UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549  FORM 20-F  [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934  OR  [ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2007  OR  [X ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  OR  [  ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934  Date of event requiring this shell company report:December 31, 2007  For the transition period from March 31, 2007 to December 31, 2007  Commission File Number 000-51625  AQUASOL ENVIROTECH LTD. (Exact name of registrant as specified in its charter)  THE CAYMAN ISLANDS, B.W.I. (Jurisdiction of incorporation or organization)  Suite 1980, 1055 West Hastings Street, Vancouver, British Columbia, Canada V6E 2E9 (Address of principal executive offices)  Securities registered or to be registered pursuant to Section 12(b) of the Act:  N/AN/ATitle of each className of each exchange on which registered  Securities registered or to be registered pursuant to Section 12(g) of the Act.  Common Shares, no par value (Title of Class)  Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None  Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:  As of December 31, 2007:  2,073,995   - 1 -  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.  Yes [  ] No [X]  If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  Yes [  ] No [  ] Not Applicable  Note  Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X] No [  ]  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of Accelerated filer and large accelerated file in Rule 12b-2 of the Exchange Act.  (Check one):  Large accelerated filer:   [  ] Accelerated file:   [  ] Non-accelerated filer:  [X]  Indicate by check mark which financial statement item the registrant has elected to follow:  Item 17 [X] Item 18 [  ]  If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  [X] No [  ]      - 2 -  TABLE OF CONTENTS  PART I 5 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS 5 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 6 ITEM 3. KEY INFORMATION 6 ITEM 4. INFORMATION ON THE COMPANY 10 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 18 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 22 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 25 ITEM 8 FINANCIAL INFORMATION 28 ITEM 9. THE OFFER AND LISTING 29 ITEM 10. ADDITIONAL INFORMATION 29 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES  ABOUT MARKET RISK 37 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 37 PART II 37 ITEM 13. DEFAULTS, DIVIDEND ARREARS AND DELINQUENCIES 37 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS  37 ITEM 15. CONTROLS AND PROCEDURES 37 ITEM 16. AUDIT COMMITTEE FINANCIAL EXPERT 38 PART III 39 ITEM 17. FINANCIAL STATEMENTS 39 ITEM 18. FINANCIAL STATEMENTS 41 ITEM 19. EXHIBITS 41      - 3 -  FORWARD-LOOKING STATEMENTS  Certain statements in this transitional report which are not statements of historical fact are what are known as "forward-looking statements," which are basically statements about the future. For that reason, these statements involve risk and uncertainty because no one can accurately predict the future. Words such as "plans," "intends," "hopes," "seeks," "anticipates," "expects," and the like, often identify such forward looking statements but are not the only indication that a statement is a forward-looking statement. Such forward-looking statements include statements concerning our plans and objectives with respect to our present and future operations and statements which express or imply that such present and future operations will or may produce revenues, income or profits. In evaluating these forward-looking statements, you should consider various factors, including those described in this annual report under the heading "Risk Factors." These and other factors may cause our actual results to differ materially from any forward-looking statement.  We caution you not to place undue reliance on these forward-looking statements.  Although we base these forward-looking statements on our expectations, assumptions, and projections about future events, actual events and results may differ materially, and our expectations, assumptions, and projections may prove to be inaccurate. The forward-looking statements speak only as of the date hereof, and we expressly disclaim any obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after the date of this filing.        - 4 -  EXPLANATORY NOTE:  As reported on Form 6-K filed with the Securities and Exchange Commission on June 2, 2008, on April 11, 2008, the Board of Directors of Aquasol Envirotech, Ltd. elected to change the Companys fiscal year end from March 31 to December 31.  This report on Form 20-F for the transition period ended December 31, 2007 is being filed as a result of the change in fiscal year.   PART I      ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS A. Directors and Senior Management  In this transitional report, the terms we, us, our, the Company, and Aquasol refer to Aquasol EnviroTech Ltd. and its subsidiaries unless the context otherwise requires. The following table sets forth as of May 30, 2008 the names, business addresses and functions of the Companys directors and senior management.   NameBusiness AddressPositionKen Z. CaiSuite 1980 - 1055 West Hastings Street, Vancouver, British Columbia
Canada V6C 1X8Chairman, Chief Executive Officer and DirectorYenyou (Jeff) ZhengSuite 1980 - 1055 West Hastings Street, Vancouver, British Columbia
Canada V6C 1X8President, Chief Financial Officer and Director  B. Advisors  The Companys transfer agent is Island Stock Transfer, located at 100 Second Avenue South, Suite 104N
St. Petersburg, Florida 33701.  The Companys principal commercial banker is the HSBC Bank Canada, Main Branch Bank, located at 885 West Georgia Street, Vancouver, British Columbia, Canada, V6C 3E9.  The Company's legal advisors are Salley Bowes Harwardt, located at 1185 West Georgia Street, Suite 1750, Vancouver, British Columbia, Canada, V6E 4E6.  St. Andrews Finance Ltd., a private British Columbia Corporation specializing in debt re-organizations, equity and debt financings, corporate finance and regulatory consulting, located at #584  816 W. Broadway, Vancouver, B.C. V5Z 1K7.  C. Auditors  The Companys current auditors are Child, Van Wagoner & Bradshaw, PLLC, located at 5296 South Commerce Drive, Suite 300, Salt Lake City, Utah 84107-5370.  Child, Van Wagoner & Bradshaw, PLLC  - 5 -  has been the Companys auditor since May 28, 2007.   From March, 2002, until July, 2006,  the Companys auditor was Moen and Company, Chartered Accountants, located at Suite 1400  701 West Georgia St., Vancouver, British Columbia, Canada V7Y 1C6.      ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE  Not Applicable.      ITEM 3. KEY INFORMATION  CURRENCY AND EXCHANGE RATES  All dollar amounts set forth in this report are in U.S. dollars, except where otherwise indicated.  The following tables set forth (i) the rates of exchange for the Canadian dollar, expressed in U.S. dollars, in effect at the end of each of the periods indicated;  (ii) the average exchange rates in effect on the last day of each month during such periods;  (iii) the high and low exchange rate during such periods, including the last six months in each case based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York.  Prices are based on the Corporations fiscal year end (December 31) and quoted in U.S. Dollars. The following table sets forth information as to the average period end, high and low exchange rate for converting the US Dollar to the Canadian Dollar for the periods indicated based on the noon buying rate in New York City for cable transfers in Canadian Dollars as certified for customs purposes by the Federal Reserve Bank of New York (US Dollar = CAN $0.9932 at May 27, 2008).  Year Ended December 31

2007
2006
2005
2004
2003Average

1.07
1.13
1.21
1.30
1.40Period End

0.99
1.17
1.16
1.20
1.29High

1.19
1.17
1.27
1.39
1.575Low

0.91
1.10
1.15
1.18
1.29  The following table sets out the high and low exchange rate for the US dollar to the Canadian dollar each month during the previous six months:  MonthHighLowMay 20081.01870.984April 20081.02681.0021March 20081.02750.9841February 20081.01880.9717January 20081.02940.9905December 20071.02160.9784  A. Selected Financial Information   - 6 -  The selected historical financial information presented in the table below for the nine months ended December 31, 2007 and 2006, is derived from the audited consolidated financial statements of the Company, which are included in this transitional report on Form 20-F which the Company has filed due to the Companys decision to change its fiscal year end from March 31 to December 31.  The selected historical financial information presented in the table below for the nine months ended December 31, 2005 and 2004, is derived from the unaudited consolidated financial statements of the Company, which were included on a Form 20-F  which the Company filed with the Securities and Exchange Commission on May 8, 2006.  The selected financial information presented below should be read in conjunction with the Companys consolidated financial statements and the notes thereto (Item 17) and the Operating and Financial Review and Prospects (Item 5) elsewhere in this annual report.  The selected consolidated financial data has been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP).  Selected Financial Data (US GAAP)  Nine Months ended
December 31, 2007
(in $US)Nine Months ended
December 31, 2006
(in $US)Nine Months ended
December 31, 2005
(in $US)Nine Months ended
December 31, 2004
(in $US)Net Operating RevenueNilNilNilNilDepreciation$1,457$564$940$0General and Administrative Expenses$68,762$100,984$112,013$50,312Loss From Operations($68,762)($100,984)($112,013)($50,312)Net income (loss)($66,213)($96,237)($102,182)($47,929)Income (Loss) per common share($0.03)($0.04)($0.05)($0.08)Diluted income (loss) per common share($0.03)($0.04)($0.05)($0.08)Total assets$149,981n/a$310,538$397,418Net assets$143,909n/a$284,304$390,441Long term debtNilNilNilNilCash dividends per shareNilNilNilNilDeficit($1,52,314)n/a($1,309,730)($1,106,456)Capital stock$1,528,351n/a$ 1,528,351$ 1,483,351Weighted average number of common shares
Basic & Diluted2,273,995n/a2,073,995573,995  B. Capitalization and Indebtedness  Not applicable. C. REASONS FOR THE OFFER AND USE OF PROCEEDS  Not applicable.  D. Risk Factors  Risks Relating to Our Company  - 7 -   We have had no operations for the past six years. We may not achieve profitability, and we may discover problems with our business model.  The Company is considered to be a shell company.  Since 2001, we have not had any operations or products.  We may not be able to pursue our business plan or achieve our business objectives.  We do not have an operating history upon which investors may rely.  Moreover, we have no commercially viable products at this time.  The validity of our technology, as described below, is based upon testing done in 2001 by a related party.  We have limited financial resources, with no guarantees that sufficient funding will be available for future development.  We may not be able to obtain adequate financing or financing on favorable terms in the future.  Failure to obtain such additional financing could result in delay or indefinite postponement of further development of our projects.  The Company is considered to be a shell company.  The Officers and Directors of our Company are officers and directors of other reporting issuers so they might not have sufficient time to devote to the Company.  Ken Cai is an officer and director of Minco Mining & Metals Corporation and Minco Silver Corporation, both of which are TSX listed companies.  Minco Mining & Metals Corporation is also listed on AMEX and is a 20-F Registrant.  He is also a director of Tranzcom China Security Network Inc., a TSX-Venture listed company.  Mr. Ken Cai and Dr. Jeffrey Zheng were directors of Goldstrike Inc., a reporting issuer on the OTCBB.  Dr. Zheng was also a director of Cantronic Systems, a TSX listed company, which has been profitable. Dr. Jeffrey Zheng was a director and president of Bralorne Mining Corporation, a SEC reporting issuer.  Mr. Cai and Dr. Zheng were the sole directors and officers of Goldstrike Inc., which subsequently entered into a reverse merger.  Mr. Cai is President, CEO and director of Minco Mining & Metals Corporation, which was a shell company that subsequently entered into a reverse merger.  All companies referenced are independent from Aquasol and are not affiliated with the Company.  All of the companies referenced above have no operations or products. Because of these obligations, the officers and directors of our company may not be able to devote sufficient time to Aquasol to ensure the continued success of the company.  Our business plan relies on patent rights, and our patent rights may be narrowed in scope, found to be invalid or unenforceable.  We currently do not have any operations or products.  However, our proposed business plan is dependent, to a significant extent, on our ability to obtain and enforce our patent rights in Canada, the United States and worldwide. Any of our pending or future patent applications may or may not result in the issuance of patents. Furthermore, pending patent applications or patents already issued to us may become subject to dispute, and any dispute could be resolved against us.  We will rely upon trade secrets and other unpatented proprietary knowledge to gain and maintain a position in the wastewater recycling industry and any loss of our rights to, or unauthorized disclosure of, our trade secrets or other unpatented proprietary knowledge could negatively affect our business.  We intend to rely upon trade secrets, unpatented proprietary knowledge and continuing technological innovation in our business. The disclosure of our trade secrets or other knowledge as a result of such a breach could cause us to lose any competitive advantages we might have in the market at the time, which would adversely affect our financial condition.   - 8 -  We will rely on key researchers and engineers, senior management and production facility operators to implement our business plan, and the loss of the services of any such personnel or the inability to attract and retain them may negatively affect our business.  Our success depends to a significant extent upon the service of research and development personnel and on our ability to attract and retain qualified researchers and technological experts, especially during periods of rapid growth.  We will also depend on the services of experienced key senior management, and if we lose their services, it would be difficult to find replacement personnel in a timely manner or at all.  The loss of the services of any of our key personnel or senior management without adequate replacement or the inability to attract new qualified personnel would render our company unable to operate.  We have been unable to secure personnel with the expertise to implement the technology of our company. It is possible that we will continue to have difficulty in securing personnel with the particular expertise that we require, which will impede our ability to continue as an operating company.  Our two principal shareholders have significant influence over corporate decisions.  