10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

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

For the quarterly period ended June 30, 2012

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

For the transition period from __________ to ____________

Commission File Number: 000-12122

APOLLO SOLAR ENERGY, INC.

 (Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization) 84-0601802 (I.R.S. Employer Identification No.)

No. 485 Tengfei Third,

Shuangliu Southwest Airport Economic Development Zone,

Shuangliu, Chengdu

People’s Republic of China, 610207

(Address of principal executive offices)

 Registrant’s Telephone Number, Including Area Code:  +86 (28) 8562-3888       

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. Yes  ý No  o

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). Yes  ý No o

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 “smaller reporting company” in Rule 12b-2 of the Exchange Act.

              Large accelerated filer              o                                        Accelerated filer                  o

              Non-accelerated filer               o                                        Smaller reporting company   ý

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o   No  ý

There were 49,377,038 shares of common stock outstanding as of August 14, 2012.

 Amendment No. 1:  Explanatory Note

This amendment is being filed in order to file the interactive data files.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

101.INS XBRL Instance

101.SCH XBRL Schema

101.CAL XBRL Calculation

101.DEF XBRL Definition

101.LAB XBRL Label

101.PRE XBRL Presentation

SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Apollo Solar Energy, Inc.
Date: August 29, 2012                 Date: August 29, 2012	By:  /s/ Jingong Pan  Jingong Pan  Chief Executive Officer  By:  /s/ Hui Hua  Hui Hua  Chief Financial Officer

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Note 7. Short-term Loan: Schedule of Short-term Debt (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
1) Loan payable to Chengdu Xihang Gang Construction & Investment Co., Ltd. due on demand, without interest collateralized by certain plant equipment of Sichuan Apollo	$ 654,631	$ 654,974
2) Loan payable to Bank of Communication, Chengdu branch due on July 29, 2012, with interest at 8.53% per annum, collateralized by the buildings and land use right of Diye, which was paid in full on July 27, 2012	317,012	317,179
3) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on August 25, 2012, with interest at 7.74% per annum, collateralized by the buildings of Sichuan Apollo	792,531	792,947
4) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on September 19, 2012, with interest at 7.74% per annum, collateralized by the buildings of Sichuan Apollo	697,427	697,794
5) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on December 25, 2012,with interest at 7.74% per annum, collateralized by the buildings of Sichuan Apollo	1,585,062	1,585,894
6) Loan payable to Bank of China, Xihanggang Branch, Chengdu, due on March 28, 2012, with interest of 6.73% per annum. The loan was paid in full in March 2012.		1,586
7) Loan payable to Wuhan Economic Development Group through Industrial and Commercial Bank of China, Huangpu Branch, Wuhan due on October 31, 2012,with interest at 7.5% per annum, collateralized by Sichuan Xinlong's 100% ownership in Shimian	1,268,050
8) Loan payable to Bo Hai Bank, Chengdu Branch, due on August 23, 2012,with interest at 7.625% per annum, collateralized by the buildings of Sichuan Apollo	1,585,062
9) Loan payable to Bank of China, Xihanggang Branch, Chengdu, due on demand	795
Short-term loans	$ 6,900,570	$ 4,050,374

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Note10. Business Segments: Business Segment Schedule for the three months ended June 30, 2011 (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Sales	$ 988,346	$ 2,940,118	$ 2,860,380	$ 6,723,338
OPERATING LOSS	(1,756,438)	(268,979)	(2,553,046)	(917,778)
Depreciation and Amortization	230,066	245,020	468,597	486,035
Capital expenditures	74,316	22,431	87,815	91,236
Manufacturing
Sales	18,861		174,532
OPERATING LOSS	(154,440)	(177,630)	(571,237)	(382,327)
Depreciation and Amortization	196,103	148,601	356,092	352,987
Capital expenditures	26,713	4,917	28,220	15,434
Refining
Sales	969,485	2,940,118	2,685,848	6,723,338
OPERATING LOSS	(1,265,620)	267,662	(1,283,234)	130,921
Depreciation and Amortization	25,875	88,502	96,242	117,272
Capital expenditures	46,935	4,057	57,263	22,590
Mining
OPERATING LOSS	(55,602)	(49,184)	(113,228)	(150,874)
Depreciation and Amortization	8,088	7,917	16,263	15,776
Capital expenditures	668	13,457	2,332	53,212
Corporate and Other
OPERATING LOSS	$ (280,776)	$ (309,826)	$ (585,347)	$ (515,498)

