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





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





For
      the
      transition period from _____________ to _____________





Commission
      File Number 000-51431





Chardan
      North China Acquisition Corporation


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


(Exact
      Name of Small Business Issuer as Specified in Its Charter)





Delaware
              --------------
              (State
                or other Jurisdiction of
              Incorporation
                or Organization)
            20-2479743
              ---------------
              (I.R.S.
                Employer
              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 o




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
      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 oNo x












PagePart
                  I: Financial Information:Item
                  1 - Financial Statements (Unaudited):Balance
                  Sheet
              3Statements
                  of Operations
              4Statement
                  of Stockholders’ Equity
              5Statement
                  of Cash Flows
              6Notes
                  to Financial Statements
              7Item
                  2 - Management’s Discussion and Analysis or Plan of
                  Operation
              9Item
                  3 - Controls and Procedures
              10Part
                  II. Other InformationItem
                  6 - Exhibits
              11Signatures
              12










**Chardan
                  North China Acquisition Corporation****(A
                  Development Stage Company)****Condensed
                  Balance Sheets**June
                  30, 2006
              
              December
                  31, 2005(Unaudited)ASSETSCurrent
                  assets:Cash
                  and cash equivalents
              
              $
              48,618
              
              $
              856,380Investments
                  held in trust
              
              
              30,780,994
              
              
              30,260,861Deferred
                  tax asset
              
              
              451,839
              
              
              177,370Prepaid
                  expenses and other
              
              
              16,003
              
              
              58,503Total
                  Assets
              
              $
              31,297,454
              
              $
              31,353,114LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              260,406
              
              $
              224,498Income
                  taxes payable
              
              
              206,501
              
              
              173,120Deferred
                  interest
              
              
              190,370
              
              
              86,395Total
                  current liabilities
              
              
              657,277
              
              
              484,013CommitmentsCommon
                  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
              
              
              25,006,126
              
              
              25,006,126Accumulated
                  deficit
              
              
              (330,666
              )
              
              (101,742
              )Total
                  stockholders' equity
              
              
              24,676,160
              
              
              24,905,084Total
                  Liabilities and Stockholders' Equity
              
              $
              31,297,454
              
              $
              31,353,114See
                  the accompanying notes to condensed financial
                  statements






-
          3
          -




**Chardan
                  North China Acquisition Corporation****(A
                  Development Stage Company)****Condensed
                  Statements of Operations**From
              
              FromThree
              
              Three
              
              Six
              
              March
                  10, 2005
              
              March
                  10, 2005Months
              
              Months
              
              Months
              
              (Inception)
              
              (Inception)Ended
              
              Ended
              
              Ended
              
              Through
              
              ThroughJune
                  30, 2006
              
              June
                  30, 2005
              
              June
                  30, 2006
              
              June
                  30, 2005
              
              June
                  30, 2006(Unaudited)
              
              (Unaudited)
              
              (Unaudited)
              
              (Unaudited)
              
              (Unaudited)Costs
                  and ExpensesAdmin
                  and office support
              
              
              22,500
              
              
              -
              
              
              45,000
              
              
              -
              
              
              82,500Consulting
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              66,700Insurance
              
              
              17,500
              
              
              -
              
              
              35,000
              
              
              -
              
              
              64,167Marketing
                  fees
              
              
              30,347
              
              
              -
              
              
              55,183
              
              
              -
              
              
              55,183Professional
                  fees
              
              
              166,827
              
              
              -
              
              
              360,218
              
              
              -
              
              
              488,175State
                  franchise tax
              
              
              5,875
              
              
              -
              
              
              11,750
              
              
              -
              
              
              35,525Travel
              
              
              77,513
              
              
              -
              
              
              163,683
              
              
              -
              
              
              310,774Other
                  operating costs
              
              
              12,117
              
              
              160
              
              
              36,607
              
              
              1,060
              
              
              58,280Total
                  costs and expenses
              
              
              332,679
              
              
              160
              
              
              707,441
              
              
              1,060
              
              
              1,161,304Operating
                  loss
              
              
              (332,679
              )
              
              (160
              )
              
              (707,441
              )
              
              (1,060
              )
              
              (1,161,304
              )Other
                  income:Interest
                  income
              
              
              173,878
              
              
              -
              
              
              419,229
              
              
              -
              
              
              767,100Net
                  loss before income tax provision
              
              
              (158,801
              )
              
