U.S. SECURITIES AND EXCHANGE COMMISSION



|Washington, D.C. 20549________________FORM 10-QSB
|-------------------------------------------------

| x |  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



|For the quarterly period ended June 30, 2007
|--------------------------------------------



|   |  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT



|For the transition period from  to Commission file number 000-51787________________
|-----------------------------------------------------------------------------------

|NEVADA(State or other jurisdiction of 
incorporation or organization) | 98-0522960(IRS employer 
Identification No.)
|--------------------------------------------------------------------- | --------------------------------------------



|6130 Elton Avenue, Las Vegas, Nevada, 89107(Address of principal executive offices)
|-----------------------------------------------------------------------------------



|702-216-0470(Issuer's telephone number)
|---------------------------------------

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes |  |No | x |

As of June 30, 2007, 51,959,692 shares of the issuer's Common Stock, $.001 par value per share, were outstanding.

Transitional Small Business Disclosure Format Yes |   |  No | x |



|- 1 -
|-----

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|INDEX   
|--------
|PART I. 
|Item 1. 
|        
|        
|        
|        
|        
|        
|Item 2. 
|Item 3. 
|PART II.
|Item 1. 
|Item 2. 
|Item 3. 
|Item 4. 
|Item 5. 
|Item 6. 
|        

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|Item 1. FINANCIAL STATEMENTS
|----------------------------

ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC.



|Consolidated Financial StatementsJUNE 30, 2007(Prepared Without Audit)-F1-
|--------------------------------------------------------------------------

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ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC. 
CONSOLIDATED BALANCE SHEETS

|                                                                           | Six Months     | Year Ended  
|-------------------------------------------------------------------------- | -------------- | ------------
|                                                                           | Ended June 30, | December 31,
|ASSETS                                                                     | 2007           | 2006        
|Current Assets:                                                            | (Unaudited)    | (Audited)   
|Cash                                                                       | $2,979,423     | $2,087,766  
|Accounts receivables                                                       | 1,859,226      | 1,878,453   
|Other receivables                                                          | 202,112        | 151,447     
|Advances to suppliers                                                      | 2,918,175      | 1,743,538   
|Inventory                                                                  | 1,957,263      | 1,826,681   
|Total current assets                                                       | 9,916,199      | 7,687,885   
|Fixed Assets:                                                              |                |             
|Land use right                                                             | 1,355,566      | 1,355,566   
|Production equipment                                                       | 164,308        | 161,682     
|Office equipment                                                           | 96,216         | 85,061      
|Vehicles                                                                   | 310,423        | 304,277     
|Construction in progress                                                   | 1,596,079      | 1,191,776   
|                                                                           | 3,522,592      | 3,098,362   
|Less accumulated depreciation                                              | 316,368        | 274,662     
|Net fixed assets                                                           | 3,206,224      | 2,823,700   
|Other Assets:                                                              |                |             
|Rental Deposit                                                             | 27,456         | 27,456      
|Deferred taxes recoverable                                                 | 40,446         | 40,446      
|Total other assets                                                         | 67,902         | 67,902      
|Total Assets                                                               | $13,190,325    | $10,579,487 
|                                                                          
|LIABILITIES AND STOCKHOLDERS' EQUITY                                       |                |             
|Current Liabilities:                                                       |                |             
|Accounts payable                                                           | $2,454,210     | $2,815,319  
|Advances from customers                                                    | 472,290        | 706,004     
|Accrued liabilities                                                        | 84,436         | 117,676     
|Other liabilities                                                          | 39,206         | 42,224      
|Shareholder advances                                                       | 195,424        | -           
|Total current liabilities                                                  | 3,245,566      | 3,681,223   
|Minority interest                                                          | 373,894        | 373,894     
|Total Liabilities                                                          | 3,619,460      | 4,055,117   
|Stockholders' 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         | 51,000      
|Preferred stock: authorized 5,000,000 shares of $ 0.001 par                |                |             
|value; issued and outstanding 5,000,000 shares                             | 5,000          | 5,000       
|Paid in capital -- stock options                                           | 1,908,333      | -           
|Capital in excess of par value                                             | 8,062,643      | 5,446,260   
|Retained Earnings (Deficit)                                                | (845,668)      | 792,904     
|Accumulated other comprehensive income                                     | 198,572        | 39,181      
|Earnings appropriated for statutory reserves                               | 190,025        | 190,025     
|Total Stockholders' equity                                                 | 9,570,865      | 6,524,370   
|Total Liabilities and Stockholders' Equity                                 | $13,190,325    | $10,579,487 
|The accompanying notes are an integral part of these financial statements.
|-F1-                                                                      

