UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the fiscal year ended December 31, 2009.
 o
    
    Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the transition period from
 Commission file number: 000-51787
 Asia Electrical Power International Group Inc.
  Nevada
    
    98-0522960(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)E-4, Floor 3, Haijin SquareTaizi Road, Nanshan District, Shenzhen, China
    
    518067(Address of principal executive offices)
    
    (Zip Code)
    Common Stock, $0.001 par value
 o þ
 o þ
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  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
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TABLE OF CONTENTS
 PART I
    
    
    2Item 1 Business
    
    
    2Item 1A. Risk Factors
    
    
    9Item 1B Unsolved Staff Comments
    
    
    9Item 2 Properties
    
    
    9Item 3 Legal Proceedings
    
    
    10PART IIItem 5 Market for Registrants Common Equity and Related Stockholder Matters
    
    
    11Item 6 Selected Financial Data
    
    
    12Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 7A Quantitative and Qualitative Disclosure About Market Risk
    
    
    17Item 8 Financial Statements and Supplementary Data
    
    
    18Item 9 Change In and disagreements With Accountants on Accounting and Financial Disclosure
    
    
    18Item 9A(T) Controls and Procedures
    
    
    18Item 9B Other Information
    
    
    19PART IIIItem 10 Directors, Executive Officers and Corporate Governance
    
    
    20Item 11 Executive Compensation
    
    
    22Item 12 Security Ownership of Certain Beneficial Owners and Management
    
    
    22Item 13 Certain Relationships and Related Transactions
    
    
    23Item 14 Principal Accountant Fees and Services
    
    
    24Item 15 Exhibits
    
    
    25Financial Statements and Report of Independent Registered Public Accounting Firm
    
    
    F-1Signatures




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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 This annual report contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act). We have based these forward-looking
statements largely on our current expectations and projections about future events and financial
trends affecting the financial condition of our business. These forward-looking statements are
subject to a number of risks, uncertainties and assumptions, including, among other things:
 
    
    general economic and business conditions, both nationally and in our markets,
    
    our expectations and estimates concerning future financial performance,
financing plans and the impact of competition,
    
    our ability to implement our growth strategy,
    
    anticipated trends in our business,
    
    advances in technologies, and
    
    other risk factors set forth herein.
 We identify forward-looking statements by use of terms such as may, will, expect,
anticipate, estimate, hope, plan, believe, predict, envision, intend, continue,
potential, should, confident, could and similar words and expressions, although some
forward-looking statements may be expressed differently. You should be aware that our actual
results could differ materially from those contained in the forward-looking statements. You should
consider carefully the statements of this report which describe factors that could cause our actual
results to differ from those set forth in the forward-looking statements.
 Forward-looking statements speak only as of the date of this report or the date of any document
incorporated by reference in this report. Except to the extent required by applicable law or
regulation, we do not undertake any obligation to update forward-looking statements to reflect
events or circumstances after the date of this report or to reflect the occurrence of unanticipated
events.
 1




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PART I
 
 ITEM 1. BUSINESS
 Overview
 (AEPW) Berita International Corporation. Keiji International Group Inc. Asia Electrical
Power International Group Inc.
 Agreement Naiji
     Recent Events
   2




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Our Headquarters
  Our Product Line and New Products
   Switchgears
 SRM 16-12/24 SF6 GIS Ring Main Unit
  AGW 12/24 Outdoor Ring Main Unit
  AGN 12/24 SF6 Ring Main Unit
  KYN 12/24 Metal Clad Switchgear
  Load Break Switches
 EK24 GIS Load Break Switch
  3




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AFL 12/24D Load Break Switch
  AFW 12/24 Overhead Load Break Switch
  AFLA 12/24D SF6 Load Break Switch
  Circuit Breakers
 VDM6/12 Vacuum
  VS1 12/24 Vacuum Circuit Breaker
  AZW 12/24 Outdoor Circuit Breaker
  BP1/BP2 Vacuum Circuit Breaker
  Branch Cabinets
 4




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ADF 630 Indoor Cable Cabinet
  ADF 630/2 Outdoor Cable Cabinet
   Product
    
    Percent of Total SalesSwitchgears
    
    
    40
    %Branch Cabinets
    
    
    14
    %Circuit Breakers
    
    
    46
    %
   New Products
  Warranty
  Raw Materials
  5




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Marketing and Markets
   
    
    The efforts of our sales staff to obtain new customers. Management oversees
the efforts of our sales staff and makes adjustments to our marketing strategy as
appropriate in response to market conditions. Management approves all marketing
strategies carried out by our sales staff. We review monthly regional market reports
of each branch office and make adjustments to our marketing strategies as market
conditions vary. In addition to marketing to tradition commercial/residential
customers, we also keep abreast of news and development in rural areas where contracts
will be awarded to supply equipment for all aspects of electrical network
implementation by the PRC.
 
