Apollo Solar Energy Inc (OTC:ASOE)

Item 1.02 Termination of a Material Definitive Agreement
On June 16, 2016 the Registrant's Board of Directors declared that the investors who were parties to the investment contract dated March 1, 2015 among the Registrant, He Jiting and Liping Yu had committed a material breach of the agreement by failing to provide the requisite funds and failing to satisfy the Registrant's debts. By reason of the default, the Board of Directors declared the agreement terminated. The Board of Directors instructed the Registrant's officers to demand the return of 20,000,000 common shares that had been issued to He Jiting and Yu Liping pursuant to that agreement.

APOLLO SOLAR ENERGY, INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


	For the Years Ended December 31,
	2014			2013

Sales	$	4,276,255		$	16,838,764

Cost of goods sold		(3,905,291	)		(16,494,355	)

Gross profit		370,964			344,409

Operating expenses:
General and administrative expenses		1,306,233			2,619,642
Selling expense		131,587			253,310
Research and development expenses		30,583			(74,854	)
Impairment loss		2,441,724			-
Total operating expenses:		3,910,127			2,798,098

Operating loss		(3,539,163	)		(2,453,689	)

Other income (expense)
Interest expense, net		(587,746	)		(641,793	)
Income in equity in Joint Venture		89,640			17,688
Loss from disposal of equipment		-			(40,765	)
Total other income(expense)		(498,106	)		(664,870	)

Loss before provision for income tax-continuing operations		(4,037,269	)		(3,118,559	)

Provison for income tax		-			-

Net loss from continuing operations		(4,037,269	)		(3,118,559	)

Loss from discontinued operations		-			(12,789	)
Gain on sale of subsidiary		-			613,218
Net income from discontinued operations		-			600,429

Net loss		(4,037,269	)		(2,518,130	)

Other comprehensive income(loss)
Foreign currency translation adjustment		(68,360	)		747,631
Comprehensive loss	$	(4,105,629	)	$	(1,770,499	)

Loss per share continuing operations
Basic and diluted	$	(0.03	)	$	(0.06	)

Income per share-discontinued operations
Basic and diluted	$	-		$	0.01

Loss per share	$	(0.03	)	$	(0.05	)

Weighted average shares outstanding
Basic and diluted		50,387,038			50,137,997

Management Discussion and Analysis

Sales

Sales for the year ended December 31, 2014 were $4,276,255, compared to the sales of $16,838,764 for the year ended December 31, 2013, a decrease of $ 12,562,509 or approximately 74.6% for the year ended December 31, 2014. The primary reasons for the decrease in sales is that the Company engaged in purchase and sale transactions during 2013 that had features of high turnover and low margin, with increased sales as a result. The Company did not pursue that kind of transaction during 2014, which has resulted in reduced sales but improved margins.

Net income/loss

We recorded net loss of $4,037,269 and $2,518,130 for the years ended December 31, 2014, and 2013, respectively. The net loss for the year ended December 31, 2013 was the result of netting our loss from continuing operations against the gain of $613,218 that we realized on the sale of our discontinued operation.

Item 1.01 Entry into Material Definitive Agreement
Item 3.02 Unregistered Sales of Equity Securities

On May 8, 2015 the Registrant's Board of Directors approved an investment contract dated March 1, 2015 and a make-good term agreement dated May 7, 2015. The agreements provide for the sale of 20,000,000 shares of the Registrant's common stock to He Jiting and Yu Liping, who are each other's spouses. The purchase price will be 0.5 RMB (approximately $.08) per share, for a total of 10,000,000 RMB (approximately $1.63 million). The agreements also give Mr. He and Mrs. Yu an option to purchase an additional 20 million shares at 0.5 RMB per share, exercisable within the six months after they receive a certificate for the shares initially purchased.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers

Pursuant to the agreements recited above, on May 8, 2015 the Board of Directors expanded to five members. To fill the vacancies, the Board elected He Jiting, Yu Liping and He Songdong, who is the son of He Jiting. At the same time, Zhou Huakang resigned from his position as Chairman and CEO of the Registrant, and Liu Tong resigned from her position as Corporate Secretary. The Board then appointed the following officers:

Yu Liping - Chairman of the Board, Chief Financial Officer
He Jiting - Vice Chairman, Chief Executive Officer
Zhou Huakang - Secretary

Information about the new Board members and new officers follows.

