|  [ x ] | 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 ofincorporation or organization) | 84-0601802(I.R.S. EmployerIdentification No.) |
|---------------------------------------------------------------------|-----------------------------------------------|

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

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| ITEM     |                                                                                                 |   | Page   |   |
|----------|------------------------------------------------------------------------------------------------------|--------|--------|--------|
|     |                                                                                                 |   |   |   |
| PART I   | FINANCIAL INFORMATION                                                                           |   |   |   |
| Item 1.  | Financial Statements                                                                                 |   |   |   |
|     | Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008                                |   |   | 2      |   |
|     | Consolidated Statements of Operations for three and six months ended June 30, 2009 and June 30, 2008 |   |   | 3      |   |
|     | Consolidated Statements of Cash Flows for six months ended June 30, 2009 and June 30, 2008           |   |   | 4      |   |
|     | Notes to Consolidated Financial Statements                                                           |   |   | 5      |   |
| Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations          |   |   | 9      |   |
| Item 4T. | Controls and Procedures                                                                              |   |   | 15     |   |
|     |                                                                                                 |   |   |   |   |
| PART II  | OTHER INFORMATION                                                                                    |   |   |   |   |
| Item 1.  |     Legal Proceedings                                                            |   |   | 15     |   |
| Item 2.  |     Unregistered Sales of Equity and Use of Proceeds                                  |   |   | 15     |   |
| Item 3.  | Defaults Upon Senior Securities                                                                      |   |   | 15     |   |
| Item 4.  | Submission of Matters to a Vote of Security Holders                                                  |   |   | 15     |   |
| Item 5.  |     Other Information                                                                 |   |   | 15     |   |
| Item 6.  | Exhibits                                                                                             |   |   | 16     |   |
|     |                                                                                                 |   |   |   |   |
|     | Signatures                                                                                           |   |   | 16     |   |

----

| APOLLO SOLAR ENERGY, INC.                                                                                                                                                                                                     |   |        |            |   |         |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|-----------------|--------|--------------|---------|
| CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                                   |   |        |            |   |         |    |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |
|                                                                                                                                                                                                                          |   | June 30,    |            |   | December 31, |    |
|                                                                                                                                                                                                                          |   | 2009        |            |   | 2008         |    |
|                                                                                                                                                                                                                          |   | (Unaudited) |            |   | (Audited)    |    |
| ASSETS                                                                                                                                                                                                                        |   |        |            |   |         |    |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |
| Current assets:                                                                                                                                                                                                               |   |        |            |   |         |    |
|   Cash and cash equivalents                                                                                                                                                                                              |   | $           | 243,318         |   |         | $       | 4,874,044 |   |
|   Account receivable, net                                                                                                                                                                                                |   |        | 1,248,370       |   |         |    | 961,600 |   |
|   Inventories                                                                                                                                                                                                            |   |        | 7,303,613       |   |         |    | 7,496,477 |   |
|   Value added taxes receivable                                                                                                                                                                                           |   |        | 5,574           |   |         |    | 494,387 |   |
|   Purchase deposit                                                                                                                                                                                                       |   |        | 425,521         |   |         |    | 321,300 |   |
|   Due from related parties                                                                                                                                                                                               |   |        | 1,503,818       |   |         |    | 2,313,198 |   |
|   Deferred tax assets                                                                                                                                                                                                    |   |        | 16,427          |   |         |    | 25,880 |   |
|   Other sundry current assets                                                                                                                                                                                            |   |        | 101,491         |   |         |    | 83,001 |   |
|      Total current assets                                                                                                                                                                                 |   |        | 10,848,132      |   |         |    | 16,569,887 |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
| Property, machinery and mining assets, net                                                                                                                                                                                    |   |        | 22,600,358      |   |         |    | 19,549,909 |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
| Non-marketable  investment                                                                                                                                                                                          |   |        | 43,919          |   |         |    | - |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
| Total Assets                                                                                                                                                                                                                  |   | $           | 33,492,409      |   |         | $       | 36,119,796 |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
| Current liabilities:                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
|   Short-term loan                                                                                                                                                                                                        |   |  $     | 1,947,095       |   |         |  $ | - |   |
|   Account payable - trade                                                                                                                                                                                                |   |        | 573,965         |   |         |    | 876,221 |   |
|                                   - construction vendors |   |        | 2,493,349       |   |         |    | 2,546,890 |   |
|   Accrued expenses                                                                                                                                                                                                       |   |        | 873,131         |   |         |    | 959,186 |   |
|   Due to shareholders                                                                                                                                                                                                    |   |        | -               |   |         |    | 9,032,382 |   |
|      Total current liabilities                                                                                                                                                                            |   |        | 5,887,540       |   |         |    | 13,414,679 |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
| Long-term debt                                                                                                                                                                                                                |   |        | 4,391,943       |   |         |    | 4,397,215 |   |
| Due to shareholders                                                                                                                                                                   |   |        | 5,831,258  |   |         |    | -  |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
| Shareholders' equity:                                                                                                                                                                                                         |   |        |            |   |         |    |   |   |
|   Perferred stock, $.001 par value, 25,000,000 shares authorized,                                                                                                                                                        |   |        |            |   |         |    |   |   |
|        0 shares issued and outstanding at June 30, 2009 and December 31, 2008                                                                                                                   |   |        |            |   |         |    |   |   |
|   Common stock, $.001 par value, 100,000,000 shares authorized,                                                                                                                                                          |   |        | 44,555          |   |         |    | 44,555 |   |
|       44,555,131 issued and outstanding at June 30, 2009 and  December 31, 2008                                                                                                       |   |        |            |   |         |    |   |   |
|   Additional paid-in capital                                                                                                                                                                                             |   |        | 17,575,261      |   |         |    | 17,347,905 |   |
|   Accumulated deficit                                                                                                                                                                                                    |   |        | (1,501,612      | )      |         |    | (383,221 | ) |
|   Accumulated other comprehensive income                                                                                                                                                                                 |   |        | 1,263,464       |   |         |    | 1,298,663 |   |
|      Total shareholders' equity                                                                                                                                                                           |   |        | 17,381,668      |   |         |    | 18,307,902 |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |
| Total Liabilities And Shareholders' Equity                                                                                                                                                                                    |   | $           | 33,492,409      |   |         | $       | 36,119,796 |   |
|                                                                                                                                                                                                                          |   |        |            |   |         |    |   |   |

