**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**







**FORM
      10-Q**


(Mark
      One)




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




**For
      the quarterly period ended March 31, 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 þ 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 þ




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




As
      of
      November 1, 2006, 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**
              4Item 1
              Financial
                Statements (Unaudited):
              4Balance
                Sheet
              4Statements
                of Operations
              5Statement
                of Stockholders’ Equity
              6Statement
                of Cash Flows
              7Notes
                to Financial Statements
              8Item
                2
              Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
              11Item
                3
              Quantitative
                and Qualitative Disclosure About Market Risk
              13Item 4
              Controls
                and Procedures
              13**PART
                II.**
              **OTHER
                INFORMATION**
              15Item 1A
              Risk
                Factors
              15Item 6
              Exhibits
              15Signatures
              
              15






2





**Explanatory
      Note**





This
      Quarterly Report on Form 10-Q is filed to revise the Quarterly Report on Form
      10-QSB filed by the Company on May 21, 2007 and provide the required disclosure
      upon the appropriate form.








3




**PART
      I.**




**FINANCIAL
      INFORMATION**


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




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




March
                31, 2007
            
            December
                31, 2006(Unaudited)ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            73,074
            
            $
            147,063Investments
                held in trust
            
            
            31,549,825
            
            
            31,294,931Prepaid
                expenses and other
            
            
            -
            
            
            13,098Total
                current assets
            
            
            31,622,899
            
            
            31,455,092Long
                term deferred tax asset
            
            
            235,333
            
            
            235,333Total
                Assets
            
            $
            31,858,232
            
            $
            31,690,425LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilities:Accounts
                payable and accrued liabilities
            
            $
            208,861
            
            $
            103,056Taxes
                payable
            
            
            227,124
            
            
            204,913Deferred
                interest
            
            
            347,039
            
            
            296,105Total
                current liabilities
            
            
            783,024
            
            
            604,074CommitmentsCommon
                stock subject to possible conversion upon the consummation of a Business
                Combination
            
            
            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
            
            
            25,003,435Accumulated
                earnings
            
            
            107,056
            
            
            118,199Total
                stockholders' equity
            
            
            25,111,191
            
            
            25,122,334Total
                Liabilities and Stockholders' Equity
            
            $
            31,858,232
            
            $
            31,690,425See
                the accompanying notes to condensed financial
                statements





4


**Chardan
                South China Acquisition Corporation****(A
                Development Stage Company)****Condensed
                Statements of Operations**FromThree
            
            Three
            
            March
                10, 2005Months
            
            Months
            
            (Inception)Ended
            
            Ended
            
            ThroughMarch
                31, 2007
            
            March
                31, 2006
            
            March
                31, 2007(Unaudited)
            
            (Unaudited)
            
            (Unaudited)Costs
                and ExpensesAdmin
                and office support
            
            
            22,500
            
            
            22,500
            
            
            150,000Insurance
            
            
            22,487
            
            
            17,500
            
            
            114,973Professional
                fees
            
            
            30,759
            
            
            4,900
            
            
            127,783State
                franchise tax
            
            
            3,637
            
            
            5,938
            
            
            51,749Travel
            
            
            106,765
            
            
            76,224
            
            
            528,994Other
                operating costs
            
            
            5,908
            
            
            5,793
            
            
            130,371Total
                costs and expenses
            
            
            192,056
            
            
            132,855
            
            
            1,103,870Operating
                loss
            
            
            (192,056
            )
            
            (132,855
            )
            
            (1,103,870
            )Other
                income (expense):Interest
                income
            
            
            203,961
            
            
            248,585
            
            
            1,384,554Interest
                expense
            
            
            (837
            )
            
            -
            
            
            (837
            )Total
                other income
            
            
            203,124
            
            
            248,585
            
            
            1,383,717Net
                income (loss) before income tax provision
            
            
            11,068
            
            
            115,730
            
            
            279,847Income
                tax provision
            
            
            (22,211
            )
            
            (62,385
            )
            