Ken Cai, indirectly through family members, and Yenyou (Jeff) Zheng together own approximately 29.34% of our common shares and have control of all matters submitted to our shareholders for approval, including electing the directors, amending our articles of incorporation and approving changes of control that may impact you as a minority shareholder. The directors elected by these shareholders are able to make decisions affecting our capital structure, including decisions to issue additional capital stock, implement stock repurchase programs and incur indebtedness.  When exercising their rights as our shareholders, either alone or in concert, Ken Cai and Jeff Zheng may take into account not only our interests but also their interests and the interests of their affiliates or other joint venture companies in competing wastewater recycling businesses. Business arrangements other than those with Aquasol may at times conflict with the interests of Aquasol because the growth of our business depends, in part, on successful competition with other wastewater technologies. These conflicts may result in lost corporate opportunities for us.  Various other conflicts of interest between our two shareholders and us may arise in the future in a number of areas relating to our business and relationships, including potential acquisitions of businesses or properties, incurrence of indebtedness, financial commitments, sales and marketing functions, indemnity arrangements, and service arrangements.  Risks relating to our status as a foreign private issuer  U.S. investors may experience difficulties in attempting to enforce judgments based upon U.S. federal securities laws against us and our non-U.S. resident directors.  All of our operations are conducted outside of the United States, and we are organized and located outside the United States.  All of our assets are located outside the United States.   In addition, all of our officers and directors are foreign citizens.  As a result, it may be difficult or impossible for U.S. investors to enforce judgments of U.S. courts for civil liabilities against us or against any of our individual directors or officers.   In addition, U. S. investors should not assume that courts in the countries in which we are incorporated or where our assets are located (i) would enforce judgments of U.S. courts obtained in actions against us based upon the civil liability provisions of applicable U.S. federal and state securities laws or (ii) would enforce, in original actions, liabilities against us based upon these laws.  Classification of the Common Stock as Penny Stock  If a trading market develops for our common stock, it is likely to be subject to the "Penny Stock" rules of the SEC.  The application of such rules would make transactions in our stock cumbersome and may  - 9 -  reduce the value of an investment in our stock. Our shares have been approved for trading on the Over-the-Counter Bulletin Board under the trading symbol AQEVF, but there is no current trading market for our Common Shares, and there can be no assurances that a trading market will develop.  If such a trading market does develop, it will probably be subject to rules adopted by the Securities and Exchange Commission that regulate broker-dealer practices in connection with transactions in "penny stocks."  Penny stocks are generally equity securities with a price of less than $5.00, except for securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to make a special written determination that the penny stock is a suitable investment for the purchaser and to receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.  These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock as long as it is subject to the penny stock rules. In addition, holders of our shares may have difficulty selling those shares because our common stock will probably be subject to the penny stock rules. Environmental Regulations  All phases of our operations will be subject to environmental regulations promulgated by government agencies from time to time.  Our proposed business plan will require us to comply with environmental regulations.  Future changes in environmental regulations, if any, may impair our ability to operate as an ongoing entity.  There is a risk that new environmental regulations could increase our costs of doing business and prevent us from carrying out our business plan.  Any failure on our part to comply with any present or future environmental regulations could result in the assessment of damages or imposition of fines against us.      ITEM 4. INFORMATION ON THE COMPANY  A. HISTORY AND DEVELOPMENT OF THE COMPANY  The Company was incorporated under the laws of the Cayman Islands B.W.I. on February 3, 2000.  On March 2, 2000, a total of 6,583,599 pre-split common shares were issued at a price of $0.0001 per common share.  The shares were issued as follows: i) Tenfei Corporation was issued 2,003,087 pre-split common shares; ii) Bing Zhang was issued 454,771 pre-split common shares; iii) Cairich Capital Inc. was issued 1,625,741 pre-split common shares; iv) Keystone EnviroTech Inc. was issued 2,500,000 pre-split common shares.  On March 26, 2000, the Company entered into a share exchange to acquire Aquasol Technologies, Inc., a Canadian corporation (Aquasol Alberta).  The Company issued 1,416,301 pre-split shares of common stock to the shareholders of Aquasol Alberta in exchange for 100% of the issued and outstanding shares of Aquasol Alberta.  At the time of the share exchange Aquasol Alberta owned tools, valued at approximately $142, which were transferred to the Company after the share exchange and did not have any other assets.   The Company purchased Aquasol Alberta in order to utilize its customer base to market the Companys wastewater technologies in Alberta. Aquasol Alberta engaged in a few small wastewater treatment projects in Alberta using unpatented technologies similar to those used by the Company.  Aquasol Alberta discontinued operations in 2001, as there was no market in Alberta for its products.  - 10 -  Aquasol Alberta was incorporated in 1996.  It was an environmental company in the area of wastewater treatment and recycling.  It used biological technologies which were similar to the current Aquasol technologies but were unpatented.  The Company has not had operations since 2001.  On April 1, 2002, Aquasol EnviroTech (Canada) Ltd., a British Columbia Corporation, became a wholly owned subsidiary of the Company. The major shareholders of the Company had incorporated Aquasol EnviroTech (Canada) Ltd. in order to have a local identity for the operations of the Company in Vancouver, British Columbia.  The Company loaned Aquasol EnviroTech (Canada) Ltd. $1,400,000 in 2000 for expenditures with respect to general and administrative expenses, consulting fees, and the purchase of equipment. There was no interest for the loan and the loan can be converted into equity of Aquasol EnviroTech (Canada) Ltd. anytime. It became a subsidiary of the Company on April 1, 2002 pursuant to the loan agreement with the Company.  On September 21, 2004, a special resolution adopted by the Company approved a 1:20 reverse stock split of the Companys common stock.  For each twenty (20) old shares, one new share of common stock was issued.  Before the reverse split, the Company had 11,479,900 shares issued and outstanding.  After the reverse split, the Company had 573,995 shares issued and outstanding.  All references to common stock in this document refer to post-split shares, unless otherwise designated.  We are Extra-Provincially registered in the Province of British Columbia, Canada, meaning that the Company was originally incorporated outside of the Province and is now registered in the Province of British Columbia.  As it is extra-provincially registered, the Company is obliged to report to the Ministry of Finance and Corporate Registries in the Province of British Columbia every year with respect to any change in officers, directors, address change or any other corporate event that requires a filing with the Minister of Finance. The registered office is located atThe Huntlaw Building, 75 Fort Street, PO Box 190 GT, Grand Cayman, Cayman Islands   and the head office is located at Suite 1980, 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9, Canada and the telephone number is (604) 688-8002.  The Company had general and administrative expenses (excluding depreciation) of $92,796 in 2005, $132,392 in 2006, $132,426 in 2007 and $68,762 for the nine months ended December 31, 2007 which were used for legal, consulting, promotion, travel and office fees. The company had no or nominal capital expenditures during the years ended March 31, 2005, 2006, 2007 and the nine months ended December 31, 2007.  The Company raised money through a series of private placements and through the receipt of grants from the Industrial Research Assistance Program and Scientific Research Experimental and Development (SR&ED) Expense Refund Program available to Canadian operating companies from the Federal Government of Canada. The Company stopped research, development, manufacturing and marketing activities in 2002, but it still maintains an office for reorganization of the Company, the search for new partners, and promotion in the Chinese market.  Dr. Zheng has spent 80% of his time working for the Company.  The Company shares a receptionist, accountant and secretary with Minco Mining & Metals Company.  The Company built a pilot facility in Squamish, British Columbia, Canada to test the Bio Trap system, which is described below.  That facility has since been closed.  Aquasol is currently seeking a manufacturer for its Bio Trap system product in mainland China. The Company built the test facility for its Bio Trap system in 2001 with IRAP assistance funding from the Canadian government.  NovaTec Consultants Inc. joined the project as an independent engineering consulting company.  The facility was closed after the test was completed in 2001.  The equipment from the Company is currently in storage in a facility in Richmond, British Columbia.  The equipment consists of tools, laboratory equipment and data analysis equipment.   - 11 -  B. Business Overview  GLOSSARY OF TERMS  BODBiochemical Oxygen DemandDenitrificationBacterial conversion of nitrate to nitrite and then to nitrogen gas in the absence of oxygenGPDGallons per dayIBSImmobilized Bioreactor SystemsMetabolitesSubstances produced by biological processesMicroEntrap Immobilization
SystemRefers to Aquasols technologies to design and manufacture bioreactors for the treatment and re-use of wastewater using a biological method.Nh3-NAmmonia nitrogenNitrificationBacterial conversion of ammonia to nitrite and to nitrate in the presence of oxygenNSF/ANSI Standard 40 ProtocolAmerican National Standards Institute (ANSI) individual household secondary wastewater treatment plant technology certification protocol established by the National Sanitation Foundation (NSF) International (Ann Arbor, Michigan)P-removalPhosphorus removalpHNegative log-power of hydrogen  a measure of how acid or base a liquid is  neutral (balanced) pH is 7.0US EPAU.S. Environmental Protection AgencyUVUltraviolet  Description and General Development  We plan to be in the business of developing, acquiring, and marketing water and wastewater technology solutions.  During the last three years we have not had, and currently we do not have, any operations or products.  We have acquired the rights for a technology, referred to as the MicroEntrap Immobilization (MEI) System, from Dr. Huazhong Mao, former Director and CTO of the company, who invented it.  On February 1, 2000, we purchased the rights from Dr. Huazhong Mao through the issuance of stock.  The MEI system is used for wastewater treatment and reuse.  The MEI system utilizes three technologies which are the Superator, Biomedia and Bacteria.  All three system technologies have been patented.  The ownership of the patents was transferred to the Company by Huazhong Mao in exchange for the issuance  - 12 -  of 2,003,087 pre-split common shares to Tenfei Corporation, which is controlled by Huazhong Mao.  Therefore, upon the completion of the issuance of the 2,003,087 common shares, the Company obtained complete ownership of the MEI System and Technologies.  The MEI System is a two-stage water treatment system consisting of an anaerobic chamber followed by a highly oxygenated aerobic chamber.  The treatment system accelerates natural biological processes to renovate wastewater while generating minimal biological solids without the use of chemicals.  The MEI System requires a low capital investment, has low operating costs and sludge production, and can be operated within self-contained units.  We will also offer stand-alone aeration equipment, digestion technology, and complete wastewater treatment systems.  We have developed the MEI system which can be used for wastewater treatment and reuse. The system uses biological methods, i.e. using bacteria to remove organic contamination in wastewater. The advantages of the system over the existing technologies in the current market are lower operating cost, less sludge production, smaller volume within self-contained units, and higher treatment efficiency. We plan to first manufacture small systems, the Bio Trap, specifically designed for wastewater treatment application in residences and restaurants and then to sell licenses or merge with other companies to achieve our sales.  The following table describes our patents and pending patents upon which our products will be based:  Patent NumberApplication Date or Date GrantedCountry Issuing PatentOwner of PatentDescription of PatentUS#6,582,596 B2Granted June 24, 2003United StatesAquasolBioreactor systems (1)#138316Granted July 1, 2001TaiwanAquasolBioreactor systems (1)#2,292,244Applied for on December 14, 1999CanadaAquasolBioreactor systems (1)#001030779Granted December 20, 2005Peoples Republic of ChinaAquasolBioreactor systems (1)  (1) As described below as the MEI Systems.  These patents relate to the same technologies that are used in the MEI bioreactor systems for wastewater treatment.  All of the patents are for the same technology.  This business plan is dependent on the patents.  MEI Systems will integrate the following key Aquasol technologies: (1) the Superator, (2) Biomedia, (3) high-efficiency bacteria, and (4) MicroTrap Bioreactors.  Superator  The Superator is a highly efficient aeration device that dissolves oxygen into liquids.  Bacteria use oxygen to digest the organic contaminants in the wastewater. The more oxygen that is provided to these bacteria, the better the results, which means there is a higher treatment efficiency and less production of sludge.  Biomedia  Our Biomedia, together with special immobilization techniques, increases bacterial density and creates an ideal microenvironment for bacteria to work efficiently. We have designed different types of biomedia, each specific to one particular type of microorganism, i.e. bacteria.  This research was started by Dr. Mao  - 13 -  with Aquasol Alberta before he joined the Company in 2000.  High-Efficiency Bacteria  Various types of highly efficient bacteria have been developed for different wastewater treatment applications.  We use these bacteria in our Bio Trap systems.  MicroEntrap Bioreactors  MicroEntrap Bioreactors are developed through the integration of the Superator, Biomedia, immobilization technology and desired bacteria with an advanced bioreactor engineering design.  This is used to selectively house (or immobilize) desired microorganisms and to provide ideal working microenvironments for them.  The MicroEntrap Bioreactors are customized for specific applications and can be retrofitted into an existing biological treatment system for removal of various pollutants in wastewater.  