- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2010

o	TRANSITION REPORT PU RSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _________

Commission File No. 000-12561

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Nevada		95-3819300
(State or other jurisdiction of incorporation)		I.R.S. Employer Identification Number

Building 3

No. 28 Feng Tai North Road,

Beijing China 100071

(Address of principal executive offices)

(011) 86-10-63860500

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o		Accelerated filer	o

Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

The number of shares of the issuer’s common stock, $.001 per share, outstanding as at November 15, 2010 was 15,233,652.

TABLE OF CONTENTS

INDEX

		Page
PART 1 - FINANCIAL INFORMATION

	Item 1. Financial Statements

	Condensed Consolidated Balance Sheets as at September 30, 2010 (unaudited) and December 31, 2009	3
	Condensed Consolidated Statements of Operations for the nine Months Ended September 30, 2010 and 2009 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the nine Months Ended September 30, 2010 and 2009 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6

	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	15

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	18

	Item 4T. Controls and Procedures	18

PART 2 - OTHER INFORMATION

	Item 1. Legal Proceedings	19
	Item 1A. Risk Factors	19
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	19
	Item 3. Defaults Upon Senior Securities	19
	Item 4. (Removed and Reserved)	19
	Item 5. Other Information	19
	Item 6. Exhibits	20

	Signatures	21

Item 1. Financial Statements

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

	As of September 30, 2010		As of December 31, 2009
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,912,633	$	4,980,717
Accounts receivable, net		10,017,206		8,067,944
Inventories		6,472,048		4,547,170
Other receivables and prepayments		3,252,339		1,733,695
Deferred tax assets		587,720		588,016
Total current assets		23,241,946		19,917,542

Property and equipment, net		13,709,246		13,775,554
Goodwill		2,003,409		1,967,153
Land use rights		1,595,175		1,592,140
Investment in Trueframe International Limited		3,704,972		3,812,806
TOTAL ASSETS	$	44,254,748	$	41,065,195

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade	$	2,104,886	$	1,601,002
Taxes payable		1,149,004		1,278,974
Other payables and accrued liabilities		9,917,486		9,977,178
Loan payable-employee		1,877,468		1,266,747
Short-term loans		746,146			-
Total current liabilities		15,794,990		14,123,901

Long-term liabilities		-		156,410
Total liabilities		15,794,990		14,280,311

Stockholders’ equity
Common stock, $0.001 par value, 66,666,667 shares authorized, 15,233,652 shares issued and outstanding		15,233		15,233
Additional paid-in capital		22,611,909		22,611,909
Accumulated other comprehensive income		1,170,695		693,016
Retained earnings		4,152,998		3,100,294
Total stockholders’ equity-China Solar		27,950,835		26,420,452
Non-controlling interest in subsidiary		508,923		364,432
Total Stockholder’s Equity		28,459,758		26,784,884
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	44,254,748	$	41,065,195

See accompanying notes to condensed consolidated financial statements.

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2010			2009			2010			2009
				(restated)						(restated)
Revenue, net	$	7,623,544		$	5,344,923		$	22,225,885		$	22,305,581
Cost of revenue		5,706,376			4,032,539			16,154,947			16,824,357
Gross profit		1,917,168			1,312,384			6,070,938			5,481,224

Operating expenses
Depreciation and amortization		116,714			69,294			343,538			261,200
Selling and distribution		762,704			526,874			2,119,033			1,566,946
General and administrative		458,501			594,489			1,750,287			2,145,024
Total operating expenses		1,337,919			1,190,657			4,212,858			3,973,170
Income from operations		579,249			121,727			1,858,080			1,508,054
Other income (expenses):
Other income (expense)		(5,766	)		37,325			(9,406	)		30,293
Reversal of reserve for bad debts		-			3			-			127,248
Interest expense, net of interest income		(101,844	)		(77,128	)		(261,417	)		(161,321	)
Loss from non-consolidated subsidiaries		(36,000	)		-			(108,000	)		-
Total other income (expenses)		(143,610	)		(39,800	)		(378,823	)		(3,780	)
gain on sale of discontinued operation net of tax		-			-			-			652,753

Income(Loss) From Continuing Operations Before Income Taxes		435,639			81,927			1,479,257			2,157,027

Income tax expense		109,977			8,042			282,062			206,780

Income(Loss) From Continuing Operations		325,662			73,885			1,197,195			1,950,247