Yu Liping. Since 2001 Mrs. Yu has been employed as Chairman of Shanghai State Grid Equipment Co., Ltd., and since 2010 as Chairman of Shanghai State Grid Construction Co., Ltd. In both positions, Mrs. Yu is the chief executive officer of the company. For eight years prior to 2001, Mrs. Yu served as President of Ninbo Transformer Co., Ltd., a manufacturing enterprise. Mrs. Yu is 46 years old.

He Jiting. Since 2005 Mr. He has been employed as President of Shanghai State Grid Equipment Co., Ltd., and since 2010 as President of Shanghai State Grid Construction Co., Ltd. In both positions, Mr. He is the chief operations officer of the company. From 1993 to 2004 Mr. He served as President of Zhanjiang Nanfang Zhongke Financing Co., Ltd. Mr. He studied accounting at Zhanjin Accounting School in 1983 and studied government accounting in 1984 at Guangdong TV University. Mr. He is 57 years old.

He Songdong. In 2014 Mr. He was awarded a Masters Degree in banking and financing by the University of Sussex (UK). In 2013 he earned a B.S. degree in Business Financing at the University of Greenwich (UK). While pursuing his degrees, Mr. He was employed on several occasions as Assistant to the President by Zhanjiang Yumei Technology Co., Ltd. Mr. He is 24 years old.

APOLLO SOLAR ENERGY, INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

	For the Three months Ended September 30,						For the Nine Months Ended September 30,
	2014			2013			2014			2013

Sales	$	628,345		$	6,350,549		$	3,549,434		$	13,446,941

Cost of goods sold		(517,254	)		(6,194,430	)		(3,188,560	)		(13,025,818	)

Gross profit		111,091			156,119			360,874			421,123

Operating expenses:
General and administrative expenses		301,836			261,984			940,247			1,356,631
Selling expense		30,899			54,980			101,543			189,127
Research and development expenses		8,144			168,731			197,947			799,414
Total operating expenses:		340,879			485,695			1,239,737			2,345,172

Operating loss		(229,788	)		(329,576	)		(878,863	)		(1,924,049	)

Other income (expense)
Interest expense, net		(153,260	)		(141,708	)		(449,639	)		(561,811	)
Income(Loss) in equity in Joint Venture		(8,887	)		(88,805	)		(76,667	)		(276,344	)
Total other income(expense)		(162,147	)		(230,513	)		(526,306	)		(838,155	)

Loss before provision for income taxes-continuing operations		(391,935	)		(560,089	)		(1,405,169	)		(2,762,204	)

Provison for income tax		-			-			-			-

Net loss from continued operations		(391,935	)		(560,089	)		(1,405,169	)		(2,762,204	)

Loss from discontinued operations											(12,789	)
Gain on sale of subsidiary		-			598,236			-			598,236
Net income(loss) from discontinued operations		-			598,236			-			585,447

Net income(loss)		(391,935	)		38,147			(1,405,169	)		(2,176,757	)

Other comprehensive income(loss)
Foreign currency translation adjustment		3,323			34,844			(110,465	)		395,742
Comprehensive loss	$	(388,612	)	$	(525,245	)	$	(1,515,634	)	$	(2,366,462	)
							\
Loss per share continuing operations
Basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.06	)

Loss per share-discontinued operations
Basic and diluted	$	-		$	0.01		$	-		$	0.01

Income(loss) per share-total loss	$	(0.01	)	$	0.00		$	(0.03	)	$	(0.05	)

Weighted average shares outstanding
Basic and diluted		50,387,038			49,377,038			50,387,038			49,377,038