    
    Effective client relations management to maintain our customer base and to
encourage referrals through existing customers. In maintaining customer relations, our
sales staff offer technical support, tend to customer service matters, and arrange for
on site visits from our technical staff so that customer questions or concerns are
addressed in a timely manner.
 
    
    Marketing campaigns launched throughout the PRC, promotional materials, and
advertising in trade magazines and billboards and at trade exhibitions.
   
    
    Residential and commercial developers or contractors which may require
expansion of existing power systems to new areas. Our sales staffs regularly keep in
contact with developers and contractors for future referrals to service any new
development projects. We also seek new developers and contractors through referrals
from existing customers, or community resources (newspapers, trade magazines, etc.).
 
    
    Wholesale manufactures who may make bulk purchases. We may offer a discount
on bulk purchases and or discounts if we receive referrals from new customers.
Manufacturers may keep promotional materials of ours in efforts to promote our
products to their customer base.
 
    
    Electrical equipment installation companies who may refer us to potential
customers. Installation companies who are also licensed electricians appointed by
government authorities also have their own customer base from which we may receive
referrals. We use a variety of installation companies as our products require
installation by these licensed electricians and by disbursing our installation hires
throughout the region; we introduce our products to these electricians who may refer
our products to their customers.
 
    
    Electrical Bureaus of urban and rural cities who may award contracts to us to
service various existing or new transportation developments such as airports, subway
stations, etc. They also may require certain areas to be networked in order to
distribute power to these areas. We keep abreast on new rural and urban developments
and bid on contracts to service these areas which require development or expansion.
 6




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Product Distribution
  Competition
    Trends in the market
  Intellectual Property
 Patents
  7




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Trademarks
  Employees
 Our World Headquarters
          Branch Offices
   8




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ITEM 1A. RISK FACTORS
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2 PROPERTIES
 Acquisition of Land Use Rights
    Our Headquarters and Manufacturing Facilities
     9




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ITEM 3. LEGAL PROCEEDINGS
  10




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
 Market Information
  Fiscal Year
    
    Quarter
    
    High ($)
    
    
    Low ($)2009
    
    First Quarter
    
    
    0.15
    
    
    
    0.051Second Quarter
    
    
    0.08
    
    
    
    0.039Third Quarter
    
    
    0.06
    
    
    
    0.036Fourth Quarter
    
    
    0.19
    
    
    
    0.042008
    
    First Quarter
    
    
    2.45
    
    
    
    1.41Second Quarter
    
    
    2.50
    
    
    
    0.70Third Quarter
    
    
    1.04
    
    
    
    0.30Fourth Quarter
    
    
    0.40
    
    
    
    0.05
 Holders and Dividends.
   Equity Compensation Plan Information
  Number of securities remainingNumber of securities to be
    
    Weighted-average
    
    available for future issuance underissued upon exercise of
    
    exercise price of
    
    equity compensation plansoutstanding options,
    
    outstanding options,
    
    (excluding securities reflected inwarrants and rights
    
    warrants and rights
    
    column (a))Plan category
    
    (a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    0
    
    0
    
    0Equity compensation
plans not approved
by security holders
    
    5,000,000(1)
    
    $0.50(1)
    
    0(1)Total
    
    5,000,000
    
    $0.50
    
    0
 
 (1)
    
    On April 24, 2007, our Directors approved the granting of options to purchase a total of
5,000,000 shares of common stock under our 2007 Stock Option Plan (the 2007 Plan) to
directors, officers, employees and consultants of the Company. The exercise price per share
was changed from $3.00 to $1.50 per share effective February 29, 2008, and to $0.50 per share
effective November 26, 2008. All options under the plan have been
granted. The options granted to each recipient were bifurcated, with half expiring June 30, 2009
and the other half expiring December 31, 2009. As of December 31, 2009, none of the granted
options were exercised and therefore all the granted options have expired. 11




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Recent Sales of Unregistered Securities
  Issuer Purchases of Equity Securities.
  