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|ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC.                            
|--------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS                                     
|For the Three and Six Month Periods Ended June 30, 2007 and 2006          
|(Prepared Without Audit)                                                  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Revenue                                                                   
|Cost of Sales                                                             
|Gross Profit                                                              
|                                                                          
|Expenses:                                                                 
|Selling and Administrative Expenses:                                      
|Stock Options Issued for Services                                         
|Other Selling and Administrative Expenses                                 
|Total                                                                     
|                                                                          
|                                                                          
|Operating Income (Loss)                                                   
|                                                                          
|Other Income and Expense:                                                 
|Other Income                                                              
|Other Expense                                                             
|                                                                          
|Income (Loss) Before Income Taxes                                         
|                                                                          
|Provision for Income Taxes:                                               
|Current Provision                                                         
|                                                                          
|Net Income (Loss) for the Period                                          
|                                                                          
|Other Comprehensive Income --                                             
|Foreign currency translation adjustments                                  
|                                                                          
|Total Comprehensive Income                                                
|(Loss)                                                                    
|Income (Loss) Per Common                                                  
|Share--Basic and Diluted                                                  
|                                                                          
|Weighted Average Number of Shares                                         
|Outstanding                                                               
|The accompanying notes are an integral part of these financial statements.
|                                                                          
|-F2-                                                                      

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|ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC.                            
|--------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                     
|For the Six Months Ended June 30, 2007 and 2006                           
|(Prepared Without Audit)                                                  
|                                                                          
|                                                                          
|CASH FLOWS FROM OPERATIONS:                                               
|Net (loss) income                                                         
|Charges not requiring the outlay of cash:                                 
|Depreciation and amortization                                             
|Issuance of stock options                                                 
|Changes in assets and liabilities:                                        
|Decrease (increase) in accounts receivable                                
|Increase in other receivables                                             
|Increase in advances to suppliers                                         
|Increase in inventory                                                     
|Increase (decrease) in accounts payable                                   
|Decrease in advances from customers                                       
|Decrease in other payable                                                 
|Decrease in accrued liabilities                                           
|Decrease in deferred taxes                                                
|                                                                          
|Net Cash Consumed By Operating Activities                                 
|                                                                          
|CASH FLOWS FROM INVESTING ACTIVITIES:                                     
|Purchases of fixed assets                                                 
|Increase in construction in progress                                      
|Deposit on land                                                           
|                                                                          
|Net Cash Consumed By Investing Activities                                 
|                                                                          
|CASH FLOWS FROM FINANCING ACTIVITIES:                                     
|Advances from shareholder                                                 
|Proceeds from sale of common shares                                       
|                                                                          
|Net Cash Provided By Financing Activities                                 
|                                                                          
|Comprehensive income -- Foreign exchange gain                             
|Net change in cash                                                        
|Cash balance, beginning of period                                         
|Cash balance, end of period                                               
|The accompanying notes are an integral part of these financial statements.
|-F3-                                                                      

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ASIA ELECTRICAL POWER INTERNATIONAL GROUP INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2007 
(Unaudited)

|1. | BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The unaudited interim financial statements of Asia Electrical Power International Group Inc. ("the Company") as of June 30, 2007 and for the three and six month periods ended June 30, 2007 and 2006, have been prepared in accordance with generally accepted accounting principles. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such periods. The results of operations for the quarter ended June 30, 2007 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2007.
|  
|   | Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2006.                                                                                                                                                                       
|  
|2. | SHAREHOLDER ADVANCES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   | To assist with financing an expansion of Company facilities, the president of the Company advanced $ 195,424 during the six months ended June 30, 2007. This advance is due on demand and bears interest of 6% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|3. | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | The Company was granted an exemption from income taxes during the June 2007 period. Such exemptions are available to Chinese enterprises located in identified economic zones. This exemption is for a period which will end in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|4. | STOCK OPTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | On April 24, 2007, the Board of Directors adopted a stock option plan, entitled 2007 Stock Option Plan, under which options to purchase up to 5,000,000 shares of common stock may be granted to officers, employees, and consultants. During the quarter ended June 30, 2007 options to purchase 5,000,000 shares were granted at exercise prices of $3 per share. The value of the options, determined by a Black Sholes valuation model, were $ 1,908,333. This value has been charged to expense during this quarter.                                                                                                                                        
|  
|5. | COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | On June 1, 2007 the Company sold 872,447 shares of its common stock in a private transaction, which yielded proceeds of 2,617,343. An additional 87,246 shares were issued as a finders fee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|6. | SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | The Company did not make any cash payments of interest during the three month and six month periods of 2007 and 2006. Cash payments of income taxes were made only in the six month period of 2006, in the amount of $13,597.
There were no non cash investing transactions during any of the periods reported. There were non cash financing transactions only in the 2007 three month and six month periods. Shares of common stock totaling 87,246 shares, were issued as a finders fee in connection with the sale of 872,447 shares of Company common stock.                                                                                                
|  





|-F4-
|----



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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (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.                                                                                  
| 

In addition, in this report, we use words such as "anticipates," "believes," "plans," "expects," "future," "intends," and similar expressions to identify forward-looking statements.