We will use these bioreactors in our Bio Trap systems.  Research Findings  Research carried out by NovaTec Consultants Inc. in 2001 demonstrated that the MEI System could be operated at higher loading rates than would be typical for competing technologies of a similar scale.  Higher loading and less sludge are important for any wastewater treatment system.  This research was performed on the technology that we intend to use when we commence operations. Troy Vassos, a former director of Aquasol, is the President, shareholder and director of NovaTec Consultants Inc.  FUTURE AQUASOL PRODUCTS  We currently do not have any operations or products.  We plan to develop the MEI systems into various products for wastewater treatment applications. In the past, some products have been tested in pilot systems and used in special applications by Aquasol Alberta before it was acquired by the Company.  The primary product of the Company, which is close to commercialization, will be the BioTrap system, or Immobilized Bioreactor Systems (IBS).  IBS was developed for the removal of various nutrients from domestic sewage and various industrial wastewaters.  Each IBS will be customized for a specific application, but they all use the same Aquasol patented technologies.  Individual IBS's will be designed for flows that are as little as 100 gallons per day to as much as 100,000 gallons or greater per day.  Applications range from replacement of conventional home septic systems to traditional wastewater treatment plants for communities and municipalities, as well as other industrial applications.  A pilot system of the IBS was built in 2001. NovaTec Consultants Inc., an environmental engineering company, was contracted to conduct systematic tests, to evaluate the test results and to give an overall detailed report of the technologies, the treatment system and performance of the system in order to optimize criteria for design and operations and to provide related suggestions.  Troy Vassos, a former director of Aquasol, is the President, shareholder and director of NovaTec Consultants Inc.  NovaTec found that the treatment results of the Bio Trap system met and surpassed the secondary disposal and re-use standards set by the U.S. EPA.  A group of test data for optimized design and operation of the system have also been obtained.  The full report on the Aquasol test unit at the Mamquam, Squamish Wastewater Technology Testing Facility, was provided by NovaTec Consultants Inc. in September 2001.  - 14 -   Other prototype products Aquasol plans to develop are as follows:  Industrial Wastewater Treatment Systems  We intend to design Aquasols industrial wastewater treatment system to treat different types of industrial wastewater generated from such facilities as pulp and paper plants, food processing plants, breweries and distilleries, the beverage industry, fertilizer plants, hospitals, etc.  We currently do not have any industrial wastewater treatment systems in use.  We currently do not have any operations or products as of the date of this annual report.  Municipal Wastewater Treatment Systems  These systems could be used for small, medium and large-scale municipal wastewater treatment projects.  We currently do not have any municipal wastewater treatment systems in use.  Biological Animal Waste Treatment Systems (BAWT)  The primary objective of the BAWT system will be to treat animal wastes, such as those from pig farms or feed lots.  This will reduce the need for large holding areas or lagoons at such facilities, as the wastewater will be processed on a continuous basis.  In addition to wastewater treatment, the BAWT process will produce three value-added by products:  (1) methane converted from the animal wastes that can be used for heating and generating electricity; (2) fertilizer components that can be recovered and utilized from the bio-solids; and (3) water that can be used for irrigation or flushing the barns.  We currently do not have any biological animal waste treatment systems in use.  Biological Nutrient Removal Systems  The biological nutrient removal systems will be self contained, packaged on a larger scale and customized through the integration of Aquasols bioreactors.  Large scale and  highly efficient nutrient removal systems can be engineered to remove organics, nitrogen and phosphorus from polluted lakes, rivers, and other water bodies.  We currently do not have any biological nutrient removal systems in use.  MARKET POTENTIAL  There are two potential sectors for IBS systems: residential and industrial/commercial.  Below is a description of each of the two sectors.  Residential  Residential applications can be characterized into single-family home septic systems and multiple-residence applications.  For single-family systems, our goal would be to replace conventional septic systems.  These systems are typically designed for 500 to 1200 gallons per day.  We believe that this is a viable market with new applications and retrofits occurring annually.  We plan to have a standardized product line and production techniques to maintain a low cost product.  Multiple-residence applications will be our main target area.  In these applications, whole communities of homes, from 10 to 1000, can be linked to one large system.  There are advantages to this type of application.  For the homeowner, the concerns of an onsite septic system are removed and the cost of the project shared with other homeowners.  For the developer, the cost of the system can be passed amongst  - 15 -  the multiple-dwellings.  Also, land that was previously designated as non-development land due to wastewater concerns can then be developed.  Multiple-home residential sales will require a longer sales cycle than single-family applications.  However, once Aquasol has become the established technology in these applications, the opportunity to be selected at the start of development of projects will eliminate the sales time and make the overall process less complicated from one application to the next.  Industrial/Commercial  There are numerous applications for Aquasols systems.  Each application has its own particular requirements.  As a result, an Aquasol system would be specifically designed to meet each particular need.  While the sales time for each of these applications is expected to be similar to that of a multiple-home development, the advantages of working with these applications for Aquasol would be: (1) Their wastewater is an understood cost of their application.  As a result they understand they must treat it and have appropriate budgets to do so. (2) They are constantly looking for better technology as they are forced to meet more stringent standards. (3) Aquasol can increase their profitability by decreasing their operating and capital costs. (4)They are Aquasols best advertisers.  They are in constant communication with each other when it comes to safety and environmental applications.  As a result, a success in these industries opens the doors for many more applications.  CORPORATE STRATEGY  We currently do not have any operations or products as of the date of this transitional report.  In the event Company management determines that it is in the best interests of the Company to develop its waste water treatment business, it is contemplated that Aquasol will concentrate its marketing efforts on the Bio Trap or IBS Systems because the Company sees a need to provide solutions to wastewater disposal problems.  In such event, the following will be expected to be the cornerstones of our strategy: (1) sales to direct end users; (2) licensing of our technology to third parties in markets and regions where Aquasol cannot achieve reasonable returns; (3) joint ventures in China and other markets where we will benefit financially with few resources other than our technology; and (4) acquisition of other companies with complementary technologies.  CORPORATE OBJECTIVES: SHORT TERM  We currently do not have any operations or products.  In the fiscal year that will end on December 31, 2008, management will make a determination as to whether to seek to resume small scale operations in the waste water treatment business or to seek other business opportunities.  CORPORATE OBJECTIVES: LONG TERM  Aquasols long-term goal is to achieve long-term growth either through capturing a significant market share in the global environmental market by using its patented technologies in wastewater management, or through completing a business combination transaction with another business which management determines has significant potential for growth.  To become a recognized environmental company, we will require additional technologies to complement our present selection.  We anticipate these technologies would be acquired through a combination of acquisitions, research and development, licensing and joint venture operations.  Through a combination of technologies, we seek to be able to design and sell complete wastewater treatment systems to large customers such as food processing plants and industrial production sites.   - 16 -  In the event management elects to seek long-term growth through a business combination transaction, the Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, in such circumstances, may acquire any type of business.  In the event the Company elects to pursue a business combination transaction, it will have unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In its efforts to analyze potential acquisition targets, it is expected that the Company would consider the following kinds of factors:  (a) Potential for growth, indicated by new technology, anticipated market expansion or new products;  (b) Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;  (c) Strength and diversity of management, either in place or scheduled for recruitment;  (d) Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;  (e) The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;  (f) The extent to which the business opportunity can be advanced;  (g) The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and  (h) Other relevant factors.  In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Companys limited capital available for investigation, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired.  C. ORGANIZATIONAL STRUCTURE  We currently have one wholly-owned subsidiary which is Aquasol EnviroTech (Canada) Ltd.  Aquasol EnviroTech (Canada) Ltd. is a British Columbia, Canada Corporation.  The registered office of Aquasol EnviroTech (Canada) Ltd. is located at Suite 1980, 1055 West Hastings Street, Vancouver, B.C., Canada, V6E 2E9.  The Company had a subsidiary in the Province of Alberta, Canada (Aquasol Alberta).  Aquasol Alberta was incorporated on June 19, 1997 under the name of Noralta Technologies Corporation and subsequently changed its name to Aquasol Technologies Inc.  Aquasol Alberta discontinued its operations in Alberta, Canada in 2001.  On May 20, 2005, the Company dissolved Aquasol Alberta because that subsidiary sold all of its assets to the Company.  As of the date of this annual report, Aquasol Alberta is no longer an active company.  - 17 -   D. PROPERTIES, PLANTS AND EQUIPMENT  We do not own any real property or buildings.  We own machinery related to the research and development of our patented wastewater recycling technology, furniture, fixtures, and computer equipment, which includes hardware tools, old computers, parts including pipes and biomedia etc., furniture and test units.  The value of these items are disclosed in the audited financial statements which form part of this annual report. The equipment is located in storage located at Unit 109  556 Minoru Boulevard Richmond, British Columbia, V6X 2A9 Canada.      ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS  A. RESULTS OF OPERATIONS  The discussion and analysis in this section compare the operating results of the nine months ended December 31, 2007 with the nine months ended December 31, 2006 and should be read in conjunction with the Consolidated Financial Statements attached hereto.  We currently do not have any operations or products.  At the present time, Aquasols expenditures consist of general and administrative costs.  Aquasol presently has no production from its interest in exploitation of its proprietary technology and has no significant revenue items.  Aquasol will be involved in development of technologies to recycle wastewater into re-usable water.   To date, it has no revenue from operations.  Development and overhead expenditures fluctuate depending on the stage of its various development projects and on the amount of available working capital.  Aquasol did not engage, does not currently engage, nor does it expect to engage, in any hedging transactions to protect against fluctuations between Canadian and U.S. currencies.  Aquasols expenses are denominated in both Canadian and U.S. currencies.  The consulting fees that appear in our financial statements consist of the consulting fees we have paid to professionals for technical reports.  In the case of Dr. Yenyou Zheng, consulting fees of $3,000 per month are paid for his services as President of Aquasol to oversee the day-to-day operations of the Company.  All reasonable expenses for travel and promotion of the Company are also paid under the consulting agreement with Dr. Zheng.  Expenses  Nine Months Ended December 31, 2007 Compared to the Nine Months Ended December 31, 2006  Professional fees for the nine months ended December 31, 2007 were $14,534, compared to $38,153 for the nine months ended December 31, 2006.  The decrease was due in professional fees was attributable to the fact that the Company completed the process for the listing the Companys common stock on the Over the Counter Bulletin Board (OTCBB).   - 18 -  Consulting fees for the nine months ended December 31, 2007 were $29,970, compared to $23,220 for the nine months ended December 31, 2006.  The increase in consulting fees from 2006 to 2007 was attributable to the fact that the Company hired an outside corporate secretary who began working for the Company in July, 2007.  Travel and promotion expenses were $3,486 for the nine months ended December 31, 2007, while they were $15,482 for the nine months ended December 31, 2006.  The decrease in travel and promotion expenses was due the Companys reduction of marketing work in China.  Salary and benefit costs for the nine months ended December 31, 2007 were $nil, compared to $4,417 for the nine months ended December 31, 2006.  The decrease in salary and benefit costs was due to the resignation of the Companys accounting assistant.  Rent and utility expenses were $7,272 for the nine months ended December 31, 2007, compared to $8,664 for the nine months ended December 31, 2006.  Depreciation for the nine months ended December 31, 2007 was $1,457, compared to $564 for the nine months ended December 31, 2006.  Office and miscellaneous expenses during the nine months ended December 31, 2007 were $9,314, compared to $6,638 for the nine months ended December 31, 2006.  The increase was the result of purchase of new office equipment.  Income  Nine Months Ended December 31, 2007 Compared to the Nine Months Ended December 31, 2006  During the nine months ended December 31, 2007, the company incurred a loss of $66,213.  During the nine months ended December 31, 2006, the company incurred a loss of $96,237. The decreased loss for the nine months ended December 31, 2007 was due primarily to less professional filing work and less marketing work in China.  