----

|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |
|---------------------------------------------------------------------------|--------------------------------------------------------------------|--------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|--------------------------------------------------------------------|-------------------------------------------------------------------------|
| APOLLO SOLAR ENERGY, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |  Three months ended June 30,                                  | Six months ended June 30,                                               |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                | 2009                                                               |                                                                    | 2008 |   | 2009 |   | 2008 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Sales                                                                     |                                                               |                                                               |                                                                                                    |  $   1,681,755                                  |                                                               |  $  1,135,466                                            |   |  $   3,990,374 |   |  $      3,045,173 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Cost of sales                                                             |                                                               |                                                               |      (1,287,590)                                                               |                                                                |       (981,218)                      |                                                                    |      (3,099,278) |   |        (2,098,713) |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Gross profit                                                              |                                                               |                                                               |          394,165                                           |                                                                |        154,248                  |                                                                    |          891,096 |   |            946,460 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Operating expenses                                                        |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |
|   General and adminstrative expenses                                 |          483,539      |                                                               |        254,838                                                       |                                                                |       1,251,954                      |                                                                    |            361,506 |
|   Stock based compensation                                           |          173,082      |                                                               |                  - |                                                                |          373,262      |                                                                    |                      - |
|   Selling expenses                                                   |                                                               |           51,220 |                                                                                                    |          99,704        |                                                               |          121,717           |   |            158,624 |
|   Research and development                                           |           38,944 |                                                               |          43,193                                            |                                                                |           49,962 |                                                                    |              45,289 |
|      Total Operating Expenses                         |          746,785      |                                                               |        397,735                                                       |                                                                |       1,796,895                      |                                                                    |            565,419 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Operating income (loss)                                                   |                                                               |        (352,620)                |                                                                                                    |       (243,487)                       |                                                               |        (905,799)                     |   |            381,041 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Interest income (expenses)                                                |          (98,771)     |                                                               |            3,628                                 |                                                                |        (189,103)                |                                                                    |              10,703 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Income (loss) before income taxes                                         |        (451,391)                |                                                               |       (239,859)                                                           |                                                                |      (1,094,902)                          |                                                                    |            391,744 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Provision for income taxes                                                |           11,667 |                                                               |            2,482                                 |                                                                |           23,488 |                                                                    |            158,717 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Net income (loss)                                                         |                                                               |  $    (463,058)                           |                                                                                                    |  $   (242,341)                                  |                                                               |  $  (1,118,390)                                          |   |  $        233,027 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Other Comprehensive Income                                                |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |
|                                                                      | Foreign currency translation adjustment                            |  $      (35,199)                |                                                                                                    |  $     464,322                        |                                                               |  $        (6,270)          |   |  $       (106,278) |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Comprehensive Income (loss)                                               |  $  (1,153,589)                                     |                                                               |  $     697,349                                                            |                                                                |  $    (469,328)                           |                                                                    |  $       (348,619) |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Basic and diluted income per common share                                 |                                                               |                                                               |                                                                                                    |                                                                |
|                                                                      | Basic                                                              |                                                               |                                                                                                    |  $         (0.02) |                                                               |  $          0.01 |   |  $         (0.01) |   |  $            (0.01) |
|                                                                      | Diluted                                                            |                                                               |                                                                                                    |  $         (0.02) |                                                               |  $          0.01 |   |  $         (0.01) |   |  $            (0.01) |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |
| Weighted-average common shares outstanding                                |                                                               |                                                               |                                                                                                    |                                                                |
|                                                                      | Basic                                                              |                                                               |                                                                                                    |     44,555,131                                  |                                                               |    44,555,131                                            |   |     44,555,131 |   |        44,555,131 |
|                                                                      | Diluted                                                            |                                                               |                                                                                                    |     45,385,131                                  |                                                               |    44,555,131                                            |   |     45,385,131 |   |        44,555,131 |
|                                                                      |                                                               |                                                               |                                                                                                    |                                                                |                                                               |                                                                    |   |   |   |   |   |

