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

                                   FORM 10-QSB
(Mark One)

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

      For the quarterly period ended June 30, 2006

|__|  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 Small Business Issuer as Specified in Its Charter)

            Delaware                                      20-2479786
         --------------                                 ---------------
(State or other Jurisdiction of                        (I.R.S. Employer
 Incorporation or Organization)                       Identification No.)

              625 Broadway, Suite 1111, San Diego, California 92101
                     (Address of Principal Executive Office)

                                 (619) 795-4627
                (Issuer'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 |_|

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

      Yes |X| No |_|

      As of August 1, 2006, 7,000,000 shares of common stock, par value $.0001
per share, were issued and outstanding.

      Transitional Small Business Disclosure Format (check one):

      Yes |_| No |X|

<PAGE>

<TABLE>
<S>                                                                              <C>
Part I:  Financial Information:

         Item 1 - Financial Statements (Unaudited):

         Balance Sheet............................................................3

         Statements of Operations.................................................4

         Statement of Stockholders' Equity........................................5

         Statement of Cash Flows..................................................6

         Notes to Financial Statements............................................7

         Item 2 - Management's Discussion and Analysis or Plan of Operation.......9

         Item 3 - Controls and Procedures .......................................10

Part II.  Other Information

         Item 6 - Exhibits.......................................................11

Signatures.......................................................................12
</TABLE>


                                       2
<PAGE>

                   Chardan South China Acquisition Corporation
                          (A Development Stage Company)
                            Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                        June 30, 2006  December 31, 2005
                                                        -------------  -----------------
                                                         (Unaudited)
<S>                                                     <C>             <C>
                                     ASSETS
Current assets:
    Cash and cash equivalents                           $     440,887   $         912,964
    Investments held in trust                              30,780,994          30,260,861
    Deferred tax asset                                        298,915             119,967
    Prepaid expenses and other                                  5,833              48,333
                                                        -------------   -----------------

Total Assets                                            $  31,526,629   $      31,342,125
                                                        =============   =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable and accrued expenses               $      75,611   $          53,253
    Income taxes payable                                      207,789             165,556
    Deferred interest                                         193,369              86,395
                                                        -------------   -----------------
Total current liabilities                                     476,769             305,204
                                                        -------------   -----------------

Commitments

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

Stockholders' equity:
    Preferred stock, $.0001 par value, 1,000,000                   --                  --
      shares authorized, none issued
    Common stock, $.0001 par value: 20,000,000                    700                 700
      shares authorized, 7,000,000 shares issued
      and outstanding (includes 1,149,425
      shares subject to possible conversion)
    Additional paid-in capital                             25,003,435          25,003,435
    Earnings accumulated during the development stage          81,708              68,769
                                                        -------------   -----------------
Total stockholders' equity                                 25,085,843          25,072,904
                                                        -------------   -----------------

Total Liabilities and Stockholders' Equity              $  31,526,629   $      31,342,125
                                                        =============   =================
</TABLE>

          See the accompanying notes to condensed financial statements


                                       3
<PAGE>

                   Chardan South China Acquisition Corporation
                          (A Development Stage Company)
                       Condensed Statements of Operations

<TABLE>
<CAPTION>
                                                                                                   From              From
                                               Three            Three             Six         March 10, 2005    March 10, 2005
                                               Months           Months           Months        (Inception)       (Inception)
                                               Ended            Ended            Ended            Through         Through
                                           June 30, 2006    June 30, 2005    June 30, 2006     June 30, 2005     June 30, 2006
                                           -------------    -------------    -------------    --------------    --------------
                                            (Unaudited)       (Unaudited)     (Unaudited)       (Unaudited)       (Unaudited)
<S>                                        <C>              <C>              <C>              <C>               <C>
Costs and Expenses
   Admin and office support                       22,500               --           45,000                --            82,500
   Consulting                                     66,700               --           66,700                --            66,700
   Insurance                                      17,500               --           35,000                --            64,167
   Professional fees                              28,217               --           33,117                --            67,592
   State franchise tax                             6,737               --           12,675                --            36,175
   Travel                                         82,643               --          158,867                --           236,711
   Other operating costs                           5,086               12           10,879               940            41,948
                                           -------------    -------------    -------------    --------------    --------------

Total costs and expenses                         229,383               12          362,238               940           595,793
                                           -------------    -------------    -------------    --------------    --------------

Operating loss                                  (229,383)             (12)        (362,238)             (940)         (595,793)

Other income:
   Interest income                               170,877               --          419,462                --           767,375
                                           -------------    -------------    -------------    --------------    --------------

Net loss before income tax provision             (58,506)             (12)          57,224              (940)          171,582

   Income tax benefit (provision)                 18,100               --          (44,285)               --           (89,874)
                                           -------------    -------------    -------------    --------------    --------------

