----

----

| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
|------------------------------------------------------------------------------------------|

| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|------------------------------------------------------------------------------------------|

| Nevada(State or other jurisdiction of incorporation or organization) | 84-0601802(I.R.S. Employer Identification No.) |
|----------------------------------------------------------------------|------------------------------------------------|

| No. 485 Tengfei Third,Shuangliu Southwest Airport Economic Development Zone,Shuangliu, ChengduPeople’s Republic of China, 610207 |
|----------------------------------------------------------------------------------------------------------------------------------------|
| (Address of principal executive offices)                                                                                               |

----

| Large accelerated filer             o      | Accelerated filer                            o |
|--------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Non-accelerated filer               o | Smaller reporting company          ý                                                                                      |

----

| ITEM     |         |                                                                                        |   |  Page |
|----------|--------------|---------------------------------------------------------------------------------------------|--------|------------|
|     |         |                                                                                        |   |       |
| PART I   |         | FINANCIAL INFORMATION                                                                  |   | 3          |
| Item 1.  |         | Financial Statements                                                                        |   | 3          |
| Item 2.  |         | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   | 15         |
| Item 3.  |         | Quantitative and Qualitative Disclosures About Market Risk                                  |   | 21         |
| Item 4.  |         | Controls and Procedures                                                                     |   | 21         |
|     |         |                                                                                        |   |       |
| PART II  |    |  OTHER INFORMATION                                                                     |   | 22         |
| Item 1.  |         | Legal Proceedings                                                                           |   | 22         |
| Item 1A. |         | Risk Factors                                                                                |   | 22         |
| Item 6.  |         | Exhibits                                                                                    |   | 22         |
|     |         |                                                                                        |   |       |
|     |         | Signatures                                                                                  |   | 22         |

----

| APOLLO SOLAR ENERGY, INC                                                                                                                       |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED BALANCE SHEETS                                                                                                                    |   |
|                                                                                                                                           |   |   |   |   |   |   |
|                                                                                                                                           |   | June 30, 2012 |   |   | December 31, 2011 |   |
|                                                                                                                                           |   | (Unaudited) |   |   |   |   |
| ASSETS                                                                                                                                         |   |   |   |   |   |   |
| Current Assets                                                                                                                                 |   |   |   |   |   |   |
| Cash                                                                                                                                           |   | $ | 427,287 |   |   | $ | 363,771 |   |
| Accounts receivable                                                                                                                            |   |   | 841,754 |   |   |   | 804,577 |   |
| Inventories                                                                                                                                    |   |   | 3,495,120 |   |   |   | 4,065,987 |   |
| Prepaid expenses and other current assets                                                                                                      |   |   | 1,768,194 |   |   |   | 1,001,660 |   |
| Total Current Assets                                                                                                                           |   |   | 6,532,355 |   |   |   | 6,235,995 |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |
| Property, machinery and mining assets, net                                                                                                     |   |   | 17,188,944 |   |   |   | 20,370,831 |   |
| Assets held for sale                                                                                                                           |   |   | 924,280 |   |   |   | 924,765 |   |
| Non-marketable investment                                                                                                                      |   |   | 55,477 |   |   |   | 55,506 |   |
| Investment in and advances to Joint Venture                                                                                                    |   |   | 5,216,212 |   |   |   | 581,963 |   |
| Total Non-current Assets                                                                                                                       |   |   | 23,384,913 |   |   |   | 21,933,065 |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |
| Total Assets                                                                                                                                   |   | $ | 29,917,268 |   |   | $ | 28,169,060 |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                                                                                                                         |   |   |   |   |   |   |   |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |
| Current Liabilities                                                                                                                            |   |   |   |   |   |   |   |   |
| Short-term loans                                                                                                                               |   | $ | 6,900,570 |   |   | $ | 4,050,374 |   |
| Account payable - trade                                                                                                                        |   |   | 265,218 |   |   |   | 202,853 |   |
| Account payable - construction vendors                                                                                                         |   |   | 1,425,454 |   |   |   | 1,493,155 |   |
| Accrued expenses and other current liabilities                                                                                                 |   |   | 2,405,594 |   |   |   | 2,677,948 |   |
| Due to stockholders and related parties                                                                                                        |   |   | 173,158 |   |   |   | 214,213 |   |
| Total Current Liabilities                                                                                                                      |   |   | 11,169,994 |   |   |   | 8,638,543 |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |
| Stockholders' Equity                                                                                                                           |   |   |   |   |   |   |   |   |
|   Preferred stock:                                                                                                                   |   |   |   |   |   |   |   |   |
|  $0.001 par value, 25,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2012 and December 31, 2011                |   |   | - |   |   |   | - |   |
|   Common stock:                                                                                                                      |   |   |   |   |   |   |   |   |
| $0.001 par value, 100,000,000 shares authorized; 51,795,961 shares  issued and outstanding as of June 30, 2012 and December 31, 2011 |   |   | 51,796 |   |   |   | 51,796 |   |
|   Additional paid-in capital                                                                                                              |   |   | 32,879,655 |   |   |   | 32,609,043 |   |
|   Treasury stock 2,418,923 shares at cost                                                                                                 |   |   | (5,216,770 | ) |   |   | (5,216,770 | ) |
|   Accumulated deficit                                                                                                                     |   |   | (11,940,865 | ) |   |   | (10,897,576 | ) |
|   Accumulated other comprehensive income                                                                                                  |   |   | 2,973,458 |   |   |   | 2,984,024 |   |
| Total Stockholders' Equity                                                                                                                     |   |   | 18,747,274 |   |   |   | 19,530,518 |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders' Equity                                                                                                     |   | $ | 29,917,268 |   |   | $ | 28,169,061 |   |