Income(Loss) From Discontinued Operations(net of tax)		-			-			-			(512,390	)

Net Income(Loss)		325,662			73,885			1,197,195			1,437,857
Less:Net Income Attributable To Non-controlling interest		20,124			6,466			144,491			93,015
Net Income(Loss) Attributable To China Solar Shareholders	$	305,538		$	67,419		$	1,052,704		$	1,344,842
Basic and Diluted
continuing operations	$	0.02		$	0.00		$	0.08		$	0.12
discontinued operations	$	0.00		$	0.00		$	0.00		$	(0.03	)
Total	$	0.02		$	0.00		$	0.08		$	0.09

Weighted average shares outstanding - Basic and Diluted		15,233,652			15,795,228			15,233,652			16,013,152

See accompanying notes to condensed consolidated financial statements.

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

	Nine months ended September 30,
	2010			2009
				(restated)
Cash flows from operating activities:
Net effect of discontiuned operation	$	-		$	-
Net cash provided by (used in) operating activities		(2,832,013	)		705,573
		(2,832,013	)		705,573
Cash flows from investing activities:
Acquisition of companies,net of cash acquired
Disposal of subsidiary		-			1,390,593
Purchase of property, plant and equipment		(180,135	)		(450,019	)
Net cash provided by (used in) investing activities		(180,135	)		940,575

Cash flows from financing activities:
Proceeds from non-controlling shareholder		-			51,232
Cash received from borrowings		735,882			-
Net cash provided by financing activities		735,882			51,232


Foreign currency translation adjustment		208,182			69,102

NET CHANGE IN CASH AND CASH EQUIVALENTS		(2,068,084	)		1,766,481

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		4,980,717			1,820,883

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,912,633		$	3,587,364

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes	$	239,246		$	221,970
Cash paid for interest expenses	$	171,147		$	118,921

See accompanying notes to condensed consolidated financial statements

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the interim reporting requirements of Regulation S-X. They do not include all of the information and footnotes for complete consolidated financial statements as required by GAAP. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2009.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates that are particularly susceptible to change include assumptions used in determining the fair value of securities owned and non-readily marketable securities.

The results of operations for the three and nine months ended September 30, 2010 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2010 or for any future period.

NOTE 2 - ORGANIZATION AND BUSINESS

China Solar & Clean Energy Solutions, Inc. (“China Solar”), formerly known as Deli Solar (USA) Inc. was incorporated in the State of Nevada on March 21, 1983 as Meditech Pharmaceuticals, Inc. (“Meditech”). In late 2004, the Board of Directors of Meditech contemplated a strategic reorganization with Deli Solar Holding Ltd., a corporation organized in the British Virgin Islands (“Deli Solar (BVI)”). The acquisition of Deli Solar (BVI) was accounted for as a recapitalization of Deli Solar (BVI).

On August 1, 2004, Deli Solar (BVI) purchased Bazhou Deli Solar Energy Heating Co., Ltd. (“Deli Solar (Bazhou)”), a corporation duly organized under the laws of the People’s Republic of China (“PRC”). As a result of this transaction, Deli Solar (Bazhou) became a wholly-foreign owned enterprise (“WFOE”) under PRC law on March 30, 2005. This acquisition was accounted for as a transfer of entities under common control.

Deli Solar (Bazhou) was incorporated on August 19, 1997 under the laws of the PRC. In the PRC, Ltd, or Limited, is equivalent to Inc, or Incorporated, in the United States (“US”).

On November 21, 2005 Deli Solar (Bazhou) acquired Ailiyang Solar Energy Technology Co., Ltd. (“Ailiyang”), an entity formerly controlled by the owners of Deli Solar (Bazhou). The transaction was accounted for as a transfer of entities under common control.

Beijing Deli Solar Technology Development Co., Ltd. (“Deli Solar (Beijing)”) was founded in 2006 and is principally engaged in solar power heater integrated construction projects in major cities in the PRC.

Deli Solar (Beijing) ownes 91.82% of Tianjin Huaneng Energy Equipment Company (“Tianjin Huaneng”), which manufactures energy saving boilers and environmental protection equipment for industrial customers.