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|                                                                                              APOLLO SOLAR ENERGY, INC. |   |                     |       |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|--------|--------|--------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Six months endedJune 30, |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2009                     |       |   | 2008   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |
| Cash flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                     |       |   |   |   |
|   Net income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                        | (1,118,390 | )      |   | $      | 233,027 |   |
|   Adjustments to reconcile net income to net cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
|   Used in operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
|     Issurance of options for service                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                     | 373,262    |   |   |   | - |   |
|     Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                     | 598,367    |   |   |   | 223,503 |   |
|     Deferred tax assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                     | 9,418      |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
|   Changes in assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                     |       |   |   |   |   |   |
|     Account receivable-trade                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                     | (287,821   | )      |   |   | (540,239 | ) |
|     Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                     | 213,263    |   |   |   | (4,929,909 | ) |
|     Other sundry current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                     | (18,581    | )      |   |   | (207,399 | ) |
|     Tax receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                     | 488,047    |   |   |   | - |   |
|     Advance for purchases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                     | (174,461   | )      |   |   | (334,021 | ) |
|     Account payable-trade                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                     | (301,101   | )      |   |   | 102,239 |   |
|     Accounts payable - construction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                     | (50,469    | )      |   |   | - |   |
|     Accrued expenses and other sundry currenty liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                     | (223,704   | )      |   |   | 429,509 |   |
|     Accrued interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     | 184,785    |   |   |   | - |   |
| Net cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                     | (307,385   | )      |   |   | (5,023,290 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                     |       |   |   |   |   |   |
|   Non-marketable investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                     | (43,904    | )      |   |   | - |   |
|   Purchase of property & equipments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                     | (1,011,214 | )      |   |   | (5,542,889 | ) |
|   Government subsidy to purchase of fixed assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                     | 2,019,579  |   |   |   |   |   |
|   Acquisition of land use rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                     | (3,673,545 | )      |   |   | - |   |
| Net cash used in investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                     | (2,709,084 | )      |   |   | (5,542,889 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                     |       |   |   |   |   |   |
|   Proceeds from short-term borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                     | 1,956,358  |   |   |   | - |   |
|   Capital contribution                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                     | -          |   |   |   | 7,146,383 |   |
|   Advance from (payment to) shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                     | (3,202,661 | )      |   |   | 144,775 |   |
|   Advance from (payment to) related party                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                     | (361,671   | )      |   |   | 531,613 |   |
| Net cash provided by (used in) financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                     | (1,607,974 | )      |   |   | 7,822,771 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                     | (6,284     | )      |   |   | 223,996 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
| Net decrease in cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                     | (4,630,727 | )      |   |   | (2,519,412 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                     | 4,874,044  |   |   |   | 2,621,139 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
| Cash and cash equivalents, end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                        | 243,318    |   |   | $      | 101,727 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     | -          |   |   |   |   |   |
| Supplemental disclosures of cash flow information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                     |       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
| Interest paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                        | 5,163      |   |   | $      | - |   |
|          Income taxes paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                        | 9,862      |   |   | $      | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |       |   |   |   |   |   |