----

| APOLLO SOLAR ENERGY, INC                                                    |   |
|-----------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) |   |
| (Unaudited)                                                                 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   | For the Three months Ended June 30, |   |   | For the Six Months Ended June 30, |   |
|                                                                        |   | 2012 |   |   | 2011 |   |   | 2012 |   |   | 2011 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales                                                                       |   | $ | 988,346 |   |   | $ | 2,940,118 |   |   | $ | 2,860,380 |   |   | $ | 6,723,338 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                                                          |   |   | (1,574,128 | ) |   |   | (2,167,917 | ) |   |   | (3,342,282 | ) |   |   | (5,598,073 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit (loss)                                                         |   |   | (585,782 | ) |   |   | 772,201 |   |   |   | (481,902 | ) |   |   | 1,125,265 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses                                         |   |   | 738,513 |   |   |   | 676,488 |   |   |   | 1,426,533 |   |   |   | 1,577,268 |   |
| Selling expense                                                             |   |   | 52,788 |   |   |   | 104,930 |   |   |   | 109,686 |   |   |   | 175,203 |   |
| Research and development expenses                                           |   |   | 379,355 |   |   |   | 259,762 |   |   |   | 534,925 |   |   |   | 290,572 |   |
| Total operating expenses:                                                   |   |   | 1,170,656 |   |   |   | 1,041,180 |   |   |   | 2,071,144 |   |   |   | 2,043,043 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating loss                                                              |   |   | (1,756,438 | ) |   |   | (268,979 | ) |   |   | (2,553,046 | ) |   |   | (917,778 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense)                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income (expense), net                                              |   |   | (114,320 | ) |   |   | (55,368 | ) |   |   | (253,216 | ) |   |   | 687,802 |   |
|    Equity in loss of Joint Venture                           |   |   | (66,151 | ) |   |   | (135,750 | ) |   |   | (174,748 | ) |   |   | (247,593 | ) |
|    Gain on investment in Joint Venture                       |   |   | 2,040,651 |   |   |   |   |   |   |   | 2,040,651 |   |   |   |   |   |
| Total other income (expense)                                                |   |   | 1,860,180 |   |   |   | (191,118 | ) |   |   | 1,612,687 |   |   |   | 440,209 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income(loss) before provision for income taxes                              |   |   | 103,742 |   |   |   | (460,097 | ) |   |   | (940,359 | ) |   |   | (477,569 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes (credit)                                         |   |   | 102,930 |   |   |   | (28,712 | ) |   |   | 102,930 |   |   |   | (125,778 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                           |   |   | 812 |   |   |   | (431,385 | ) |   |   | (1,043,288 | ) |   |   | (351,791 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                     |   |   | (39,516 | ) |   |   | 313,399 |   |   |   | (10,566 | ) |   |   | 499,538 |   |
| Comprehensive income (loss)                                                 |   | $ | (38,704 | ) |   | $ | (117,986 | ) |   | $ | (1,053,855 | ) |   | $ | 147,747 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                       |   | $ | 0.00 |   |   | $ | (0.01 | ) |   | $ | (0.02 | ) |   | $ | (0.01 | ) |
| Diluted                                                                     |   | $ | 0.00 |   |   | $ | (0.01 | ) |   | $ | (0.02 | ) |   | $ | (0.01 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                       |   |   | 51,795,961 |   |   |   | 50,159,169 |   |   |   | 51,795,961 |   |   |   | 50,159,169 |   |
| Diluted                                                                     |   |   | 51,795,961 |   |   |   | 50,159,169 |   |   |   | 51,795,961 |   |   |   | 50,159,169 |   |

