**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**






**FORM
      10-Q**


(Mark
      One)





x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
      1934




**For
      the quarterly period ended September 30, 2007**




o Transition report under Section 13 or 15(d) of the Exchange Act




**For
      the transition period from _____________ to _____________**




**Commission
      File Number 000-51432**






**Chardan
      South China Acquisition Corporation**


(Exact
      name of registrant as specified in is charter)




**Delaware**
            
            **20-2479786**





(State
                or other Jurisdiction of
              Incorporation
                or Organization)
            
            (I.R.S.
                Employer
              Identification
                No.)




**625
                Broadway, Suite 1111, San Diego, California 92101**
              (Address
                of principal executive offices)**(619)
                795-4627**
              (Registrant’s
                telephone number, including area code)


Check
      whether the issuer (1) 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 requirements for the past 90 days.


Yes x No o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition. of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):




Large
      accelerated filer o Accelerated filer o Non-accelerated filer x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes x No o




As
      of October 31, 2007, 7,000,000 shares of common stock, par value $.0001 per
      share, were issued and outstanding.





**CHARDAN
      SOUTH CHINA ACQUISITION CORPORATION**




**FORM
      10-Q**




**INDEX**




**PART
                I**
            **FINANCIAL
                INFORMATION**Item
                1
            Financial
                Statements (Unaudited):
            3Condensed
                Balance Sheets
            3Condensed
                Statements of Operations
            4Statements
                of Stockholders’ Equity
            5Condensed
                Statement of Cash Flows
            6Notes
                to the Financial Statements
            7Item
                2
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            8Item
                3
            Quantitative
                and Qualitative Disclosure About Market Risk
            11Item
                4
            Controls
                and Procedures
            11**PART
                II**
            **OTHER INFORMATION**Item
                1A
            Risk
                Factors
            11Item
                6
            Exhibits
            11Signatures
            
            12





2


**PART
      I.**





**FINANCIAL
      INFORMATION**





**ITEM
      1**  **FINANCIAL
      STATEMENTS (UNAUDITED)**





**Chardan
                      South China Acquisition Corporation****(A
                      Development Stage Company)****Condensed
                      Balance Sheets**September
                      30, 2007
                  
                  December
                      31, 2006(Unaudited)ASSETSCurrent
                      assets:Cash
                      and cash equivalents
                  
                  $
                  5,167
                  
                  $
                  147,063Investments
                      held in trust
                  
                  
                  32,099,689
                  
                  
                  31,294,931Deferred
                      tax asset
                  
                  
                  235,333
                  
                  
                  235,333Prepaid
                      expenses and other
                  
                  
                  -
                  
                  
                  13,098Total
                      Assets
                  
                  $
                  32,340,189
                  
                  $
                  31,690,425LIABILITIES
                      AND STOCKHOLDERS' EQUITYCurrent
                      liabilities:Accounts
                      payable and accrued liabilities
                  
                  $
                  624,844
                  
                  $
                  103,056Income
                      taxes payable
                  
                  
                  258,962
                  
                  
                  204,913Notes
                      payable, related party
                  
                  
                  172,231
                  
                  
                  -Deferred
                      interest
                  
                  
                  456,957
                  
                  
                  296,105Total
                      current liabilities
                  
                  
                  1,512,994
                  
                  
                  604,074CommitmentsCommon
                      stock subject to possible conversion
                  
                  
                  5,964,017
                  
                  
                  5,964,0171,149,425
                      shares at conversion valueStockholders'
                      equity:Preferred
                      stock, $.0001 par value, 1,000,000
                  
                  
                  -
                  
                  
                  -shares
                      authorized, none issuedCommon
                      stock, $.0001 par value: 20,000,000
                  
                  
                  700
                  
                  
                  700shares
                      authorized, 7,000,000 shares issued and outstanding(includes
                      1,149,425 shares subject to possible conversion)Additional
                      paid-in capital
                  
                  
                  25,003,435
                  
                  
                  25,003,435Earnings
                      accumulated during the development stage
                  
                  
                  (140,957
                  )
                  
                  118,199Total
                      stockholders' equity
                  
                  
                  24,863,178
                  
                  
                  25,122,334Total
                      Liabilities and Stockholders' Equity
                  
                  $
                  32,340,189
                  
                  $
                  31,690,425See
                      the accompanying notes to condensed financial
                      statements





