholders

      * Incorporated by referenced from the registration statement on Form S-1
        (Reg. No. 333-125016).

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

      The firm of  Goldstein  Golub  Kessler LLP ("GGK")  acts as our  principal
accountant.  Through September 30, 2005, GGK had a continuing  relationship with
American  Express Tax and Business  Services  Inc.  (TBS),  from which it leased
auditing staff who were full time,  permanent employees of TBS and through which
its partners provide non-audit services.  Subsequent to September 30, 2005, this
relationship  ceased and the firm  established a similar  relationship  with RSM
McGladrey, Inc. (RSM). GGK has no full time employees and therefore, none of the
audit services performed were provided by permanent  full-time employees of GGK.
GGK  manages  and  supervises  the  audit and audit  staff,  and is  exclusively
responsible  for the opinion  rendered in connection with its  examination.  The
following is a summary of fees paid to GGK and TBS for services rendered.

Audit Fees

      During the fiscal year ended December 31, 2005, we paid, or expect to pay,
our principal  accountant  $18,200 for the services they performed in connection
with our initial public offering, including the financial statements included in
the Current Report on Form 8-K filed with the Securities and Exchange Commission
on August  11,  2005,  $5,000 in  connection  with the  review of our  Quarterly
Reports  on Form  10-QSB,  and  approximately  $15,000  in  connection  with the
December 31, 2005 audit and Form 10-KSB.

Audit-Related Fees

      During 2005, our principal accountant did not render assurance and related
services  reasonably  related  to the  performance  of the  audit or  review  of
financial statements other than those described in Audit Fees.

Tax Fees

      During 2005, we did not make any payments for tax services.

All Other Fees

      During 2005, there were no fees billed for products and services  provided
by the principal accountant other than those set forth above.


                                       23
<PAGE>

                   Chardan North China Acquisition Corporation
                    (a corporation in the development stage)

Report of Independent Registered Public Accounting Firm                     F-2

Financial Statements

   Balance Sheet                                                            F-3
   Statement of Operations                                                  F-4
   Statement of Stockholders' Equity                                        F-5
   Statement of Cash Flows                                                  F-6

Notes to Financial Statements                                       F-7 to F-11
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Chardan North China Acquisition Corp.

We  have  audited  the  accompanying   balance  sheet  of  Chardan  North  China
Acquisition  Corporation (a corporation in the development stage) as of December
31, 2005,  and the related  statements of operations,  stockholders'  equity and
cash flows for the period from March 10, 2005  (inception) to December 31, 2005.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Chardan North China Acquisition
Corporation  as of December 31, 2005,  and the results of its operations and its
cash flows for the period from March 10, 2005  (inception)  to December 31, 2005
in conformity with United States generally accepted accounting principles.


GOLDSTEIN GOLUB KESSLER LLP
New York, New York

March 15, 2006


                                      F-2
<PAGE>

                   Chardan North China Acquisition Corporation
                          (A Development Stage Company)
                                  Balance Sheet

<TABLE>
<CAPTION>
                                                                    December 31, 2005
                                                                    -----------------
<S>                                                                 <C>
                                     ASSETS
Current assets:
     Cash and cash equivalents                                      $         856,380
     Investments held in trust                                             30,260,861
     Deferred tax asset                                                       177,370
     Prepaid expenses and other                                                58,503
                                                                    -----------------

Total Assets                                                        $      31,353,114
                                                                    =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued liabilities                       $         224,498
     Income taxes payable                                                     173,120
     Deferred interest                                                         86,395
                                                                    -----------------
Total current liabilities                                                     484,013
                                                                    -----------------

Commitments

Common stock subject to possible conversion                                 5,964,017
     1,149,425 shares at conversion value                           -----------------

Stockholders' equity:

     Preferred stock, $.0001 par value, 1,000,000                                  --
                 shares authorized, none issued
     Common stock, $.0001 par value: 20,000,000                                   700
                 shares authorized, 7,000,000 shares issued and
                 outstanding
                 (includes 1,149,425 shares subject to possible
                 conversion)
     Additional paid-in capital                                            25,006,126
     Accumulated deficit                                                     (101,742)
                                                                    -----------------
Total stockholders' equity                                                 24,905,084
                                                                    -----------------

Total Liabilities and Stockholders' Equity                          $      31,353,114
                                                                    =================
</TABLE>

             See the accompanying notes to the financial statements


                                      F-3
<PAGE>

                   Chardan North China Acquisition Corporation
                          (A Development Stage Company)
                             Statement of Operations