            (172,791
            )Net
                income (loss)
            
            $
            (11,143
            )
            $
            53,345
            
            $
            107,056Loss
                per share - basic and diluted
            
            
            (0.002
            )
            
            0.008
            
            
            0.018Weighted
                average shares outstanding - basic and diluted
            
            
            7,000,000
            
            
            7,000,000
            
            
            5,897,470See
                the accompanying notes to condensed financial
                statements





5


**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 quarter ended March 31, 2007
            
            
            
            
            
            
            
            
            
            
            
            (11,143
            )
            
            (11,143
            )Balance
                at March 31, 2007
            
            
            7,000,000
            
            
            700
            
            $
            25,003,435
            
            $
            107,056
            
            $
            25,111,191See
                the accompanying notes to condensed financial
                statements





6


**Chardan
                South China Acquisition Corporation****(A
                Development Stage Company)****Condensed
                Statements of Cash Flows**FromThree
            
            Three
            
            March
                10, 2005Months
            
            Months
            
            (Inception)Ended
            
            Ended
            
            ThroughMarch
                31, 2007
            
            March
                31, 2006
            
            March
                31, 2007(Unaudited)
            
            (Unaudited)
            
            (Unaudited)Cash
                Flows from Operating Activities:Net
                income (loss)
            
            $
            (11,143
            )
            $
            53,345
            
            $
            107,056Adjustments
                to reconcile net loss to net cashused
                in operating activities:Amortization
                of discounts and interest earned on securities held in
                trust
            
            
            (254,894
            )
            
            (302,814
            )
            
            (1,714,825
            )Changes
                in operating Assets and Liabilities:Prepaid
                expenses and other current assets
            
            
            13,099
            
            
            25,000
            
            
            -Deferred
                tax asset
            
            
            -
            
            
            (72,893
            )
            
            (235,333
            )Accounts
                payable and accrued expenses
            
            
            105,805
            
            
            46,206
            
            
            208,861Income
                taxes payable
            
            
            22,211
            
            
            (45,722
            )
            
            227,124Deferred
                interest
            
            
            50,933
            
            
            60,533
            
            
            347,039Net
                cash used by operating activities
            
            
            (73,989
            )
            
            (236,345
            )
            
            (1,060,078
            )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 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
            
            
            -
            
            
            -
            
            
            30,968,152Net
                increase (decrease) in cash and cash equivalents
            
            
            (73,989
            )
            
            (236,345
            )
            
            73,074Cash
                and cash equivalents, beginning of the period
            
            
            147,063
            
            
            912,964
            
            
            -Cash
                and cash equivalents, end of the period
            
            $
            73,074
            
            $
            676,619
            
            $
            73,074Cash
                paid for taxes
            
            $
            -
            
            $
            181,000
            
            $
            181,800Cash
                paid for interest
            
            $
            -
            
            $
            -
            
            $
            -See
                the accompanying notes to condensed financial
                statements





7


**CHARDAN
      SOUTH CHINA ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO THE FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007**




**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
      Peoples 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-Q and
      Item 310(b) of Regulation S-K. 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 period ended March 31, 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. The condensed balance
      sheet at December 31, 2006 has been derived from the audited financial
      statements.




8




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 quarter of 2007, the Company recognized no
      adjustments for uncertain tax benefits.




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 March 31,
      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, as amended on
      July 23, 2007, 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.




9




**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 month period
      ended March 31, 2007 includes $22,500 of such fees.




**5.**  **SUBSEQUENT EVENTS**




On
      April
      14, 2007 the Company 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 the Company’s stockholders of an amendment to the
      Company’s certificate of incorporation allowing the Company to enter into a
      business combination with a company with principal operations north of the
      Yangtze River and approval by the Company’s stockholders of the transaction
      itself. If the proposed acquisition of Head Dragon is not approved by the
      Company’s stockholders, the Company will not have the time or funds to identify
      and enter into a proposed agreement with another business and would therefore
      commence liquidation.