3




**Chardan
                  South China Acquisition Corporation****(A
                  Development Stage Company)****Condensed
                  Statements of Operations**FromThree
              
              Three
              
              Nine
              
              Nine
              
              March
                  10, 2005Months
              
              Months
              
              Months
              
              Months
              
              (Inception)Ended
              
              Ended
              
              Ended
              
              Ended
              
              ThroughSeptember
                  30, 2007
              
              September
                  30, 2006
              
              September
                  30, 2007
              
              September
                  30, 2006
              
              September
                  30, 2007(Unaudited)
              
              (Unaudited)
              
              (Unaudited)
              
              (Unaudited)
              
              (Unaudited)Costs
                  and ExpensesAdmin
                  and office support
              
              
              22,500
              
              
              22,500
              
              
              67,500
              
              
              67,500
              
              
              195,000Consulting
              
              
              -
              
              
              -
              
              
              20,000
              
              
              66,700
              
              
              86,700Insurance
              
              
              17,073
              
              
              14,277
              
              
              56,448
              
              
              49,277
              
              
              148,934Professional
                  fees
              
              
              141,295
              
              
              10,612
              
              
              381,064
              
              
              43,729
              
              
              478,088State
                  franchise tax
              
              
              6,125
              
              
              5,937
              
              
              19,974
              
              
              18,612
              
              
              68,086Travel
              
              
              38,345
              
              
              104,323
              
              
              175,687
              
              
              263,190
              
              
              597,916Other
                  operating costs
              
              
              12,862
              
              
              8,128
              
              
              49,232
              
              
              19,007
              
              
              106,995Total
                  costs and expenses
              
              
              238,200
              
              
              165,777
              
              
              769,905
              
              
              528,015
              
              
              1,681,719Operating
                  loss
              
              
              (238,200
              )
              
              (165,777
              )
              
              (769,905
              )
              
              (528,015
              )
              
              (1,681,719
              )Other
                  income (expense):Interest
                  income
              
              
              221,793
              
              
              203,668
              
              
              643,907
              
              
              623,130
              
              
              1,824,500Interest
                  expense
              
              
              (10,333
              )
              
              -
              
              
              (18,138
              )
              
              -
              
              
              (18,138
              )Penalties
                  - income tax
              
              
              (3,073
              )
              
              -
              
              
              (46,586
              )
              
              -
              
              
              (46,586
              )Net
                  income before income tax provision
              
              
              (29,813
              )
              
              37,891
              
              
              (190,722
              )
              
              95,115
              
              
              78,057Income
                  tax provision
              
              
              (23,023
              )
              
              (12,110
              )
              
              (68,434
              )
              
              (56,395
              )
              
              (219,014
              )Net
                  income (loss)
              
              $
              (52,836
              )
              $
              25,781
              
              $
              (259,156
              )
              $
              38,720
              
              $
              (140,957
              )Earnings
                  (loss) per share - basic and diluted
              
              
              (0.01
              )
              
              0.00
              
              
              (0.04
              )
              
              0.01
              
              
              (0.02
              )Weighted
                  average shares outstanding - basic and diluted
              
              
              7,000,000
              
              
              7,000,000
              
              
              7,000,000
              
              
              7,000,000
              
              
              6,113,490See
                  the accompanying notes to condensed financial
                  statements




4







**Chardan
                South China Acquisition Corporation****(A
                Development Stage Company)****Statements
                of Changes in Stockholders' Equity**Additional
            
            
            
            Stockholders'Common
            
            Paid
                - In
            
            Accumulated
            
            EquityShares
            
            Amount
            
            Capital
            
            Earnings
            
            (Deficit)Balance
                at March 10, 2005 (Inception)
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Issuance
                of common shares to initial shareholders at $0.02 per
                share
            
            
            1,250,000
            
            
            125
            
            
            24,875
            
            
            
            
            
            25,000Sale
                of 5,750,000 units, net of underwriters' discount and offering
                expenses
            
            
            5,750,000
            
            
            575
            
            
            30,942,477
            
            
            
            
            
            30,943,052(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
            
            
            
            
            
            100Income
                for the year ended December 31, 2005
            
            
            
            
            
            
            
            
            
            
            