              (160
              )
              
              (288,212
              )
              
              (1,060
              )
              
              (394,204
              )Income
                  tax benefit
              
              
              42,875
              
              
              -
              
              
              59,288
              
              
              -
              
              
              63,538Net
                  loss
              
              $
              (115,926
              )
              $
              (160
              )
              $
              (228,924
              )
              $
              (1,060
              )
              $
              (330,666
              )Loss
                  per share - basic and diluted
              
              
              (0.02
              )
              
              (0.00
              )
              
              (0.03
              )
              
              (0.00
              )
              
              (0.06
              )Weighted
                  average shares outstanding - basic and diluted
              
              
              7,000,000
              
              
              1,250,000
              
              
              7,000,000
              
              
              1,250,000
              
              
              5,264,151See
                  the accompanying notes to condensed financial
                  statements






-
          4
          -




**Chardan
                  North China Acquisition Corporation****(A
                  Development Stage Company)****Statements
                  of Changes in Stockholders' Equity**From
                  March 10, 2005 (Inception) through June 30, 2006DeficitAdditional
              
              Accumulated
              
              Stockholders'Common
              
              Paid
                  - In
              
              During
                  The
              
              EquityShares
              
              Amount
              
              Capital
              
              Development
                  Stage
              
              (Deficit)Issuance
                  of common shares to initial shareholders on March 10, 2005
              
              
              1,250,000
              
              $
              125
              
              $
              24,875
              
              $
              -
              
              $
              25,000at
                  $0.02 per shareSale
                  of 5,750,000 units, net of underwriters' discount and offering
                  expenses
              
              
              5,750,000
              
              
              575
              
              
              30,945,168
              
              
              -
              
              
              30,945,743(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
              
              
              -
              
              
              100Loss
                  for the period ended December 31, 2005
              
              
              -
              
              
              -
              
              
              -
              
              
              (101,742
              )
              
              (101,742
              )Balance
                  at December 31, 2005
              
              
              7,000,000
              
              
              700
              
              
              25,006,126
              
              
              (101,742
              )
              
              24,905,084Unaudited:
                Loss
                  for the six months ended June 30, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              (228,924
              )
              
              (228,924
              )Balance
                  at June 30, 2006
              
              
              7,000,000
              
              $
              700
              
              $
              25,006,126
              
              $
              (330,666
              )
              $
              24,676,160See
                  the accomanying notes to condensed financial
                  statements






-
          5
          -




**Chardan
                  North China Acquisition Corporation****(A
                  Development Stage Company)****Condensed
                  Statement of Cash Flows**From
              
              FromSix
              
              March
                  10, 2005
              
              March
                  10, 2005Months
              
              (Inception)
              
              (Inception)Ended
              
              Through
              
              ThroughJune
                  30, 2006
              
              June
                  30, 2005
              
              June
                  30, 2006(Unaudited)
              
              (Unaudited)
              
              (Unaudited)Cash
                  Flows from Operating Activities:Net
                  loss
              
              $
              (228,924
              )
              $
              (1,060
              )
              $
              (330,666
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Amortization
                  of discounts and interest earned on securities held in
                  trust
              
              
              (520,132
              )
              
              -
              
              
              (945,993
              )Cash
                  received on interest bearing accounts
              
              
              (3,070
              )
              
              -
              
              
              (3,070
              )Changes
                  in operating Assets and Liabilities:Prepaid
                  expenses and other current assets
              
              
              42,500
              
              
              (73,432
              )
              
              (5,833
              )Deferred
                  tax asset
              
              
              (274,469
              )
              
              -
              
              
              (451,839
              )Accounts
                  payable and accrued expenses
              
              
              35,908
              
              
              12,417
              
              
              260,406Income
                  taxes payable
              
              
              33,381
              
              
              -
              
              
              206,501Deferred
                  interest
              
              
              103,974
              
              
              -
              
              
              190,369Net
                  cash used by operating activities
              
              
              (810,832
              )
              
              (62,075
              )
              
              (1,080,125
              )Cash
                  Flows from Investing Activities:Purchases
                  of investments held in trust
              
              
              -
              
              
              -
              
              
              (29,835,000
              )Cash
                  received on interest bearing accounts
              
              
              3,070
              
              
              -
              
              
              3,070Net
                  cash used by investing activities
              
              
              3,070
              
              
              -
              
              
              (29,831,930
              )Cash
                  Flows from Financing ActivitiesProceeds
                  from related party loans
              