Management Discussion and Analysis

Sales

Sales for the three and nine months ended September 30, 2014 were $628,345 and 3,549,434 respectively, compared to the sales of $6,350,549 and $13,446,941 in the same periods in 2013, a decrease of $5,722,204 or approximately 90.1% for the three months period and a decrease of $9,897,507 or approximately 73.6% for the nine months period. The primary reason for the decrease is that the Company engaged in purchase and sale transactions during 2013 that had features of high turnover and low margin, with increased sales as a result. The Company has not been pursuing that kind of transaction during 2014, which has resulted in reduced sales but improved margins.

Net loss

We recorded net loss of $391,935 for the three months ended September 30, 2014 and a net loss of $1,405,169 for the nine months ended September 30, 2014.

We recorded net income of 38,147 for the three months ended September 30, 2013 and a net loss of $2,176,757 for the nine months ended September 30, 2013.

APOLLO SOLAR ENERGY, INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

	For the Three months Ended June 30,						For the Six Months Ended June 30,
	2014			2013			2014			2013

Sales	$	1,934,173		$	6,365,860		$	2,921,089		$	7,922,075

Cost of goods sold		(1,742,659	)		(6,091,735	)		(2,671,306	)		(7,511,244	)

Gross profit		191,514			274,125			249,783			410,831

Operating expenses:
General and administrative expenses		378,910			625,128			638,411			1,244,176
Selling expense		41,309			78,221			70,644			142,769
Research and development expenses		197,751			335,431			189,803			630,683
Total operating expenses:		617,970			1,038,780			898,858			2,017,628

Operating loss		(426,456	)		(764,655	)		(649,075	)		(1,606,797	)

Other income (expense)
Interest expense, net		(146,255	)		(313,983	)		(296,379	)		(420,512	)
Income(Loss) in equity in Joint Venture		100,025			(92,039	)		(67,780	)		(187,539	)
Total other income(expense)		(46,230	)		(406,022	)		(364,159	)		(608,051	)

Loss before provision for income taxes-continuing operations		(472,686	)		(1,170,677	)		(1,013,234	)		(2,214,848	)

Provison for income tax		-			-			-			-

Net loss		(472,686	)		(1,170,677	)		(1,013,234	)		(2,214,848	)

Other comprehensive income(loss) Foreign currency translation adjustment		778			274,765			(113,788	)		360,898
Comprehensive loss	$	(471,908	)	$	(895,912	)	$	(1,127,022	)	$	(1,853,950	)

Loss per share
Basic and diluted	$	(0.01	)	$	(0.02	)	$	(0.02	)	$	(0.04	)
Weighted average shares outstanding
Basic and diluted		50,387,038			49,377,038			50,387,038			49,377,038

Management Discussion and Analysis

Sales

Sales for the three and six months ended June 30, 2014 were $1,934,173 and 2,921,089 respectively, compared to the sales of $6,365,860 and $7,922,075 in the same period in 2013, a decrease of $4,431,687 or approximately 69.6% for the three months period and a decrease of $5,000,986 or approximately 63.1% for the six months period. The primary reason for the decrease is that the Company engaged in purchase and sale transactions during 2013 that had features of high turnover and low margin, with increased sales as a result. The Company has not been pursuing that kind of transaction during 2014, which has resulted in reduced sales but improved margins.

Net loss

We recorded net loss of $472,686 for the three months ended June 30, 2014 and a net loss of $1,013,234 for the six months ended June 30, 2014 .

We recorded net loss of $1,170,677 for the three months ended June 30, 2013 and a net loss of $2,214,848 for the six months ended June 30, 2013.