 ITEM 6. SELECTED FINANCIAL DATA.
  
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Cautionary Notice Regarding Forward Looking Statements
   12




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OVERVIEW
 Results of Operation
  Revenues
 2009
    
    
    % Sales
    
    
    2008
    
    
    % SalesRevenues
    
    
    20,848,514
    
    
    
    100
    %
    
    $
    14,118,660
    
    
    
    100
    %Cost of Sales
    
    
    16,597,830
    
    
    
    80
    %
    
    
    11,714,350
    
    
    
    83
    %Gross Profit
    
    
    4,250,684
    
    
    
    20
    %
    
    $
    2,404,310
    
    
    
    17
    %
  Expenses (selling and administrative expenses).
  2009
    
    
    2008Travel and promotion
    
    $
    309,220
    
    
    $
    248,251Research and development
    
    
    162,619
    
    
    
    32,775Technical Support and warranty
    
    
    37,901
    
    
    
    39,394Salaries and benefits
    
    
    717,370
    
    
    
    509,689Depreciation and amortization
    
    
    352,913
    
    
    
    242,684Executive salaries and bonuses
    
    
    1,720,000
    
    
    
    Other
    
    
    429,989
    
    
    
    250,063Total Expenses
    
    $
    3,730,012
    
    
    $
    1,322,856
  Operating Income (Loss).
  13




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Other Income and Expenses.
 Other income Interest income Interest expense Other expense
 Foreign currency transaction loss.
  Total Comprehensive Income (Loss).
  Income (Loss) Per Share.
  Current Trends in the Industry.
   Liquidity and Capital Resources.
   Materials, Labor, Overhead
    
    $
    10,200,000Selling Expenses and Administrative Expenses
    
    
    1,800,000Total
    
    $
    12,000,000
 Sources of Capital.
  14




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Plans for Expansion.
   Material Commitments.
  Seasonal Aspects.
  Off Balance Sheet Arrangements.
  15




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CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES.
 Critical Accounting Estimates.
  
    
    Assumptions are required to be made, and
    
    Changes in estimates could have a material adverse effect on our financial statements.
  Balance Sheet
    
    There is a risk of
    
    How did we arrive
    
    How accurate have we
    
    How likely to change inAccount
    
    change because?
    
    at these Estimates?
    
    been in the past?
    
    the future?Accounts 
Receivable
    
    We provide an
Allowance For
Doubtful Accounts
(AFDA) based on the
age of each
account.
Uncollectible
accounts are also
written off,
particularly when
bankruptcy occurs.
    
    AFDA provisions are
made by analyzing
agings of the
accounts
receivable.
    
    These estimates of
AFDA have been
accurate in the
past.
    
    This method of
determining AFDA
will likely not
change as the
method used has
provided accurate
results.Inventory
    
    We review the net
realizable value of
our inventory to
ensure that it is
recorded at a lower
of cost or market
value. At this
time, any obsolete
inventory is
written off. The
market value could
change due to the
success of
technical
innovation on our
part or by
competitors within
the switchgear
Market.
    
    The cost of our
inventory
(including
manufacturing
Overhead) is
compared to net
realizable value in
the market.
    
    Our procedure has
produced reliable
results.
    
    We do not expect
any change in
procedure.Fixed Assets
    
    We calculate our
depreciation using
the straight line
method based on
useful lives of the
assets. The useful
lives of the asset
could change due to
technical
innovation and or
other factors and
we may write off or
write down obsolete
assets.
    
    The estimated lives
of fixed assets are
based on guidelines
provided by Chinese
tax authorities.
    
    We believe our
depreciation method
has produced
accurate results.
    
    We do not foresee
any changes.Accrued Liabilities
(Income Tax)
    
    We are subject to
income taxes in
China. The
determination of
the tax liability
is based on
calculations which
are further based
on estimates such
as, for example,
allowances for bad
debt. These
estimates may
change from time to
time and the final
tax outcome may
increase or
decrease our income
tax expense
provision made.
    
    Income tax
provision is
calculated based on
the statutory tax
rate and level of
operating income.
Operating income is
partially based on
various estimates.
These estimates may
differ from actual
results. This
calculation is made
monthly and
installments are
made toward the tax
liability.
    