Asia Electrical Power International Group Inc. ("AEPI" or the "Company") undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this prospectus. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.



|History
|-------

Asia Electrical Power International Group Inc.("AEPI or the Company")was incorporated in the State of Nevada on August 30, 2002 as "Berita International Corporation", for the purpose of producing high and mid-voltage electrical switchgears in PRC. On December 24, 2003, we changed our name to "Keiji International Group Inc." and on September 30, 2004 we changed our name to "Asia Electrical Power International Group Inc.".

On January 23, 2003, we entered into an Asset and Share Exchange Agreement (the "Agreement") with Shenzhen Naiji Electrical Equipment Co., Ltd. ("Naiji"), a PRC Corporation whereby we acquired all the issued and outstanding stock of Naiji for consideration of 24,000,000 shares of our common stock. Naiji has produced high and mid-voltage electrical switchgears since its inception in 1997. We design, manufacture and market electrical power systems designed to monitor and control the flow of electrical energy and to provide protection to motors, transformers and other electrically powered equipment.

Shenzhen Naiji Science and Technology Co., Ltd. (Variable Interest Entity)

Shenzhen Naiji Science and Technology Co. Ltd. (herein referred to as "Science") is a corporation organized during 2006 under the laws of China by our President, Mr. Yulong Guo. It is considered a Variable Interest Entity (VIE) under the provision of FASB Interpretation No. 46R (FIN 46R), "Variable Interest Entities," as its sole shareholder is Mr. Guo. Its principal activity has been raising capital and making advances to or on behalf of the Company. Our financial statements have been consolidated with Science and all intercompany transactions have been eliminated upon consolidation.



|Granting of Stock Options
|-------------------------

On April 24, 2007, the Board of Directors of the Company approved the granting of options to purchase a total of 5,000,000 shares of common stock as described in the 2007 Stock Option Plan (the "2007 Plan") to directors, officers, employees and consultants of the Company. The following is intended as a brief description of the 2007 Plan and is qualified in its entirety by the full text of the 2007 Plan which is attached as Exhibit 99.1.



|Administration:
|---------------



|- 8 -
|-----

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The 2007 Plan will be administered by the Board of Directors. The Board of Directors may appoint a committee of the Board of Directors (the "Committee") comprised of two or more of directors, each of whom will be a "Non-Employee Director" within the meaning of Rule 16b-3 under theSecurities Exchange Act of 1934, as amended, and an "Outside Director" within the meaning of Section 162(m) of the Internal Revenue Code, to administer the 2007 Plan. Subject to the terms of the 2007 Plan, the Board of Directors or the Committee may determine and designate those employees, directors and consultants to whom options should be granted and the nature and terms of the options to be granted.



| | Eligibility:
| | ------------

All of our employees, including our executive officers and directors who are also employees, are eligible to participate in the 2007 Plan. Directors who are not employees, as well as our consultants and advisers, are eligible to receive options under the 2007 Plan, except that such persons may only receive non-qualified options. Additionally, non U.S. residents who receive option grants may also only receive non-qualified options.



|Exercise of Stock Options:
|--------------------------

The exercise price per share for each option granted under the 2007 Plan shall be determined by the Board of Directors or the Committee. The price is payable in cash.

Subject to earlier termination upon termination of employment and the incentive stock option limitations as provided in the 2007 Plan, each option shall expire on the date specified by the Board of Directors or the Committee, which shall be no later than two years from the date of grant.