----

NOTE 1. BASE OF PRESENTATION The accompanying unaudited consolidated financial statements of Apollo Solar Energy, Inc. (the "Company") reflect all material adjustments consisting of only normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of results for the interim periods.  Certain information and footnote disclosures required under accounting principles generally accepted in the UnitedStates of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading.  These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the Securities andExchange Commission. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and those estimates.  Estimates that are particularly susceptible to changeinclude assumptions used in determining the fair value of securities owned and non-readily marketable securities. The results of operations for the six months ended June 30, 2009 are not necessarily indicative of the results to be expected for the entire year or for any other period. The Company’s functional currency in the Chinese Renminbi (“RMB”); however, the accompanying financial statements have been translated and presented in United States Dollars (“USD”).NOTE 2. BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES On October 14, 2008, the Company completed a reverse merger transaction with Apollo Solar Energy, Inc., (“ASE-Delaware”) by issuing 4,000 shares of its common stock in exchange for each outstanding share of ASE-Delaware’s common stock.  Under the terms of the merger agreement, all of the outstanding shares ofcommon stock of ASE-Delaware were exchanged for 44,000,000 shares of common stock of the Company, resulting in the former shareholders of ASE-Delaware owning 98.75% of the Company’s issued and outstanding common stock.For accounting purposes, ASE-Delaware became the surviving entity whereas the Company was recognized as the surviving entity for legal purposes.  Accordingly, the financial statements include the assets, liabilities and operations of ASE-Delaware.On August 4, 2008, ASE-Delaware, an inactive company, acquired 100% of the registered capital of Sichuan Apollo Solar Science & Technology Co., Ltd. (“Sichuan Apollo”), in a transaction accounted for as a reorganization.Sichuan Apollo was formed in June, 2006 in the People’s Republic of China and develops and manufactures high purity metals and compounds which are widely used in the field of national defense, navigation, spaceflight and the electronic industry.  In addition, the Company is developing semiconductor, photoelectrical, photoconductiveand photovoltaic basic materials for thin film solar cells through its 100% owned subsidiary, Sichuan Xinlong Diye Tellurium Industry & Technique Co., Ltd ( “Diye”).Effective August 22, 2008 Diye acquired 100% of the equity of Sichuan Xinju Shimian Dadu River Mining & Metallurgy Co., Ltd. (“Dadu River”) from significant shareholders of Apollo.  Dadu River owns the exclusive rights to the Dashuigou tellurium mine through at least January 2013.  Prior year financialstatements have not been restated as the effects of this acquisition of the financial position and results of operations are immaterial.  The company entered into various exclusive contractual arrangements on April 10, 2009 with Sichuan Xinju Mineral Resources Development Corporation, or the VIE, and certain of its shareholders who are our direct or indirect employees and who collectively own 51.6619% of the VIE.  Among other things, these agreements grantedto our wholly-owned subsidiary a first option to purchase the exploration rights related to the Dashuigou area mine and the mining rights related to that certain tellurium and bismuth mine in Shimian Majiagou (which rights are collectively referred to in this report as the Mining Business).  Additionally, the VIE and certain of its shareholders who collectively own 51.6619% of the VIE granted to our wholly-owned subsidiary an exclusive right to purchase all of the products produced from the Mining Businessfor a specified period of time.  As a result, we consolidate the financial results of the VIE related to the Mining Business.Stock-Based CompensationThe Company account for stock-based compensation in accordance with SFAS No. 123(R), Share-Based Payment. Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable vesting period of the stockaward using the straight-line method.ReclassificationsCertain previously reported amounts have been reclassified to conform to classifications adopted in the period ended June 30, 2009.Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statementsand the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. InventoriesInventories are valued at the lower of cost or market with cost determined on the weighted-average method.Property, machinery and mining assetsExpenditures for new facilities or equipment and expenditures that extend the useful lives of existing facilities or equipment are capitalized and depreciated using the straight-line method at rates sufficient to depreciate such costs over the estimated productive lives.Mineral exploration costs are expensed according to the term of the license granted to the Company by the PRC.  Extraction rights are stated at the lower of cost and recoverable amount.  When extraction rights are obtained from the government according to the mining industry practice in the PRC, extraction rights andother costs incurred prospectively to develop the property are capitalized as incurred and are amortized using the units-of-production ("UOP") method over the estimated life of the mineralized body based on estimated recoverable volume through to the end of the period over which the Company has extraction rights.  At the Company’s underground mines, these costs include the cost of building access ways, shaft sinking and access, lateral development, drift development, ramps and infrastructure development.Major development costs incurred after the commencement of production are amortized using the UOP method based on estimated recoverable volume in mineralized material.  To the extent that these costs benefit the entire mineralized body, they are amortized over the estimated life of the mineralized body.  Costs incurredto access specific mineralized blocks or areas that only provide benefit over the life of that area are amortized over the estimated life of that specific mineralized block or area.  Interest cost allocable to the cost of developing mining properties and to constructing new facilities, if any, is capitalized until assets are ready for their intended use.