APOLLO SOLAR ENERGY, INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

	For the Three Months Ended March 31,
	2014			2013

Sales	$	986,916		$	1,556,215

Cost of goods sold		(928,647	)		(1,419,509	)

Gross profit		58,269			136,706

Operating expenses:
General and administrative expenses		259,501			619,048
Selling expense		29,335			64,548
Research and development expenses		(7,948	)		295,252
Total operating expenses:		280,888			978,848

Operating loss		(222,619	)		(842,142	)

Other income (expense)
Interest expense, net		(150,124	)		(106,529	)
Loss in equity in Joint Venture		(167,805	)		(95,500	)
Total other income(expense)		(317,929	)		(202,029	)

Loss before provision for income taxes-continuing operations		(540,548	)		(1,044,171	)

Provison for income tax		-			-

Net loss		(540,548	)		(1,044,171	)


Other comprehensive income(loss)
Foreign currency translation adjustment		(114,566	)		86,133
Comprehensive loss	$	(655,114	)	$	(958,038	)

Loss per share
Basic and diluted	$	(0.01	)	$	(0.02	)
Weighted average shares outstanding
Basic and diluted		49,377,038			49,377,038

Management Discussion and Analysis

Results of Operations

Sales

Sales for the three months ended March 31, 2014 were $986,916, compared to the sales of $1,556,215 in the same period in 2013, a decrease of $569,299 or approximately 36.6% for the three months period. The primary reason for the decrease in sales was the market in first quarter of year 2014 was rather depressed compared to the same period in 2013.

Net loss

We recorded net loss of $540,548 and $1,044,171 for the three months ended March 31, 2014 and 2013.

APOLLO SOLAR ENERGY, INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


	For the Years Ended December 31,
	2013			2012

Sales	$	16,838,764		$	4,082,303

Cost of goods sold		(16,494,355	)		(4,396,943	)

Gross profit(loss)		344,409			(314,640	)

Operating expenses:
General and administrative expenses		2,619,642			3,031,823
Selling expense		253,310			200,476
Research and development expenses		(74,854	)		1,155,895
Impairment on assets held for sale		-			925,086
Total operating expenses:		2,798,098			5,313,280

Operating loss		(2,453,689	)		(5,627,920	)

Other income (expense)
Interest expense, net		(641,793	)		(1,053,940	)
Income in equity of Joint Venture		17,688			7,496
Gain on investment in Joint Venture		-			2,041,525
Loss from disposal of equipment		(40,765	)		-
Total other income(expense)		(664,870	)		995,081

Loss before provision for income taxes-continuing operations		(3,118,559	)		(4,632,839	)

Provison for income tax		-			102,918

Net loss from continuing operations		(3,118,559	)		(4,735,757	)

Loss from discontinued operations		(12,789	)		(491,993	)
Gain on sale of subsidiary		613,218			-
Net income( loss) from discontinued operations		600,429			(491,993	)

Net loss		(2,518,130	)		(5,227,750	)

Other comprehensive income(loss)
Foreign currency translation adjustment		747,631			10,269
Comprehensive loss	$	(1,770,499	)	$	(5,217,481	)
	\
Net loss per share continuing operations
Basic and diluted	$	(0.06	)	$	(0.10	)

Income (Loss) per share-discontinued operations
Basic and diluted	$	0.01		$	(0.01	)

Loss per share-total loss
Basic and diluted	$	(0.05	)	$	(0.11	)

Weighted average shares outstanding
Basic and diluted		50,137,997			49,377,038

Management Discussion and Analysis

Results of Operations

Sales

Sales for the years ended December 31, 2013 were $16,838,764, compared to the sales of $4,082,303 for the year ended December 31, 2012, an increase of $ 12,756,461 or approximately 312.5% for the year. The primary reasons for the increase in sales were:

·Sales orders increased due to more incentives for sales people as a result of the reform enforced in the purchase department and sales department since last year.

·The special trading business we started this April has the features of high turnover , although it yields a low profit margin.

·Compared to 2013, the market in 2012 was rather depressed.