----

| APOLLO SOLAR ENERGY, INC                                                                 |   |
|------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                                    |   |
| (Unaudited)                                                                              |   |
|                                                                                     |   |   |   |
|                                                                                     |   | For the Six Months Ended June 30, |   |
|                                                                                     |   | 2012 |   |   | 2011 |   |
| Cash flows from operating activities:                                                    |   |   |   |   |   |   |
|                                                                                     |   |   |   |   |   |   |
| Net Loss                                                                                 |   | $ | (1,043,289 | ) |   | $ | (351,791 | ) |
| Adjustments to reconcile net loss to net cash provided by(used in) operating activities: |   |   |   |   |   |   |   |   |
| Stock-based compensation                                                                 |   |   | 270,611 |   |   |   | 321,728 |   |
| Interest income from related party loan                                                  |   |   | - |   |   |   | (837,359 | ) |
| Gain on investment in Joint Venture                                                      |   |   | (2,040,651 | ) |   |   | - |   |
| Loss in equity of Joint Venture                                                          |   |   | 174,748 |   |   |   | 247,593 |   |
| Deferred tax assets                                                                      |   |   | - |   |   |   | (121,221 | ) |
| Inventory allowance                                                                      |   |   | 324,831 |   |   |   | - |   |
| Depreciation and amortization                                                            |   |   | 468,598 |   |   |   | 486,035 |   |
| Changes in operating assets and liabilities:                                             |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                      |   |   | (37,637 | ) |   |   | (366,381 | ) |
| Inventory                                                                                |   |   | 244,462 |   |   |   | 2,334,284 |   |
| Prepaid expenses and other current assets                                                |   |   | (767,814 | ) |   |   | 467,736 |   |
| Accounts payable-trade                                                                   |   |   | 62,534 |   |   |   | (203,428 | ) |
| Accounts payable-construction                                                            |   |   | (66,983 | ) |   |   | (1,090,806 | ) |
| Accrued expenses and other current liabilities                                           |   |   | (271,729 | ) |   |   | 1,010,440 |   |
| Net cash provided by(used in) operating activities                                       |   |   | (2,682,319 | ) |   |   | 1,896,830 |   |
|                                                                                     |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                    |   |   |   |   |   |   |   |   |
| Purchase of property and equipment                                                       |   |   | (87,815 | ) |   |   | (91,236 | ) |
| Net cash used in investing activities                                                    |   |   | (87,815 | ) |   |   | (91,236 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                    |   |   |   |   |   |   |   |   |
| Short-term bank loans                                                                    |   |   | 2,855,126 |   |   |   | (380,069 | ) |
| Payment to shareholders                                                                  |   |   | - |   |   |   | (1,619,527 | ) |
| Due to related parties                                                                   |   |   | (20,748 | ) |   |   | 52,307 |   |
| Net cash provided by (used in)  financing activities                           |   |   | 2,834,378 |   |   |   | (1,947,289 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |
| Effect of exchange rate changes on cash                                                  |   |   | (728 | ) |   |   | 64,707 |   |
|                                                                                     |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                                          |   |   | 63,516 |   |   |   | (76,988 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |
| Cash at beginning of period                                                              |   |   | 363,771 |   |   |   | 2,676,176 |   |
| Cash at end of period                                                                    |   | $ | 427,287 |   |   | $ | 2,599,188 |   |
|                                                                                     |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information                                         |   |   |   |   |   |   |   |   |
| Income tax paid in cash                                                                  |   | $ | 102,930 |   |   | $ | 11,829 |   |
| Interest expense                                                                         |   | $ | 222,311 |   |   | $ | 135,389 |   |
| Treasury stock acquired in exchange for loans from related parites                  |   | $ | - |   |   | $ | 5,273,253 |   |
| Assets transferred to Joint Venture                                                      |   | $ | 2,793,536 |   |   | $ | - |   |