            68,769
            
            
            68,769Balance
                at December 31, 2005
            
            
            7,000,000
            
            $
            700
            
            $
            25,003,435
            
            $
            68,769
            
            $
            25,072,904Income
                for the year ended December 31, 2006
            
            
            
            
            
            
            
            
            
            
            
            49,430
            
            
            49,430Balance
                at December 31, 2006
            
            
            7,000,000
            
            
            700
            
            $
            25,003,435
            
            $
            118,199
            
            $
            25,122,334UnauditedLoss
                for the nine months ended September 30, 2007
            
            
            
            
            
            
            
            
            
            
            
            (259,156
            )
            
            (259,156
            )Balance
                at September 30, 2007
            
            
            7,000,000
            
            
            700
            
            $
            25,003,435
            
            $
            (140,957
            )
            $
            24,863,178See
                the accompanying notes to condensed financial
                statements


5




**Chardan
                  South China Acquisition Corporation****(A
                  Development Stage Company)****Condensed
                  Statement of Cash Flows**FromNine
              
              Nine
              
              March
                  10, 2005Months
              
              Months
              
              (Inception)Ended
              
              Ended
              
              ThroughSeptember
                  30, 2007
              
              September
                  30, 2006
              
              September
                  30, 2007(Unaudited)
              
              (Unaudited)
              
              (Unaudited)Cash
                  Flows from Operating Activities:Net
                  income (loss)
              
              
              (259,156
              )
              $
              38,720
              
              $
              (140,957
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Amortization
                  of discounts and interest earned on securities held in
                  trust
              
              
              (804,758
              )
              
              (774,686
              )
              
              (2,264,689
              )Changes
                  in operating Assets and Liabilities:Prepaid
                  expenses and other current assets
              
              
              13,098
              
              
              39,889
              
              
              -Deferred
                  tax asset
              
              
              -
              
              
              (135,087
              )
              
              (235,333
              )Accounts
                  payable and accrued expenses
              
              
              521,788
              
              
              21,953
              
              
              624,844Income
                  taxes payable
              
              
              54,049
              
              
              10,482
              
              
              258,962Deferred
                  interest
              
              
              160,852
              
              
              157,859
              
              
              456,956Net
                  cash used by operating activities
              
              
              (314,127
              )
              
              (640,870
              )
              
              (1,300,216
              )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 ActivitiesProceeds
                  from related party loans
              
              
              172,231
              
              
              -
              
              
              172,231Proceeds
                  from issuance of common stock
              
              
              -
              
              
              -
              
              
              34,525,000Proceeds
                  from issuance of option
              
              
              -
              
              
              -
              
              
              100Payment
                  of costs associated with public offering
              
              
              -
              
              
              -
              
              
              (3,556,948
              )Net
                  cash provided by financing activities
              
              
              172,231
              
              
              -
              
              
              31,140,383Net
                  increase (decrease) in cash and cash equivalents
              
              
              (141,896
              )
              
              (640,870
              )
              
              5,167Cash
                  and cash equivalents, beginning of the period
              
              
              147,063
              
              
              912,964
              
              
              -Cash
                  and cash equivalents, end of the period
              
              $
              5,167
              
              $
              272,094
              
              $
              5,167See
                  the accompanying notes to condensed financial
                  statementsCash
                  paid for taxes
              
              $
              -
              
              $
              181,800
              
              $
              181,800Cash
                  paid for interest
              
              $
              -
              
              $
              -
              
              $
              -




6





**CHARDAN
      SOUTH CHINA ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO THE FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED SEPTEMBER 30, 2007**


**(UNAUDITED)**







**2.** **SUMMARY
      OF ORGANIZATION AND BASIS OF PRESENTATION**




Business
      and Organization -
      Chardan South China Acquisitions Corp. (Chardan South) 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 south 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. III to Chardan South
      China Acquisition Corporation.





In
      August
      2005, Chardan South 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 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.





The
      accompanying unaudited condensed financial statements have been prepared in
      accordance with accounting principles generally accepted in the United States
      for interim financial information and with the instructions to Form 10-QSB
      and
      Item 310(b) of Regulation S-B. Accordingly, they do not include all of the
      information and footnotes required by accounting principles generally accepted
      in the United States for complete financial statements. In the opinion of
      management, all adjustments (consisting of normal recurring adjustments)
      considered necessary for a fair presentation have been included. Operating
      results for the three-month and nine-month periods ended September 30, 2007
      are
      not necessarily indicative of the results that may be expected for the year
      ending December 31, 2007. For further information, refer to the consolidated
      financial statements and footnotes thereto for the year ended December 31,
      2006,
      included in Form 10-KSB filed with the Securities and Exchange
      Commission.