    Our estimates
currently have been
in line with the
actual assessment
in our tax
liability. Income
tax provisions are
calculated monthly.
    
    Our estimates may
change from time to
time and this may
affect the income
tax provision. We
may under or over
remit our
installments based
on how our
estimates differ
from actual
results.
 16




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Revenue Recognition.
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 Not Applicable.
 17




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 The Financial Statements and Supplementary Data follow Part III-Item 15 below.
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
 None
 
 ITEM 9A(T). CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures.
  Managements Report on Internal Control Over Financial Reporting.
      18




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Changes in Internal Controls over Financial Reporting.
    Limitations on Effectiveness of Controls and Procedures.
  
 ITEM 9B. OTHER INFORMATION
  19




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PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  Name
    
    Age
    
    PositionYulong Guo
    
    
    49
    
    
    President, Chief Executive Officer and DirectorXiaoling Chen
    
    
    49
    
    
    Secretary and DirectorYunbin Li
    
    
    35
    
    
    Chief Financial OfficerJiansheng Xu
    
    
    40
    
    
    Director
 Duties, Responsibilities and Experience
 Yulong Guo Kangyuan
 Xiaoling Chen
 Political and Ideological
 Yunbin Li
 Jiansheng Xu
 20




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Board of Directors
  Board Committees
  Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics
  21




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ITEM 11. EXECUTIVE COMPENSATION
  Summary Compensation Table
 NonqualifiedNonequity
    
    
    deferredName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    incentive plan
    
    
    compensation
    
    
    All otherprincipal
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    awards
    
    
    awards
    
    
    compensation
    
    
    earnings
    
    
    compensation
    
    
    Totalposition
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)Yulong Guo,
President, CEO &
Chairman of the
Board
    
    
    2009
    
    
    
    400,000
    
    
    
    150,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    550,0002008
    
    
    
    5,800
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    5,800Xiaoling
Chen, Secretary &
Director
    
    
    2009
    
    
    
    300,000
    
    
    
    120,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    420,0002008
    
    
    
    4,400
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    4,400Yunbin Li, CFO
    
    
    2009
    
    
    
    120,000
    
    
    
    50,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    170,0002008
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
  
    
    by each person who is known to us to beneficially own more than 5% of our common stock;
    
    by each of our officers and directors; and
    
    by all of our officers and directors as a group.
 22




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(3) Amount andNature of(2) Name
    
    Beneficial(1) Title of Class
    
    of Beneficial Onwer
    
    Ownership
    
    (4) Percent of ClassCommon Stock
    
    Yulong Guo,
President, CEO and
Chairman of the
Board
    
    
    26,862,345
    
    
    
    51.70
    %Preferred Stock(i)
    
    
    
    
    5,000,000
    
    
    
    100
    %Common Stock
    
    Xiaoling Chen,
Secretary and
Director
    
    
    5,300,000
    
    
    
    10.20
    %Preferred Stock
    
    
    
    
    0
    
    
    
    0
    %Common Stock
    
    Ying Yang(ii)
    
    
    4,600,000
    
    
    
    8.85
    %Common Stock
    
    Directors and
Officers as a group
    
    
    32,162,345
    
    
    
    61.90
    %Preferred Stock
    
    
    
    
    5,000,000
    
    
    
    100
    %
 
 i.
    
    Each share of preferred stock has 100 for 1 voting rights on matters subject to vote.ii.
    
    The address from Ying Yang is A201 Xiangjingge Garden, Biashizhou, Shenzhen, Guangdong
Province, PRC. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 Naiji
    23




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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2009
    
    
    2008Audit Fees
    
    $
    30,000
    
    
    $
    39,000Audit-Related Fees
    
    
    0
    
    
    
    0Tax Fees
    
    
    0
    
    
    
    All Other Fees
    
    
    0
    
    
    
    0Total
    
    $
    30,000
    
    
    $
    39,000
  Pre-Approval Policies and Procedures
  Maintaining Principal Accountants Independence
  24




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ITEM 15. EXHIBITS.
 Exhibit Number
    
    Description3.1
    
    Certificate of Incorporation, dated August 30, 2002-Berita International Corporation (1)3.2
    
    Certificate of Incorporation, dated December 24, 2003-Keiji International Group Inc. (1)3.3
    
    Certificate of Incorporation, dated September 30, 2004-Asia Electrical Power International Group
Inc. (1)3.4
    