During the nine months ended December 31, 2007, Aquasol had non-operating income of $2,549, compared to non-operating income of $4,747 in the nine months ended December 31, 2006.  The following table is a summary of the above:   Nine Months Ended December 31, 2007Nine Months Ended Ended December 31, 2007Net income (loss)($66,213)($96,237)Non-operating income$2,549$4,747Consulting Fees$29,970$23,220Professional Fees$14,534$38,153Rent and Utilities$7,272$8,664Depreciation$1,457$564Salaries and Benefits$nil$4,417  - 19 -   Travel and Promotion$3,486$15,482Office and miscellaneous$9,314$6,638  B. LIQUIDITY AND CAPITAL RESOURCES  Our primary source of funds since incorporation has been from the sale of our Common Shares through private placements and the receipt of funds from the Industrial Research Assistance Program (IRAP) granted by the Government of the Province of British Columbia, Canada.  We currently do not have any operations or products. We have no revenue from the exploitation of our products to date and do not anticipate product revenues in the foreseeable future.  We do not have adequate working capital for the next 12 months in the event management elects to proceed with development of the Companys wastewater treatment business.  Therefore, if management elects to proceed with activities related to development of our wastewater treatment business we will be required to seek additional working capital.  We have no loan agreements or other current financing plans to raise additional capital.  The Company does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, the Companys liquidity either materially increasing or decreasing at present or in the foreseeable future.  Material increases or decreases in the Companys liquidity will be substantially determined by the success or failure of the Companys development programs and its future acquisition of products and projects.  On August 30, 2002, we entered into a loan agreement with Cleanwater Technologies Inc. (Cleanwater), a Nevada Corporation.  Pursuant to the Agreement, we lent $20,000 to Cleanwater in two installments, $5,000 on May 3, 2002 and $15,000 on September 3, 2002, for a period of 120 calendar days.  This loan was made because Clearwater and Aquasol were in the same business and both desired to promote technologies and products in the Chinese market.  The loan amount of $20,000 was not material to our operations. At the time, the Company wanted Cleanwater to promote the technologies in the Chinese market, in conjunction with the Company.  Cleanwater did not have the funds for this marketing so the Company loaned them money.  The loan has not been repaid, and therefore interest will accrue at a rate of 4.5% per annum or the prime rate set by HSBC banking corporation, whichever is the higher rate, until the loan is fully repaid, or the amount is otherwise realized.  In consideration and as collateral for this loan agreement, Cleanwater agreed to grant us a security interest in its assets until the loan is paid in full, which assets include furniture and fixtures, office equipment, and intangible property such as the assigned technology as is, for the manufacture and distribution of P30 wastewater treatment polymer and EF&P Solutions worldwide, contracts and securities.  As of March 31, 2006, management recorded an allowance for this doubtful loan and accordingly recorded a bad debt charge to income of $20,000 in the period ended March 31, 2006.  During the transitional period ended December 31, 2007, and the fiscal years ended March 31, 2007 and 2006, we received $0 from private placements, $0 from the exercise of warrants and $0 from the exercise of stock options.   During the fiscal year ended March 31, 2005, we received $45,000 from private placements, $0 from the exercise of warrants and $0 from the exercise of stock options.   The private placements consisted of the issuance of common shares at a price of $0.03 per common share.  During the nine months ended December 31, 2007, we used $63,094 of our cash resources for operating activities, received net cash inflows of $0 in financing activities, and used $0 in investing activities.  During the nine months ended December 31, 2006, we used $100,897 of our cash resources for operating activities and received net cash inflows of $0 in financing activities and used $nil in investing activities.  - 20 -   C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES  We currently have the following Patents and Pending Patents:  Patent NumberApplication Date or Date GrantedCountry Issuing PatentOwner of PatentDescription of PatentUS#6,582,596 B2Granted June 24, 2003United StatesAquasolBioreactor systems#138316Granted July 1, 2001TaiwanAquasolBioreactor systems#2,292,244Applied for on December 14, 1999CanadaAquasolBioreactor systems#001030779Granted December 20, 2005Peoples Republic of ChinaAquasolBioreactor systems  Please refer to Exhibits 4.5, 4.6, 4.7 and 4.8.  The Company did not carry out any research and development activities in the last six years because the Company has not had operations since 2001.  D. TREND INFORMATION  Increasing Urbanization and Strict Water Regulations Boost Opportunities for Water Treatment Equipment  Water is turning into a scarce commodity, and the growing demand for it is drawing the attention of the financial community. Large conglomerates are buying out smaller water companies, and an ever-increasing number of investors are turning their attention to this sector.  As the trend toward urbanization continues, the U.S. Environmental Protection Agency (EPA) continues to enforce water quality regulations through the Clean Water Act (CWA) and the Safe Drinking Water Act (SDWA). Further, a booming population and an aging water infrastructure provide for growth opportunities for water treatment, new technologies and equipment vendors.  Aquasol intends to take advantage of the trend toward urbanization and the enforcement of stringent water quality regulations and the demand for water treatment technologies.  The current trends provide an atmosphere for Aquasol to present its technologies for use in the manufacture of its Bio Trap System on a large scale for commercialization in Asia and North America.  The current trends toward growth opportunities in the treatment of wastewater create an environment for Aquasol to exploit the commercial market for its Bio Trap system.  The transmission and distribution category is drawing the bulk of the investments on account of the ongoing upgrade of municipal water treatment and distribution plants.  With the need to develop efficient technologies to tackle new-found contaminants, the market seems to indicate that there will be growth for water equipment companies.  E. OFF BALANCE SHEET ARRANGEMENTS   - 21 -  We have no off balance sheet arrangements.  F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS  We do not have any contractual obligations.  G. SAFE HARBOR  Not applicable.      ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. DIRECTORS AND SENIOR MANAGEMENT  The following table sets forth the names and addresses of each of our directors and officers, their principal occupations and their respective date of commencement of their term.  The Company currently does not have any employees.  All directors and officers hold office until the next annual general meeting of our shareholders or until successor can be appointed.  The officers and directors of the Company are as follows:  NAMEAGEPOSITIONDATE OF APPOINTMENTKen Z. Cai43Chairman, Chief Executive Officer, and DirectorMarch 2, 2000Yenyou (Jeff) Zheng49President, Chief Financial Officer, and DirectorNovember 9, 2001  Biographical Information  Dr. Ken Z. Cai, President President, Chief Executive Officer and Director  Dr. Cai has served as Chairman and director of the Company since March 2000. From 1996 to present, Dr. Cai has served as the president and chief executive officer of Minco Mining and Metals Corporation, a TSX listed company.  From August 2004 to present, he has served as the president and chief executive officer of Minco Silver Corporation.  From December 2001 to present, Dr. Cai has served as the chairman and chief executive officer of Tranzom China Security Networks, a TSX Venture listed company.  Dr. Cai also worked as a director and president of Gobi Gold, Inc., a TSX Venture listed company.  In all of these companies, Dr. Cai was responsible for assisting in mineral exploration, project evaluation, corporate financing and company management.  Since July 1998, he has served as a director of Dragon Pharmaceutical Inc., a company whose shares are registered under the Securities Exchange Act of 1934.  From June 2003 through September 2005, he served as the president and a director of Goldstrike Inc.   Dr. Cai holds a Ph.D. in mineral economics from Queen's University in Kingston, Ontario, Canada.  Dr. Cai devotes approximately 10% of his time to the Companys business.  Jeff Yenyou Zheng, Ph.D. President, CFO and Director  - 22 -   Dr. Zheng has served as a director of the Company since March 2000 and as President of the Company since 2003.  He has been responsible for the Companys corporate management and for market development of the proprietary water and wastewater treatment technologies.  From June 2003 to November 2005, Dr. Zheng was a director and CFO of Goldstrike Inc., listed on OTCBB (GTSK).  He has been a director and president of Bralorne Mining Corp., a reporting issuer in the United States, since June 2004.  Dr. Zheng is involved with public listing, management and financing of these companies.  From February 2005 to present, he has been a director of Cantronic Systems Inc., a hi-tech company listed on the TSX-Venture (CTS).  From 1991 to 2002, he worked as a senior research associate at the University of British Columbia in Vancouver.  Dr. Zheng has also served as an adjunct professor at Tsinghua University in Beijing, China.  Dr. Zheng devotes approximately 80% of his time to the Companys business. Dr. Zheng received his doctorate degree in physics from Flinders University of South Australia in 1990.  B. COMPENSATION OF DIRECTORS AND OFFICERS  The aggregate direct or indirect remuneration paid to the directors and officers of the Company, as a group during the transitional period ended December 31, 2007, for service to the Company in all capacities, was $27,000.  Certain information about payments to the Companys executive officers is set out in the following table:   SUMMARY COMPENSATION TABLE  The following table sets forth executive compensation for the period ended December 31, 2007. We have not paid any salaries or bonuses to any of our officers from our inception through the date hereof. We refer to all of these officers collectively as our "named executive officers."  Summary Compensation Table  Name And Principal PositionNine Month Period Ended December 31SalaryBonusStock Awards ($)Securities Underlying OptionsOptions Awards (Value of Options) ($) (5)Total CompensationKen Cai, Chairman, & Director (1)2007NilNilNilNilNilNilYenyou (Jeff) Zheng
President, CFO,  & Director2007NilNilNilNilNil26,764(2)  (1) Current Member of the Audit Committee of the Company. (2) Yenyou (Jeff) Zheng received a total of $26,764 during the transitional period ended December 31, 2007.  We have no written employment agreements with our officers and directors.  Compensation was  - 23 -  determined after discussion about expected time commitments, remuneration paid by comparable organizations and the flexibility provided to the Company by not having extended terms and other terms typical of employment agreements.  We have no plans or packages providing for compensation of officers after resignation or retirement.  Outstanding Employee and Director Stock Options  The following table demonstrates the outstanding equity awards at the end of the transitional period ended December 31, 2007:  NameSecurities Acquired
on Exercise
(#)Aggregate
Value
Realized
($)Unexercised Options/
SARs
at Financial
Year-End
(#)
Exercisable/
UnexercisableUnexercised
In-the-Money
Options/SARs
at Financial Year-End
(#)
Exercisable/
UnexercisableOption Exercise Price ($)Option Expiration DateYenyou (Jeff) ZhengNilNil60,000/060,000/0$0.104/2/2010Ken CaiNilNil60,000/060,000/0$0.104/2/2010Troy VassosNilNil60,000/060,000/0$0.104/2/2010Brigitte M. McArthurNilNil20,000/020,000/0$0.104/2/2010   Outstanding Warrants from Previous Private Placements  There are no outstanding warrants from previous private placements.  Defined Benefit or Actuarial Plan Disclosure  We have no defined benefit or actuarial plans.  Termination of Employment, Changes in Responsibility and Employment Contracts  We do not presently have any outstanding employment contracts.  Director Compensation  We do not currently compensate our directors for their services as directors. Directors are reimbursed for their reasonable out-of-pocket expenses incurred with attending board or committee meetings.  The following table provides summary information concerning compensation awarded to, earned by, or paid to any of our directors for all services rendered to the Company in all capacities for the transitional period ended December 31, 2007.   - 24 -   NameSalary/Fees Earned or Paid in Cash ($)Stock Awards ($)Option Awards ($)Non-Equity Incentive Plan Compensation ($)Change in Pension Value and Nonqualified Deferred Compensation EarningsAll Other Compensation ($)Total Compensation (1)Yenyou (Jeff) Zheng--------------Ken Cai--------------  (1) This total does not reflect the amounts paid to directors who are also officers.  See the Executive Compensation table above.  No Directors were paid for their services as directors.  Management and Consulting Contracts Compensation of Directors  On October 1, 2004, the Company entered into a Consulting Agreement with Yenyou (Jeff) Zheng, whereby Yenyou (Jeff) Zheng will receive a total of CDN$3,000 per month for services rendered to the Company. Dr. Zhengs responsibilities are to oversee the day-to-day operations of the Company and to promote Aquasols technologies and products.  All reasonable expenses for travel and promotion of the Company are also paid under the consulting agreement with Dr. Zheng.  Except as described above, Aquasol has no arrangements, standard or otherwise, pursuant to which directors are compensated by it for their services in their capacity as directors, or for committee participation, involvement in special assignments or for services as consultant or expert during the most recently completed financial year or subsequently.  No other directors have received any manner of compensation for services provided in their capacity as directors during the most recently completed financial year with the exception of stock options granted to the directors.  C. BOARD PRACTICES  The directors will serve until the next annual meeting of Aquasols stockholders or until their successors have been appointed.  Thereafter, directors will be elected for one-year terms at the annual stockholders meeting.  Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated. There are no arrangements to provide compensation to officers and directors upon termination of employment.  The members of the audit committee are Ken Cai and Dr. Jeff Zheng.  Mr. Cai and Dr. Zheng examine all internal controls of the accounting practices of Aquasol and refine them or amend them to comply with public company disclosure regulations as necessary.  