Net income/loss

We recorded net loss of $2,518,130 and $5,227,750 for the year ended December 31, 2013, and 2012, respectively. The net loss for the year ended December 31, 2013 was the result of netting our loss from continuing operations against the gain of $613,218 that we realized on the sale of our discontinued operation. The decrease in net loss during December 31, 2013 was mainly because of the significant improvement in revenue and gross profit, resulted in a reduction of $2,709,620 in our net loss.

APOLLO SOLAR ENERGY, INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2013			2012			2013			2012

Sales	$	6,365,860		$	988,346		$	7,922,075		$	2,860,380

Cost of goods sold		(6,091,735	)		(1,574,128	)		(7,511,244	)		(3,342,282	)

Gross profit/loss		274,125			(585,782	)		410,831			(481,902	)

Operating expenses:
General and administrative expenses		625,128			738,513			1,244,176			1,426,533
Selling expense		78,221			52,788			142,769			109,686
Research and development expenses		335,431			379,355			630,683			534,925
Total operating expenses:		1,038,780			1,170,656			2,017,628			2,071,144

Operating loss		(764,655	)		(1,756,438	)		(1,606,797	)		(2,553,046	)

Other income (expense)
Interest expense, net of interest income		(313,983	)		(114,320	)		(420,512	)		(253,216	)
Loss in equity in Joint Venture		(92,039	)		(66,151	)		(187,539	)		(174,748	)
Gain on investment in Joint Venture		-			2,040,651			-			2,040,651
Total other income (expense)		(406,022	)		1,860,180			(608,051	)		1,612,687

Income (loss) before provision for income taxes		(1,170,677	)		103,742			(2,214,848	)		(940,359	)

Income tax		-			102,930			-			102,930

Net income (loss)		(1,170,677	)		812			(2,214,848,	)		(1,043,289	)

Other comprehensive loss
Foreign currency translation adjustment		274,765			(39,516	)		360,898			(10,566	)
Comprehensive loss	$	(895,912	)	$	(38,704	)	$	(1,853,950	)	$	(1,053,855	)
							\
Loss per share
Basic	$	(0.02	)	$	0.00		$	(0.04	)	$	(0.02	)
Diluted	$	(0.02	)	$	0.00		$	(0.04	)	$	(0.02	)

Weighted average shares outstanding
Basic		49,377,038			51,795,961			49,377,038			51,795,961
Diluted		49,377,038			51,795,961			49,377,038			51,795,961

APOLLO SOLAR ENERGY, INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

	For the Three Months Ended March 31,
	2013			2012

Sales	$	1,556,215		$	1,872,034

Cost of goods sold		(1,419,509	)		(1,768,154	)

Gross profit		136,706			103,880

Operating expenses:
General and administrative expenses		619,048			688,019
Selling expense		64,548			56,898
Research and development expenses		295,252			155,570
Total operating expenses		978,848			900,487

Operating loss		(842,142	)		(796,607	)

Other income (expense):
Interest expense		(106,529	)		(138,896	)
Loss in equityof Joint Venture		(95,500	)		(108,597	)
Total other income (expense)		(202,029	)		(247,493	)

Loss before provision for income taxes		(1,044,171	)		(1,044,100	)

Provision for income taxes		-			-

Net loss		(1,044,171	)		(1,044,100	)

Other comprehensive loss
Foreign currency translation adjustment		86,133			28,950
Comprehensive loss	$	(958,038	)	$	(1,015,150	)

Loss per share
Basic	$	(0.02	)	$	(0.02	)
Diluted	$	(0.02	)	$	(0.02	)

Weighted average shares outstanding
Basic		49,377,038			49,377,038
Diluted		49,377,038			49,377,038

APOLLO SOLAR ENERGY, INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


	For the Years Ended December 31,
	2012			2011

Sales	$	4,484,708		$	10,369,260

Cost of goods sold		(4,850,113	)		(8,884,367	)

Gross profit (loss)		(365,405	)		1,484,893

Operating expenses:
General and administrative expenses		3,292,124			4,213,495
Selling expense		271,575			369,092
Research and development expenses		1,265,423			934,583
Impairment on assets held for sale		925,086			221,143
Total operating expenses:		5,754,208			5,738,313