    Articles of Incorporation, dated August 26, 2002-Berita International Corporation (1)3.5
    
    Certificate Amending Articles of Incorporation dated December 24, 2003 changing our name to Keiji
International Group Inc. (1)3.6
    
    Certificate Amending Articles of Incorporation dated September 30, 2004 changing our name to Asia
Electrical Power International Group Inc.(1)3.7
    
    Bylaws, effective September 3, 2002 (1)14
    
    Code of Ethics (4)31.1
    
    Principal Executive Officer Section 302 Certification31.2
    
    Principal Financial Officer Section 302 Certification32.1
    
    Principal Executive Officer and Principal Financial Officer Section 1350 Certification99.1
    
    2007 Stock Option Plan (3)
 
 1.
    
    Incorporated by reference from our Form SB-2 that was originally filed with the SEC on
October 29, 2004.2.
    
    Incorporated by reference from our Form SB -2, Amendment No. 1 that was originally filed with
the SEC on February 14th, 2005.3.
    
    Incorporated by reference from Form 8K that was originally filed with the SEC on May 30,
2007.4.
    
    Incorporated by reference to Exhibit 14 to the Annual Report on Form 10-K of the Company that
was originally filed with the SEC on April 15, 2009. 25




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ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC.
AND SUBSIDIARIES
 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 26




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F-1




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##### 



Year Ended
    
    
    Year EndedDecember 31, 2009
    
    
    December 31, 2008ASSETSCurrent Assets:Cash
    
    $
    3,013,027
    
    
    $
    3,013,900Accounts receivables, net of allowances for doubtful accounts of $354,704 and $354,381, respectively
    
    
    5,381,315
    
    
    
    2,465,300Other receivables
    
    
    161,290
    
    
    
    141,203Advances to suppliers
    
    
    81,340
    
    
    
    66,351Inventory
    
    
    2,851,726
    
    
    
    2,290,470Total current assets
    
    
    11,488,698
    
    
    
    7,977,224Fixed Assets:Land use right
    
    
    2,727,123
    
    
    
    2,791,248Buildings
    
    
    4,945,096
    
    
    
    4,932,832Production equipment
    
    
    1,456,800
    
    
    
    985,032Office equipment
    
    
    327,387
    
    
    
    308,445Vehicles
    
    
    364,446
    
    
    
    355,205Improvements
    
    
    719,255
    
    
    
    806,11410,540,107
    
    
    
    10,178,876Less accumulated depreciation
    
    
    1,449,790
    
    
    
    1,056,603Net fixed assets
    
    
    9,090,317
    
    
    
    9,122,273Other Assets:Deposits
    
    
    554,345
    
    
    
    1,043,807Advances to affiliate
    
    
    
    
    
    
    920,500Total other assets
    
    
    554,345
    
    
    
    1,964,307Total Assets
    
    $
    21,133,360
    
    
    $
    19,063,804LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Notes payable
    
    $
    
    
    
    $
    201,653Accounts payable
    
    
    5,935,828
    
    
    
    3,727,138Advances from customers
    
    
    545,739
    
    
    
    1,105,403Accrued liabilities
    
    
    713,579
    
    
    
    337,803Other liabilities
    
    
    195,643
    
    
    
    396,531Convertible note payable
    
    
    1,400,833
    
    
    
    Total current liabilities
    
    
    8,791,622
    
    
    
    5,768,528Long term debt:Convertible note payable
    
    
    
    
    
    
    1,545,483Total liabilities
    
    
    8,791,622
    
    
    
    7,314,011Stockholders Equity:Common stock: authorized 150,000,000 shares of $0.001
par value; issued and outstanding 51,959,693 shares
    
    
    51,960
    
    
    
    51,960Preferred stock: authorized 5,000,000 shares of $0.001 par
value; issued and outstanding 5,000,000 shares
    
    
    5,000
    
    
    
    5,000Paid in capital  Stock options
    
    
    
    
    
    
    2,933,333Capital in excess of par value
    
    
    11,154,789
    
    
    
    7,932,156Retained earnings ( deficit)
    
    
    94,546
    
    
    
    (180,650
    )Earnings appropriated for statutory reserves
    
    
    183,749
    
    
    
    183,749Accumulated other comprehensive income
    
    
    851,694
    
    
    
    824,245Total Stockholders equity
    
    
    12,341,738
    
    
    