Net income (loss)                          $     (40,406)   $         (12)   $      12,939    $         (940)   $       81,708
                                           =============    =============    =============    ==============    ==============

Loss per share
  - basic and diluted                              (0.01)           (0.00)            0.00             (0.00)             0.02
Weighted average shares outstanding
  - basic and diluted                          7,000,000        1,250,000        7,000,000         1,250,000         5,264,151
</TABLE>

          See the accompanying notes to condensed financial statements


                                       4
<PAGE>

                   Chardan South China Acquisition Corporation
                          (A Development Stage Company)
                  Condemsed Statements of Stockholders' Equity
              From March 10, 2005 (Inception) through June 30, 2006

<TABLE>
<CAPTION>
                                                                                                       Earnings
                                                    ---------------------------    Additional         accumulated     Stockholders'
                                                              Common                Paid - In          during the        Equity
                                                       Shares         Amount         Capital       development stage    (Deficit)
                                                    ------------   ------------   ------------    -----------------   -------------
<S>                                                 <C>            <C>            <C>             <C>                 <C>
Issuance of common shares to initial
  shareholders on March 10, 2005
  at $0.02 per share                                   1,250,000   $        125   $     24,875    $              --   $      25,000
Sale of 5,750,000 units, net of
  underwriters' discount and offering
  expenses (includes 1,149,425 shares
  subject to possible conversion)                      5,750,000            575     30,942,477                   --      30,943,052
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
Net Income for the year ended December 31, 2005               --             --             --               68,769          68,769
                                                    ------------   ------------   ------------    -----------------   -------------

Balance at December 31, 2005                           7,000,000            700     25,003,435               68,769      25,072,904

Unaudited:
Net Income for the six months ended June 30, 2006             --             --             --               12,939          12,939

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

Balance at June 30, 2006                               7,000,000   $        700   $ 25,003,435    $          81,708   $  25,085,843
                                                    ============   ============   ============    =================   =============
</TABLE>

          See the accompanying notes to condensed financial statements


                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                              From              From
                                                             Six         March 10, 2005    March 10, 2005
                                                            Months         (Inception)       (Inception)
                                                            Ended            Through           Through
                                                        June 30, 2006     June 30, 2005     June 30, 2006
                                                       --------------    --------------    --------------
                                                         (Unaudited)       (Unaudited)       (Unaudited)
<S>                                                    <C>               <C>               <C>
Cash Flows from Operating Activities:
Net income (loss)                                      $       12,939    $         (940)   $       81,708
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
    Amortization of discounts and interest
      earned on securities held in trust                     (520,133)               --          (945,994)
Changes in operating Assets and Liabilities:
    Prepaid expenses and other current assets                  42,500                --            (5,833)
    Deferred tax asset                                       (178,948)               --          (298,915)
    Accounts payable and accrued expenses                      22,358               900            75,611
    Income taxes payable                                       42,233                --           207,789
    Deferred interest                                         106,974                --           193,369
                                                       --------------    --------------    --------------
Net cash used by operating activities                        (472,077)              (40)         (692,265)
                                                       --------------    --------------    --------------
Cash Flows from Investing Activities:
    Purchases of investments held in trust                         --                --       (29,835,000)
                                                       --------------    --------------    --------------
Net cash provided (used) by investing activities                   --                --       (29,835,000)
                                                       --------------    --------------    --------------

Cash Flows from Financing Activities
    Proceeds from related party loans                              --            80,000                --
    Proceeds from issuance of common stock                         --            25,000        34,525,000
    Proceeds from issuance of option                               --                --               100
    Payment of costs associated with public offering               --           (76,416)       (3,556,948)
                                                       --------------    --------------    --------------
Net cash provided by financing activities                          --            28,584        30,968,152
                                                       --------------    --------------    --------------

Net increase in cash and cash equivalents                    (472,077)           28,544           440,887
Cash and cash equivalents, beginning of the period            912,964                --                --
                                                       --------------    --------------    --------------
Cash and cash equivalents, end of the period           $      440,887    $       28,544    $      440,887
                                                       ==============    ==============    ==============
Supplemental schedule of non-cash financing:
Accrual of offering costs                                          --    $        9,679                --
                                                       ==============    ==============    ==============
</TABLE>

          See the accompanying notes to condensed financial statements


                                       6
<PAGE>

                   CHARDAN SOUTH CHINA ACQUISITION CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2006

1. SUMMARY OF ORGANIZATION AND BASIS OF PRESENTATION

      Business and Organization - Chardan South China Acquisition 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 six-month periods ended June 30, 2006 and 2005
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2006. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended December 31, 2005,
included in Form 10-KSB filed with the Securities and Exchange Commission.

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 statements of operations for the
three and six month periods ended June 30, 2006 include $22,500 and $45,000 of
such fees, respectively.