----

----

|             |   | As of         |      |
|------------------|--------|---------------|-----------|
|             |   | June 30, 2012 |      |   | December 31, 2011 |   |
|             |   |          |      |   |   |   |
| Raw Materials    |   | $             | 756,251   |   |   | $ | 719,635 |   |
| Work-in-progress |   |          | 1,125,401 |   |   |   | 1,322,666 |   |
| Finished goods   |   |          | 1,613,468 |   |   |   | 2,023,686 |   |
| Total            |   | $             | 3,495,120 |   |   | $ | 4,065,987 |   |

|                  |   | June 30,2012 |      |   | December 31,2011 |   |
|--------------------------------|--------|--------------|-----------|--------|------------------|--------|
|                           |   |         |      |   |             |   |
| Advances for purchases  |   | $            | 1,608,044 |   |             | $      | 908,760 |   |
| Other receivable               |   |         | 153,968   |   |             |   | 92,900 |   |
| Other prepaid expenses  |   |         | 6,182     |   |             |   | - |   |
| Total                          |   | $            | 1,768,194 |   |             | $      | 1,001,660 |   |

|                |   | As of         |      |
|---------------------|--------|---------------|-----------|
|                |   | June 30, 2012 |      |   | December 31, 2011 |   |
|                |   |          |      |   |   |   |
| Due from (to) Xinju |   | $             | 38,063    |   |   | $ | (2,992) |   |
| Due to shareholders |   |          | (211,221) |   |   |   | (211,221 | )  |
| Total               |   | $             | (173,158) |   |   | $ | (214,213) |   |

----

|                                                                                                                                                     |   | June 30, 2012 |            |   | June 30, 2011 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------------|--------|---------------|--------|
| Statement of operations                                                                                                                                  |   |          |            |   |          |   |
| Revenues                         |   | $             | -               |   |          | $      | 3,141 |   |
| Cost of sales                                                                                |   |          |  -         |   |          |   |  1,689 |   |
| Gross profit                                                                                                                                             |   |          |  -         |   |          |   | 1,443 |   |
| Operating Loss                                                                                                        |   |          |  (499,280) |   |          |   | (707,410) |   |
| Loss before income tax                                                                                                                    |   |          |  (499,280) |   |          |   | (707,410) |   |

----

|                     |   | June 30, 2012 |            |   | December 31, 2011 |   |
|--------------------------|--------|---------------|-----------------|--------|-------------------|--------|
| Accrued interest         |   | $             | 823,840  |   |              | $      | 819,418 |   |
| Salaries and benefits    |   |          | 192,523  |   |              |   | 275,194 |   |
| Other taxes              |   |          | 269,271  |   |              |   | 715,277 |   |
| Professional fees        |   |          | 73,541          |   |              |   | 102,779 |   |
| Accrued R&D expenses |   |          | 625,000         |   |              |   | 375,000 |   |
| Other payables           |   |          | 421,419         |   |              |   | 390,280 |   |
| Total                    |   | $             | 2,405,594       |   |              | $      | 2,677,948 |   |