The options will either be fully exercisable on the date of grant or shall be exercisable thereafter in such installments as the Board of Directors or Committee may specify. Upon termination of employment or other service of an option holder, an option may only be exercised for a period of three months or, in the case of termination due to disability or death, a period of 12 months.



| | Transferability:
| | ----------------

Options granted under the 2007 Plan may not be transferred except by will or the laws of the descent and distribution and, during his or her lifetime, options may be exercised only by the optionee.



|Certain Adjustments:
|--------------------

In the event of any change in the number or kind of our outstanding common shares by reason of a stock dividend, stock split, recapitalization, combination, subdivision, rights issuance or other similar corporate change, the Committee of the Board shall make such adjustment in the number of common shares that may be issued under the 2007 Plan, and the number of common shares subject to, and the exercise price of, each then-outstanding option, as it, in its sole discretion, deems appropriate.



|Amendments or Discontinuance:
|-----------------------------

The Board may amend or discontinue the 2007 Plan, provided that no amendment may, without an optionee's consent, materially and adversely affect any rights under any option previously granted to the optionee under the 2007 Plan. Additionally, the approval of our shareholders is required for any amendment that would increase or decrease the number of common shares that may be issued under the 2007 Plan; or materially modify the requirements as to eligibility for participation in the 2007 Plan.



|New Directors
|-------------

During the quarter, on May 31, 2007, we appointed Mr. Allan Moore and Mr. Locksley Samuels as directors.

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Allan Mooreage 72 is currently the President of AS Moore Consulting Ltd. ("ASMCL") providing
consultation services in areas of environmental audits, developing environmental management systems, and sourcing alternative fuels for cement and lime industries. Mr. Moore has been the President of ASMCL since its inception in 1999.

Mr. Moore has received a Masters of Business Administration degree from Simon Fraser University of British Columbia, Canada in 1986, a Masters of Science degree from the University of Wisconsin in 1958, and a Bachelors of
Science degree from the Philander Smith College of Arkansas in 1956.

Locksley Samuelsage 55 is currently the President of Eurotrend Manufacturing Co., Ltd., ("Eurotrend")
providing services for design, manufacturing and installation of custom kitchen cabinetry. Mr. Samuels has been the President of Eurotrend since its inception in 1984.

Mr. Samuels obtained his Bachelors of Applied Sciences degree in Chemical Engineering from the University of Waterloo in Ontario, Canada in 1975.

Mr. Moore and Mr. Samuels do not have family relationships with any other director or executive officer of the Registrant, and neither have been a party to any transaction with the Registrant during the past fiscal year
ended December 31, 2006. The Registrant currently does not have an employment agreement with either Mr. Moore or Mr. Samuels.

Prior to being appointed directors of the Company, Mr. Moore and Mr. Samuels assisted the Company in performing market research in the Caribbean area. Both were granted 100,000 stock options each on April 24, 2007 for their
efforts.

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Advertising and marketing strategy

Our main marketing strategies to target our markets are based on:

|1. | The efforts of our sales staff in our marketing department and branch offices located throughout the region to obtain new customers. Members of our top management oversee the efforts of our sales staff and make adjustments to our marketing strategy as appropriate in response to market conditions. Top management approves all marketing strategies carried out by our sales staff. Top management, on a monthly basis, reviews regional market reports of each branch office and makes adjustments to marketing strategies as market conditions vary in each region if necessary. In addition to marketing to traditional 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.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | Effective client relations management directed through top management to maintain the current customer base and to encourage referrals through these customers. In maintaining customer relations, our sales staff in our branch offices offer technical support, tend to customer service matters and arrange for on site visits from our technical staff to follow up on questions or concerns the customer may have.                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|3. | Continuous enhancement of product quality and new product development.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|4. | Marketing campaigns launched throughout the PRC through the use of promotional materials, advertising in trade magazines and billboards and at trade exhibitions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  

Management believes that such marketing strategies have been effective in our achieving desired levels of revenues and therefore implementation of these strategies has been consistent.

We also participate in industry exhibitions and trade fairs to be held in Harbin, Shenyang, Beijing, Guangzhou, Jinan, Nanning and Shanghai.



|Our target markets are:
|-----------------------

|- | Residential and commercial developers or contractors who may require expansion of existing power systems to new areas.
|- | ----------------------------------------------------------------------------------------------------------------------
| 
|  | o                                                                                                                     
| 
|  | o                                                                                                                     
| 
|- | Wholesale manufactures who may make bulk purchases.                                                                   
| 
|  | o                                                                                                                     
| 
|- | Electrical equipment installation companies who may refer us to potential customers.                                  
| 
|  | o                                                                                                                     
| 
|  | o                                                                                                                     
| 

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|- | 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 may also require certain areas to be networked in order to distribute power to these areas.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|  | o                                                                                                                                                                                                                                                                                 
| 

Much of our marketing effort is designed to generate referrals from existing customers. We place emphasis on providing what we believe to be a higher lever of customer service, specifically relating to our on site visits, and technical support.



|Trends in the market
|--------------------

We expect a high volume of new domestic business from electricity infrastructure investments as a result of the PRC's 11thfive year plan which will:

"Build new socialist rural areas, optimize and upgrade industrial structures, promote concordant development of regions, build a conservation-minded and environment-friendly society, further system reform and enhance opening-up, efficiently practice strategies to invigorate China through science and education and through human resource development, and give impetus to constructing a socialist harmonious society." -- Source,www.China.org

With new developments in rural areas, the PRC will be accepting bids to service such areas to establish electrical networks. We anticipate such new developments will increase our sales by 40% per year for fiscal 2007 and 2008 year ends and 30% by fiscal 2009 year end. A majority of our sales are generated through existing customer base by referrals however with these new developments, we expect a substantial amount of our sales to be generated by fulfilling PRC contract bids to service rural areas in 2007 though 2009.

