##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 Asia Electrical Power International Group Inc.
  NEVADA
    
    0-51787
    
    98-0522960(State or other jurisdiction of
    
    (Commission File No.)
    
    (IRS Employeeincorporation or organization)
    
    
    
    Identification No.)
 E-4, Floor 3, Haijin Square  Taizi Road, Nanshan District, Shenzhen, PRC 518067
 86 755 2823 1993  (Issuer Telephone
number)
 þ o
 o o
 Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RisksItem 4. Controls and ProceduresPART II OTHER INFORMATIONItem 1 Legal ProceedingsItem 1A Risk FactorsItem 2 Unregistered Sales of Equity Securities and Use of ProceedsItem 3 Defaults Upon Senior SecuritiesItem 5 Other InformationItem 6 ExhibitsSIGNATURESEX-31.1EX-31.2EX-32    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC.
CONSOLIDATED BALANCE SHEETS
 June 30, 2010
    
    
    December 31, 2009(Unaudited)
    
    
    (Audited)ASSETSCurrent Assets:Cash
    
    $
    3,179,864
    
    
    $
    3,013,027Accounts receivables
    
    
    5,791,166
    
    
    
    5,381,315Other receivables
    
    
    191,819
    
    
    
    161,290Advances to suppliers
    
    
    188,670
    
    
    
    81,340Inventory
    
    
    4,109,969
    
    
    
    2,851,726Total current assets
    
    
    13,461,488
    
    
    
    11,488,698Fixed Assets:Land use right
    
    
    2,725,995
    
    
    
    2,727,123Property, Plant & Equipment
    
    
    8,090,132
    
    
    
    7,812,984Total cost
    
    
    10,816,127
    
    
    
    10,540,107Less accumulated depreciation
    
    
    1,685,025
    
    
    
    1,449,790Net fixed assets
    
    
    9,131,102
    
    
    
    9,090,317Other Assets:Deposits
    
    
    1,059,435
    
    
    
    554,345Total other assets
    
    
    1,059,435
    
    
    
    554,345Total Assets
    
    $
    23,652,025
    
    
    $
    21,133,360LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Notes payable
    
    $
    1,278,515
    
    
    $
    Accounts payable
    
    
    6,498,413
    
    
    
    5,935,826Advances from customers
    
    
    1,504,953
    
    
    
    545,739Accrued liabilities
    
    
    315,437
    
    
    
    713,579Other liabilities
    
    
    193,474
    
    
    
    195,643Convertible Note Payable
    
    
    1,473,160
    
    
    
    1,400,833Total current liabilities
    
    
    11,263,952
    
    
    
    8,791,620Shareholder advances
    
    
    0
    
    
    
    0Total Liabilities
    
    
    11,263,952
    
    
    
    8,791,620Stockholders Equity:Common stock: authorized 150,000,000 shares of
$0.001 par value; issued and outstanding 51,959,693 and
51,000,000, respectively
    
    
    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
    
    
    0
    
    
    
    0Capital in excess of par value
    
    
    11,154,789
    
    
    
    11,154,789Accumulated deficit
    
    
    5,840
    
    
    
    94,546Earnings appropriated for statutory reserves
    
    
    183,749
    
    
    
    183,749Other accumulated comprehensive income
    
    
    986,735
    
    
    
    851,696Total Stockholders equity
    
    
    12,388,073
    
    
    
    12,341,740Total Liabilities and Stockholders Equity
    
    $
    23,652,025
    
    
    $
    21,133,360




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##### Table of Contents



ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Month Periods Ended June 30, 2010 and 2009
 Six Month Periods Ended June 30,
    
    
    Three Month Periods Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue
    
    $
    8,609,330
    
    
    $
    6,713,518
    
    
    $
    5,072,406
    
    
    $
    4,634,236Cost of Sales
    
    
    6,964,376
    
    
    
    5,397,613
    
    
    
    4,134,235
    
    
    
    3,698,146Gross Profit
    
    
    1,644954
    
    
    
    1,315,905
    
    
    
    938,171
    
    
    
    936,090Expenses:Selling and Administrative Expenses
    
    
    1,619,331
    
    
    
    1,294,868
    
    
    
    846,115
    
    
    
    796,854Operating Income
    
    
    25,623
    
    
    
    21,037
    
    
    
    92,056
    
    
    
    139,236Interest expense
    
    
    (75,504
    )
    
    
    (58,832
    )
    
    
    (38,071
    )
    
    
    (30,835
    )Foreign exchange loss
    
    
    
    
    
    
    (61,148
    )
    
    
    
    
    
    
    (61,148
    )Interest income
    
    
    2,819
    
    
    
    5,878
    
    
    
    1,351
    
    
    
    3,642Other income
    
    
    70,577
    
    
    
    61,771
    
    
    
    36,747
    
    
    
    37,378Other expenses
    
    
    (30,725
    )
    
    
    
    
    
    
    (29,262
    )
    
    
    Total other income(expense)
    
    
    (32,833
    )
    
    
    (52,331
    )
    
    
    (29,235
    )
    
    
    (50,963
    )Income before Income Taxes
    
    
    (7,210
    )
    
    
    (31,294
    )
    
    
    62,821
    
    
    
    88,273Provision for Income Taxes:Current Provision
    
    
    81,497
    
    
    
    47,470
    
    
    
    45,864
    
    
    
    47,470Net loss(income) for the period
    
    
    (88,707
    )
    
    
    (78,764
    )
    
    
    16,957
    
    
    
    40,803Other Comprehensive Income -Foreign currency translation adjustments
    
    
    135,039
    
    
    
    14,426
    
    
    