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NOTE 3. INVENTORY 

|             |   |          |      |  As of |              |   |
|------------------|--------|---------------|-----------|-------------|-------------------|--------|
|             |   | June 30, 2009 |      |        | December 31, 2008 |   |
|             |   |          |      |        |              |   |
| Raw Materials    |   | $             | 3,542,236 |        |              | $      | 4,351,326 |   |
| Work-in-progress |   |          | 1,366,974 |        |              |   | 1,080,390 |   |
| Finished goods   |   |          | 2,394,403 |        |              |   | 2,064,761 |   |
|             |   |          |      |        |              |   |   |   |
| Total            |   | $             | 7,303,613 |        |              | $      | 7,496,477 |   |
|             |   |          |      |        |              |   |   |   |
|             |   |          |      |        |              |   |   |   |

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|                          |   |          |      |   |     |   |      |   |   |   | Corporate & |   |   | Consolidated |     |
|-------------------------------|--------|---------------|-----------|--------|----------|--------|-----------|--------|--------|--------|-----------------|--------|--------|--------------|----------|
|                          |   | Manufacturing |      |   | Refining |   |      | Mining |   |   | Others          |   |   | Total        |     |
|                          |   |          |      |   |     |   |      |   |   |   |            |   |   |         |     |
| Revenue                       |   | $             | -         |   |     | $      | 3,990,374 |   |   | $      | -               |   |   | $            | -        |   |   | $ | 3,990,374 |   |
| Operating profit (loss)       |   |          | (372,328  | )      |     |   | 178,444   |   |   |   | (43,522         | )      |   |         | (668,393 | ) |   |   | (905,799 | ) |
| Depreciation and amortization |   |          | 240,849   |   |     |   | 344,079   |   |   |   | 13,439          |   |   |         |     |   |   |   | 598,367 |   |
| Capital expenditures          |   |          | 2,413,269 |   |     |   | 149,540   |   |   |   | 102,372         |   |   |         |     |   |   |   | 2,665,180 |   |
|                          |   |          |      |   |     |   |      |   |   |   |            |   |   |         |     |   |   |   |   |   |