On April 1, 2008, Beijing Deli Solar Technology Development Co., Ltd (“Deli Solar (Beijing)”) acquired 100% of Shenzhen Pengsangpu Solar Industrial Products Corporation (“SZPSP”), which is engaged in the re-sale of energy-saving related heating products such as heat pipes, heat exchangers, pressure water boilers, solar energy heaters and radiators. On July 6, 2009, Deli Solar (Beijing) entered into a termination agreement (the "Termination Agreement") with the three shareholders of SZPSP. The Termination Agreement terminates the equity purchase and complementary agreements. We accounted for SZPSP as a wholly-owned subsidiary from March 31, 2008 until March 31, 2009.

China Solar, Deli Solar (BVI), Deli Solar (Bazhou), Ailiyang, Deli Solar (Beijing) and Tianjin Huaneng are hereinafter referred to as the “Company”.

NOTE 3 - RECENTLY ISSUED ACCOUNTING STANDARDS

In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, “improving Disclosures about Fair Value Measurements,” which clarifies certain existing requirements in ASC 820 “Fair Value Measurements and Disclosures,” and required disclosures related to significant transfers between each level and additional information about Level 3 activity. FASB ASU 2010-06 begins phasing in the first fiscal period beginning after December 15, 2009. The Company is currently assessing the impact on its consolidated results of operations and financial conditions.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

NOTE 4-INVESTMENT IN TRUEFRAME INTERNATIONAL LTD.

Trueframe International Limited

In October, 2009 we acquired 28% of the outstanding equity of Truefame International Limited ("Truefame"), which is a holding company that owns 55.78 % of the outstanding common stock of AgriSolar Solutions, Inc. ("AGSO"), which holds Shengzhen Fuwaysun Technology Co., Ltd. ("Fuwaysun") for approximately $3,705,000. Fuwaysun is a PRC company primarily engaged in the development and production of solar pest killing lamps and transportable solar generators. The investment is accounted for under the equity method of accounting.

NOTE 5– BUSINESS DISPOSAL

On July 6, 2009, we entered into the Termination Agreement with the three former shareholders of SZPSP to terminate “The Equity Purchase Agreement” and “Complementary Agreement to the Equity Purchase Agreement”

The key terms of the Termination Agreement are:

Pursuant to the terms of the agreements the Company received RMB 28,800,000 and 939,364 shares of its common stock in exchange for its ownership of SZPSP. In addition, the Company will receive a portion of the net profit, if any, of SZPSP for the year ended March 31, 2009. No effect has been given to the profit distribution in the accompanying financial statements.

The operations of SZPSP have been presented as discontinued operations in the accompanying financial statements from the date of acquisition to the date of disposition, for the appropriate periods.

As summary of the operations of SZPSP is follows:

	Nine months ended March 31, 2009

Revenues	$	1,024,103
Income before provision for income taxes from discontinued operations		(501,120	)
Income tax provision		11,270
Income(loss) from discontinued operation, net of tax	$	(512,390	)

NOTE 6 - BALANCE SHEET COMPONENTS

Accounts receivable, net

The majority of the Company’s sales are on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on the aging of accounts receivable that management believes to be reasonable.

	September 30, 2010		December 31, 2009
	(Unaudited)

Accounts receivable, cost	$	11,599,843	$	9,621,122
Less : allowance for doubtful accounts		(1,582,637)		(1,553,178	)

Accounts receivable, net	$	10,017,206	$	8,067,944

	September 30, 2010		December 31, 2009
	(Unaudited)
Inventories:
Raw materials	$	2,637,583	$	1,186,188
Consumables		17,628		16,358
Work-in-process		85,216		57,357
Finished goods		3,731,621		3,287,267
Inventories	$	6,472,048	$	4,547,170

	September 30, 2010		December 31, 2009
	(Unaudited)
Other receivables and prepayments:
Advance to suppliers	$	1,138,932	$	555,781
Other receivables		2,113,407		1,177,914
Other receivables and prepayments(1)	$	3,252,339	$	1,733,695

(1) The amount includes the loan of RMB2, 000,000 for Xiongri. In 2006, we entered into a series of agreements with the three shareholders of Shenzhen Xiongri Solar Co., Ltd. (“Xiongri”) to purchase 60% of the entire equity interests of Xiongri for RMB2, 000,000. The three shareholders agreed to loan RMB2, 000,000 to Xiongri as working capital. We have not completed the transfer of the 60% equity interests. However ， the parties came to consensus after negotiation on October 23, 2009 that the agreement shall be revoked and the three shareholders need to return RMB2, 000,000 in following two years after signed.