Operating loss		(6,119,613	)		(4,253,420	)

Other income (expense)
Interest income-related party		-			837,359
Interest expense, net of interest income		(1,054,240	)		(272,619	)
Income (loss) in equity in Joint Venture		7,496			(80,058	)
Gain on investment in Joint Venture		2,041,525			-
Total other income		994,781			484,682

Loss before provision for income taxes		(5,124,832	)		(3,768,738	)

Provision for income taxes		102,918			-

Net loss		(5,227,750	)		(3,768,738	)

Other comprehensive loss
Foreign Currency Translation Adjustment		10,269			963,429
Comprehensive loss	$	(5,217,481	)	$	(2,805,309	)

Loss per share
Basic	$	(0.11	)	$	(0.08	)
Diluted	$	(0.11	)	$	(0.08	)

Weighted average shares outstanding
Basic		49,377,038			49,819,684
Diluted		49,377,038			49,819,684

Item 5.02.

Departure of Directors or Principal Officers; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers

Effective May 22, 2012, Mr. Wilson Liu resigned from his position as Chief Financial Officer of Apollo Solar Energy, Inc. (the “Company”). Mr. Liu’s resignation was not related to any disagreement or dispute with the Company.

The Board of Directors has appointed Ms. Hua Hui to serve as Interim Chief Financial Officer of the Company for an indefinite term, effective May 22, 2012. Ms. Hua Hui, age 37, has served as the Chief Financial Officer of the Company’s wholly-owned subsidiary, Sichuan Apollo Solar Science & Technology Co., Ltd., since 2011. From 2004 through 2011, Ms. Hua served as Chief Financial Officer for Sichuan Jinke Public Equipment Manufacturing Company. Ms. Hua received a Bachelor’s degree in accounting, Master Degree in accounting and is a Certified Public Accountant. There is no family relationship between Ms. Hua and any of the executive officers or directors of the Company. In addition, Ms. Hua is not a party to any transaction with the Company or its subsidiaries that would require disclosure under Item 404(a) of the Securities and Exchange Commission Regulation S-K.

The Board of Directors has agreed to pay Ms. Hua Hui an annual salary of 230,000 Renminbi (approximately $36,250) for her services as Interim CFO

APOLLO SOLAR ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME

(Unaudited)

(In US Dollars)

	Three months Ended March 31,
	2012			2011

SALES	$	1,872,034		$	3,783,220

COST OF SALES		1,768,154			3,430,156

GROSS PROFIT		103,880			353,064

OPERATING EXPENSES
General and administrative expenses		688,019			900,781
Selling expenses		56,898			70,273
Research and development expenses		155,570			30,810
TOTAL OPERATING EXPENSES		900,487			1,001,864

OPERATING LOSS		(796,607	)		(648,800	)

OTHER INCOME (EXPENSES)
Interest income - related party		-			837,359
Interest expenses, net of interest income		(138,896	)		(94,189	)
Loss in equity in Joint Venture		(108,597	)		(111,843	)

LOSS BEFORE INCOME TAXES		(1,044,100	)		(17,473	)

Income tax credit		-			(97,066	)

NET INCOME (LOSS)		(1,044,100	)		79,593

OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment		28,950			186,139

COMPREHENSIVE INCOME (LOSS)	$	(1,015,150	)	$	265,732

Basic and Diluted Loss per common share
Basic and diluted	$	(0.02	)	$	0.00

Weighted average number of common share outstanding
Basic and diluted		49,377,038			51,091,546

Sales for the three months ended March 31, 2012 were $1,872,034, compared to the sales of $3,783,220 in the same period in 2011, a decrease of $1,911,186 or approximately 50.5%. The primary reasons for the reduction in sales were:

Termination of the Company’s relationship with First Solar, whose purchases in the first quarter of 2011 totalled $1,166,000.
There were sales of Selenium totaled $44,466 in the first quarter of 2012. In the first quarter of 2011, our sales of Selenium totaled $825,550.