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| ·   | First Option Exclusive Acquiring Agreement, between 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 timeas 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, between 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 connectionwith 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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|                                      |   | Three months ended June 30, |       |   | Six months ended June 30, |   |
|-------------------------------------------|--------|-----------------------------|------------|--------|---------------------------|--------|
|                                      |   | 2009                        |       |   | 2008                      |   |   | 2009 |   |   | 2008 |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |
| Sales                                     |   | $                           | 1,681,755  |   |                      | $      | 1,135,466 |   |   | $ | 3,990,374 |   |   | $ | 3,045,173 |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                             |   |                        | (1,287,590 | )      |                      |   | (981,218 | ) |   |   | (3,099,278 | ) |   |   | (2,098,713 | ) |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                              |   |                        | 394,165    |   |                      |   | 154,248 |   |   |   | 891,096 |   |   |   | 946,460 |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses                        |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   General and adminstrative expenses |   |                        | 483,539    |   |                      |   | 254,838 |   |   |   | 1,251,954 |   |   |   | 361,506 |   |
|   Stock based compensation           |   |                        | 173,082    |   |                      |   | - |   |   |   | 373,262 |   |   |   | - |   |
|   Selling expenses                   |   |                        | 51,220     |   |                      |   | 99,704 |   |   |   | 121,717 |   |   |   | 158,624 |   |
|   Research and development           |   |                        | 38,944     |   |                      |   | 43,193 |   |   |   | 49,962 |   |   |   | 45,289 |   |
| Total Operating Expenses                  |   |                        | 746,785    |   |                      |   | 397,735 |   |   |   | 1,796,895 |   |   |   | 565,419 |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                   |   |                        | (352,620   | )      |                      |   | (243,487 | ) |   |   | (905,799 | ) |   |   | 381,041 |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Interest income (expenses)                |   |                        | (98,771    | )      |                      |   | 3,628 |   |   |   | (189,103 | ) |   |   | 10,703 |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income taxes         |   |                        | (451,391   | )      |                      |   | (239,859 | ) |   |   | (1,094,902 | ) |   |   | 391,744 |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                |   |                        | 11,667     |   |                      |   | 2,482 |   |   |   | 23,488 |   |   |   | 158,717 |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                         |   | $                           | (463,058   | )      |                      | $      | (242,341 | ) |   | $ | (1,118,390 | ) |   | $ | 233,027 |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| As a Percentage of Sales                  |   |                        | 100.00     | %      |                      |   | 100.00 | % |   |   | 100.00 | % |   |   | 100.00 | % |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                             |   |                        | 76.56      | %      |                      |   | 86.42 | % |   |   | 77.67 | % |   |   | 68.92 | % |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                              |   |                        | 23.44      | %      |                      |   | 13.58 | % |   |   | 22.33 | % |   |   | 31.08 | % |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                       |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   General and adminstrative expenses |   |                        | 28.75      | %      |                      |   | 22.44 | % |   |   | 31.37 | % |   |   | 11.87 | % |
|   Stock based compensation           |   |                        | 10.29      | %      |                      |   | 0.00 | % |   |   | 9.35 | % |   |   | 0.00 | % |
|   Selling expenses                   |   |                        | 3.05       | %      |                      |   | 8.78 | % |   |   | 3.05 | % |   |   | 5.21 | % |
|   Research and development           |   |                        | 2.32       | %      |                      |   | 3.80 | % |   |   | 1.25 | % |   |   | 1.49 | % |
| Total Operating Expenses                  |   |                        | 44.41      | %      |                      |   | 35.03 | % |   |   | 45.03 | % |   |   | 18.57 | % |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                   |   |                        | -20.97     | %      |                      |   | -21.44 | % |   |   | -22.70 | % |   |   | 12.51 | % |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Interest income (expenses)                |   |                        | 5.87       | %      |                      |   | -0.32 | % |   |   | 4.74 | % |   |   | -0.35 | % |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income taxes         |   |                        | -26.84     | %      |                      |   | -21.12 | % |   |   | -27.44 | % |   |   | 12.86 | % |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                |   |                        | 0.69       | %      |                      |   | 0.22 | % |   |   | 0.59 | % |   |   | 5.21 | % |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                         |   |                        | -27.53     | %      |                      |   | -21.34 | % |   |   | -28.03 | % |   |   | 7.65 | % |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   | c |   |

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|                                                | Six Months Ended June 30, |
|-----------------------------------------------------|---------------------------|
|                                                |                      | 2009 |   | 2008 |   |   |
|                                                |                      |   |
| Net cash (used in) provided by operating activities |                    |  $ |            (307,385) |   | $ |           (5,023,290) |   |   |
| Net cash (used in) provided by investing activities |                    |   |              (2,709,084) |   |   |           (5,542,889) |   |   |
| Net cash (used in) provided by financing activities |                    |   |             (1,607,974) |   |   |            7,822,771 |   |   |
| Effect of exchange rate changes on cash             |                    |   |              (6,284) |   |   |              223,996 |   |   |
| Net increase (decrease) in cash                     |                    | $ |             (4,630,727) |   | $ | (2,519,412) |   |   |
| Cash at beginning of period                         |                    |   |             4,874,044 |   |   |               2,621,139 |   |   |
| Cash at end of period                               |                    | $ |             243,318 |   | $ |         101,727 |   |   |
|                                                |                      |   |   |   |   |   |   |   |

----

g. 

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|      |   |                                                                                                                                                                                        |   |          |   | Incorporated by Reference |   |
|-----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|-------------------------------------|--------|
| ExhibitNo |   | Exhibit Title                                                                                                                                                                          |   | FiledHerewith |   | Form                                |   | ExhibitNo. |   | File No. |   | FilingDate |   |
| 31.1      |   | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14 and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                     |   | X             |   |                                |   |   |   |   |   |   |   |
| 31.2      |   | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14 and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                     |   | X             |   |                                |   |   |   |   |   |   |   |
| 32.1      |   | Certification of Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  |   | X             |   |                                |   |   |   |   |   |   |   |

|   |                                  |   |
|--------|---------------------------------------|--------|
|   |   Apollo Solar Energy, Inc. |

 16