	September 30, 2010		December 31, 2009
	(Unaudited)
Other payables and accrued liabilities:
Customer deposit	$	4,143,348	$	4,488,561
Salary payable		489,071		521,951
Accrued expenses		105,000		226,430
Other payables		2,814,510		2,551,978
Warranty provision		1,035,830		1,016,549
Current portion of investment payable(1)		1,329,727		1,171,709
Totals	$	9,917,486	$	9,977,178

(1) Represents liability in connection with the acquisition of Tianjin Huaneng,

NOTE 7 - STOCKHOLDERS’ EQUITY

Common stock

During the year ended December 31, 2009, 373,566 shares of preferred stock were converted to the same number of shares of common stock.

During the year ended December 31, 2009, 939,364 shares of common stock were cancelled due to termination with SZPSP.

Common Stocks Held in Escrow

In connection with the private placement on February 29, 2008, the Company deposited 2,000,000 shares of common stock (“Make Good Shares”) into escrow and we are required to deliver (i) 1,000,000 of the Make Good Shares to the investors on a pro rata basis for no additional consideration in the event that the Company’s after-tax net income for the fiscal year ending December 31, 2008 is less than $4.8 million; and (ii) 1,000,000 of the Make Good Shares to the investors on a pro rata basis for no additional consideration in the event that the Company’s after-tax net income for the fiscal year ending December 31, 2009 is less than $8 million. As of December 31, 2008, the after-tax net income target of $4.8 million has not been met. The registration statement of 1,000,000 of the Make Good Shares to the investors was declared effective on July 20, 2009.

Warrants for services

A summary of the status of the Company’s outstanding common stock warrants:

	Number of Shares	Weighted- average Exercise Price		Weighted- average Remaining Contractual
Outstanding and Exercisable at January 1, 2009	7,091,682	$	2.76	3.53 years
Granted	-		-	-
Exercised	-		-	-
Forfeited	469,150		-	-
Expired	-		-	-
Outstanding and Exercisable at December 31, 2009	6,622,532	$	2.48	2.25 years
Granted	-		-	-
Exercised	-		-	-
Forfeited	-		-	-
Expired	1,825,719		-	-
Outstanding and Exercisable at September 30, 2010	4,796,813		1.95	2.05years

NOTE 8 - INCOME TAXES

The Company is registered in the United States of America and has operations in three tax jurisdictions: the United States of America, British Virgin Island (“BVI”) and the PRC. The operations in the United States of America and British Virgin Island have incurred net operating losses for income tax purposes. The Company generated substantially all of its net income from the operation of its subsidiary in the PRC and is subject to the PRC tax jurisdiction.

NOTE 9 - SEGMENT REPORTING, GEOGRAPHICAL INFORMATION

(a) Business information

During the nine months ended September 30, 2010, the Company had primarily three reportable segments, (i) Solar Heater/Biomass Stove/Boiler related products, (ii) Heat pipe related products and (iii) Building integrated energy-saving projects, under the management of Bazhou, Tianjin Huaneng, and Deli Solar (Beijing), respectively.

The Company’s revenue, gross profit and total assets by reportable segment are as follows:

Sales Revenues

		Three months ended September 30,				Nine months ended September 30,
		2010		2009		2010		2009
Revenue:
Solar heater/Biomass stove/Boiler related products	$	2,691,900	$	1,528,177	$	5,223,734	$	4,539,572
Heat pipe related equipments/Energy-saving projects		4,738,678		3,816,746		16,809,713		17,766,009
Building integrated energy saving projects		192,966		-		192,438		-
	$	7,623,544	$	5,344,923	$	22,225,885	$	22,305,581

Gross Profit

	Three months ended September 30,						Nine months ended September 30,
	2010			2009			2010			2009
Gross profit:
Solar heater/Biomass stove/Boiler related products		$	575,718		$	375,791		$	1,080,347		$	1,024,025
Heat pipe related equipments/Energy-saving projects			1,218,251			936,593			4,867,920			4,457,199
Building integrated energy saving projects			123,199			-			122,671			-
		$	1,917,168		$	1,312,384		$	6,070,938		$	5,481,224

Total assets

	September 30 , 2010		December 31, 2009
Total assets	2010		2009
Solar heater/Biomass stove/Boiler related products	$	20,407,778	$	17,075,566
Heat pipe related equipments/Energy-saving projects	$	19,655,356	$	17,210,210
Building integrated energy saving projects	$	1,500,826	$	1,774,920
Other	$	2,690,788	$	5,004,499
	$	44,254,748	$	41,065,195

(b) Geographic information

The Company operates in the PRC and all of the Company’s long lived assets are located in the PRC. In respect of geographical segment reporting, sales are based on the country in which the customer is located and total assets and capital expenditure are based on the country where the assets are located.