    11,749,793Total Liabilities and Stockholders Equity
    
    $
    21,133,360
    
    
    $
    19,063,804
  F-2




---



##### 



Year Ended Dec. 31,2009
    
    
    2008Revenue
    
    $
    20,848,514
    
    
    $
    14,118,660Cost of Sales
    
    
    16,597,830
    
    
    
    11,714,350Gross Profit
    
    
    4,250,684
    
    
    
    2,404,310Expenses:Options issued for services
    
    
    
    
    
    
    1,025,000Selling and Administrative Expenses
    
    
    3,730,012
    
    
    
    1,322,8563,730,012
    
    
    
    2,347,856Operating Income
    
    
    520,672
    
    
    
    56,454Other Income (Expense):
    
    
    Interest expense
    
    
    149,410
    
    
    
    0Interest income
    
    
    9,602
    
    
    
    28,248Loss on foreign exchange transactions
    
    
    (58,981
    )
    
    
    (564
    )Other income
    
    
    249,217
    
    
    
    117,243Other expense
    
    
    (50,029
    )
    
    
    (71,981
    )Income before Income Taxes
    
    
    521,071
    
    
    
    129,400Provision for Income Taxes:Current Provision
    
    
    245,875
    
    
    
    111,723Net Income for the Period
    
    
    275,196
    
    
    
    (17,677
    )Other Comprehensive Income -
Foreign currency translation adjustments
    
    
    27,449
    
    
    
    827,565Total Comprehensive Income
    
    $
    302,645
    
    
    $
    845,242Income Per Common Share -Basic
    
    $
    0.01
    
    
    $
    0.00Diluted
    
    $
    0.00
    
    
    $
    0.00Weighted average number of shares outstanding
    
    
    51,959,693
    
    
    
    51,959,693
  F-3




---



##### 



AccumulatedCapital in
    
    Paid in
    
    
    
    
    
    
    
    
    
    OtherCommon Stock
    
    Preferred Stock
    
    Excess of
    
    Capital-
    
    Statutory
    
    Retained
    
    ComprehensiveShares
    
    Amount
    
    Shares
    
    Amount
    
    Par Value
    
    Options
    
    Reserve
    
    Earnings
    
    Income
    
    TotalBalance,
December 31, 2007
    
    
    51,959,693
    
    
    $
    51,960
    
    
    
    5,000,000
    
    
    $
    5,000
    
    
    $
    7,932,156
    
    
    $
    1,908,333
    
    
    $
    183,749
    
    
    $
    (198,327
    )
    
    $
    (3,320
    )
    
    $
    9,879,551Net loss for period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,677
    )
    
    
    827,565
    
    
    
    779,917Effect of change in option terms
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,025,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,025,000Balance, December 31, 2008
    
    
    51,959,693
    
    
    $
    51,960
    
    
    
    5,000,000
    
    
    $
    5,000
    
    
    $
    7,932,156
    
    
    $
    2,933,333
    
    
    $
    183,749
    
    
    $
    (180,650
    )
    
    $
    824,245
    
    
    $
    11,749,793Net income for period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    275,196
    
    
    
    
    
    
    
    275,196Beneficial conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    289,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    289,300Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,449
    
    
    
    27,449Transfer of value expired options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,933,333
    
    
    
    (2,933,333
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2009
    
    
    51,959,693
    
    
    $
    51,960
    
    
    
    5,000,000
    
    
    $
    5,000
    
    
    $
    11,154,789
    
    
    $
    
    
    
    $
    183,749
    
    
    $
    94,546
    
    
    $
    851,694
    
    
    $
    12,341,738


F-4



---



##### 



2009
    
    
    2008CASH FLOWS FROM OPERATIONS:Net income (loss)
    
    $
    275,196
    
    
    $
    (17,677
    )Charges not requiring the outlay of cash:Depreciation and amortization
    
    
    550,193
    
    
    
    483,342Amortization of discount on convertible note
    
    
    144,650
    
    
    
    Option issued for services
    
    
    
    
    
    
    1,025,000Changes in assets and liabilities:Increases in accounts receivable
    
    
    (2,899,549
    )
    
    
    (720,545
    )(Increase) decrease in other receivables
    
    
    (28,497
    )
    
    
    5,029(Increase) decrease in advances to suppliers
    
    
    (14,816
    )
    