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| | Results of Operations
| | ---------------------

For the Three and Six month Period ended June 30, 2007, compared to Three and Six month Period ended June 30, 2006.



|Revenues
|--------

We generated revenues for the six months ended June 30, 2007, 2006 of $ 4,647,195 and $ 3,140,055, respectively. The increase was attributed to establishing additional branch offices and sales staff devoted solely to marketing of our products in various areas.

For the three month periods ended June 30, 2007 and 2006, our revenues were $ 2,707,712 and $ 1,733,531, respectively. The increase of $ 974,181 was mainly as a result of a slow start in the 2006 year as a result of various businesses being closed for the Chinese New Year. We did not experience this lag in the 2007 period as many of customers/vendors opened their business earlier than usual. The increase was also attributed to establishing additional branch offices and sales staff devoted solely to marketing of our products in various areas.



|Cost of Sales
|-------------

Our cost of sales for the six month period ended June 30, 2007 and 2006 were $ 3,799,935 and $ 2,622,900 which yields 82% and 83% of revenues, respectively.

Our cost of sales for the three month period ended June 30, 2007 and 2006 were $ 2,219,610 and $ 1,531,789 which yields 82% and 88% of revenues, respectively.

Our cost of sales is typically 80% and 90% of revenues depending on whether we take advantage of purchase discounts granted on advances made to suppliers or make larger bulk purchases in which we receive a discounted bulk price.



|Selling and Administrative Expenses
|-----------------------------------

On April 24, 2007, the Board of Directors adopted a stock option plan, entitled 2007 Stock Option Plan, under which options to purchase up to 5,000,000 shares of common stock may be granted to officers, employees, and consultants. During the quarter ended June 30, 2007 options to purchase 5,000,000 shares were granted at prices of $3 per share. The value of the options, were determined by a Black Sholes valuation model, were $ 1,908,333. The vesting schedule for these options are 90% in year 1 and 10% in year 2.

Our other selling and administrative expenses consist of the following for the three and six month period ended June 30, 2007 and 2006:

|                            | For the Six Month Period Ended June 30,
|--------------------------- | ---------------------------------------
|                            | 2007                                   
|                            | (Unaudited)                            
|Salaries, benefits and dues | $ 233,891                              
|Transportation              | 85,427                                 
|Travel and promotion        | 84,021                                 
|Office and utilities        | 50,154                                 
|Depreciation                | 41,706                                 
|Occupancy                   | 31,078                                 
|Technical support           | 14,347                                 
|Marketing                   | 5,371                                  
|Research & development      | 2,604                                  
|Other                       | 30,667                                 
|                           
|Total expenses              | $ 579,266                              

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|                            | For the Three Month Period Ended June 30,
|--------------------------- | -----------------------------------------
|                            | 2007                                     
|                            | (Unaudited)                              
|Salaries, benefits and dues | $93,278                                  
|Transportation              | 56,335                                   
|Travel and promotion        | 53,362                                   
|Depreciation                | 25,767                                   
|Office and utilities        | 24,060                                   
|Occupancy                   | 15,622                                   
|Marketing                   | (823)                                    
|Technical support           | 8,816                                    
|Research & development      | -                                        
|Other                       | 15,505                                   
|                           
|Total expenses              | $291,922                                 

Salariesincreased as a result of bonuses paid to employees and also retaining additional staff in branch offices.

Office and Utilitiescosts increased as a result of increased utility rates.

OurTravel and Promotioncosts were increased as a result of market research efforts, surveying north eastern and western markets. Promotion costs consist of functions held for current and prospective customers for the purpose of maintaining good client relations with current customers while providing an opportunity to generate interest by prospective customers. We hope to generate referrals through our existing customer base.

Transportation expenseconsists of delivery to customers and travel to and from such locations for follow up and on call visits for technical support. Such costs increased as a result of the PRC imposing further taxes on fuel and new fees per transportation unit based on the vehicle weight. These fees were imposed to generate the funds for improvements of roads.