Mr. Cai and Dr. Zheng oversee the corporate accountants in the preparation stages of audit in order to ensure all controls are followed stringently and all disclosure requirements are met.  Mr. Cai has extensive experience as a principal of public companies to provide valuable input as a member of the audit committee.  We have not established a remuneration committee.      ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  A. MAJOR SHAREHOLDERS  - 25 -  The following table sets forth, as of December 31, 2007, the stock ownership of each executive officer of the Company, of all the executive officers and directors of the Company as a group, and of each person known by the Company to be a beneficial owner of 5% or more of its Common Stock.  Except as otherwise noted, each person listed below is the sole beneficial owner of the shares and has sole investment and voting power as to such shares.  Name of Major ShareholdersNumber of SharesPercentage of SharesZhiquan Cai (2)137,9416.65%Jeff Yenyou Zheng (1)199,1349.60%Affaires Financiers SA (3)217,00010.46%Thomas Wayne Spilsbury150,0007.23%Hans Wick250,00012.05%Zhibin Cai (4)150,0007.23%Chuan Mei Deng150,0007.23%Tianying Zheng (5)200,0009.64%Bunnaton Ltd. (6)115,0005.54%Ken Z. Cai (1)284,60913.72%Troy Vassos (1)00%Brigitte M. McArthur (1)00%All Officers and Directors As a Group (4 in number)483,74323.32%  (1)Officer or director of the Company.(2)Mr. Cai is the brother of Ken Z. Cai, an officer and director of the Company.(3)Mr. Werner Wagerman beneficially owns these shares.(4)Mr. Cai is the father of Ken Cai, an officer and director of the Company.(5)Mr. Zheng is the cousin of Jeff Zheng, an officer and director of the Company.(6)Mr. Douglas Casey beneficially owns these shares.  There have been no significant changes in ownership during the past three years.  The major shareholders do not have different voting rights.  In certain shareholder voting instances, the major shareholders have to abstain from voting on certain matters to which they are not impartial, such as the granting of stock options, purchase of corporate assets, takeover bids or any other shareholder action to which they are not impartial.  In these instances, the majority of the minority rule will apply  the number of votes by the minority votes in favor or against any action will apply.  None of our shareholders currently reside in the United States.  B. RELATED PARTY TRANSACTIONS  The following table summarizes private placements that occurred which involved an officer or director or an affiliate thereof.  Name and Address of PurchaserOriginal
Number of
Common
Shares
PurchasedConsolidated
Balance
of
Common
SharesPurchase
Price
Per ShareDate of PurchaseTotal
Common
Shares  - 26 -   Zhiquan Cai (1)
1-301 Building 16 Yihai Garden, Beijing,
Peoples Republic of China2,758,820137,941$0.0001March 2, 2000137,941Huazhong Mao (2)
#105  7230 Adera Street
Vancouver, B.C.,
V6P 5C4, Canada48724$0.0001March 26, 200024Greendew Bioengineering Corp.  (3)
#105  7230 Adera Street, Vancouver, B.C.,
V6P 5C4, Canada666,66633,333$0.0001March 26, 200033,333Yenyou (Jeff) Zheng (4)
#708  711 Brighton Street, Vancouver, B.C.,
V6C 1Z8, Canada182,677
190,0009,134$0.0001
$0.03March 26, 2000
March 18, 20059,134
190,000
199,134Keystone Environtech Inc. (5)
1980  1055 West Hastings Street, Vancouver, B.C.,
V6E 2E9, Canada,1,858,86492,943$0.0001March 2, 200092,943Golden Dragon Capital Inc.  (6)
East Asia Chambers, P.O. Box 901 Road Town, Tortola, British Virgin Islands499,90024,995$0.0001March 26, 200124,995Zhibin Cai (7)
18 Main Street Luotian Hubei,
Peoples Republic of China150,000$0.03March 18, 2005150,000Tianying Zheng (8)
88  8th Street Xiaohe, Weiyuan Sichuan Province, Peoples Republic of China200,000$0.03March 18, 2005200,000  (1) Brother of Ken Cai (2) Former director of the Company (3) Owned by Huazhong Mao, former director of the Company (4) Officer and director of the Company (5) Partially owned and controlled by Zhiquan Cai, brother of Ken Cai (6) Owned by Zhiquan Cai, brother of Ken Cai (7) Father of Ken Cai (8) Cousin of Dr. Yenyou Zheng  On October 1, 2004, Aquasol entered into a Cost Sharing Agreement with Minco Mining & Metals Corporation (Minco) (the Cost Share Agreement).  On July 1, 2006, Aquasol entered into a Cost Sharing Agreement with Minco replacing the original agreement dated October 1, 2004. Mr. Ken Cai is the President, CEO and a Director of Minco Mining & Metals Corporation.  Minco entered into an agreement with Guinness Tower Holdings Ltd. and Omers Realty Corporation to lease the premises located at Suite 1980, 1055 West Hastings Street, Vancouver, B.C., V6E 2E9 (the Premises).  Minco  - 27 -  then entered into the Cost Sharing Agreement with several sub-tenants to share in office expenses for the Premises as more specifically described below.  Aquasol is one of those sub-tenants.  Office Rental costs are based on a percentage basis (the shared expenses) as more particularly described below:  MincoTrancomMinco
SilverAquasolTOTALRent42%15%35%8%100%ParkingStall #150%15%35%100%Stall #260%-40%100%Stall #350%15%35%100%Stall #450%15%35%100%Shared Office Expenses50%15%35%100%Annual Charge Back$297.96.USD   Minco invoices on a monthly basis to the Sub-Tenants for reimbursement.  Included in the Minco invoice is the rent, shared employee salaries, and benefits.  Aquasol shares bookkeeping services, corporate secretary services and reception services with Minco.  The cost sharing is based on a percentage for expenses such as rent, corporate secretarial and communication expenses.  The company paid $19,468, $16,457 and $26,378 for the years of 2007, 2006 and 2005, respectively. The expenses paid are comparable to that which would have been paid for services rendered by unaffiliated parties.  On October 1, 2004, the Company entered into a Consulting Agreement with Yenyou (Jeff) Zheng, whereby Yenyou (Jeff) Zheng will receive a total of CAD$3,000 per month for services rendered to the Company.      ITEM 8 FINANCIAL INFORMATION  A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION  Consolidated Statements and Other Financial Information  The following financial statements of the Company are attached to this Transitional Report:  Consolidated audited financial statements for the nine months ended December 31, 2007 and 2006 (in US dollars).  Dividend policy  The Company has never paid any dividends and does not intend to pay any dividends in the near future.   - 28 -  There are currently no legal or arbitration proceedings against the Company which may have a significant effect on the Companys financial position or profitability.  We have commenced an action against Mr. Huazhong Mao. Mr. Mao failed to deliver to Aquasol certain materials for ownership of the technologies, including the Bio Trap system, and failed to provide a completed prototype, as he was contractually obligated to do.  The patents which were impacted by this failure were applied for, and in the case of the United States, China and Taiwan, granted to Aquasol.  Aquasol has full ownership and control of the patents.  The litigation with Huazhong Mao has not had a material effect on Aquasols business and it not anticipated to effect the business going forward.  The litigation with Huazhong Mao has no material effect on the ownership of the patented technologies.  B. SIGNIFICANT CHANGES  Other than the issuance of common shares by way of private placement, as described herein, there have been no significant changes since the date of the Financial Statements.      ITEM 9. THE OFFER AND LISTING  A. OFFER AND LISTING DETAILS  Not applicable.      ITEM 10. ADDITIONAL INFORMATION A. SHARE CAPITAL  Not applicable.  B. ARTICLES, MEMORANDUM AND BY-LAWS OF THE COMPANY  The Company was incorporated under the laws of the Cayman Islands B.W.I. on February 3, 2000 under incorporation number 96650.  The Articles of Incorporation allow for the Company to carry on business for a broad variety of purposes, and the Company is not restricted from any business activity.  The Memorandum and Articles of Incorporation are incorporated herein by reference.  Common Shares  All issued and outstanding common shares are fully paid and non-assessable.  Each holder of record of common shares is entitled to one vote for each common share so held on all matters requiring a vote of shareholders, including the election of directors.  The holders of common shares will be entitled to dividends on a pro-rata basis, if declared by the board of directors.  There are no preferences, conversion rights, preemptive rights, subscription rights, or restrictions or transfers attached to the common shares.  In the event of liquidation, dissolution, or winding up of the Company, the holders of common shares are entitled to participate in the assets of the Company available for distribution after satisfaction of the claims of creditors.   - 29 -  Changes in Capital  The Company may, by a resolution of directors, amend the Memorandum and Articles of Association to increase or decrease its authorized capital, the number of authorized but unissued shares, or the par value of such shares.  However, no reduction of capital may occur if it reduces the capital of the Company to an amount that is less than the aggregate par value of all outstanding shares and all shares with par value held by the Company.  Further, the Company must be able to satisfy its liabilities in the ordinary course of business after the reduction in capital.  Powers and Duties of Directors Under the provisions of the Articles, Directors meetings must be held in the Cayman Islands every year.  Annual General Meetings must be held every 12 months.  Both Annual and Extraordinary General meetings must provide 21 days notice to shareholders.  In each case 1/20 of the shareholders must provide votes.  A quorum must be present to conduct business at any Annual or Extraordinary General meeting and two shareholders must be present either in person or by proxy in order for a meeting to be properly constituted and held.  The directors are to manage or supervise the management of the affairs and business of the Company and have authority to exercise all such powers of the Company as are not, by the Business Corporations Act, or by the memorandum or the articles of incorporation, required to be exercised by the Company in a general meeting.  Directors will serve as such until the next annual meeting.  In general, a director who is, in any way, directly or indirectly interested in an existing or proposed contract or transaction with the Company whereby a duty or interest might be created to conflict with his duty or interest as a director, is to declare the nature and extent of his interest in such contract or transaction or the conflict or potential conflict with his duty and interest as a director.  Such director may not vote in respect of any such contract or transaction with the Company in which he is interested and if he does so, his vote will not be counted, but he will be counted in the quorum present at the meeting at which such vote is taken.  However, notwithstanding the foregoing, directors have the right to vote on determining the remuneration of the directors.  The directors may from time to time on behalf of the Company: (a) borrow money in such manner and amount from such sources and upon such terms and conditions as they think fit; (b) issue bonds, debentures and other debt obligations; or (c) mortgage, charge or give other security on the whole or any part of the property and assets of the Company.  There is no minimum share ownership requirement for the Company's directors.  The Articles of the Company provide that the audit committee consist of three members, a majority of which must be officers of the Company.  In this instance, the Articles with respect to the composition of the audit committee are more stringent than the requirements of the SEC.  Shareholders  An annual general meeting is to be held once in every calendar year at such time and place as may be determined by the directors.  A quorum at an annual general meeting and special meeting is two or more shareholders or one or more proxy holder representing two shareholders, or one shareholder and a proxy holder representing another shareholder.   - 30 -  There are no limitations of rights to own securities including non-resident or foreign shareholders rights to own and vote their shareholdings.  There are currently no anti-takeover, poison pill or shareholder rights protections in the event of a takeover bid in place.  Ownership Threshold  There is no threshold at which an individual must declare shareholdings.  However, the Corporations Act of British Columbia, requires notification of ownership of 10% or more.   SEC disclosure regulations require that holders of 5% or more of the issued securities must disclose such holdings.  C. MATERIAL CONTRACTS  The Company entered into a Cost Sharing Agreement with Minco Mining and Metals Corporation, of which Ken Cai is the CEO, on October 1, 2004.  This original agreement was replaced by a new Cost Sharing Arrangement on July 1, 2006. Under the terms of the new Cost Sharing Agreement, Aquasol pays 8% of the total rent of the office space to Minco Mining and Metals Corporation, which is approximately CAD$1,200 per month.  The Company entered into a Consulting Agreement with Dr. Yenyou Zheng on the 1st day of October, 2004, whereby Aquasol pays Dr. Zheng $3,000 CAD per month to act as president of the Company, oversee day to day operations of the Company, and promote technologies and products of the Company.  The Agreement also provides for the reimbursement of reasonable expenses upon presentation of invoices and receipts by Dr. Zheng to the Company. D. EXCHANGE CONTROLS  There are no laws or legislation which may affect the import or export of capital including the availability of cash or cash equivalents to be used by the Company.  Other than the standard withholding tax levied in Canada, there are no other laws that affect the remittance of dividends, interest, or other payments to non-resident holders of the Companys shares.  Standard withholding tax refers to the tax that is applied to the funds received on the sale of securities by non-residents.  E. TAXATION  ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMMON SHARES  Canadian Federal Income Tax Consequences to United States Investors  The following is a summary of the principal Canadian federal income tax consequences to a shareholder of acquiring, holding and disposing of common share where, for the purposes of the ITA, the holder (a) is not resident in Canada, (b) does not, and is not deemed to, carry on business in Canada, (c) holds common shares as capital property, and (d) is the beneficial owner of the common shares, and where, for the purposes of the Canada-United States Income Tax Convention (1980) (the Convention), the shareholder is resident in the United States.   - 31 -  The summary is based on the current provisions of the ITA and the regulations thereunder and on the Companys understanding of the current administrative practices of Canada Customs and Revenue Agency.  The provisions of the ITA are subject to the provisions of the Convention.  The summary also takes into account all specific proposals to amend the ITA and the regulations thereunder publicly announced by the Minister of Finance of Canada through November 1997.  The summary does not otherwise take into account or anticipate any changes in law, whether by legislative, governmental or judicial decision or action, nor does it take into account or consider any provincial, territorial or foreign income tax considerations.  