The Company’s operations are located in PRC, which is the main geographical area. The Company’s revenue, gross profit and total assets by geographical market for the nine months ended September 30, 2010 and 2009 are analyzed as follows:

Revenue
	Three months ended September 30,						Nine months ended September 30,
	2010			2009			2010			2009

Revenue:
PRC		$	7,617,367		$	5,339,069		$	20,783,053		$	21,897,864
Others			6,177			5,854			1,442,832			407,717

		$	7,623,544		$	5,344,923		$	22,225,885		$	22,305,581

Gross profit

	Three months ended September 30,						Nine months ended September 30,
	2010			2009			2010			2009

Gross profit:
PRC		$	1,915,076		$	1,307,387		$	5,582,345		$	5,222,797
Others			2,092			4,997			488,593			258,427

		$	1,917,168		$	1,312,384		$	6,070,938		$	5,481,224

Total assets

	September 30,			December 31,
	2010			2009
Total assets:
PRC		$	43,972,474		$	37,720,553
Others		$	282,274		$	3,344,642

		$	44,254,748		$	41,065,195

CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 10 –NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income per share for the nine months ended September 30, 2010 and 2009:

	Three months ended September 30,					Nine months ended September 30,
	2010			2009		2010			2009

Basic and diluted net income per share calculation

Numerator:
Net income from continuing operations		$	305,538	$	67,419		$	1,052,704	$	1,857,232
Net (loss) income from discontinued operation			-		-			-		(512,390	)
		$	305,538	$	67,419		$	1,052,704	$	1,344,842
Denominator: - Weighted average ordinary shares outstanding – Basic and Diluted			15,233,652		15,795,228			15,233,652		16,013,152

NOTE 11 - SUBSEQUENT EVENT

The Company has evaluated subsequent events after the balance sheet date through the financial statements were issued , there are no subsequent events that are required to be recorded or disclosed in the accompanying interim financial statements.

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

Forward-Looking Information — this item includes “forward-looking statements”. All statements, other than statements of historical facts, included in this item regarding the Company's financial position, business strategy and plans and objectives of management of the Company for future operations are forward-looking statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside of the Company's control, which could cause actual results to materially differ from such statements. While the Company believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors, especially the timing and magnitude of technological advances; the prospects for future acquisitions; the competition in the solar water heaters and boilers industry and the impact of such competition on pricing, revenues and margins; uncertainties surrounding budget reductions or changes in funding priorities of existing government programs and the cost of attracting and retaining highly skilled personnel.

Overview

We are engaged in the solar and renewable energy business in the PRC. Our business is conducted through our wholly-owned PRC based operating subsidiaries, Bazhou Deli Solar, Beijing Deli Solar, and our indirect subsidiary Tianjin Huaneng (majority owned).

We have three reportable segments: (i) Solar Heater/Biomass Stove/Boiler related products, (ii) Heat pipe related products and (iii) Building integrated energy-saving projects, under the management of Bazhou, Tianjin Huaneng, and Deli Solar (Beijing), respectively.

Deli Solar (Bazhou) designs, manufactures and sells renewable energy systems to produce hot water and for space heating in the PRC. Bazhou Deli Solar’s principal products are solar hot water heaters and multifunctional space heaters, including coal-fired boilers for residential use. Bazhou Deli Solar also sells component parts for its products and provides after-sales maintenance and repair services.

Deli Solar (Beijing) is principally engaged in building integrated energy-saving projects in major cities in the PRC, including Beijing.

Tianjin Huaneng manufactures heating products such as heating pipes, heat exchangers, specialty heating pipes and tubes, high temperature hot blast boilers, heating filters, normal pressure water boilers, solar energy water heaters and radiators.

Approximately 23.50% of our net revenue for the nine months ended September 30, 2010 was derived from sales of our solar heater/biomass stove/boiler related products and 75.6% from sales of our heat pipe related equipment/energy-saving projects, respectively. Approximately 93.5% and 6.5% of our net revenues for the nine months ended September 30, 2010, were derived from sales made inside the PRC and outside the PRC, respectively.