    
    196,460(Increase) decrease in inventory
    
    
    (555,262
    )
    
    
    415,498(Decrease) increase in notes payable
    
    
    (202,045
    )
    
    
    306,610Increases in accounts payable
    
    
    3,196,006
    
    
    
    119,874(Decrease) increase in advances from customers
    
    
    (562,109
    )
    
    
    231,100Increase (decrease) in other liabilities
    
    
    1,513,769
    
    
    
    (1,036,722
    )Decrease in accrued liabilities
    
    
    374,734
    
    
    
    Increases in deposits
    
    
    288,057
    
    
    
    25,189Net Cash Provided By Operating Activities
    
    
    2,080,327
    
    
    
    1,068,512CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of fixed assets
    
    
    (495,584
    )
    
    
    (1,504,413
    )Return of guarantee deposit
    
    
    203,734
    
    
    
    (200,183
    )Advance to affiliate
    
    
    (1,796,839
    )
    
    
    Net Cash Consumed By Investing Activities
    
    
    (2,088,689
    )
    
    
    (1,704,596
    )CASH FLOWS FROM FINANCING ACTIVITIES:Issuance of consultable note
    
    
    
    
    
    
    1,548,483Advances from affiliate
    
    
    
    
    
    
    618,330Repayment of advances from affiliate
    
    
    
    
    
    
    (1,458,960
    )Net Cash Provided By Financing Activities
    
    
    
    
    
    
    707,853Effect of exchange rates on cash
    
    
    7,489
    
    
    
    22,058Net change in cash
    
    
    (873
    )
    
    
    93,827Cash balance, beginning of period
    
    
    3,013,900
    
    
    
    2,920,073Cash balance, end of period
    
    $
    3,013,027
    
    
    $
    3,013,900
  F-5




---



##### 



F-6




---



##### 



2009
    
    
    2008Raw materials
    
    $
    1,266,569
    
    
    $
    1,070,138Work in process
    
    
    578,181
    
    
    
    398,658Finished goods
    
    
    1,006,976
    
    
    
    821,674Total
    
    $
    2,851,726
    
    
    $
    2,290,470
               F-7




---



##### 



(a)
    
    Assets and liabilities, at the rates of exchange in effect at balance sheet dates;(b)
    
    Equity accounts, at the exchange rates prevailing at the times of the transactions
that established the equity accounts; and(c)
    
    Revenues and expenses, at the average rate of exchange for each year.
                F-8




---



##### 





























Dividend Yield
    
    0.0%Expected volatility
    
    73%Risk free interest rate
    
    1.33%Expected term (in years)
    
    .12 yrs. To .17 yrs






F-9




---



##### 



2009
    
    
    2008Tax calculated using statutory rate
    
    $
    130,268
    
    
    $
    32,350Less, tax exemption
    
    
    (65,134
    )
    
    
    (16,175
    )Tax effect of non-deductible expenses
    
    
    223,758
    
    
    
    128,125Other
    
    
    (43,017
    )
    
    
    (32,577
    )Tax provision
    
    $
    245,875
    
    
    $
    111,723
   Deferred tax assets
    
    $
    31,997Valuation reserve
    
    
    31,997Balance
    
    $
    
 F-10




---



##### 



2009
    
    
    2008Travel and Promotion
    
    $
    309,220
    
    
    $
    248,251Technical Support and warranty
    
    
    37,901
    
    
    
    39,394Research and development
    
    
    162,619
    
    
    
    32,775Salaries and benefits
    
    
    717,370
    
    
    
    509,689Depreciation and amortization
    
    
    352,913
    
    
    
    242,684Executive salaries and bonus
    
    
    1,720,000
    
    
    
    Other
    
    
    429,989
    
    
    
    250,063Total Expenses
    
    $
    3,730,012
    
    
    $
    1,322,856
            F-11




---



##### 



SIGNATURES
  ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC.
 Date: June 15, 2010By:
    /s/ Yulong GuoYulong GuoPresident, Chief Executive Officer and DirectorBy:
    /s/ Yunbin LiYunbin LiChief Financial Officer  SIGNATURE
    
    TITLE
    
    DATE/s/ Yulong Guo

Yulong Guo
    
    President, Chief Executive Officer and
Director
    
    June 15, 2010/s/ Yunbin Li

Yunbin Li
    
    Chief Accounting Officer
    
    June 15, 2010