----

|                                                                                                                                                                                                                                            |   | June 30, |      |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|--------|--------------|--------|
|                                                                                                                                                                                                                                              |   | 2012     |      |   | 2011         |   |
| 1) Loan payable to Chengdu Xihang Gang Construction & Investment Co., Ltd. due on demand, without interest collateralized by certain plant equipment of Sichuan Apollo                                                                        |   | $        | 654,631   |   |         | $      | 654,974 |   |
|                                                                                                                                                                                                                                              |   |     |      |   |         |   |   |   |
| 2) Loan payable to Bank of Communication, Chengdu branch due on July 29, 2012, with interest at 8.53% per annum, collateralized by the buildings and land use right of Diye, which was paid in full on July 27, 2012                              |   |     | 317,012   |   |         |   | 317,179 |   |
|                                                                                                                                                                                                                                              |   |     |      |   |         |   |   |   |
| 3) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on August 25, 2012, with interest at 7.74% per annum, collateralized  by the buildings of Sichuan Apollo                                                               |   |     | 792,531   |   |         |   | 792,947 |   |
|                                                                                                                                                                                                                                              |   |     |      |   |         |   |   |   |
| 4) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on September 19, 2012, with interest at 7.74% per annum, collateralized by the buildings of Sichuan Apollo                                                                       |   |     | 697,427   |   |         |   | 697,794 |   |
|                                                                                                                                                                                                                                              |   |     |      |   |         |   |   |   |
| 5) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on December 25, 2012,with interest at 7.74% per annum, collateralized by the buildings of Sichuan Apollo                                                                         |   |     | 1,585,062 |   |         |   | 1,585,894 |   |
|                                                                                                                                                                                                                                              |   |     |      |   |         |   |   |   |
| 6) Loan payable to Bank of China, Xihanggang Branch, Chengdu, due on March 28, 2012, with interest of 6.73% per annum.  The loan was paid in full in March 2012.                                                                        |   |     | -         |   |         |   | 1,586 |   |
|                                                                                                                                                                                                                                              |   |     |      |   |         |   |   |   |
| 7) Loan payable to Wuhan Economic Development Group through Industrial and Commercial Bank of China, Huangpu Branch, Wuhan due on October 31, 2012,with interest at 7.5% per annum, collateralized by Sichuan Xinlong's 100% ownership in Shimian |   |     | 1,268,050 |   |         |   | - |   |
|                                                                                                                                                                                                                                              |   |     |      |   |         |   |   |   |
| 8) Loan payable to Bo Hai Bank, Chengdu Branch, due on August 23, 2012,with interest at 7.625% per annum, collateralized by the buildings of Sichuan Apollo                                                                                       |   |     | 1,585,062 |   |         |   | - |   |
|                                                                                                                                                                                                                                              |   |     |      |   |         |   |   |   |
| 9) Loan payable to Bank of China, Xihanggang Branch, Chengdu, due on demand                                                                                                                                                                       |   |     | 795       |   |         |   | - |   |
|                                                                                                                                                                                                                                              |   |     |      |   |         |   |   |   |
|                                                                                                                                                                                                                                              |   | $        | 6,900,570 |   |         | $      | 4,050,374 |   |

----

|                                       |   |  Six months ended June 30 |     |
|--------------------------------------------|--------|--------------------------------|----------|
|                                       |   |  2012                     |     |   |  2011 |   |
| U.S. Statutory rate of 35%                 |   | $                              | (329,126 | ) |   | $ | (167,148 | ) |
| Tax rate difference between China and U.S. |   |                           | 184,940  |   |   |   | 159,885 |   |
| Change in valuation allowance              |   |                           | 144,186  |   |   |   | (112,651 | ) |
| Tax paid for prior year                    |   |                           | 102,930  |   |   |   | - |   |
| Permanent difference                       |   |                           | -        |   |   |   | (5,864 | ) |
| Effective tax                              |   | $                              | 102,930  |   |   | $ | (125,778 | ) |

----

|     |   | Six months ended June 30 |    |
|----------|--------|--------------------------|---------|
|     |   | 2012                     |    |   | 2011 |   |
|     |   |                     |    |   |   |   |
| Current  |   | $                        | 102,930 |   |   | $ | 11,872 |   |
| Deferred |   |                     | -       |   |   |   | (137,650 | ) |
| Total    |   | $                        | 102,930 |   |   | $ | (125,778 | ) |