Dividends on Common Shares  Under the ITA, a nonresident of Canada is generally subject to Canadian withholding tax at the rate of 25% on the gross amount of dividends paid or credited to him by a corporation resident in Canada.  The Convention limits the rate to 15% of the gross amount of the dividends if the shareholder is resident in the United States and the dividends are beneficially owned by him.  The Convention further limits the rate to 10% of the gross amount of the dividends if the shareholder is also a corporation that beneficially owns at least 10% of the voting stock of the payor corporation.  The Convention generally exempts from Canadian withholding tax dividends paid to a religious, scientific, literary, educational or charitable organization or to an organization exclusively administering a pension, retirement or employee benefit fund or plan, if the organization is resident in the United States and exempt from income tax under the laws of the United States.  However, the payor of such dividends may still be required to withhold and remit tax to Canada Customs and Revenue Agency (which is refundable upon application by the organization) unless the organization has obtained a valid letter of exemption from Canada Customs and Revenue Agency.  Organizations in possession of a valid letter of exemption are normally listed in Revenue Canadas annual publication, List of United States Organizations Exempt from Canadian Non-Resident Tax under Article XXI (1) of the Canada-United States Tax Convention.  Disposition of Common Shares  The proceeds of disposition to a nonresident of Canada from the disposition of common shares will be the sale price therefore.  However, if common shares are purchased by the Company from a nonresident of Canada other than in an open market in the manner in which shares would normally be purchased by the public, the proceeds of disposition to the shareholder will generally be the paid-up capital of the common shares and the balance of the price received will be deemed to be a dividend and taxable as described under Dividends on common shares.  Under the ITA only capital gains and capital losses realized on the disposition of taxable Canadian property are taken into account by a nonresident of Canada in computing income.  The common shares will constitute taxable Canadian property to a nonresident of Canada in a particular time, if any time in the preceding five years, 25% or more of the issued shares of any class or series of the capital stock of the Company belonged to the non-resident person, to persons with whom the non-resident person did not deal at arms length or to the non-resident person and persons with whom he did not deal at arms length.  The capital gains (or capital loss) of a non-resident of Canada from the disposition of common shares that are taxable Canadian property will be the amount, if any, by which his proceeds of disposition, less any costs of disposition, exceed (or are far less than) the adjusted cost base of the common shares to the holder immediately prior to the disposition.  The portion of a capital gain (the taxable capital gain) and the portion of a capital loss (the allowable capital loss) required to be taken into account currently is as follows:  - 32 -   July 1, 1999  February 27, 2000 75% February 28, 2000  October 17, 2000 66 2/3% October 18, 2000  December 31, 2000 50%  Any allowable capital loss realized by the shareholder will, subject to the rules in the ITA which deny or restrict the ability to utilize losses, be deductible from taxable capital gains realized by the shareholder in the current tax year, the three preceding taxation years or future taxation years.  The Convention relieves Uniteds States residents from liability for Canadian tax on capital gains derived from a disposition of common shares unless:  (a) their value is derived principally from real property in Canada; (b) the holder was resident in Canada for 120 months during any period 20 consecutive years preceding, and at any time during the 10 years immediately preceding, the disposition and the common shares (or, in certain circumstances, property for which the common shares were substituted) were owned by him when he ceased to be resident in Canada; or, (c) they formed part of the business property of a permanent establishment the holder has or had within the 12 months preceding disposition, or pertained to a fixed base the holder has or had in Canada, or was available to the United States resident in Canada for purposes of performing  independent personal services within the 12 month preceding the disposition.  We do not believe that the value of our shares is derived principally from real property in Canada.  Certain United States Federal Income Tax Consequences to United States Investors  The following general discussion sets forth a summary of the material United States federal income tax consequences that are applicable to the following persons who invest in and hold common shares as capital assets (U.S. Shareholders): (i) citizens or residents (as specifically defined for federal income tax purposes) of the United States, (ii) corporations or partnerships created or organized in the United States or under the laws of the United States or of any state and (iii) estates or trusts the income of which is subject to United States federal income taxation regardless of its source.  This discussion does not deal with (a) all aspects of federal income taxation that may be relevant to a particular U.S. Shareholder based on such U.S. Shareholders particular circumstances (including potential application of the alternative minimum tax), (b) certain U.S. shareholders subject to special treatment under the federal income tax laws or foreign individuals or entities, (c) U.S. Shareholders owning directly or by attribution 10% or more of the common shares, or (d) any aspect of state, local or non-United States tax laws.  Additionally, the following discussion assumes that the Company will not be classified as a foreign personal holding company under the Internal Revenue Code of 1986, as amended (the Code).  Passive Foreign Investment Company  For any taxable year of the Company, if 75% or more of the Companys gross income is passive income (as defined in the Code) or if at least 50% of the Companys assets, by average fair market value (or by adjusted income tax bases if the Company elects), are assets that produce or are held for the production of passive income, the Company will be a Passive Foreign Investment Company (PFIC).  The Company may be a PFIC and, if so, may continue to be a PFIC for the foreseeable future.  To its knowledge, the Company has not been considered a PFIC in the past.  A U.S. Shareholder of a PFIC is subject to special U.S. federal income tax rules in Sections 1291 to 1297 of the Code.  As described below, these provisions set forth two alternative tax regimes at the election of  - 33 -  each such U.S. Shareholder, depending upon whether the U.S. Shareholder elects to treat the Company as a qualified electing fund (a QEF Election).  U.S. SHAREHOLDERS ARE STRONGLY URGED TO CONSIDER MAKING A QEF ELECTION TO AVOID CERTAIN POTENTIALLY SIGNIFICANT ADVERSE U.S. TAX CONSEQUENCES  1. The QEF Election Alternative  Each U.S. Shareholder is strongly urged to consider making a QEF Election because of the potential benefits of such election that are discussed below and because the Company anticipates that it will not have any earnings and profits (as computed for United States federal income tax purposes) for the current taxable year and little, if any, earnings and profits for any future taxable year in which the Company is a PFIC.  Accordingly, the timely making of the QEF Election as discussed below, generally should, subject to the discussion below under Other PFIC Rules, avoid any significant adverse United States federal income tax consequences resulting form any classification of the Company as a PFIC, although this may depend on a particular U.S. Shareholders particular circumstances.  A U.S. Shareholder who elects in a timely manner to treat the Company as a QEF (an Electing U.S. Shareholder) will be subject under Section 1293 of the Code, to current federal income tax for any taxable year in which the Company is a PFIC (or is treated as a PFIC with respect to the U.S. shareholder) on such Electing U.S. Shareholders pro rata share of the Companys (i) net capital gain (the excess of net long term capital gain over net short-term capital loss), which will be taxed as long-term capital gain to the Electing U.S. Shareholder and (ii) ordinary earnings (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Shareholder, in each case, for the shareholders taxable year in which (or with which) the Companys taxable year ends, regardless of whether such amounts are actually distributed.  An Electing U.S. Shareholder, however, would not take into account any income with respect to any taxable year of the Company for which it has no earnings and profits.  Adjustments are provided generally to prevent double taxation at the time of later distributions on or dispositions of common shares.  The QEF election also allows the electing U.S. Shareholder to (i) generally treat any gain realized on the disposition of common shares (or deemed to be realized on the pledge of such shareholders common shares) as capital gain; (ii) treat such shareholders share of the Companys net capital gain, if any, as long-term capital gain instead of ordinary income; (iii) probably (although in the absence of regulations this matter is not free from doubt) retain the case of an individual Electing U.S. Shareholder, the step-up in the tax basis of common share to the fair market value of such shares on the date of such Electing U.S. Shareholders death (which would otherwise not be retained); and (iv) generally avoid interest charges resulting from PFIC status altogether.  In the event the Company is deemed a PFIC, the Company intends to comply with the reporting requirements prescribed by Treasury regulations.  In particular, the Company will maintain information so that the ordinary earnings and net capital gain of the Company may be determined.  However, future regulations may contain reporting and record-keeping requirements that are so onerous that it would not be practicable for the Company to comply.  If, after review of the requirements, the Company decides not to comply with the PFIC record-keeping requirements, the Company will so notify its shareholders.  A QEF election must be made by attaching the following document to the timely filed US. Federal income tax return for the first taxable year of the U.S. Shareholder in which or with which a taxable year of the Company during which the Company was a PFIC and the U.S. Shareholder held (or was considered to have held) common shares ends: (i) a Shareholder Section 1295 Election Statement executed by the U.S. Shareholder, (ii) a PFIC Annual Information Statement received by the U.S. Shareholder from the  - 34 -  Company, and (iii) a Form 8621.  In addition, the Electing U.S. Shareholder must file a copy of the Shareholder Section 1295 Election Statement with the Internal Revenue Service Center, P.O. Box 21086, Philadelphia, PA 19114.  In the case of common shares owned through a U.S. entity, the election is made at the entity level.  The following three paragraphs apply to Electing U.S. Shareholders:  Dividends Paid on Common shares.  Dividends paid on common shares (including any Canadian taxes withheld) to an Electing U.S. Shareholder will be treated as ordinary dividend income for United States federal income tax purposes to the extent of the Companys current and accumulated earnings and profits (as computed for U.S. federal income tax purposes) unless paid out of earnings and profits that were taxed to the Electing U.S. Shareholder under the QEF rules.  Such dividends generally will not qualify for the dividends-received deduction available to corporation. Amounts in excess of such earnings and profits will be applied against the Electing U.S. Shareholders tax basis in the common shares, and to the extent in excess of such tax basis, will be treated as gain from the sale or exchange of such common shares.  Credit for Canadian Taxes withheld.  Subject to the limitations set forth in Section 904 of the Code (which generally restricts the availability of foreign tax credits to a U.S. Shareholders tax liability attributable to foreign source income of the same type as the income with respect to which the tax was imposed, as determined under complex U.S. tax rules), the Canadian tax withheld or paid with respect to dividends on the common shares generally may be taken as a foreign tax credit against United States federal income taxes by an Electing U.S. Shareholder who chooses to claim such a credit for the taxable year.  Electing U.S. Shareholders who do not choose to claim foreign tax credits for a taxable year may claim a United States Tax deduction for such Canadian tax in such taxable year.  Disposition of common shares.  Any gain or loss on a sale or exchange of common shares by an Electing U.S. Shareholder will be capital gain or loss, which will be long-term capital gain or loss if the common shares have been held for more than one year, and otherwise will be short-term capital gain or loss.  The sale of common shares through certain brokers may be subject to the information reporting and back-up withholding rules of the Code.  2. The Non-QEF Alternative  If a U.S. Shareholder does not timely make a QEF election for the first taxable year of the Company during which he holds (or is considered to hold) the common shares in question and the Company is a PFIC (a Non-electing U.S. Shareholder), then special rules under Section 1291of the Code will apply to (i) gains realized on the disposition (or deemed to be realized by reason of a pledge) of common shares, and (ii) certain excess distributions (as defined in the Code) by the Company.  The Company has never made any distributions with respect to the common shares and it does not anticipate making any such distributions in the foreseeable future.  A non-electing U.S. Shareholder generally would be required to pro-rate all gains realized on the disposition of common shares and all excess distributions over such shareholders entire holding period of the common shares.  All gains or excess distributions allocated to prior years of the U.S. Shareholder (provided that such periods are not prior to the first day of the first taxable year of the Company during such U.S. Shareholders holding period and beginning after December 31, 2006 for which it was a PFIC) would be taxed at the highest tax rates for each such prior year applicable to ordinary income.  (Special foreign tax credit rules apply with respect to withholding taxes imposed on amounts that are treated as excess distributions.) The Non-electing U.S. Shareholder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year.  A non-electing U.S. Shareholder that is not a corporation must treat this interest charge as personal interest which is non-deductible.  The balance of  - 35 -  the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution and no interest charge will be incurred with respect to such balance.  If the Company is a PFIC for any taxable year during which a Non-electing U.S. Shareholder holds (or is considered to hold) common shares, then the Company will continue to be treated as a PFIC with respect to such common shares, even if it is no longer definitely a PFIC.  