Occupancyexpense is not expected to fluctuate as monthly payments are predetermined as per our lease agreement and any deviation from such amounts are as a result of increases to maintenance or common area costs. Our office and manufacturing facilities are leased from July 31, 2004 until April 30, 2006 wherein a new lease was negotiated with our lease to expire April 30, 2009. Our occupancy cost per month increased by approximately 30% to reflect the change in the market conditions which have allowed occupancy costs in the area to increase. We expect our new facilities to be completed September 2007. The rental market for the facilities we currently occupy is expected to increase and we are currently examining sub letting opportunities.

Marketingcosts decreased as we are in the process of negotiating with various marketing agencies. These negotiations are expected to be finalized by the end of the 3rd quarter.

Technical Supportcosts increased as a result of various on site visits initiated by management to ensure the customer's satisfaction.

OurResearch & developmentcosts are incurred upon review of technical support logs which determine which any of our products require refinements based on customer reviews.



| | Liquidity and Capital Resources
| | -------------------------------

As of June 30, 2007, we had a positive working capital of $ 6,670,633.

Not including our plans for construction of new office facilities, over the next 12 months, we will require approximately $ 4,000,000 to sustain our working capital needs based on projected yearly sales of $ 10,500,000.



|Sources of Capital:
|-------------------

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We expect our revenues generated to absorb these costs; however, if additional capital is needed, we will explore financing options such as shareholder loans. Shareholder loans are without stated terms of repayment with interest at the rate of 6% per annum. We will not be considering taking on any long-term or short-term debt from financial institutions in the next 12 months. Shareholders loans are granted from time to time as required to meet current working capital needs. We have no formal agreement that ensures that we will receive such loans. We may exhaust this source of funding at any time.

In the past, we have normally been able to sustain our working capital needs that have surpassed the revenues from sales through shareholder loans. We expect this source of funding to continue; however, in the event shareholder loans are no longer granted to us, we may obtain long or short term financing.

We may also receive capital contributions from our shareholders.

As of June 30, 2007, we received $ 195,424 in shareholder loans from Mr. Guo, our President.



|Plans for Expansion:
|--------------------

Given sufficient funding, we expect to expand our operations throughout the region by establishing up to 20 more branch offices devoted to marketing efforts. Each branch office will have approximately 3-10 full time and part time employees. To sustain a new branch office for 12 months, we will require a total of $200,000 of which $164,000 will be allocated to salaries and $36,000 allocated to rent. The need for the $200,000 for expansion and funds required to complete new manufacturing facilities, as discussed below, is not included in the $4,000,000 we require to meet working capital needs.

We will be occupying our current office space and manufacturing facilities leased until April 30, 2009 until we have constructed a new office building on land we leased for 50 years effective January 2006. The lease was financed through shareholder loans. No bank loans were taken out to fund this lease.

We do not know of any trends, events or uncertainties that are likely to have a material impact on our short-term or long-term liquidity other than those factors discussed above.



|New Manufacturing Facilities
|----------------------------

Through June 30, 2007, we incurred construction costs in the amount of $ 1,596,079 for excavation and land leveling, surrounding roadwork, design & architectural fees and building construction costs relating to structural work.

We estimate costs to complete the facilities to be an additional $ 2,816,250 for project management costs and $3,750,000 in costs to complete the interior of the facilities. Costs for new production equipment and office equipment will be approximately $ 1,830,000.

We estimate the completion date to be September 2007. Funding for this project will be through shareholder loans and bank loans. Our new facilities will occupy 300,000 square feet with 158,000 square feet of new manufacturing facilities. New facilities will be approximately 5 times the size of existing facilities and as such will have the capabilities of meeting production requirements based on our projected levels of sales in the next 3 years.

We will be occupying our office space at 28thBuilding, Lishan Industrial Zone, Xinghai Road, Nanshan District, Shenzhen, until construction of our new facility is completed.

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|Cash FlowsOperating Activities
|------------------------------

Net Cash consumed by operating activities were $ 1,656,271 in 2007 compared to $ 805,944 in 2006 and are summarized as follows:

2007
     2006Net income (loss)
     $ (1,638,572)
     $ 80,205Issuance of stock options
     1,908,333
     -Decrease (increase) in accounts receivable
     19,227
     (43,096)Increase in advances to suppliers
     (1,174,637)
     (52,424)Increase in inventory
     (130,582)
     (466,096)Increase (decrease) in accounts payable
     (361,109)
     166,786Decrease in advances from customers
     (233,714)
     (309,634)Other
     (45,217)
     (181,685)Net Cash Consumed By Operating Activities
     $ (1,656,271)
     $ (805,944)


We collected a majority of accounts which were older than 1 year. In anticipation of sales levels for the 2ndquarter ended, we replenished our inventory levels to fulfill such orders. The increase in prepayments to suppliers was as a result of costs incurred for construction of our new manufacturing facilities. During the quarter there was a decrease in advance payments by customers however we expect levels of prepayments to increase in the next quarter.