|                          |   | Manufacturing |     |   | Refining |   |       | Mining |   |   | Corporate &Others |   |   | ConsolidatedTotal |     |
|-------------------------------|--------|---------------|----------|--------|----------|--------|------------|--------|--------|--------|-----------------------|--------|--------|-------------------|----------|
|                          |   |          |     |   |     |   |       |   |   |   |                  |   |   |              |     |
| Revenue                       |   | $             | 174,532  |   |     | $      | 2,685,848  |   |   | $      | -                     |   |   | $                 | -        |   |   | $ | 2,860,380 |   |
|                          |   |          |     |   |     |   |       |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Operating loss                |   |          | (571,237 | )      |     |   | (1,283,234 | )      |   |   | (113,228              | )      |   |              | (585,347 | ) |   |   | (2,553,046 | ) |
|                          |   |          |     |   |     |   |       |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Depreciation and amortization |   |          | 356,092  |   |     |   | 96,242     |   |   |   | 16,263                |   |   |              | -        |   |   |   | 468,597 |   |
|                          |   |          |     |   |     |   |       |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Capital expenditures          |   | $             | 28,220   |   |     | $      | 57,263     |   |   | $      | 2,332                 |   |   | $                 | -        |   |   | $ | 87,815 |   |

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|                          |   | Manufacturing |     |   | Refining |   |      | Mining |   |   | Corporate &Others |   |   | ConsolidatedTotal |     |
|-------------------------------|--------|---------------|----------|--------|----------|--------|-----------|--------|--------|--------|-----------------------|--------|--------|-------------------|----------|
|                          |   |          |     |   |     |   |      |   |   |   |                  |   |   |              |     |
| Revenue                       |   | $             | -        |   |     | $      | 6,723,338 |   |   | $      | -                     |   |   | $                 | -        |   |   | $ | 6,723,338 |   |
|                          |   |          |     |   |     |   |      |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Operating loss                |   |          | (382,327 | )      |     |   | 130,921   |   |   |   | (150,874              | )      |   |              | (515,498 | ) |   |   | (917,778 | ) |
|                          |   |          |     |   |     |   |      |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Depreciation and amortization |   |          | 352,987  |   |     |   | 117,272   |   |   |   | 15,776                |   |   |              | -        |   |   |   | 486,035 |   |
|                          |   |          |     |   |     |   |      |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Capital expenditures          |   | $             | 15,434   |   |     | $      | 22,590    |   |   | $      | 53,212                |   |   | $                 | -        |   |   | $ | 91,236 |   |

|                          |   | Manufacturing |     |   | Refining |   |       | Mining |   |   | Corporate &Others |   |   | ConsolidatedTotal |     |
|-------------------------------|--------|---------------|----------|--------|----------|--------|------------|--------|--------|--------|-----------------------|--------|--------|-------------------|----------|
|                          |   |          |     |   |     |   |       |   |   |   |                  |   |   |              |     |
| Revenue                       |   | $             | 18,861   |   |     | $      | 969,485    |   |   | $      | -                     |   |   | $                 | -        |   |   | $ | 988,346 |   |
|                          |   |          |     |   |     |   |       |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Operating loss                |   |          | (154,440 | )      |     |   | (1,265,620 | )      |   |   | (55,602               | )      |   |              | (280,776 | ) |   |   | (1,756,438 | ) |
|                          |   |          |     |   |     |   |       |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Depreciation and amortization |   |          | 196,103  |   |     |   | 25,875     |   |   |   | 8,088                 |   |   |              | -        |   |   |   | 230,066 |   |
|                          |   |          |     |   |     |   |       |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Capital expenditures          |   | $             | 26,713   |   |     | $      | 46,935     |   |   | $      | 668                   |   |   | $                 | -        |   |   | $ | 74,316 |   |