Reclassifications -
      Certain reclassifications have been made in the prior period financial
      statements for presentation purposes to conform to the current
      presentation.





***Accounting
      Pronouncements:***





Effective
      January 1, 2007, the Company adopted the provisions of FASB Interpretation
      No.
      48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — An Interpretation
      of FASB Statement No. 109.” FIN 48 provides detailed guidance for the financial
      statement recognition, measurement and disclosure of uncertain tax positions
      recognized in the financial statements in accordance with SFAS No. 109. Tax
      positions must meet a “more-likely-than-not” recognition threshold at the
      effective date to be recognized upon the adoption of FIN 48 and in subsequent
      periods. Upon the adoption of FIN 48, the Company had no unrecognized tax
      benefits. During the first nine months of 2007, the Company recognized no
      adjustments for uncertain tax benefits.


7





The
      Company recognizes interest and penalties, if any, related to uncertain tax
      positions in selling, general and administrative expenses. No interest and
      penalties related to uncertain tax positions were accrued at September 30,
      2007.





The
      tax
      years 2005 and 2006 remain open to examination by the major taxing jurisdictions
      in which the Company operates. The Company expects no material changes to
      unrecognized tax positions within the next twelve months.





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








**3.** **GOING
      CONCERN**





These
      financial statements have been prepared assuming that the Company will continue
      as a going concern. 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, 2008. This raises substantial doubt about the Company’s ability to continue
      as a going concern. The financial statements do not include any adjustments
      that
      may result from the outcome of this uncertainty.








**4.** **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 statements of operations for the three and nine month
      periods ended September 30, 2007 include $22,500 and $67,500 of such fees,
      respectively.





Notes
      payable - related parties consists of the following as of September 30,
      2007:





Unsecured
                demand notes payable - shareholder notes bearing an annual interest
                rate
                of 8% due on various dates during 2008
            
            $
                172,231





To
      date
      no interest as been paid on such notes.





**5.** **OTHER**





On
      July
      23, 2007, after approval thereof at its special meeting of stockholders held
      on
      July 20, 2007, the registrant filed with the Secretary of State of the State
      of
      Delaware a certificate of amendment to its certificate of incorporation, the
      effect of which was to (i) eliminate the provision of its certificate of
      incorporation that purported to prohibit amending its “business combination”
provisions; (ii) extend the date before which the registrant must complete
      a
      business combination, to avoid being required to liquidate, from August 10,
      2007
      to February 10, 2008; and (iii) allow holders of up to 20% of the shares issued
      in the registrant’s initial public offering (“Public Shares”) who vote against
      the proposals considered at the meeting and elect conversion to convert their
      Public Shares into cash held in the registrant’s IPO trust account.







**ITEM
      2.** **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**




The
      following discussion should be read in conjunction with the Company’s
      Consolidated Financial Statements and footnotes thereto contained in this
      report.




8


**Forward
      Looking Statements**




The
      statements discussed in this Report include forward looking statements that
      involve risks and uncertainties detailed from time to time in the Company’s
      reports filed with the Securities and Exchange Commission. Please refer to
      our
      Annual Report on Form 10-KSB for a discussion of the risks related to our
      business.




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 in any city or province south of the Yangtze River,
      including but not limited to Shanghai, Zhejiang, Anhui and Shichuan. 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 activity from
      March 10, 2005 through August 10, 2005 related to our formation and our initial
      public offering.




***Recent
      Developmen*** **ts**




*Purchase
      Agreement for Proposed Business Combination*




On
      April
      14, 2007 we entered into a stock purchase agreement to acquire all of the issued
      and outstanding ordinary shares of Head Dragon Holdings Limited, which owns
      a
      controlling interest in Liaoning GaoKe Energy Group (“GaoKe”). GaoKe is a
      provider of distributed power generation and micro power grids in China. There
      remain several conditions to the closing of the transaction to acquire GaoKe,
      including the customary conditions regarding the accuracy of representations
      and
      warranties and deliveries to be made. Other conditions include the approval
      of
      our stockholders of an amendment to our certificate of incorporation allowing
      us
      to enter into a business combination with a company with principal operations
      north of the Yangtze River and approval by our stockholders of the transaction
      itself.