Our accounts payables were settled as a result of sales discounts granted for early payment. The majority of such payables relate to costs incurred for construction of our new facilities.



|Investing Activities
|--------------------

Net Cash consumed by investing activities in 2007 was $ 424,230 which was used to purchase office equipment for our branch offices. In 2006, deposits were made on the land we leased in September of 2004 for which our President provided the necessary funding.



|Financing Activities
|--------------------

Net Cash provided by financing activities in 2007 were $ 2,812,767 as result of shareholder loans provided by Mr. Guo consisting of $ 195,424 and proceeds we received from the sale of our common stock. Please refer to Part II, Item 2. "Unregistered Sales of Equity Securities and Use of Proceeds" below.

Factors That May Affect Our Future Results and the Trading Price of Our Common Stock

An investment in shares of our common stock involves a high degree of risk. You should consider carefully the following information about these risks, together with other information contained in this report and our other filings with the Securities and Exchange Commission before you decide to buy our stock. If any of the following risks actually occur, our business, financial condition and prospects would likely suffer. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our operations.

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Broker-dealers may be discouraged from effecting transactions in our shares because they are considered penny stocks and are subject to the penny stock rules.

Rules 15g-1 through 15g-9 promulgated under theSecurities Exchange Act of 1934(the "Securities Exchange Act") impose sales practice and disclosure requirements on NASD broker-dealers who make a market in "penny stocks". A penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.

In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.

Our stock is substantially controlled by directors, officers and principal shareholders for the foreseeable future and as a result, will be able to control our overall direction.

Our insiders, being the directors, officers and principal shareholders, own an aggregate of approximately 57.3% of our outstanding shares. As a result, the insiders will be able to control the outcome of all matters requiring stockholder approval and will be able to elect all of our directors. Such control, which may have the effect of delaying, deferring or preventing a change of control, is likely to continue for the foreseeable future and significantly diminishes control and influence which future stockholders may have in AEPI.



|Item 3. CONTROLS AND PROCEDURES
|-------------------------------

(A) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's Chief Executive Officer/Chief Accounting Officer of the effectiveness of the design and operation of the Company's disclosure controls and procedures. The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving the Company's disclosure control objectives. The Company's Chief Executive Officer/Chief Accounting Officer has concluded that the Company's disclosure controls and procedures are, in fact, effective at this reasonable assurance level as of the period covered. In addition, the Company reviewed its internal controls, and there have been no significant changes in its internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation or from the end of the reporting period to the date of this Form 10-QSB.

(B) Changes in Internal Controls Over Financial Reporting

In connection with the evaluation of the Company's internal controls during the Company's second fiscal quarter ended June 30, 2007, the Company's Chief Executive Officer/Chief Accounting Officer has determined that there are no changes to the Company's internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

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|PART II.
|--------



|OTHER INFORMATION
|-----------------



|Item 1. Legal Proceedings
|-------------------------



|None.
|-----

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



|During the year ended December 31, 2006
|---------------------------------------

On December 21, 2006, we approved a stock split wherein the number of authorized common stock with a par value $0.001 was to be increased on a two for one basis. The total authorized capital increased from 75,000,000 to 150,000,000. Accordingly, the number of issued common stock increased from 24,000,000 to 48,000,000. The Company also approved the establishment of a new class of preferred shares with a $ 0.001 par value with an authorized capital of 5,000,000 preferred shares.

On December 22, 2006, 5,000,000 shares of preferred stock, par value $0.001, were allotted and issued to our President, Yulong Guo for repayment of shareholder loans.

A further 2,500,000 shares of common stock were allotted and issued to Yulong Guo and 500,000 shares issued to Xiaoling Chen. These shares were issued for repayment of shareholder loans.



|During the 2ndquarter ended June 30, 2007
|-----------------------------------------

On June 1, 2007, we entered into a Share Subscription Agreement (the"Agreement") with Century International Group Inc. (herein referred to as "Century") to purchase 872,447 shares of our shares for a price of $ 3.00 per share for total proceeds of $ 2,617,343. The shares were allotted and issued on June 1, 2007.

Century is a Belize company 100% owned by Liping Zheng, a minority shareholder holding less than 5% of our outstanding capital. The Agreement was therefore a non arms length transaction. Mr. Zheng remains a minority shareholder through his indirect ownership of the 872,447 shares through Century and in addition to his direct ownership of his shareholdings of the Company.