    132,992
    
    
    
    1,394Total Comprehensive Income
    
    $
    46,332
    
    
    $
    (64,338
    )
    
    
    149,949
    
    
    
    42,197Income Per Common Share -Basic and Diluted
    
    $
    0.00
    
    
    
    ($0.00
    )
    
    $
    0.00
    
    
    $
    0.00Weighted average number of shares outstanding
    
    
    51,959,693
    
    
    
    51,959,693
    
    
    
    51,959,693
    
    
    
    51,959,693




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ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended June 30, 2010mand 2009
(Unaudited)
 2010
    
    
    2009CASH FLOWS FROM OPERATIONS:Net income (loss)
    
    $
    (88,707
    )
    
    $
    (78,764
    )Charges not requiring the outlay of cash:Depreciation and amortization
    
    
    219,714
    
    
    
    182,283Amortization of discount on convertible note
    
    
    72,326
    
    
    
    55,994Changes in assets and liabilities:Increases in accounts receivable
    
    
    (352,212
    )
    
    
    (787,655
    )Increases in other receivables
    
    
    (28,625
    )
    
    
    (46,231
    )Decrease (increase) in advances to suppliers
    
    
    (105,486
    )
    
    
    23,055Increase (decrease) in inventory
    
    
    (1,217,685
    )
    
    
    573,538(Decrease) inrease in notes payable
    
    
    1,266,218
    
    
    
    (201,976
    )Decreases in accounts payable
    
    
    (187,343
    )
    
    
    (107,690
    )Increases in advances from customers
    
    
    944,542
    
    
    
    122,441Increases in other payable
    
    
    677,957
    
    
    
    292,468Decreases in accrued liabilities
    
    
    (401,434
    )
    
    
    (29,015
    )Net Cash Consumed (Provided) By Operating Activities
    
    
    799,265
    
    
    
    (1,552
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of fixed assets
    
    
    (178,884
    )
    
    
    (438,843
    )Return of guarantee deposit
    
    
    0
    
    
    
    203,664Increase( decrease) in deposits
    
    
    (485,214
    )
    
    
    267,025Net Cash Consumed By Investing Activities
    
    
    (664,098
    )
    
    
    31,846Issuance of consultable noteExchange rate effect on cash
    
    
    31,670
    
    
    
    4,132Net change in cash
    
    
    166,837
    
    
    
    34,426Cash balance, beginning of period
    
    
    3,013,027
    
    
    
    3,013,900Cash balance, end of period
    
    $
    3,179,864
    
    
    $
    3,048,326




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##### Table of Contents



ASIA ELECTRICAL POWER INTERNATIONAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)
 1. BASIS OF PRESENTATION
   2. INCOME TAXES
  3. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Cautionary Notice Regarding Forward Looking Statements.
  Background
 (AEPW) Berita International Corporation. Keiji International Group Inc. Asia Electrical
Power International Group Inc.
 Agreement Naiji




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Recent Events
   Results of Operations
 June 30, 2010, compared to June 30, 2009
 Revenues
 Six months ended
    
    
    
    
    
    
    Six months endedJune 30, 2010
    
    

% Sales
    
    
    June 30, 2009
    
    

% SalesRevenue
    
    $
    8,609,330
    
    
    
    100
    %
    
    $
    6,713,518
    
    
    
    100
    %Cost of Sales
    
    
    6,964,376
    
    
    
    81
    %
    
    
    5,397,613
    
    
    
    80
    %Gross Profit
    
    $
    1,644,954
    
    
    
    19
    %
    
    $
    1,315,905
    
    
    
    20
    %
   Three months ended
    
    
    
    
    
    
    Three months endedJune 30, 2010
    
    

% Sales
    
    
    June 30, 2009
    
    

% SalesRevenue
    
    $
    5,072,406
    
    
    
    100
    %
    
    $
    4,634,236
    
    
    
    100
    %Cost of Sales
    
    
    4,134,235
    
    
    
    81.5
    %
    
    
    3,698,146
    
    
    
    80
    %Gross Profit
    
    $
    938,171
    
    
    
    18.5
    %
    
    $
    936,090
    
    
    
    20
    %




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Selling and Administrative Expenses
   Operating (Loss) Income
   Other Income (Expense)
  Income (Loss) before Income Taxes, Net Income (Loss) for the Period, Total Comprehensive Income
(Loss), and Loss Per Share




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Current Trends in the Industry
  Liquidity and Capital Resources
   Materials, Labor, Overhead
    
    $
    4,960,000Selling Expenses and Administrative Expenses
    
    $
    1,240,000Total
    
    $
    6,200,000
 Sources of Capital




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Material Commitments
  Seasonal Aspects.
  Off Balance Sheet Arrangements.




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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.
  How accurate have
    
    How likely toBalance Sheet
    
    There is a risk of
    
    How did we arrive
    
    we been in the
    
    change in theAccount
    
    change because?
    
    at these Estimates?
    
    past?
    
    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.




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Revenue Recognition.
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risks
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
  Changes in Internal Controls over Financial Reporting.




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Limitations on Effectiveness of Controls and Procedures.
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
 None.
 
 Item 1A. Risk Factors.
 Not applicable to small reporting companies.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 None.
 
 Item 3. Defaults Upon Senior Securities.
 None.
 
 Item 5. Other Information.
 None.
 
 Item 6. Exhibits
 31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
 (Signatures appear on following page)




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SIGNATURES
  ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC.
  By:
    /s/ Yulong GuoYulong GuoPresident and Chief Executive OfficerBy:
    /s/ Yunbin LiYunbin LiChief Financial Officer