                                                                     From
                                                                March 10, 2005
                                                                 (Inception)
                                                                   Through
                                                              December 31, 2005
                                                              -----------------

Costs and Expenses
      Admin and office support                                           37,500
      Consulting                                                         66,700
      Insurance                                                          29,167
      Professional fees                                                 127,957
      State franchise tax                                                23,775
      Travel                                                            147,091
      Other operating costs                                              21,673
                                                              -----------------

Total costs and expenses                                                453,863
                                                              -----------------

Operating loss                                                         (453,863)

Other income:
      Interest income                                                   347,871
                                                              -----------------

Net loss before income tax provision                                   (105,992)

      Income tax benefit                                                  4,250
                                                              -----------------

Net loss                                                      $        (101,742)
                                                              =================

Loss per share - basic and diluted                                        (0.03)
Weighted average shares outstanding - basic and diluted               4,020,202

             See the accompanying notes to the financial statements


                                      F-4
<PAGE>

                   Chardan North China Acquisition Corporation
                          (A Development Stage Company)
                  Statements of Changes in Stockholders' Equity

<TABLE>
<CAPTION>
                                                                       Common             Additional                   Stockholders'
                                                                       ------               Paid-In      Accumulated      Equity
                                                                 Shares        Amount       Capital       (Deficit)      (Deficit)
                                                             ----------------------------------------------------------------------
<S>                                                             <C>        <C>           <C>            <C>            <C>
Issuance of common shares to initial shareholders on            1,250,000  $        125  $     24,875   $         --   $     25,000
     March 10, 2005 at $0.02 per share
Sale of 5,750,000 units, net of underwriters' discount          5,750,000           575    30,945,168             --     30,945,743
     and offering expenses (includes 1,149,425 shares
     subject to possible conversion)
Proceeds subject to possible conversion of 1,149,425 shares            --            --    (5,964,017)            --     (5,964,017)
Proceeds from issuance of an underwriter's option                      --            --           100             --            100
Loss for the period ended December 31, 2005                            --            --            --       (101,742)      (101,742)

                                                             ----------------------------------------------------------------------

Balance at December 31, 2005                                    7,000,000  $        700  $ 25,006,126   $   (101,742)  $ 24,905,084
                                                             ======================================================================
</TABLE>

              See the accomanying notes to the financial statements


                                      F-5
<PAGE>

                   Chardan North China Acquisition Corporation
                          (A Development Stage Company)
                             Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                                      From
                                                                                 March 10, 2005
                                                                                   (Inception)
                                                                                     Through
                                                                                December 31, 2005
                                                                                -----------------
<S>                                                                             <C>
Cash Flows from Operating Activities:
Net loss                                                                        $        (101,742)
Adjustments to reconcile net loss to net cash
  used in operating activities:
     Amortization of discounts and interest earned on securities held in trust           (425,861)
Changes in operating Assets and Liabilities:
     Prepaid expenses and other current assets                                            (48,333)
     Deferred tax asset                                                                  (177,370)
     Accounts payable and accrued liabilities                                             224,498
     Income taxes payable                                                                 173,120
     Deferred interest                                                                     86,395
                                                                                -----------------
Net cash used by operating activities                                                    (269,293)
                                                                                -----------------

Cash Flows from Investing Activities:
     Purchases of investments held in trust                                           (29,835,000)
                                                                                -----------------
Net cash used by investing activities                                                 (29,835,000)
                                                                                -----------------

Cash Flows from Financing Activities
     Proceeds from issuance of common stock                                            34,525,000
     Proceeds from issuance of option                                                         100
     Payment of costs associated with public offering                                  (3,554,257)
     Advance to affiliate                                                                 (10,170)

                                                                                -----------------
Net cash provided by financing activities                                              30,960,673
                                                                                -----------------

Net increase in cash and cash equivalents                                                 856,380
Cash and cash equivalents, beginning of the period                                             --
                                                                                -----------------
Cash and cash equivalents, end of the period                                    $         856,380
                                                                                =================
</TABLE>

             See the accompanying notes to the financial statements


                                      F-6
<PAGE>

                   CHARDAN NORTH CHINA ACQUISITION CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

      Business and Organization - Chardan North China Acquisition Corp.
("Chardan North") was incorporated in Delaware on March 10, 2005 as a blank
check company whose objective is to acquire an operating business that has its
primary operating facilities in the People Republic of China in any city or
province north of the Yangtze River.

      Effective July 14, 2005, the Company's Board of Directors and Initial
Stockholders authorized an amendment to the Company's Certificate of
Incorporation to change the Company's name from Chardan China Acquisition Corp.
II to Chardan North China Acquisition Corporation.