A finders fee of 10% of the Shares purchased by Century, or 87,246, was issued to Port Mercantile Capital Inc., (herein referred to as "PMC"). PMC was a minority shareholder holding less than 5% of the outstanding capital of the Registrant prior to the Registrant entering into the Agreement with Century. PMC remains a minority shareholder subsequent to the Agreement.

As a result of the aforesaid share issuances, the issued and outstanding share capital of the Company is now 51,959,692 common shares (51,000,000+872,447+87,245) and 5,000,000 shares of preferred stock.

The offer and sale of the shares were exempt from registration pursuant to section 4(2) of the Securities Act, Rule 701 and Rule 506 of Regulation D promulgated thereunder. We limited the manner of the offering and provided disclosure regarding the offering and our company to the stockholders. Both of the stockholders are our officers and directors. We believe that these sales were also exempt under Regulation S under the Securities Act, as such sales were made in offshore transactions to a non-U.S. persons.

All of our authorized common shares are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of shares are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders.

All of our authorized preferred shares are of the same class and once issued, are restricted from being publicly traded, have no dividend rights and are not entitled to the participation in assets in the event of dissolution of the Company. Preferred shares are entitled to 100 votes per share.

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Dividends may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available. However, our present intention is not to pay any cash dividends to holders of shares but to reinvest earnings, if any. In the event of our liquidation, dissolution or winding up the holders of shares are entitled to share pro-rata in all assets remaining after payment of liabilities.

Our common and preferred shares have no pre-emptive, conversion or other subscription rights. There are no redemption or sinking fund provisions applicable to the shares.

Our articles and by-laws do not contain any provisions that would delay, defer or prevent our change in control.

|Item 3.        | Defaults Upon Senior Securities                                                                         
|-------------- | --------------------------------------------------------------------------------------------------------
|None.          |                                                                                                         
|Item 4.        | Submission of Matters to a Vote of Security Holders                                                     
|None           |                                                                                                         
|Item 5.        | Other Information                                                                                       
|None.          |                                                                                                         
|Item 6.        |                                                                                                         
|A)             |                                                                                                         
|              
|Exhibit Number | Description                                                                                             
|3.1            |                                                                                                         
|3.2            |                                                                                                         
|3.3            |                                                                                                         
|3.4            |                                                                                                         
|3.5            |                                                                                                         
|               |                                                                                                         
|3.6            |                                                                                                         
|               |                                                                                                         
|3.7            |                                                                                                         
|31.1           |                                                                                                         
|31.2           |                                                                                                         
|32.1           |                                                                                                         
|32.2           |                                                                                                         
|(1)            | Incorporated by reference from our Form SB-2 that was originally filed with the SEC on October 29, 2004.

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|B) Reports on Form 8-KDuring the 1st quarter ended March 31, 2007
|-----------------------------------------------------------------

|- | Form 8-K Filed on January 8, 2007 reporting the following items:                                                                                                                      
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|  | Item 3.02: Unregistered Sales of Equity Securities                                                                                                                                    
| 
|  | Item 3.03: Material Modifications to Rights of Security Holders                                                                                                                       
| 
|  | Item 5.02: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers                                                                     
| 
|  | Item 5.03: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year                                                                                                   
| 
|  | Item 9.01: Financial Statements and Exhibits                                                                                                                                          
| 
|- | Form 8K/A was filed on January 29, 2007 to correct errors on Form 8K filed on January 8, 2007.                                                                                        
| 
|  | During the 2nd quarter ended June 30, 2007                                                                                                                                            
| 
|- | Form 8K filed on May 30, 2007 reporting the following items:                                                                                                                          
| 
|  | Item 8.01: Other events -- Approval of the 2007 Stock Option Plan                                                                                                                     
| 
|  | Item 9.01: Financial statements and Exhibits                                                                                                                                          
| 
|- | Form 8K filed on June 4, 2007 reporting the following items:                                                                                                                          
| 
|  | Item 5.02: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers -- Appointment of 2 directors, Dudley Delapenha and Locksley Samuels
| 

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|SIGNATURES
|----------



|SIGNATURES
|----------

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.



|ASIA ELECTRICAL POWERINTERNATIONAL GROUP INC.
|---------------------------------------------



|Date: August 16, 2007
|---------------------



| | /s/ Yulong Guo
By:Yulong GuoPresident, Chief Executive Officer and Director/s/ Xiaoling ChenBy:  **Xiaoling Chen**            Secretary, Chief Accounting Officer
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|





|
|

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