A Non-electing U.S. Shareholder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-electing U.S. Shareholders) as if such common shares had been sold on the last day of the last taxable year for which it was a PFIC.  Certain other elections are also available to Non-electing U.S. Shareholders.  Other PFIC Rules  Certain special, generally adverse, rules will apply with respect to the common shares while the Company is a PFIC, regardless of whether the common shares are held (or considered to be held) by an Electing or Non-electing U.S. Shareholder.  For example, under Section 1297(b)(6) of the Code, a U.S. Shareholder who uses PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such stock.  In addition, under Section 1291(f) of the Code, the Treasury has the authority to issue regulations that would treat as taxable certain transfers that are generally not so treated, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death, although it is not clear that such authority extends to transfers by Electing U.S. Shareholders.  Future Developments  The foregoing discussion is based on existing provisions of the Code, existing and proposed regulations thereunder, and current administrative rulings and court decisions, all of which are subject to change.  Any such changes could affect the validity of this discussion.  In addition, the implementation of certain aspects of the PFIC rules requires the issuance of regulations which in many instances have not yet been promulgated and which may have retroactive effect.  Furthermore, legislation has been proposed which would replace the PFIC provisions with a consolidated anti-deferral regime.  While this legislation was vetoed, it may be re-introduced in subsequent years.  ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON SHARES.  E. DIVIDEND AND PAYING AGENTS  We do not pay dividends on any of our issued shares and do not have a dividend paying agent.  F. STATEMENT OF EXPERTS  Not applicable.  G. DOCUMENTS ON DISPLAY   - 36 -  All documents exhibited hereto or incorporated by reference are available for viewing at the corporate offices of the Company at Suite 1980, 1055 West Hastings Street, Vancouver, B.C., V6E 2E9, Canada, upon reasonable notice given to the Company.       ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES 
ABOUT MARKET RISK  Not applicable.      ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES  Not Applicable      PART II      ITEM 13. DEFAULTS, DIVIDEND ARREARS AND DELINQUENCIES  Not Applicable        ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS  There are no material modifications to the rights of security holders.      ITEM 15. CONTROLS AND PROCEDURES  We carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2007. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that the disclosure controls and procedures as of December 31, 2007 were designed to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required.  As of December 31, 2007, the CEO and CFO have also concluded that our disclosure controls and procedures were designed to ensure that information required to be disclosed is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.  As of December 31, 2007, the CEO and CFO also concluded that our disclosure controls and procedures were effective to provide reasonable assurance of the achievement of these objectives.  There has been no change in our internal control over financial reporting during the transitional period ended December 31, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  Our controls and procedures were effective as of December 31, 2007.  There were no significant changes in the Companys internal controls or in other factors that could  - 37 -  significantly affect these controls, nor were there any significant deficiencies or material weaknesses in the Companys internal controls requiring corrective actions.      ITEM 16. AUDIT COMMITTEE FINANCIAL EXPERT  A. AUDIT COMMITTEE FINANCIAL EXPERT  We do not have an audit committee financial expert.  B. CODE OF ETHICS  The Company has prepared a code of ethics for its CEO, CFO, Directors and Officers which are included herein as Exhibits 11.1, 11.2 and 11.3.  C. PRINCIPAL ACCOUNTANT FEES AND SERVICES  The nature of the services provided by Child, Van Wagoner & Bradshaw, PLLC (for 2007) under each of the categories indicated in the table is described below.  The follow table describes the fees paid for accounting services during 2007.  Principal Accountant ServiceNine Months Ended
December 31, 2007Fiscal Year Ended
March 31, 2007Audit Fees$7,500$7,500Tax Fees----$0.00Total Fees$7,500$7,500  Audit Fees  Audit fees were for professional services rendered by Child, Van Wagoner & Bradshaw, PLLC for the audit of the Registrants annual consolidated financial statements and services provided in connection with statutory and regulatory filing or engagements.  Audit Related Fees  Audit related fees were for assurance and related services reasonably related to the performance of the audit or review of the annual consolidated statements or bi-annual statements that are not reported under Audit Fees above.  Tax Fees  Tax fees were for tax compliance, tax advice and tax planning professional services.  These services consisted of tax compliance including the review of tax returns, and tax planning and advisory services relating to common forms of domestic and international taxation (i.e. income tax, capital tax, goods and services tax, payroll tax and value added tax).  Pre-Approved Policies and Procedures   - 38 -  It is within the mandate of the Registrants Audit Committee to approve all audit and non-audit related fees.  The Audit Committee has pre-approved specifically identified non-audit related services, including tax compliance, review of tax returns and documentation of processes and controls as submitted to Audit Committee from time to time.  The auditors also present the estimate for the annual audit related services to the Committee for approval prior to undertaking the annual audit of the consolidated financial statements.  D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES  Not applicable.  E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS  The following is a table outlining the purchase of securities by affiliated purchasers.   PeriodOriginal
Number of
Common
Shares
PurchasedConsolidated
Balance
of
Common
SharesPurchase
Price
Per ShareTotal Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under  the Plans or ProgramsMarch 2, 20002,758,820137,941$0.0001137,941NoneMarch 26, 200048724$0.000124NoneMarch 26, 2000666,66633,333$0.000133,333NoneMarch 18, 2005190,000190,000$0.03190,000NoneMarch 26, 2000182,6779,134$0.00019,134NoneMarch 2, 20001,858,86492,943$0.000192,943NoneMarch 26, 2001499,90024,995$0.000124,995NoneMarch 18,2005150,000$0.03150,000NoneMarch 18, 2005200,000$0.03200,000None    PART III      ITEM 17. FINANCIAL STATEMENTS  Unless expressly stated otherwise, all financial data included in this annual report are presented on a consolidated basis in accordance with accounting principles generally accepted in the United States, or U.S. GAAP.  All references to CAD dollars or CAD$ are to the currency of Canada.   All references to U.S. dollars or US$ are to the currency of the United States, all references to RMB or Renminbi are to the currency of the Peoples Republic of China.  Any discrepancies in any table between the totals and the sums of the amounts listed are due to rounding.   - 39 -  INDEX TO FINANCIAL STATEMENTS    PageReport of Independent Registered Public Accounting Firm45Consolidated Balance Sheets46Consolidated Statements of Income and Comprehensive Income (Loss)47Consolidated Statements of Cash Flows48Consolidated Statement of Stockholders Equity49-50Notes to Consolidated Financial Statements51-60       - 40 -  ITEM 18. FINANCIAL STATEMENTS  See Item 17      ITEM 19. EXHIBITS  Exhibit
Number1.1Certificates of Incorporation of Aquasol EnviroTech Ltd., a Cayman Island company dated October 1, 2002.(*)1.2Memorandum of Association of Aquasol Envirotech Ltd.(*)1.3Certificate of Extraprovincial Registration in the Province of British Columbia, Canada dated October 11, 2002.(*)1.4Certificate of Incorporation of Aquasol EnvironTech Inc., a British Columbia company, dated November 25, 1998.(*)1.5Certificate of Name Change of Aquasol EnvironTech Inc. to Aquasol EnviroTech (Canada) Inc., a British Columbia company, dated December 11, 2000.(*)1.6Articles and Memorandum of Aquasol EnviroTech (Canada) Inc.(*)1.7Certificate of Incorporation dated June 19, 1997 of Noralta Technologies Corporation (an Alberta, Canada Corporation)(*)1.8Certificates of Name Change dated February 23, 1998 from Noralta Technologies Corporation to Aquasol Technologies Inc. (Alberta)(*)1.9Certificate of Dissolution of Aquasol Technologies Inc. (Alberta) dated May 20, 2005(*)2.1Option Agreements between the Company and Management, Directors, Officers and Employees of Aquasol Envirotech Ltd.(*)2.2Loan Agreement between the Company and Aquasol EnviroTech (Canada) Ltd. dated April 1, 2000(*)4.1Share Exchange agreement between Aquasol EnviroTech Ltd. and Aquasol EnviroTech Ltd. (an Alberta Corporation) dated March 10, 2000(*)4.2Consulting Agreement dated October 1, 2004 and Yenyou (Jeff) Zheng.(*)4.3Cost Sharing Agreement dated October 1, 2004(*)4.4Assignment of Invention(*)4.5Patent Number US #6,582,596 B2, granted June 24, 2003 in the United States(*)4.6Patent Number #138316, granted July 1, 2001 in Taiwan(*)4.7Patent Pending:  Application #2,292,244, Application Date: December 14, 1999 in Canada(*)4.8Pending Patent:  Application #001030779, Application Date: February 28, 2000 in The Peoples Republic of China.(*)4.9Report by NovaTec Consultants Inc. dated September 2001.(*)4.10Cost Sharing Agreement dated July 1, 2006(*)5.1Stock Option Plan dated(*)11.1Code of Ethics  Chief Executive Officer(*)11.2Code of Ethics  Chief Financial Officer(*)11.3Code of Ethics  Directors and Officers(*)12.1Certification of the President Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  - 41 -   12.2Certification of the Chief Financial Officer Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200213.1Certification of the President Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200213.2Certification of the Chief Financial Officer Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  (*) = previously filed  - 42 -  SIGNATURES  Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused  this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.  AQUASOL ENVIROTECH LTD.    By: Yenyou (Jeff) Zheng Yenyou (Jeff) Zheng President & Director   Date: June 4, 2008   - 43 -   [aquasol20fchangefiscalyea001.jpg]  - 44 -   AQUASOL ENVIROTECH LTD.
Consolidated Balance Sheets
(A Development Stage Enterprise)
(Expressed in US Dollars)December 31, 2007
- $ -March 31,
2007
- $ -AssetsCurrent assetsCash141,526181,661Accounts receivable482176Prepaid expenses and deposits-1,581Total Current Assets142,008183,418Property and Equipment net of accumulated depreciation of $65,537 and $45,461 (Note 4)7,9732,922Total Assets149,981186,340Liabilities and Stockholders EquityCurrent LiabilitiesAccounts payable and accrued liabilities6,0724,948Total Current Liabilities6,0724,948Stockholders EquityCapital stockAuthorized: 500,000,000 ordinary voting shares with par value of $0.002 eachIssued and outstanding: 2,073,995 ordinary voting shares4,1484,148Additional paid-in capital1,524,2031,524,203Total Capital Stock1,528,3511,528,351Deficit accumulated during the development stage(1,520,314)(1,454,101)Accumulated other comprehensive income135,872107,142Total Stockholders Equity143,909181,392Total Liabilities and Stockholders Equity149,981186,340         -See Accompanying Notes  - 45 -    AQUASOL ENVIROTECH LTD.
Consolidated Statements of Operations and Comprehensive Loss
(A Development Stage Enterprise)
(Expressed in US Dollars)Nine Months Ended December 31, 2007Nine Months Ended December 31, 2006the Period of February 3, 2000 (Inception) to December 31, 2007- $ -- $ -- $ -General and administrative expensesBad debt--20,000Consulting29,97023,220341,686Depreciation1,45756452,970Filing fees2,7293,84632,474Office and miscellaneous9,3146,638214,816Professional fees14,53438,153184,497Rent and utilities7,2728,664139,359Salaries and benefits-4,417423,152Travel and promotion3,48615,482353,882Total General and Administrative Expenses68,762100,9841,762,836Loss from Operations(68,762)(100,984)(1,762,836)Other Income (Expense)Interest2,5494,74789,577Research and development expenses refund--154,630Discount loan receivable--(1,685)Net loss(66,213)(96,237)(1,520,314)Other comprehensive incomeForeign currency translation adjustments28,73018,864135,872Comprehensive loss(37,483)(77,373)(1,384,442)Loss per shareBasic(0.03)(0.04)Diluted(0.03)(0.04)Weighted Shares Outstanding2,273,9952,273,995              -See Accompanying Notes   - 46 -     Consolidated Statements of Cash Flows
(A Development Stage Enterprise)
(Expressed in US Dollars)Nine Months Ended December 31, 2007Nine Months Ended December 31, 2006the Period of February 3, 2000 (Inception) to December 31, 2007- $ -- $ -- $ -Net loss(66,213)(96,237)(1,520,314)Provided by (used in) operating activitiesDepreciation1,45756446,917Shares issued for subsidiary--142Shares issued for finders fee--1Changes in operating assets and liabilitiesAccounts receivable(247)3,197(482)Prepaid expenses1,653(2,956)-Accounts payable and accrued liabilities256(5,465)6,072Net Cash Used in Operating Activities(63,094)(100,897)(1,467,664)Investing activitiesProperty and equipment--(54,890)Net Cash provided by (used in) Investing Activities--(54,890)Financing activitiesIssuance of shares for cash--1,528,208Net Cash Provided by Financing Activities--1,528,208Effect of Foreign Currency Translation Adjustment22,95918,864135,872Increase (decrease)(40,135)(82,033)141,526Cash, beginning181,661288,860-Cash, ending141,526206,827141,526Interest Paid in Cash---Income Tax Paid in Cash---       - See Accompanying Notes -  - 47 -   AQUASOL ENVIROTECH LTD.
Consolidated Statement of Stockholders Equity
For the Period From Date of Inception on February 2, 2000 to December 31, 2007
(Expressed in US Dollars)Number sharesPar Value
- $ -Additional Paid-in Capital
- $ -Deficit Accumulated During Development Stage
- $ -Accumulated Other Comprehensive Income
- $ -Total Stockholders Equity
- $ -March 2, 2000 issued for cash at $0.0001 per share6,583,699658---658March 26, 2000 issued for subsidiary at $0.0001 per share1,416,301142---142March 26, 2000 issued for cash at $0.0001 per share499,90050---50March 30, 2000 issued for cash at $0.50 per share2,965,0002971,482,203--1,482,500March 30, 2000 issued for finders fee at $0.0001 per share15,0001---1Net loss for the period from date of inception February 3, 2000 to March 31, 2002---(1,290,180)-(1,290,180)Balance, March 31, 200211,479,9001,1481,482,203(1,290,180)-193,171Other comprehensive income  currency translation adjustment---2,8462,846Net income---257,165-257,165Balance, March 31, 200311,479,9001,1481,482,203(1,033,015)2,846453,182Net loss---(73,988)-(73,988)Balance, March 31, 200411,479,9001,1481,482,203(1,107,003)2,846379,194September 21, 2004 20:1 consolidation573,995March 18, 2005 issued for cash at $0.03 per share1,500,0003,00042,000--45,000Other comprehensive income  currency translation adjustment----57,23057,230Net loss---(100,545)-(100,545)Balance, March 31, 20052,073,9954,1481,524,203(1,207,548)60,076380,879- See Accompanying Notes -  - 48 -   AQUASOL ENVIROTECH LTD.