Under
      the
      agreement with Mr. Lu Jinxiang, the holder of all of the outstanding ordinary
      shares of Head Dragon Holdings, we will acquire all of his stock in exchange
      for
      13,000,000 of the common shares of our merger subsidiary, China Energy
      Technology, Limited, a British Virgin Islands company formed for the purpose
      of
      changing our domicile from Delaware to the British Virgin Islands.




As
      additional purchase price, the holders of the Head Dragon ordinary shares will
      be issued, on an all or none basis each year, an aggregate of 9,000,000 ordinary
      shares of CETL, as set forth below, if on a consolidated basis CETL has net
      operating profits on a U.S. GAAP basis of the following amounts for the
      indicated fiscal years ending December 31:




**Fiscal
                Year**
            
            **After-Tax
                Profit**
            
            **Number
                of Shares**2007
            
            $14,000,000
            
            1,000,0002008
            
            $19,000,000
            
            1,000,0002009
            
            $29,000,000
            
            1,000,0002010
            
            $44,000,000
            
            2,000,0002011
            
            $63,000,000
            
            2,000,0002012
            
            $87,000,000
            
            2,000,000








For
      more
      information regarding the agreement with the stockholder of Head Dragon Holdings
      and GaoKe, please see our S-4 registration statement, as amended.




As
      noted
      above, our corporate charter specifies that we are to enter into a business
      combination with a business that has its principal operations south of the
      Yangtze River. GaoKe is based in Shenyang, Liaoning Province, which is north
      of
      the Yangtze River. We elected to propose to our stockholders that, of the
      businesses that we evaluated, we engage in a business combination with GaoKe
      despite its location, because we believed that GaoKe represented the best
      opportunity for us and would produce the greatest benefits for our stockholders.
      In order to consummate the combination with GaoKe, we will need to amend our
      certificate of incorporation, which will require the majority vote of our
      stockholders. We plan on seeking stockholder approval for the amendment at
      the
      time that we seek stockholder approval of the GaoKe transaction.




9





We
      expect
      the transaction with GaoKe will be consummated in the fourth quarter of 2007,
      if
      we obtain the required approval by our stockholders for concluding a
      transaction. Our board of directors determined that it was unlikely that we
      would be able to meet the August 10, 2007 deadline. For that reason, we
      conducted a special meeting of our stockholders on July 20, 2007 for the purpose
      of, among other things, amending our certificate of incorporation to extend
      the
      time by which we must conclude a business combination until February 10, 2008,
      and that proposition was approved by our stockholders. As a result, we now
      have
      until February 10, 2008 to conclude our transaction with Head Dragon Holdings.
      If we are unable to do so within that time, we do not believe it is possible
      either to extend the time further or to conclude a different transaction within
      that time.




Additional
      information regarding the proposals on which our stockholders voted and the
      reasons for the vote is available from our definitive proxy materials filed
      with
      the Commission on Form 14 A on June 28, 2007.




*Financial
      Performance* .




We
      had a
      net loss of $52,836 for the three months ended September 30, 2007. Expenses
      were
      $238,200, consisting principally of $38,345 of travel expenses, $22,500 for a
      monthly administrative services agreement, $17,073 for directors and officers
      liability insurance, state franchise taxes of $6,125, $141,295 for professional
      fees and $12,862 for other operating costs, together with an income tax
      provision of $23,023, an interest expense of $10,333, income tax penalties
      of $3,073 and interest income on the trust fund investments in the amount
      of $221,793.




The
      loss
      for the quarter ending September 30, 2007 compares with a net gain of $25,781
      for the same period in 2006. The principal difference between the two periods
      was professional fees, which were $130,683 higher in the quarter ending
      September 30, 2007, principally the result of the costs associated with the
      preparation of our amended S-4 registration statements and proxy materials
      in
      anticipation of a stockholder vote on the business combination with Head Dragon
      Holdings. This was partially offset by travel expenses, which declined by
      $65,978 in the third quarter of 2007 from those incurred during same period
      in
      2006, reflecting decreased efforts to search for a target business, since the
      decision was made to engage in a business combination with Head Dragon Holdings.
      Other significant changes between the two periods were an increase in interest
      income of $18,125 and an increase in our income tax provision of
      $10,913.