      In August 2005, Chardan North commenced its efforts to locate a company
with which to effect a business combination. After signing a definitive
agreement for the acquisition of a target business, such transaction will be
submitted for stockholder approval. In the event that stockholders owning 20% or
more of the outstanding stock excluding, for this purpose, those persons who
were stockholders prior to the Offering, vote against the Business Combination
and exercise their conversion rights described below, the Business Combination
will not be consummated. All of the Company's stockholders prior to the Initial
Public Offering, including all of the officers and directors of the Company
("Initial Stockholders"), have agreed to vote their 1,250,000 founding shares of
common stock in accordance with the vote of the majority in interest of all
other stockholders of the Company ("Public Stockholders") with respect to the
Business Combination. After consummation of the Business Combination, all of
these voting safeguards will no longer be applicable. With respect to a Business
Combination which is approved and consummated, any Public Stockholder who voted
against the Business Combination may demand that the Company convert his or her
shares. The per share conversion price will equal the amount in the Trust Fund
as of the record date for determination of stockholders entitled to vote on the
Business Combination divided by the number of shares of common stock held by
Public Stockholders at the consummation of the Offering. Accordingly, Public
Stockholders holding 19.99% of the aggregate number of shares owned by all
Public Stockholders may seek conversion of their shares in the event of a
Business Combination.

      Such Public Stockholders are entitled to receive their per share interest
in the Trust Fund computed without regard to the shares held by Initial
Stockholders. Accordingly, a portion of the net proceeds from the offering
(19.99% of the amount originally held in the Trust Fund) has been classified as
common stock subject to possible conversion in the accompanying balance sheet
and 19.99% of the related interest earned on the investments held in the Trust
Fund has been recorded as deferred interest.

      Cash and Cash Equivalents -- The Company considers all highly liquid debt
securities purchased with original or remaining maturities of three months or
less to be cash equivalents. The carrying value of cash equivalents approximates
fair value.

      Fair Value of Financial Instruments - The carrying amounts of cash and
cash equivalents, investments held in trust, accounts payable and accrued
liabilities approximate fair market value because of the short maturity of those
instruments.

      Credit Risk - It is the Company's practice to place its cash equivalents
in high quality money market securities or certificate of deposit accounts with
one major banking institution. Certain amounts of such funds are not insured by
the Federal Deposit Insurance Corporation. However, the Company considers its
credit risk associated with cash and cash equivalents to be minimal.

      Investments Held in Trust - Investments held in trust are invested in
United States government securities with a maturity of 180 days or less which
are accounted for as a trading security and recorded at market value which
approximates amortized cost. The excess of market value over cost, exclusive of
the deferred interest described below, is included in interest income in the
accompanying Statement of Operations.


                                      F-7
<PAGE>

                   CHARDAN NORTH CHINA ACQUISITION CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS

      Deferred Interest - Deferred interest consists of 19.99% of the interest
earned on the investments held in trust.

      Income Taxes - The Company uses the asset and liability method of
accounting for income taxes as required by SFAS No. 109 "Accounting for Income
Taxes". SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax basis of certain assets and
liabilities. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized. Statutory taxes not
based on income are included in state franchise tax in the statement of
operations.

      Income (Loss) Per Common Share - The Company computed basic and diluted
earnings per share amounts for December 31, 2005 pursuant to SFAS No. 128,
"Earnings per Share." Basic earnings per share ("EPS") are computed by dividing
the net income (loss) by the weighted average common shares outstanding during
the period. Diluted EPS reflects the additional dilution for all potentially
dilutive securities such as stock warrants and options. The effect of the
11,500,000 outstanding warrants, issued in connection with the initial public
offering described in Note 5 has not been considered in the diluted EPS since
the warrants are contingently exercisable. The effect of the 25,000 units
included in the underwriters purchase option, as described in Note 5, along with
the warrants underlying such units, has not been considered in the diluted EPS
calculation since the effect would be antidilutive.

Recent Authoritative Pronouncements

Share-Based Payment

      In December 2004, the FASB issued a revision of SFAS 123 ("SFAS 123(R)")
that will require compensation costs related to share-based payment transactions
to be recognized in the statement of operations. With limited exceptions, the
amount of compensation cost will be measured based on the grant-date fair value
of the equity or liability instruments issued. In addition, liability awards
will be re-measured each reporting period. Compensation cost will be recognized
over the period that an employee provides service in exchange for the award.
SFAS 123(R) replaces SFAS 123 and is effective January 1, 2006. Based on the
number of shares and awards outstanding as of December 31, 2005 (and without
giving effect to any awards which may be granted in the fiscal year ending
December 31, 2006), we expect that the adoption of SFAS 123(R) will have no
material impact to the financial statements.