Results of Operations

Three months ended September 30, 2010 compared to three months ended September 30, 2009

Sales Revenues

	Three months ended September 30,
	2010			2009

Revenue:
Solar heater/Biomass stove/Boiler related products		$	2,691,900		$	1,528,177
Heat pipe related equipments/Energy-saving projects			4,738,678			3,816,746
Building integrated energy saving projects			192,966			-
		$	7,623,544		$	5,344,923

Overall: Sales revenue for the three months ended September 30, 2010 were $7,623,544 as compared to $5,344,923 for the three months ended September 30, 2009, an increase of $2,278,621 or 42.63%. Because the large orders is more than the same season last year of Tianjin Huaneng and the increasing demand for solar heater in the third quarter this year of Solar heater.

Solar heater/Biomass stove/Boiler rel ated products : Sales revenue for these products for the three months ended September 30, 2010 were $2,691,900 as compared to $1,528,177 for the three months ended September 30, 2009, an increase of $1,163,723 or 76.15%. The increase in sales revenue derived from solar heaters/biomass stove/boiler related products was due to the increasing demand for solar heater in the third quarter this year.

Heat pipe related equipments/Energy-saving projects: Sales revenue for the three months ended September 30, 2010 was $4,738,678 compared to $3,816,746 for the three months ended September 30, 2009, an increase of $921,932 or 24.15%, because the large orders is more than the same season last year.

Gross Profit

	Three months ended September 30,
	2010			2009

Gross profit:
Solar heater/Biomass stove/Boiler related products		$	575,718		$	375,791
Heat pipe related equipments/Energy-saving projects			1,218,251			936,593
Building integrated energy saving projects			123,199			-
		$	1,917,168		$	1,312,384

Overall: Gross profit margin for the three months ended September 30, 2010 increased by approximately 0.59% to 25.15%, as compared to 24.55% for the three months ended September 30, 2009. This was primarily due to the increase in sales prices of our heat pipe related equipments.

Solar heater/Biomass stove/Boiler related products : Gross profit margin for the three months ended September 30, 2010 was approximately 21.39%, a decrease of 3.20% as compared to 24.59% for the three months ended September 30, 2009.

Heat pipe related equipments/Energy-saving projects: Gross profit margin for the three months ended September 30, 2010 was approximately 25.71%, an increase of 1.17% from 24.54% for the three months ended September 30, 2009 due to an increase in the sale prices.

Operating Expenses

Operating expenses for the three months ended September 30, 2010 were $1,337,919, as compared to $1,190,657 for the three months ended September 30, 2009, an increase of $147,262, or 12.37%. The overall increase in operating expenses was primarily due to the increase in the wages of the staff under the management of Tianjin Huaneng.

Depreciation and amortization expenses increased to $116,714 for the three months ended September 30, 2010, an increase of $47,420 or 68.43%, from $69,294 for the three months ended September 30, 2009, primarily as a result of the increase of our manufacturing equipment and building.

Selling and distribution expenses increased to $762,704 for the three months ended September 30, 2010, an increase of $ 235,830 or 44.76%, from $526,874 for the three months ended September 30, 2009, because we have improved the marketing personnel's wage level this year.

General and administrative expenses were $458,501 for the three months ended September 30, 2010 (or approximately 6.01% of sales) compared to $594,489 (or approximately 11.12% of sales) for the three months ended September 30, 2009, a decrease of 22.87%. The decrease was primarily due to the compression of operation cost.

Net Income

Net income was $305,538 for the three months ended September 30, 2010, compared to $67,419 for the three months ended September 30, 2009. The increase in net income was mainly due to the increase of revenue.

N i ne months ended September 30 , 2010 compared to N i ne months ended September 30 , 2009

Sales Revenue

	Nine months ended September 30,
	2010			2009
Revenue:
Solar heater/Biomass stove/Boiler related products		$	5,223,734		$	4,539,572
Heat pipe related equipments/Energy-saving projects			16,809,713			17,766,009
building integrated energy saving projects			192,438			-
		$	22,225,885		$	22,305,581

Overall: Sales revenue for the nine months ended September 30, 2010 were $22,225,885 as compared to $22,305,581 for the nine months ended September 30, 2009, a decrease of $79,696 or 0.36%. The decrease in sales was primarily attributable to the decline in revenue from our heat pipe related equipments/Energy-saving projects under the management of Tianjin Huaneng.