APOLLO SOLAR ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
(In US Dollars)

	Year Ended December 31,
	2011			2010

SALES	$	10,369,260		$	9,594,382

COST OF SALES		8,884,367			8,108,486

GROSS PROFIT		1,484,893			1,485,896

OPERATING EXPENSES
General and administrative expenses		4,434,638			6,971,192
Selling expenses		369,092			252,748
Research and development expenses		934,583			646,086
TOTAL OPERATING EXPENSES		5,738,313			7,870,026

OPERATING LOSS		(4,253,420	)		(6,384,130	)

OTHER INCOME (EXPENSES)
Interest income - related party		837,359			-
Interest expenses, net of interest income		(272,619	)		(196,589	)
Gain on investment in Joint Venture		-			730,572
Loss in equity in Joint Venture		(80,058	)		(348,285	)

LOSS BEFORE INCOME TAXES		(3,768,738	)		(6,198,432	)

Income tax credit		-			(368,387	)

NET LOSS	$	(3,768,738	)	$	(5,830,045	)

OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment	$	963,429		$	733,401

COMPREHENSIVE LOSS	$	(2,805,309	)	$	(5,096,644	)

Basic and Diluted Loss per common share
Basic and diluted	$	(0.08	)	$	(0.12	)

Weighted average number of common share outstanding
Basic and diluted		49,819,684			48,460,149

APOLLO SOLAR ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In US Dollars)

	Three Months Ended September 30,								Nine Months Ended September 30,
	2011				2010				2011				2010

Sales		$	2,245,534			$	3,582,735			$	8,968,872			$	6,158,700
Cost of sales			(1,920,272	)			(2,577,786	)			(7,518,345	)			(4,675,245	)
Gross profit			325,262				1,004,949				1,450,527				1,483,455

Operating Expenses
General and administrative expenses			835,272				862,246				2,412,540				2,785,182
Selling expenses			71,805				73,737				247,008				190,074
Research and development expenses			84,181				314,098				374,753				667,208
Total Operating Expenses			991,258				1,250,081				3,034,301				3,642,464

Operating Loss			(665,996	)			(245,132	)			(1,583,774	)			(2,159,009	)
Interest income (expenses)			(56,946	)			(68,356	)			630,851				(251,792	)
Loss on sale of assets			(132,398	)							(132,398	)
Gain on investment in Joint Venture			1,205,110								1,205,110
Loss in equity of Joint Venture			(141,078	)			(223,025	)			(388,666	)	(223,025)
Income (loss) before income tax			208,692				(536,513	)			(268,877	)			(2,633,826	)
Income tax expense (credit)			2,335				-				(123,443	)			-
Net income (loss)			206,357				(536,513	)			(145,434	)			(2,633,826	)

Other Comprehensive Income (Loss)
Foreign Currency Translation Adjustment			285,338				384,489				784,876				518,286
Comprehensive income (loss)		$	491,696			$	(152,024	)		$	639,442			$	(2,115,540	)

Basic and Diluted Loss per common share
Basic and diluted		$	(0.00	)		$	(0.01	)		$	(0.00	)		$	(0.06	)
Weighted average common share outstanding
Basic and diluted			49,237,038				50,133,662				49,848,414				47,885,783

Second Quarter 2011 results

Sales for the three months ended June 30, 2011 were $2,940,118, compared to sales of $1,501,919 in the same period in 2010, an increase of $1,438,199, or approximately 96%

For the three months ended June 30, 2011, the Company had a net loss of $431,385, compared to a net loss of $1,011,002 for the three months ended June 30, 2010. The primary reasons for the decrease in net loss for the three months ended June 30, 2011 was an increase in sales, and the reduction of general and administrative expenses, plus interest income of a loan to related parties.