Consolidated Statement of Stockholders Equity
For the Period From Date of Inception on February 2, 2000 to December 31, 2007
(Expressed in US Dollars)Number sharesPar Value
- $ -Additional Paid-in Capital
- $ -Deficit Accumulated During Development Stage
- $ -Other Comprehensive Income
- $ -Total Stockholders Equity
- $ -Other comprehensive income  currency translation adjustment----26,39826,398Net loss---(120,209)-(120,209)Balance, March 31, 20062,073,9954,1481,524,203(1,327,757)86,474287,068Other comprehensive income  currency translation adjustment----20,66820,668Net loss---(126,344)-(126,344)Balance, March 31, 20072,073,9954,1481,524,203(1,454,101)107,142181,392Other comprehensive income  currency translation adjustment----28,73028,730Net loss---(66,213)-(66,213)Balance, December 31, 20072,073,9954,1481,524,203(1,520,314)135,872143,909     - 49 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) For the nine months ended December 31, 2007 (Expressed in US Dollars)   Note 1 - ORGANIZATION AND NATURE OF BUSINESS  Aquasol Envirotech Ltd. (the Company) was incorporated under the laws of Cayman Islands, B.W.I. on February 3, 2000 which is also the inception date, with an authorized capital of 10,000,000,000 ordinary voting shares of $0.0001 par value.  On March 20, 2000, the Company issued 6,583,699 ordinary voting shares at par value of $0.0001 for cash from founders.  On March 26, 2000 1,916,201 ordinary voting shares were issued at par value in exchange for 100% of the issued and outstanding shares of Aquasol Technologies Inc. (Aquasol Alberta), an Alberta, Canadian company.  Aquasol Alberta discontinued operations in 2001.  By Special Resolution dated September 21, 2004, the Company consolidated its authorized ordinary voting shares and issued and outstanding ordinary voting shares for every twenty (20) old ordinary voting shares into one (1) new ordinary voting share.  The authorized ordinary voting shares after consolidation are 500,000,000 at a par value of $0.002 each.  The Company is an Exploration Stage Company as defined by Statement of Financial Accounting Standard (SFAS) No. 7.  The Company is registered Extra-Provincially in the Province of British Columbia, Canada.  The Companys principal business activities include design and manufacture of bioreactors for the treatment and reuse of wastewater.  All assets and operations are in Canada.  Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES       Basis of presentation  These financial statements have been prepared in accordance with generally accepted accounting principles in the United States (USGAAP).       Principles of consolidation  The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Aquasol Envirotech (Canada) Ltd., a British Columbia, Canadian company.  On April 1, 2002, Aquasol EnviroTech (Canada) Ltd., a British Columbia Corporation, became a wholly owned subsidiary of the Company. The major shareholders of the Company had incorporated Aquasol EnviroTech (Canada) Ltd. in order to have a local identity for the operations of the Company in Vancouver, British Columbia.  The Company loaned Aquasol EnviroTech (Canada) Ltd. $1,400,000 in 2000 for expenditures with respect to general and administrative expenses, consulting fees, and the purchase of equipment. There was no interest for the loan and the loan can be converted into equity of Aquasol EnviroTech (Canada) Ltd. anytime. It became a subsidiary of the Company on April 1, 2002 pursuant to the loan agreement with the Company.   - 50 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) For the nine months ended December 31, 2007 (Expressed in US Dollars)  Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)       Use of estimates  The preparation of consolidated financial statements in conformity with USGAAP 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.       Concentration of credit risk  Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents that are not collateralized and accounts receivable that are unsecured.  The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions.       Cash and cash equivalents  Cash and cash equivalents consist of cash on deposit and highly liquid short-term interest bearing securities with the maturity at the date of purchase of three months or less.       Income taxes  Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements.  Deferred tax assets and liabilities are included in the financial statement at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB Statement No. 109, Accounting for Income Taxes, and are reduced by valuation allowances.  As changes in tax laws or rate are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.  Compensated absences  Employees of the corporation are entitled to paid vacations, sick days and other time off depending on job classification, length of service and other factors.  The liability for compensated absences has been recorded in the accompanying consolidated financial statements.  Stock-Based Compensation  Prior to the effective date of SFAS 123(R) Share-Based Payment which requires the fair value method for employee stock compensation, the Company accounted for employee stock compensation under the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123). The Company accounted for equity instruments issued to non-employees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force No. 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services.  Any subsequent issuances will be accounted for using FSAS 123(R) Share-Based Payment.  - 51 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) For the nine months ended December 31, 2007 (Expressed in US Dollars)  Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)  Net earnings (loss) per share  Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period.  Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares and dilutive potential common shares outstanding during the period.  The Company adopted FAS-128, when the number of common shares outstanding increases as a result of a stock dividend or stock split, or decreases as a result of a reverse stock split; the computations of basic EPS and diluted EPS were adjusted retroactively for all periods presented to reflect such changes in the number of shares.  Recently issued accounting pronouncements  In March of 2008 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 161, Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133, Accounting for Derivatives and Hedging Activities.  SFAS No. 161 has the same scope as Statement No. 133 but requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows.  SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.  The statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption.  SFAS No. 161 has no effect on the Companys financial position, statements of operations, or cash flows at this time.  In December, 2007, the FASB issued SFAS No. 160, Non-controlling interests in Consolidated Financial Statements, an amendment of ARB No. 51.   SFAS No. 160 applies to for-profit entities that prepare consolidated financial statements where there is an outstanding non-controlling interest in a subsidiary.  The Statement requires that the non-controlling interest be reported in the equity section of the consolidated balance sheet but identified separately from the parent.  The amount of consolidated net income attributed to the non-controlling interest is required to be presented, clearly labeled for the parent and the non-controlling entity, on the face of the consolidated statement of income.  When a subsidiary is de-consolidated, any retained non-controlling interest is to be measured at fair value.  Gain or loss on de-consolidation is recognized rather than carried as the value of the retained investment.  The Statement is effective for fiscal years and interim periods beginning on or after December 15, 2008.  It cannot be adopted earlier but, once adopted, is to be applied retroactively.  This pronouncement has no effect on this Companys financial reporting at this time.       - 52 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) For the nine months ended December 31, 2007 (Expressed in US Dollars)  Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)  Recently issued accounting pronouncements (contd)  Also in December 2007, the FASB issued SFAS No. 141R, Business Combinations(SFAS No. 141R).  SFAS No. 141R amends SFAS 141 and provides revised guidance for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any non-controlling interest in the acquiree.  It also provides disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination.  It is effective for fiscal years beginning on or after December 15, 2008 and will be applied prospectively.  SFAS No. 141R has no effect on the Companys financial reporting.  None of the above new pronouncements has current application to the Company but will be implemented in the Company's future financial reporting when applicable.       Property and equipment and depreciation  Property and equipment are recorded at cost.  Depreciation is provided on the decline balance method based on the following rates:  Computer equipment 30% per year Furniture and fixtures 20% per year Machinery 20% per year  Intangible assets and amortization  Patents  The Company owns patents of Bioreactor Systems for wastewater treatment.  These patents are registered in the United States under the number 6,582,596 B2 and registered in Taiwan under the number 138316.  The Company has also filed patent applications in Canada and in the Peoples Republic of China  No costs or asset values are assigned to the patents in these financial statements.   - 53 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) For the nine months ended December 31, 2007 (Expressed in US Dollars)  Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)  Recognition criteria  Gains are recognized when realized.  Gains are realized when all of the following criteria are met: - Persuasive evidence of an arrangement exists, - Delivery has occurred or services have been rendered, - The sellers price to the buyer is fixed or determinable, and - Collection is reasonably assured Expenses and losses are recognized when an expenditure or previously recognized asset does not have future economic benefit.  An expenditure or previously recognized asset does not have future economic benefit when all of the following criteria are met:  - The operations and cash flows of the component have been eliminated from the ongoing operations of the entity as a result of the disposal transaction and - The entity will have no significant continuing involvement in the operations of the component after the disposal transaction. Expenses that are not linked with specific revenues are related to a period on the basis of transactions or events occurring in that period or by allocation to the periods to which they apply. The cost of assets that benefit more than one period is normally allocated over the periods benefited.       Revenue recognition  Revenue generally is realized or realizable and earned when all of the following criteria are met: - Persuasive evidence of an arrangement exists, - Delivery has occurred or services have been rendered, - The sellers price to the buyer is fixed or determinable, and - Collection is reasonably assured      Financial instruments  The companys financial instruments consist of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities.  Unless otherwise noted, it is managements opinion that the company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  The fair values of these financial instruments approximate their carrying values.     Foreign currency translation adjustments  The reporting currency of the Company is the United States Dollar; functional currency of the Company is the Canadian Dollar. The assets, liabilities, and operations of the entity have been measured in terms of Canadian dollars before translation into U.S. dollars.  The Companys consolidated financial statements were translated to US dollars prior to consolidation using year-end exchange rates for the balance sheet, and weighted average exchange rates for the statements of operations. Equity transactions were translated using historical rates.  - 54 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) For the nine months ended December 31, 2007 (Expressed in US Dollars)   Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)  Research and development costs  Expenditures for research activities relating to product development and improvement are charged to expense as incurred as follows:  20072006Research and development expenses$-$-Research and development expenses refund$-$-     Note 3 - LOAN RECEIVABLE  On August 30, 2002, under a loan agreement with Cleanwater Technologies Inc. (Cleanwater), a Nevada Corporation, the Company loaned $20,000 to Cleanwater; $5,000 on May 3, 2002 and $15,000 on September 3, 2002 for a period of 120 calendar days.  In consideration, and as collateral for this loan agreement, Cleanwater agreed to grant to Aquasol first charge over its assets until the loan was paid in full, which assets included furniture and fixtures, office equipment, and intangible property such as the assigned technology as is, for the manufacture and distribution of P30 wastewater treatment polymer and EF&P Solutions worldwide, contracts and securities.  As of March 31, 2006, management has recorded an allowance for this doubtful loan and accordingly, recorded a bad debt charge to income of $20,000 in the period ended March 31, 2006.  December 31, 2007
- $ -March 31, 2007
- $ -March 31, 2006
- $ -Loan--18,315Less: unamortized discount--1,685Allowance for doubtful account--(20,000)---
      - 55 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) For the nine months ended December 31, 2007 (Expressed in US Dollars)  Note 4 - PROPERTY AND EQUIPMENT  December 31, 2007AccumulatedCostDepreciationNet- $ -- $ -- $ -Computer equipment36,16934,2081,961Furniture and fixtures14,87112,3302,542Machinery22,46918,999347073,50965,5377,972March 31, 2007Computer equipment23,11422,997117Furniture and fixtures9,9908,7401,250Machinery15,27913,7241,55548,38345,4612,922     Note 5 - PENSION AND EMPLOYMENT LIABILITIES  The Company does not have any liabilities as at Decmeber 31, 2007, for pension, post-employment benefits or post-retirement benefits.  The Company does not have a pension plan.  Note 6 - NON-OPERATING INCOME  Non-operating income of for the nine month period ended December 31, 2007 was $2,549 from interest income and  $4,747  for the nine month period ended December 31, 2006   - 56 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) For the nine months ended December 31, 2007 (Expressed in US Dollars)  Note 7 - RELATED PARTY TRANSACTIONS  During the nine months ended December 31, 2007, related parties reimbursement of expenses paid on behalf of the company, are as follows:  Nine months ended December 31,20072006- $ -- $ -Related Partiesofficer, and shareholder of the companyconsulting fees--office expenses-422office rent7,2728,664salaries and benefits4,417Total7,27213,503Nine months ended December 31,20072006- $ -- $ -Related PartiesJeff Zheng, a director, officer, and shareholder of the companyconsulting fees27,32423,220reimbursement of expenses9,58316,865Total36,90740,085        - 57 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) March 31, 2007, 2006 and 2005 (Expressed in US Dollars)  Note 8 - INCOME TAXES  The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under SFAS No. 109 to give effect to the temporary differences which may arise from differences in the bases of fixed assets, depreciation methods and allowances based on the income taxes expected to be payable in future years. Minimal development stage deferred tax assets arising as a result of net operating loss carry-forwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carry-forwards generated during the period from February 3, 2000 (date of inception) through December 31, 2007 of approximately $1,520,315 will begin to expire in 2026. Accordingly, deferred tax assets of approximately $516,495 were offset by the valuation allowance.  Note 9 - LITIGATION  The Company has sued Mr. Huazhong Mao, the original inventor of the patented processes, for failure by him to deliver the information and particulars with respect to the patented processes in an acceptable and workable manner.  Results of this lawsuit are not determinable to the date of these financial statements.  Note 10 - NET PROFIT (LOSS) PER SHARE  The following is a reconciliation of the number of shares used in the calculation of basic earnings per share and diluted earnings per share for the nine months ended December 31, 2007.  December 31, 2007December 31, 2006Net income (loss for the period)$(66,213)$(96,237)Weighted-average number of common sharesoutstanding (retroactively adjusted to reflect the reverse stock split on 09/21/042,073,9952,073,995Effect of dilutive securities200,000200,000Dilutive potential common shares2,273,9952,273,995Net earnings per share:Basic$(0.03)$(0.04)Diluted$(0.03)$(0.04)* Anti-dilutive due to loss      - 58 -  AQUASOL ENVIROTECH LTD. Notes to Consolidated Financial Statements (A Development Stage Enterprise) March 31, 2007, 2006 and 2005 (Expressed in US Dollars)  Note 11 - STOCK-BASED COMPENSATION  The Company implemented a stock option plan dated April 2, 2005, for the issuance of up to 200,000 common shares to directors, officers, employees and consultants.  The following table shows issuance of options: Number ofExercise PriceDate ofStock OptionsPer ShareExpiryGrantName of OptioneeOutstanding($)DateApril 2, 2005Yenyou (Jeff) Zheng60,000$0.10April 2, 2010April 2, 2005Ken Cai60,000$0.10April 2, 2010April 2, 2005Troy Vassos60,000$0.10April 2, 2010April 2, 2005Brigitte M. McArthur20,000$0.10April 2, 2010200,000
   As discussed in Note 1, the Company accounts for its stock-based compensation using the method prescribed by APB No.25, Accounting for Stock Issued to Employees since the agreement was made on April 2, 2005, prior to the effective date of SFAS No. 123(R).  Had the Company determined its stock-based compensation cost based on the fair value at the grant dates for the awards under the method prescribed by SFAS No.123, the Company's net loss would have been increased to the pro forma amounts indicated below:  Net Loss:Year Ended March 31, 2006Year ended March 31, 2005As reported(120,209)(100,545)Proforma(121,229)(100,545)   The Company calculated the fair value of each option grant on the date of grant using the Black-Scholes option pricing model and the following assumptions: expected option term of 5 years; risk free interest rate of 4% at March 31, 2006; and a volatility of 50% at March 31, 2006.  The fair value of the 200,000 options granted was $0.005 for the year ended March 31, 2006.   .      - 59 -