              
              -
              
              
              80,000
              
              
              -Proceeds
                  from issuance of common stock
              
              
              -
              
              
              25,000
              
              
              34,525,000Proceeds
                  from issuance of option
              
              
              -
              
              
              -
              
              
              100Payment
                  of costs associated with public offering
              
              
              -
              
              
              (25,000
              )
              
              (3,554,257
              )Advance
                  to affiliate
              
              
              -
              
              
              -
              
              
              (10,170
              )Net
                  cash provided by financing activities
              
              
              -
              
              
              80,000
              
              
              30,960,673Net
                  increase in cash and cash equivalents
              
              
              (807,762
              )
              
              17,925
              
              
              48,618Cash
                  and cash equivalents, beginning of the period
              
              
              856,380
              
              
              -
              
              
              -Cash
                  and cash equivalents, end of the period
              
              $
              48,618
              
              $
              17,925
              
              $
              48,618See
                  the accompanying notes to condensed financial
                  statements






-
          6
          -




CHARDAN
          NORTH CHINA ACQUISITION CORPORATION
 (A
          DEVELOPMENT STAGE COMPANY)
 NOTES
          TO
          THE FINANCIAL STATEMENTS
 FOR
          THE
          THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2006
 
 1.
          SUMMARY OF ORGANIZATION AND BASIS OF PRESENTATION
 
 Business
          and Organization -
          Chardan North China Acquisitions Corp. (Chardan North) was incorporated
          in
          Delaware on March 10, 2005 as a blank check company whose objective is
          to
          acquire an operating business that has its primary operating facilities
          in the
          People Republic of China in any city or province north of the
          YangtzeRiver.
 
 Effective
          July 14, 2005, the Company's Board of Directors and Initial Stockholders
          authorized an amendment to the Company's Certificate of Incorporation to
          change
          the Company's name from Chardan China Acquisition Corp. II to Chardan North
          China Acquisition Corporation.
 
 In
          August
          2005, Chardan North commenced its efforts to locate a company with which
          to
          effect a business combination. After signing a definitive agreement for
          the
          acquisition of a target business, such transaction will be submitted for
          stockholder approval. In the event that stockholders owning 20% or more
          of the
          outstanding stock excluding, for this purpose, those persons who were
          stockholders prior to the Offering, vote against the Business Combination
          and
          exercise their conversion rights described below, the Business Combination
          will
          not be consummated. All of the Company's stockholders prior to the Initial
          Public Offering, including all of the officers and directors of the Company
          ("Initial Stockholders"), have agreed to vote their 1,250,000 founding
          shares of
          common stock in accordance with the vote of the majority in interest of
          all
          other stockholders of the Company ("Public Stockholders") with respect
          to the
          Business Combination. After consummation of the Business Combination, all
          of
          these voting safeguards will no longer be applicable. With respect to a
          Business
          Combination which is approved and consummated, any Public Stockholder who
          voted
          against the Business Combination may demand that the Company convert his
          or her
          shares. The per share conversion price will equal the amount in the Trust
          Fund
          as of the record date for determination of stockholders entitled to vote
          on the
          Business Combination divided by the number of shares of common stock held
          by
          Public Stockholders at the consummation of the Offering. Accordingly, Public
          Stockholders holding 19.99% of the aggregate number of shares owned by
          all
          Public Stockholders may seek conversion of their shares in the event of
          a
          Business Combination.
 
 Such
          Public Stockholders are entitled to receive their per share interest in
          the
          Trust Fund computed without regard to the shares held by Initial Stockholders.
          Accordingly, a portion of the net proceeds from the offering (19.99% of
          the
          amount originally held in the Trust Fund) has been classified as common
          stock
          subject to possible conversion in the accompanying balance sheet and 19.99%
          of
          the related interest earned on the investments held in the Trust Fund has
          been
          recorded as deferred interest.
 
 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 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.
 
 -
              7 -
 CHARDAN
                NORTH CHINA ACQUISITION CORPORATION
 (A
                DEVELOPMENT STAGE COMPANY)
 NOTES
                TO
                THE FINANCIAL STATEMENTS
 FOR
                THE
                THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2006
 
 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.
 
 In
          May
          2005 the Company made a non-interest bearing advance of $10,170 to an affiliate,
          which is included in prepaid expenses and other current assets on the
          accompanying balance sheet. This amount is due on demand, and is expected
          to be
          repaid in the current fiscal year.
 