Solar heater/Bioma ss stove/Boiler related products : Sales revenue for these products for the nine months ended September 30, 2010 were $5,223,734 as compared to $4,539,572 for the nine months ended September 30, 2009, an increase of $684,162 or 15.07%. The increase in sales revenue derived from solar heaters/biomass stove/boiler related products was due to the increasing demand for solar heater in the third quarter this year.

Heat pipe related equipments/Energy-saving projects: Sales revenue for the nine months ended September 30, 2010 was $ 16,809,713 compared to $17,766,009 for the nine months ended September 30, 2009, a decrease of $ 956,296 or 5.38%. The decrease in sales was because we pay little attention to small orders this year. No enough attention to mini-orders results in the decrease of sales in the past nine months.

Gross Profit

	Nine months ended September 30,
	2010			2009

Gross profit:
Solar heater/Biomass stove/Boiler related products		$	1,080,347		$	1,024,025
Heat pipe related equipments/Energy-saving projects			4,867,920			4,457,199
building integrated energy saving projects			122,671			-
		$	6,070,938		$	5,481,224

Overall: Gross profit margin for the nine months ended September 30, 2010 increased by approximately 2.74% to 27.31%, as compared to 24.57% for the nine months ended September 30, 2009. This was primarily due to the increase in sales volume and prices of our heat pipe related equipments.

Solar heater/Biomass stove/Boiler related products : Gross profit margin for the nine months ended September 30, 2010 was approximately 20.68%, as compared to 22.56% for the nine months ended September 30, 2009. This was primarily due to weak market in which we had to sell our products in lower price.

Heat pipe related equipments/Energy -saving projects: Gross profit margin for nine months ended September 30, 2010 was approximately 28.96% as compared to 25.09% from the nine months ended September 30, 2009, an increase of 3.87%. The increase is mainly due to an increase in the sale prices.

Operating Expenses

Operating expenses for the nine months ended September 30, 2010 were $4,212,858, as compared to $3,973,170 for the nine months ended September 30, 2009, an increase of $239,688, or 6.03%. The overall increase in operating expenses was primarily due to increase of salary expense.

Depreciation and amortization expenses increased to $343,538 for the nine months ended September 30, 2010, an increase of $82,338 , or 31.52%, from $ 261,200 for the nine months ended September 30, 2009, primarily as a result of the increase of our manufacturing equipment and building.

Selling and distribution expenses increased to $2,119,033 for the nine months ended September 30, 2010, an increase of $552,087, or 35.23%, from $1,566,946 for nine months ended September 30, 2009, because we have improved the marketing personnel's wage level this year.

General and administrative expenses were $1,750,287 for the nine months ended September 30, 2010 (or approximately 7.87% of sales) compared to $2,145,024 (or approximately 9.62% of sales) for the nine months ended September 30, 2009, a decrease of 18.40%. The decrease was primarily due to the compression of operation cost.

Net Income (loss)

Net income was $1,052,704 for the nine months ended September 30, 2010, compared to the net income of $1,344,842 for the nine months ended September 30, 2009, primarily due to increase of salary expense and strong competition.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities was $2,832,013 for the nine months ended September 30, 2010, while net cash provided by our operating activities was $705,573 for the nine months ended September 30, 2009.

Net cash used in investing activities was $180,135 for the nine months ended September 30, 2010, compared with net cash provided by investing activities in the amount of $940,575 for the nine months ended September 30, 2009.

Net cash provided by financing activities was $735,882 for the nine months ended September 30, 2010, compared with net cash provided by financing activities in the amount of $51,232 for the nine months ended September 30, 2009.

We believe that current cash flow is sufficient to meet anticipated working capital and capital expenditures for at least the next twelve months. We may require additional cash for further development of business, including any investments or acquisitions we may decide to pursue. However, we cannot assure you that such funding will be available.

Cash

Cash and cash equivalents decreased to $2,912,633 as of September 30, 2010, compared to $4,980,717 as of December 31, 2009, primarily as a result of the increase in the operating activities in the second quarter of 2010.

Accounts Receivable

Accounts receivable increased to $10,017,206 as of September 30, 2010, from $8,067,944 as of December 31, 2009, primarily due to Tianjin Huaneng.