Under
      the
      agreement with Mr. Lu Jin Xiang, the holder of all of the outstanding ordinary
      shares of Head Dragon Holdings, the Company will acquire all of his stock in
      exchange for 13,000,000 of the common shares of the Company’s merger subsidiary,
      China Energy Technology, Limited (“CETL”), a British Virgin Islands company
      formed for the purpose of changing the Company’s domicile from Delaware to the
      British Virgin Islands.




As
      additional purchase price, the holders of the Head Dragon common 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




In
      addition to its outstanding common stock, Head Dragon Holdings has or will
      have
      650,000 shares of preferred stock outstanding. It is expected that CETL will
      offer to exchange one share of its common stock for each outstanding share
      of
      Head Dragon preferred stock.




10




**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.




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 Jin Xiang, 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 (“CETL”), a British Virgin Islands company formed for the
      purpose of changing our domicile from Delaware to the British Virgin
      Islands.




11




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




In
      addition to its outstanding common stock, Head Dragon Holdings has or will
      have
      650,000 shares of preferred stock outstanding. It is expected that CETL will
      offer to exchange one share of its common stock for each outstanding share
      of
      Head Dragon preferred stock.




For
      more
      information regarding the agreement with Head Dragon Holdings and GaoKe, please
      see our S-4 registration statement, filed with the SEC on May 11, 2007 (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 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 of the businesses that we evaluated. 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.




We
      expect
      the transaction with GaoKe will be consummated in the second half of 2007,
      if we
      obtain the required approval by our stockholders. Had we not entered into the
      agreement in principle to combine with GaoKe on or before February 10, 2007,
      our
      certificate of incorporation required us to begin dissolution of the company.
      The entry into the agreement in principle to acquire GaoKe on January 31, 2007
      extended the time for completing a business combination until August 10, 2007.
      On July 23, 2007, we amended our certificate of incorporation to extend the
      time
      for completing the business combination to February 10, 2008. We will regularly
      assess the progress that we are making toward completion of our transaction
      with
      GaoKe. Should it appear likely that the completion of the business combination
      with GaoKe will not be completed by February 10, 2008, we would commence
      liquidation of the company.




*Financial
      Performance* .




We
      had a
      net loss of $11,143 for the three months ended March 31, 2007. Expenses of
      $192,056, consisting principally of $106,765 of travel expenses, $22,500 for
      a
      monthly administrative services agreement, $22,487 for directors and officers
      liability insurance, state franchise taxes of $3,637, $30,759 for professional
      fees and $5,908 for other operating costs, together with an income tax provision
      of $22,211, offset by interest income on the trust fund investments in the
      amount of $203,961.




12




The
      loss
      for the quarter ending March 31, 2007 compares with net income of $53,345 for
      the same period in 2006, a decrease in income of $64,488, or 121%. Travel
      expenses and professional fees were approximately $30,000 and $25,000 higher
      in
      the first quarter of 2007 than in the same period in 2006, accounting for the
      majority of the $60,000 increase in expenses. These higher expenses resulted
      from the fact that we entered into an agreement in principle with Head Dragon
      Holdings to acquire an operating business known as Liaoning GaoKe Energy Group,
      and the drafting and negotiation of legal documents commenced in earnest during
      the quarter. Other significant changes between the two periods were a decline
      in
      both interest income and a decrease in our income tax provision that roughly
      offset each other.




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 sufficient
      available funds outside of the trust fund to operate through the consummation
      of
      the proposed business combination with Head Dragon Holdings. We intend to
      acquire the additional operating capital needed to effect a business combination
      through borrowing, some or all of which may be borrowing from our officers
      and
      directors.




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.




**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
      March 31, 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.




13




**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***




3.2
      -
      Bylaws***




4.6
      -
      Warrant Clarification Agreement with Continental Stock Transfer and Trust
      Company, dated April 16, 2007 *  *




4.7
      -
      Amendment to Representative Unit Purchase Option**




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)
  14


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:
                August 14, 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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