      The Company does not believe that any other recently issued but not yet
effective accounting standards will have a material effect on the Company's
financial position or results of operations.

2. RELATED PARTY TRANSACTIONS

      Commencing on August 2, 2005 and ending upon the acquisition of a target
business, the Company incurs an administrative fee of $7,500 per month from
Chardan Capital, LLC, a company managed and partially owned by the Company's
Chairman of the Board. The fee includes the provision of office space and
certain office and secretarial services. The statement of operations for the
period ended December 31, 2005 includes $37,500 of such fees.


                                      F-8
<PAGE>

                   CHARDAN NORTH CHINA ACQUISITION CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS

      In April 2005, two of the Company's stockholders advanced an aggregate of
$80,000 to the Company, on a non-interest bearing basis, for payment of offering
expenses on the Company's behalf. These loans were repaid following the initial
public offering from the proceeds of the Offering.

      In May 2005 the Company made a non-interest bearing advance of $10,170 to
an affiliate, which is included in prepaid expenses and other current assets on
the accompanying balance sheet. This amount is due on demand, and is expected to
be repaid in the first quarter of 2006.

3. INCOME TAXES

Components of income taxes are as follows:

Current
   Federal                               $ 134,731
   State                                    38,389
                                         ---------
Total Current                              173,120

Less deferred income taxes                (177,370)

                                         ---------
Total income taxes                       $  (4,250)
                                         =========


The Deferred tax asset consists of the following:


Deferred interest income                   36,328
Deferred operating costs                  141,042
Deferred transaction fees                  37,238
                                        ---------
                                          214,608
                                        ---------
Valuation allowance                       (37,238)
                                        ---------
                                        $ 177,130
                                        =========

      The valuation allowance releases the deferred tax asset for transaction
costs incurred in connection with the proposed transaction described in Note 7.

      The effective income tax differs from the statutory rate of 34%
principally due to the increase in the valuation allowance.

4. COMMITMENTS

      In September 2005, the Company entered into an agreement with a consulting
firm to assist in the search to identify prospective target businesses for the
Business Combination. As part of the agreement, the consulting firm is to
receive $200,000, including $133,300 upon consummation of the Business
Combination, and agreed to perform due diligence on such prospective target
businesses as well as assist in structuring and consummating the business
combination. The statements of operations for the period ended December 31, 2005
include $66,700 relating to this agreement.


                                      F-9
<PAGE>

                   CHARDAN NORTH CHINA ACQUISITION CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS

5. COMMON STOCK, COMMON STOCK PURCHASE WARRANTS AND OPTIONS

      On August 10, 2005, the Company sold 5,000,000 units ("Units") in the
initial public offering, and on August 17, 2005, the Company consummated the
closing of an additional 750,000 units that were subject to the over-allotment
option (the "Offering"). Gross proceeds from the initial public offering were
$34,500,000. The Company paid a total of $3,035,000 in underwriting discounts
and commissions, and approximately $519,257 was paid for costs and expenses
related to the offering. After deducting the underwriting discounts and
commissions and the offering expenses, the total net proceeds to the Company
from the offering was approximately $30,945,843, of which $29,835,000 was
deposited into in an interest bearing trust account until the earlier of the
consummation of a business combination or the liquidation of the Company. The
Company's Certificate of Incorporation provides for mandatory liquidation of the
Company, without stockholder approval, in the event that the Company does not
consummate a Business Combination prior to February 10, 2007, or August 10, 2007
if certain extension criteria have been satisfied. In the event of liquidation,
it is likely that the per share value of the residual assets remaining available
for distribution (including Trust Fund assets) will be less than the initial
public offering price per share in the Offering due to costs related to the
Offering and since no value would be attributed to the Warrants contained in the
Units sold.

      Each Unit consisted of one share of the Company's common stock, $.0001 par
value, and two Redeemable Common Stock Purchase Warrants ("Warrants"). Each
Warrant entitles the holder to purchase from the Company one share of common
stock at an exercise price of $5.00 commencing the later of the completion of a
Business Combination or one year from the effective date of the Offering and
expiring four years from the effective date of the Offering. The Warrants will
be redeemable, at the Company's option, at a price of $.01 per Warrant upon 30
days' notice after the Warrants become exercisable, only in the event that the
last sale price of the common stock is at least $8.50 per share for any 20
trading days within a 30 trading day period ending on the third day prior to the
date on which notice of redemption is given.