Inventory

Inventories increased to $6,472,048 as of September 30, 2010, as compared to $4,547,170 as of December 31, 2009, primarily due to the increase of raw materials considering the rise of the domestic steel prices.

Other Receivables and Prepayments

Other receivables and prepayments increased to $3,252,339 as of September 30, 2010, compared to $1,733,695 as of December 31, 2009, primarily due to the increase of temporary turnover.

Accounts Payable

Accounts payable increased to $2,104,886 as of September 30, 2010, compared to $1,601,002 as of December 31, 2009. This increase was due to the increase in raw materials.

Other Payables and Accrued Liabilities

Other payables and accrued liabilities slightly decreased to $ 9,917,486 as of September 30, 2010 from $9,977,178 as of December 31, 2009.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Item 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

No change in our system of internal control over financial reporting occurred during the period covered by this report for the quarter ended September 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. RISK FACTORS

Not applicable.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. (REMOVED AND RESERVED)

Item 5. OTHER INFORMATION

RESTATEMENT ON CONSOLIDATED FINANCIAL STATEMENTS

The following are the reasons the restatement is required.

The acquisition of the additional 29.97% interest in Tianjin Huaneng Energy Equipment Company on October 27, 2009 was not properly recorded. As disclosed in Note 4 to the financial statements of 2008, the Registrant paid $515,026 at the completion of the agreement with the remainder, aggregating approximately $1,047,611 plus interest to be paid over the next three years. We only recorded the amount actually paid and did not record the corresponding debt. In addition there 1,000,000 warrants to purchase the company’s common stock were issued as part of the purchase price and were not valued and included as additional purchase price.

The using right of building of Deli Solar (Beijing) will expire in August, 2011. But the Company never depreciated for it. So the Company decided to correct it.

After further analysis of the Company’s revenue recognition policy, it has decided to change the revenue recognition of its consolidated subsidiary Tianjin Huaneng. The Company will make the appropriate entries to properly record the revenue and associated costs of revenue.

The following is a summary of the effects of the restatement on the company’s consolidated financial statements.

	As of September 30, 2009
	as previously reported			as restated

ASSETS
Accounts receivable, net		$	7,512,359		$	7,512,359
Inventories			2,892,074			2,892,074
Total current assets			20,921,155			20,921,155
Property, plant and equipment, net			14,145,114			13,928,303
Goodwill			1,911,320			1,966,929
Total assets			38,641,685			38,480,483

	As of September 30,2009
	as previously reported		as restated
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Income tax payables		1,539,204			1,539,204
Other payables and accrued liabilities		5,190,508			6,362,486
Total current liabilities		9,999,590			11,171,568
Long-term debt		-			286,483
Minority interests		1,837,503			327,797

Stockholders’ equity:
Additional paid-in capital		22,506,055			22,612,909
Retained earnings		3,587,603			3,370,792
Total stockholders’ equity		26,804,592			26,694,635

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	38,641,685		$	38,480,483

	For nine months ended September 30,2009
	as previously reported		as restated
Revenue, net	$	20,120,492		$	22,305,581
Cost of revenue		15,762,295			16,824,357
Gross profit		4,358,197			5,481,224
Depreciation and amortization		261,200			261,200
Total operating expenses		3,973,170			3,973,170
Income from operations		385,027			1,508,054
Income before income taxes		288,232			2,157,027
Net income		81,452			1,437,857
Net income available to common stockholders	$	221,815		$	1,344,842
Net income per share – basic and diluted	$	0.02		$	0.09

	For three months ended September 30,2009
	as previously reported		as restated
Revenue, net	$	5,344,923		5,344,923
Cost of revenue		4,032,539		4,032,539
Gross profit		1,312,384		1,312,384
Depreciation and amortization		69,294		69,294
Total operating expenses		1,190,657		1,190,657
Income from operations		121,727		121,727
Income before income taxes		81,927		81,927
Net income		73,885		73,885
Net income available to common stockholders	$	67,419		67,419
Net income per share – basic and diluted	$	-	$	-

Item 6.

EXHIBITS

Exhibit No.		Document Description
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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

	China Solar & Clean Energy Solutions, Inc.

November 15, 2010	By:	/s/ Deli Du
		Deli Du
		Chief Executive Officer and President
		(Principal Executive Officer)

November 15, 2010	By:	/s/ Fangsong Zheng
		Fangsong Zheng
		Acting Chief Financial Officer
		(Principal Accounting Officer)