"Apollo improved its financial results in the second quarter of 2011. We believe this improvement in our results of operations strongly indicates we are now on the right track," Dr. Jingong Pan, CEO of Apollo Solar, stated. "Our new marketing strategy to increase three product lines such as material for solar panel glass, material for signal integrated processors, and substrate material for LED panels helped us increase our sales and our effort to cost improvement helped us reduce expenses. We will continue pursuit of these strategies to deliver better results in the further." of a loan to related parties.

The Company believes that its cash flows generated internally may not be sufficient to sustain operations and repay short term bank loans for the next twelve months. Therefore, from time to time, the Company may require extra funding through short term borrowing from PRC banks or other financing activities if needed in the near future.

CHENGDU, China, May 20, 2011 /PRNewswire-Asia-FirstCall/ -- Apollo Solar Energy, Inc. (OTCBB: ASOE) ("Apollo" or "the Company"), a vertically integrated refiner and producer of high purity tellurium (Te), tellurium-based compounds and other metals for the solar photovoltaic (PV) industry and specific segments of the electronic materials market worldwide reported its first quarter 2011 earnings in its Form 10-Q filed with the Securities and Exchange Commission on May 16, 2011.

Sales for the three months ended March 31, 2011 were $3,783,220, compared to the sales of $1,073,774 in the same period in 2010, an increase of $2,709,446, or approximately 252%.
For the three months ended March 31, 2011, the Company had net income of $79,593, compared to a net loss of $1,086,159 for the three months ended March 31, 2010. The primary reasons for the increase in net income for the three months ended March 31, 2011 was an increase in sales, and the reduction of general and administrative expenses, plus interest income of a loan to related parties.

"Apollo turned profitable in the first quarter of 2011. We believe this change in our results of operations strongly indicates we are now on the right track," Dr. Jingong Pan, CEO of Apollo Solar, stated. "We believe that our new marketing strategy to increase three product lines such as material for solar panel glass, material for signal integrated processors, and substrate material for LED panels will further our future success. Additionally, we expect the Chinese government support of solar energy development will increase demand for our products in 2011 and well into the future."

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
(In US Dollars)
	Year Ended December 31,
	2010			2009
SALES	$	9,594,382		$	7,813,605

COST OF SALES		8,108,486			6,012,500

GROSS PROFIT		1,485,896			1,801,105

OPERATING EXPENSES:
General and administrative expenses		6,971,192			5,586,508
Selling expenses		252,748			204,701
Research and development expenses		646,086			48,623
TOTAL OPERATING EXPENSES		7,870,026			5,839,832

OPERATING LOSS		(6,384,130	)		(4,038,727	)

Gain on investment in Joint Venture		730,572			3,977,511
Loss in equity of Joint Venture		(348,285	)
Interest expense		(196,589	)		(476,638	)
Other income expenses		-			207,137

LOSS BEFORE PROVISION FOR INCOME TAXES		(6,198,432	)		(330,717	)

Income tax expense (credit)		(368,387	)		584,854

NET LOSS	$	(5,830,045	)	$	(915,571	)

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment	$	733,401		$	(8,908	)

COMPREHENSIVE LOSS	$	(5,096,644	)	$	(924,479	)

Basic and Diluted losses per common share
Basic	$	(0.12	)	$	(0.02	)
Diluted	$	(0.12	)	$	(0.02	)

Weighted average number of common shares outstanding
Basic		48,460,149			44,555,131
Diluted		48,460,149			44,555,131

We have accumulated significant net losses from our inception through December 31, 2010 and we may be unable to generate significant revenue or any net income in the future. We cannot predict when, or if, we will become profitable in the future. Even if we achieve profitability, we may not be able to sustain it. We have funded our operations primarily through the issuance of equity and debt securities to investors and may not be able to generate a positive cash flow in the future.

On December 30, 2010, Apollo Solar Energy, Inc. issued a total of 1,500,000 shares of the Company’s common stock to 11 individuals, in the aggregate, in consideration for technical, marketing and R&D consulting services rendered by such individuals to the Company.

Apollo Solar Energy Inc (OTC:ASOE)

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