      In connection with this Offering, the Company issued an option, for $100,
to the representative of the underwriters to purchase 250,000 Units at an
exercise price of $7.50 per Unit. The Company accounted for the fair value of
the option, inclusive of the receipt of the $100 cash payment, as an expense of
the public offering resulting in a charge directly to stockholders' equity. The
Company estimated that the fair value of this option is approximately $550,000
($2.20 per Unit) using a Black-Scholes option-pricing model. The fair value of
the option granted to the Representative is estimated as of the date of grant
using the following assumptions: (1) expected volatility of 44.5%, based on the
volatilities of similar entities who have effected a business combination, (2)
risk-free interest rate of 3.8% and (3) expected life of 5 years. The option may
be exercised for cash or on a "cashless" basis, at the holder's option, such
that the holder may use the appreciated value of the option (the difference
between the exercise prices of the option and the underlying warrants and the
market price of the units and underlying securities) to exercise the option
without the payment of any cash. In addition, the warrants underlying such Units
are exercisable at $6.65 per share.

6. STOCK DIVIDEND

      Effective July 22, 2005, the Company's Board of Directors authorized a
stock dividend of 0.25 shares of common stock for each outstanding share of
common stock. All references in the accompanying financial statements to the
number of shares of common stock have been retroactively restated to reflect
this transaction.

7. SUBSEQUENT EVENTS - UNAUDITED

      On February 2, 2006, the Company entered into a definitive stock purchase
agreement pursuant to which it will acquire a controlling interest in Beijing
HollySys Company, Limited and Hangzhou HollySys Automation Company, Limited
(collectively referred to as "HollySys"). Upon completion of the transaction,
Chardan North will own 74.11% and 89.64%, respectively, of the two companies. If
approved by the stockholders of Chardan North, the transaction is expected to
close in the second quarter of 2006. At closing, Chardan North will change its
name to HLS Systems International, Limited ("HLS" or the "Company").


                                      F-10
<PAGE>

                   CHARDAN NORTH CHINA ACQUISITION CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS

      Under the terms of the acquisition, Chardan North will acquire from
participating shareholders their equity interests in HollySys, by acquiring
Gifted Time Holdings, Ltd., a British Virgin Islands corporation that holds all
of those interests. The Gifted Time interests in HollySys will be exchanged for
23,500,000 shares of common stock of Chardan North equal to 77% of the total
issued and outstanding common stock of the post-transaction company, and a cash
consideration of $30,000,000. A variable portion of the cash consideration will
be deferred, ranging from $3,000,000 to $7,000,000, depending on the number of
shares that Chardan North shareholders redeem, if any, in the process of
approving the transaction. The deferred cash compensation will either be paid at
the rate of 50% of positive cash flow generated by the Company post-acquisition
based on audited financial statements or upon the receipt of $60,000,000 in
equity investment, whether from the exercise of issued and outstanding warrants
or other sources.

      As additional consideration, participating parties will be entitled to
receive, on an all or none basis each year, an additional 2,000,000 shares for
each of the next four fiscal years beginning with the year ending June 30, 2007
if HollySys achieves the following operating after-tax profits:

                      FY Ending June 30            After-Tax Profit
                      -----------------            ----------------
                            2007                     $ 23,000,000
                            2008                     $ 32,000,000
                            2009                     $ 43,000,000
                            2010                     $ 61,000,000


                                      F-11
<PAGE>

                                   SIGNATURES

      Pursuant  to the  requirements  of the  Section  13 or 15 or  15(d) 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 on this
17th day of March 2006.

                                    CHARDAN NORTH CHINA ACQUISITION CORPORATION

                                    By:      /s/ Li Zhang
                                             ----------------------------------
                                             Li Zhang
                                             President

In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed below by the  following  persons on behalf of the  registrant  and in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
                 Signature                                        Title                       Date
                 ---------                                        -----                       ----
<S>                                            <C>                                       <C>
/s/ Richard D. Propper
------------------------------------------     Chairman of the Board of Directors        March 17, 2006
Dr. Richard D. Propper

/s/ Li Zhang
------------------------------------------     Chief Executive Officer and Director      March 17, 2006
Li Zhang                                       (principal executive officer)

/s/ Kerry Propper
------------------------------------------     Chief Financial Officer, Secretary        March 17, 2006
Kerry Propper                                  and Director (principal accounting
                                               officer)

/s/ Jiangnan Huang
------------------------------------------     Executive Vice President and Director     March 17, 2006
Jiangnan Huang
</TABLE>