 3.
          MATERIAL AGREEMENTS
 
 On
          February 2, 2006, the Company entered into a definitive stock purchase
          agreement
          pursuant to which it will acquire a controlling interest in Beijing HollySys
          Company, Limited and Hangzhou HollySys Automation, Limited (collectively
          referred to as "HollySys"). Upon completion of the transaction, Chardan
          North
          will own 74.11% and 89.64%, respectively, of the two companies. The original
          termination of the agreement was June 30, 2006. On June 5, 2006, the stock
          purchase agreement was amended to extend the termination date to December
          31,
          2006. At closing, Chardan North will change its name to HLS Systems
          International, Limited ("HLS" or the "Company").
  Under
          the
          terms of the acquisition, Chardan North will acquire from participating
          shareholders their equity interests in HollySys, by acquiring Gifted Time
          Holdings, Ltd., a British Virgin Islands corporation that holds all of
          those
          interests. The Gifted Time interests in HollySys will be exchanged for
          23,500,000 shares of common stock of Chardan North equal to 77% of the
          total
          issued and outstanding common stock of the post-transaction company, and
          a cash
          consideration of $30,000,000. A variable portion of the cash consideration
          will
          be deferred, ranging from $3,000,000 to $7,000,000, depending on the number
          of
          shares that Chardan North shareholders redeem, if any, in the process of
          approving the transaction. The deferred cash compensation will either be
          paid at
          the rate of 50% of positive cash flow generated by the Company post-acquisition
          based on audited financial statements or upon the receipt of $60,000,000
          in
          equity investment, whether from the exercise of issued and outstanding
          warrants
          or other sources.
  As
          additional consideration, participating parties will be entitled to receive,
          on
          an all or none basis each year, an additional 2,000,000 shares for each
          of the
          next four fiscal years beginning with the year ending June 30, 2007 if
          HollySys
          achieves the following operating after-tax profits:
  FY
                    Ending June 30
                
                After-Tax
                    Profit2007
                
                $
                23,000,0002008
                
                $
                32,000,0002009
                
                $
                43,000,0002010
                
                $
                61,000,000


-
          8
          -








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 relating 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 north of the Yangtze River,
      including but not limited to the Jiangshu and Hubei provinces and Chongqing.
      We
      intend to utilize cash derived from the proceeds of our 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
      Developments***




On
      February 2, 2006 we entered into a Stock Purchase Agreement with the
      stockholders of Gifted Time Holdings, Ltd. for the acquisition of that company,
      which is a holding company that owns a majority interest in each of two Chinese
      companies, Beijing HollySys Co., Ltd., and Hangzhou HollySys Automation Co.,
      Ltd., (collectively, “HollySys”). HollySys is engaged in the production and sale
      of industrial automation and control systems. For a more complete discussion
      of
      our proposed business combination, including the risks related to our
      acquisition of HollySys, see the Form S-4 (as amended) filed by our wholly-owned
      subsidiary HLS Systems International Ltd., by which we are seeking to solicit
      shareholder approval of the proposed Business Combination and register the
      stock
      received by our current stockholders as a result of the Redomestication Merger
      that will occur if the Business Combination is approved.




The
      consummation of this transaction requires the approval of our stockholders.
      On
      March 30, 2006 we filed a registration statement on Form S-4 to register the
      stock that will be issued to our stockholders in that merger, if our
      stockholders approve the merger and acquisition of Gifted Time Holdings. On
      June
      28, 2006 we filed an amendment to that registration statement in response to
      comments received from the SEC on the initial filing. The registration statement
      also includes proxy materials for conducting the required stockholder vote.
      We
      intend to distribute the proxy statement/prospectus included in the registration
      statement to our stockholders promptly after the SEC declares the registration
      statement effective it and to conduct the stockholder vote as soon as
      practicable thereafter. As the consummation of the proposed transaction with
      Gifted Time Holdings, Ltd. depends upon the outcome of the stockholder vote,
      unless otherwise indicated, the remainder of this Quarterly Report on Form
      10-QSB includes information only about us, and it does not include any
      information regarding Gifted Time Holdings, Ltd. or HollySys.




In
      conjunction with the filing of the S-4 Registration Statement, the staff of
      the
      SEC is reviewing our financial statements. There are several aspects of our
      financial statements that have not previously been reviewed by the SEC,
      including the accounting for consummation of our initial public offering.
      Recently, 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 would require 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.