|                          |   | Manufacturing |     |   | Refining |   |      | Mining |   |   | Corporate &Others |   |   | ConsolidatedTotal |     |
|-------------------------------|--------|---------------|----------|--------|----------|--------|-----------|--------|--------|--------|-----------------------|--------|--------|-------------------|----------|
|                          |   |          |     |   |     |   |      |   |   |   |                  |   |   |              |     |
| Revenue                       |   | $             | -        |   |     | $      | 2,940,118 |   |   | $      | -                     |   |   | $                 | -        |   |   | $ | 2,940,118 |   |
|                          |   |          |     |   |     |   |      |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Operating loss                |   |          | (177,630 | )      |     |   | 267,662   |   |   |   | (49,184               | )      |   |              | (309,826 | ) |   |   | (268,978 | ) |
|                          |   |          |     |   |     |   |      |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Depreciation and amortization |   |          | 148,601  |   |     |   | 88,502    |   |   |   | 7,917                 |   |   |              | -        |   |   |   | 245,020 |   |
|                          |   |          |     |   |     |   |      |   |   |   |                  |   |   |              |     |   |   |   |   |   |
| Capital expenditures          |   | $             | 4,917    |   |     | $      | 4,057     |   |   | $      | 13,457                |   |   | $                 | -        |   |   | $ | 22,431 |   |

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| · | First Option Exclusive Acquiring Agreement among Sichuan Xinlong Tellurium Industry & Technique Co., Ltd., Sichuan Xinju Mineral Resources Development Co., Ltd., Renyi Hou and Ling Yong, which grants to our wholly-owned subsidiary a first option to purchase the Mining Business at such time as the purchase becomes advisable, permissible and in our best interest. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Exclusive Sales Agreement between Sichuan Xinlong Tellurium Industry & Technique Co., Ltd. and Sichuan Xinju Mineral Resources Development Co., Ltd., which grant to our wholly-owned subsidiary the exclusive right to buy all of the output of the Mining Business. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·       | Business Operation Agreement among Sichuan Xinlong Tellurium Industry & Technique Co., Ltd., Sichuan Xinju Mineral Resources Development Co., Ltd., Renyi Hou and Ling Yong, which imposes certain restrictions and obligations on the VIE and certain of its shareholders to support the VIE arrangement, including refraining from competing with our business and modifying the business operations of the VIE without the prior consent of our wholly-owned subsidiary.                                                                                                    |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  · |  Exclusive Technical and Consulting Agreement between Sichuan Xinlong Tellurium Industry & Technique Co., Ltd. and Sichuan Xinju Mineral Resources Development Co., Ltd., which requires the VIE to provide certain technical and consulting services exclusively to our wholly-owned subsidiary in connection with the Mining Business.  Our wholly-owned subsidiary agrees to provide up to $6.0 million in investing funding to the VIE in connection with its operation of the Mining Business, on such terms as the parties shall agree from time to time. |

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|   | · | Decrease in sales from overseas due to financial crisis in Europe and slow than expected recovery of economy in USA.  |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | Decrease in the selling price of Seleniumdue to weak demand.  |
|--------|--------|--------------------------------------------------------------------|

|   | · | Decrease in quantity of the product purchased by our customers due to uncertainty in the economy. |
|--------|--------|---------------------------------------------------------------------------------------------------|

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|                                            |   | Payments due by Period (in $) |
|-------------------------------------------------|--------|-------------------------------|
| Contractual Obligations                         |   | Total                         |   |   | Less Than 1 Year |   |   | 1 – 3Years |   |   | 3 – 5Years |   |   | More Than 5 Years |   |
| Short term loan                                 |   | $                             | 6,900,570 |   |   | $ | 6,900,570 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Loans from shareholder  related party |   | $                             | 211,221 |   |   | $ | 211,221 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |

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| 31.1    | Rule 13a-14(a) Certification – CEO |
|---------|------------------------------------------|
| 31.2    | Rule 13a-14(a) Certification – CFO |
| 32      | Rule 13a-14(b) Certification             |
| 101 INS | XBRL Instance Document*                  |
| 101 SCH | XBRL Schema Document*                    |
| 101 CAL | XBRL Calculation Linkbase Document*      |
| 101 DEF | XBRL Definition Linkbase Document*       |
| 101 LAB | XBRL Labels Linkbase Document*           |
| 101 PRE | XBRL Presentation Linkbase Document*     |

| Date: August 14, 2012 | By:  /s/ Jingong Pan  |
|-----------------------|--------------------------------------|
|                  | Jingong Pan                          |
|                  | Chief Executive Officer              |
|                  |                                 |
| Date: August 14, 2012 | By:  /s/ Hui Hua           |
|                  | Hui Hua                              |
|                  | Chief Financial Officer              |

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