During
      the nine months ended September 30, 2007, our net loss was $259,156. Expenses
      were $769,905, consisting principally of $175,687 of travel expenses, $67,500
      for a monthly administrative services agreement, $56,448 for directors and
      officers liability insurance, state franchise taxes of $19,974, $381,064 for
      professional fees, $20,000 for consulting services and $49,232 for other
      operating costs, together with an income tax provision of $68,434, an
      interest expense of $18,138, income tax penalties of $46,586 and interest
      income on the trust fund investments in the amount of $643,907.




During
      the comparable period a year ago we had net income of $38,720. Professional
      fees
      increased by $337,335 over the first nine months of 2006, accounting for most
      of
      the difference. Other significant differences included travel expenses, which
      declined by $87,503, and consulting expenses, which declined by $46,700, while
      other expenses, which included various filing fees and miscellaneous expenses,
      increased by $30,225.




We
      have
      used all of the net proceeds of our initial public offering to acquire a target
      business, including identifying and evaluating prospective acquisition
      candidates, selecting the target business and structuring, negotiating and
      consummating the business combination. As a result, we do not have any funds
      from our public offering remaining outside of the trust fund to operate through
      the consummation of the proposed business combination with Head Dragon Holdings.
      We have acquired the additional operating capital needed to effect a business
      combination through borrowing, and we intend to continue to do so, some or
      all
      of which may be borrowing from our officers and directors of their
      affiliates.




We
      do not
      expect to raise additional funds to consummate the business combination with
      Head Dragon Holdings, as the current agreement calls only for stock
      consideration.


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**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK.**




Pursuant
      to the instructions for Item 305(c) of Regulation S-K, this item is not
      applicable to us for interim periods of this fiscal year.




**ITEM
      4.** **CONTROLS AND PROCEDURES.**




An
      evaluation of the effectiveness of our disclosure controls and procedures as
      of
      June 30, 2007 was made under the supervision and with the participation of
      our
      management, including our chief executive officer and our chief financial
      officer. Based on that evaluation, our chief executive officer and chief
      financial officer concluded that our disclosure controls and procedures are
      effective as of the end of the period covered by this report. During the most
      recently completed fiscal quarter, there has been no significant change in
      our
      internal control over financial reporting that has materially affected, or
      is
      reasonably likely to materially affect, our internal control over financial
      reporting.




**PART
      II**




**OTHER
      INFORMATION**




**ITEM
      1A RISK FACTORS.**




There
      have been no material changes to the risk factors disclosed in our most recent
      Annual Report on Form 10-KSB.




**ITEM
      6:** **EXHIBITS**




(a)  Exhibits:




2.1
      - Stock Purchase Agreement dated April 14, 2007 with Lu Jin Xiang for
      acquisition of ordinary shares of Head Dragon Holdings Limited *




3.1
      - Certificate of Incorporation***




3.1(a)
      - Amendment to Certificate of Incorporation***




3.1(b)
      - Amendment to Certificate of Incorporation
      ****




3.2
      - Bylaws***




31.1
      - Section 302 Certification by CEO




31.2
      - Section 302 Certification by CFO




32.1
      - Section 906 Certification by CEO




32.2
      - Section 906 Certification by CFO




*
      Incorporated by reference from the registration statement on Form S-4 (Reg.
      No.
      333-142894)


**
      Incorporated by reference to the registrant’s report on Form 10-KSB for the year
      ended December 31, 2006


***
      Incorporated by reference to the registrant's registration statement on Form
      S-1
      (Reg. No. 333-125018)


****
      Incorporated by reference to the registrant's
      report on Form 8-K filed on July 25, 2007.





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SIGNATURES




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




CHARDAN
                SOUTH CHINA ACQUISITION CORPORATIONDated:November
                16, 2007/s/
                Kerry PropperKerry
                PropperChief
                Executive Officer and Secretary (Principal Executive
                Officer)/s/
                Dr. Richard D. PropperDr.
                Richard D. PropperChief
                Financial Officer (Principal Accounting and Financial
                Officer)





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