The
      net
      loss of $125,401 for the three months ended June 30, 2006 resulted from expenses
      of $323,546, which consisted primarily of travel expenses, amounts paid under
      a
      monthly administrative services agreement, directors and officers liability
      insurance premiums, state franchise taxes, professional fees and other operating
      costs incurred in our efforts to consummate a Business Combination with Gifted
      Time Holdings, Ltd., offset by interest income of $173,876 and an income tax
      benefit of $24,269.






-
          9
          -






For
      the
      six months ended June 30, 2006, our net loss was $238,527, which resulted from
      expenses of $698,437 that consisted primarily of travel expenses, amounts paid
      under a monthly administrative services agreement, due diligence consulting
      fees, directors and officers liability insurance premiums, state franchise
      taxes, professional fees and other operating costs incurred in our efforts
      to
      consummate a Business Combination with Gifted Time Holdings, Ltd., offset by
      interest income of $419,228 and an income tax benefit of $40,682.




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.




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 $519,257
      was paid for costs and expenses related to the offering. After deducting the
      underwriting discounts and commissions and the offering expenses, the total
      net
      proceeds to us from the offering were approximately $30,945,843, of which
      $29,835,000 was deposited into the trust account (or approximately $5.19 per
      share sold in the offering). The remaining proceeds have been available to
      us
      for business, legal and accounting due diligence on prospective acquisitions,
      tax payments and continuing general and administrative expenses. We have
      expended significant amounts during the first six months of 2006 in drafting
      and
      negotiating the definitive agreements for our proposed Business Combination
      and
      in drafting and revising in response to SEC comments on our Form S-4
      registration statement and proxy materials.




We
      had an
      accumulated deficit of just over $340,000 as of June 30, 2006, reflecting the
      fact that we have incurred expenses in excess of the net proceeds of our
      offering that were not placed in the trust fund to acquire a target business,
      including identifying and evaluating prospective acquisition candidates,
      selecting the target business, and structuring, negotiating and consummating
      the
      business combination. To the extent that our capital stock is used in whole
      or
      in part as consideration to effect a business combination, the proceeds held
      in
      the trust fund as well as any other net proceeds not expended will be used
      to
      finance the operations of the target business after consummation of the business
      combination, including the payment of any expenses that have been accrued but
      not paid as of the date of that consummation.




We
      do not
      believe that we currently have sufficient funds outside the trust fund to
      operate through August 10, 2007 or date of the consummation of the proposed
      Business Combination or, if it is not approved by our stockholders, a different
      Business Combination, whichever occurs first. We expect to obtain the additional
      operating capital we will need by borrowing, some or all of which may be loans
      made to us by our officers and directors or their affiliates.




How
      much
      we will have to borrow to consummate the proposed transaction with Gifted Time
      Holdings, Ltd. will depend on how quickly we can obtain effectiveness of our
      S-4
      registration statement. At the time we close a Business Combination, assuming
      that occurs, our current liabilities will exceed our current assets, in whch
      case the additional liabilities will be paid out of the funds held in the trust
      account.




It
      is
      possible that we will need to raise additional funds as consideration paid
      in
      connection with consummation of a Business Combination, although the terms
      of
      the definitive agreement with respect to the acquisition of Gifted Time
      Holdings, Ltd. interests in HollySys are such that additional funds will not
      be
      required for that purpose. Should that need arise, however, we would most likely
      do so through a private offering of debt or equity securities, and we would
      only
      consummate such a financing simultaneously with the consummation of a Business
      Combination approved by our stockholders.




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.






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PART
      II.





OTHER
      INFORMATION














ITEM
      6:
      EXHIBITS




(a) Exhibits:




10.7
      *-
      Second Amendment to Stock Purchase Agreement




10.8
      -
      Amendment to Investment Management Trust 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




*
                Incorporated by reference from Annex A to the registration statement
                on
                Form S-4 (Reg. No. 333-132286)






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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
              NORTH
              CHINA ACQUISITION CORPORATIONDated:
              August 21, 2006By:
            /s/ Li
              ZhangLi
                Zhang
              Chief Executive Officer (Principal Executive
                Officer)


By:
            /s/ Kerry
              PropperKerry
                Propper
              Chief Financial Officer and Secretary (Principal
                Accounting and Financial Officer)








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