3. MATERIAL AGREEMENTS

      In June 2006, 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 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 periods ended June 30, 2006
include $66,700 relating to this agreement with the remaining amount due upon
the closing of a Business Combination, if any.

4. ACCOUNTING PRONOUNCEMENTS

      In July 2006, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No.48, "Accounting for Uncertainty in Income Taxes", an
interpretation of FASB Statement No.109 ("FIN 48"), which provides criteria for
the recognition, measurement, presentation and disclosure of uncertain tax
positions. A tax benefit from an uncertain position may be recognized only if it
is "more likely than not" that the position is sustainable based on its
technical merits. The provisions of FIN 48 are effective for fiscal years
beginning after December 15, 2006. We don not expect FIN 48 will have a material
effect on our financial condition or results of operations.

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


                                       7
<PAGE>

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.

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.

Background

      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.

Results of Operations

      The net loss of $40,406 for the three months ended June 30, 2006 consisted
primarily of $82,643 of travel expenses, $22,500 for a monthly administrative
services agreement, $17,500 for directors and officers liability insurance,
state franchise taxes of $6,737, $28,217 for professional fees, $66,700 for
consulting fees and $5,086 for other operating costs. These expenses were offset
by interest income on the trust fund investments in the amount of $170,877 and
an income tax benefit of $18,100.

      The net income of $12,939 for the six-month period ending June 30, 2006
resulted from expenses of $362,238, consisting primarily of $158,867 of travel
expenses, $45,000 for a monthly administrative services agreement, $35,000 for
directors and officers liability insurance, state franchise taxes of $12,675,
$33,117 for professional fees, $66,700 for consulting fees and $10,879 for other
operating costs. For that period we also had an income tax provision of $44,285.
Offsetting those amounts was interest of $419,462 earned on the trust
investments.

      As we were incorporated only on March 10, 2005 and began our efforts to
locate and negotiate with a target for a Business Combination only after our
initial public offering, which occurred in the third quarter of 2005, no
comparison is provided for either the three-month or the six-month periods
ending June 30, 2005 and June 30, 2006, as such comparison would provide no
information of value in understanding the financial condition of our business.

      We have recently become aware that the staff of the SEC has raised
questions about the application of various accounting rules and guidance,
including EITF 00-19, to offerings by special purpose acquisition companies,
such as our company, which involve warrants and purchase options. If the SEC
staff ultimately concludes that application of these provisions requires a
different treatment of certain aspects of our financial statements, we may be
required to restate our financial statements, including reflecting as a
liability on our balance sheet our obligation to maintain an effective
registration statement with respect to the offer and sale of shares issuable
upon exercise of our outstanding warrants and purchase options.

Liquidity

      We consummated our initial public offering on August 10, 2005. On August
17, 2005, we consummated the closing of an additional 750,000 units that were
subject to the over-allotment option. Gross proceeds from our initial public
offering were $34,500,000. We paid a total of $3,035,000 in underwriting
discounts and commissions, and approximately $521,948 was or will be 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 $30,943,052, of which $29,835,000 was
deposited into the trust account (or approximately $5.19 per share sold in the
offering). The remaining proceeds are available to be used by us to provide for
business, legal and accounting due diligence on prospective acquisitions, tax
payments and continuing general and administrative expenses.

      We intend to use substantially all of the net proceeds of this 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. Upon consummation of a
business combination, the proceeds remaining in the trust fund, if any, as well
as any other unexpended net proceeds of our offering, will be used to finance
the operations of the target business.


                                       8
<PAGE>

      We believe we will have sufficient available funds outside of the trust
fund to operate through August 10, 2007, assuming that a business combination is
not consummated prior to that date. However, should we require additional
operating capital to effect a business combination, we will likely obtain it
through borrowing, some or all of which may be borrowing from our officers and
directors.

      We may need to raise additional funds through a private offering of debt
or equity securities if such funds are required to consummate a business
combination that is presented to us. We would only consummate such a financing
simultaneously with the consummation of a business combination.

ITEM 3. CONTROLS AND PROCEDURES.

      An evaluation of the effectiveness of our disclosure controls and
procedures as of June 30, 2006 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, 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. 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.


                                       9
<PAGE>

                                    PART II.

                                OTHER INFORMATION

ITEM 6:  EXHIBITS

         (a)      Exhibits:

                  10.12 - Amendment to Investment Management Agreement

                  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


                                       10
<PAGE>

                                   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 CORPORATION

      Dated: August 21, 2006

                                     /s/ Kerry Propper
                                     ---------------------------------------
                                     Kerry Propper
                                     Chief Executive Officer and Secretary
                                     (Principal Executive Officer)


                                     /s/ Dr. Richard D. Propper
                                     ---------------------------------------
                                     Dr. Richard D. Propper
                                     Chief Financial Officer (Principal
                                     Accounting and Financial Officer)


                                       11