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Note 2. Inventories: Schedule of Inventory, Current (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Inventory, Raw Materials, Gross	$ 756,251	$ 719,635
Inventory, Work in Process, Gross	1,125,401	1,322,666
Inventory, Finished Goods, Gross	1,613,468	2,023,686
Inventories	$ 3,495,120	$ 4,065,987

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Note 8. Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)

3 Months Ended

Jun. 30, 2012

Schedule of Effective Income Tax Rate Reconciliation:

Schedule of Effective Income Tax Rate Reconciliation

	Six months ended June 30
	2012	2011
U.S. Statutory rate of 35%	$       (329,126)	$     (167,148)
Tax rate difference between China and U.S.	184,940	159,885
Change in valuation allowance	144,186	(112,651)
Tax paid for prior year	102,930	-
Permanent difference	-	(5,864)
Effective tax	$         102,930	$     (125,778)

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Note 8. Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Current Income Tax Expense (Benefit)			$ 102,930	$ 11,872
Deferred Income Tax Expense (Benefit)				(137,650)
Provision for income taxes(credit)	$ 102,930	$ (28,712)	$ 102,930	$ (125,778)

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Note 5. Equity Method Investment in Joint Venture: Summarized financial information for our investment in the JV assuming a 100% ownership interest (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Proforma Revenue		$ 3,141
Proforma Cost of Sales		1,689
Proforma Gross Profit		1,443
Proforma Operating Loss	(499,280)	(707,410)
Proforma Loss before income tax	$ (499,280)	$ (707,410)

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Note 4. Related Parties Transactions and Balances

3 Months Ended

Jun. 30, 2012

Note 4. Related Parties Transactions and Balances:

Note 4. Related Parties Transactions and Balances

NOTE 4.  RELATED PARTIES TRANSACTIONS AND BALANCES

The breakdown of due from/due to related parties consists of the following:

	As of
	June 30, 2012		December 31, 2011
Due from (to) Xinju	$	38,063	$	(2,992)
Due to shareholders		(211,221)		(211,221	)
Total	$	(173,158)	$	(214,213)

Due to shareholders and due to/from Xinju are non-interest bearing and due on demand.

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Note10. Business Segments: Business Segment Schedule for the six months ended June 30, 2012 (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Sales	$ 988,346	$ 2,940,118	$ 2,860,380	$ 6,723,338
OPERATING LOSS	(1,756,438)	(268,979)	(2,553,046)	(917,778)
Depreciation and Amortization	230,066	245,020	468,597	486,035
Capital expenditures	74,316	22,431	87,815	91,236
Manufacturing
Sales	18,861		174,532
OPERATING LOSS	(154,440)	(177,630)	(571,237)	(382,327)
Depreciation and Amortization	196,103	148,601	356,092	352,987
Capital expenditures	26,713	4,917	28,220	15,434
Refining
Sales	969,485	2,940,118	2,685,848	6,723,338
OPERATING LOSS	(1,265,620)	267,662	(1,283,234)	130,921
Depreciation and Amortization	25,875	88,502	96,242	117,272
Capital expenditures	46,935	4,057	57,263	22,590
Mining
OPERATING LOSS	(55,602)	(49,184)	(113,228)	(150,874)
Depreciation and Amortization	8,088	7,917	16,263	15,776
Capital expenditures	668	13,457	2,332	53,212
Corporate and Other
OPERATING LOSS	$ (280,776)	$ (309,826)	$ (585,347)	$ (515,498)

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Note10. Business Segments: Business Segment Schedule for the three months ended June 30, 2012 (Tables)

3 Months Ended

Jun. 30, 2012

Business Segment Schedule for the three months ended June 30, 2012:

Business Segment Schedule for the three months ended June 30, 2012

	Manufacturing	Refining	Mining	Corporate & Others	Consolidated Total
Revenue	$      18,861	$ 969,485	$     -	$      -	$ 988,346
Operating loss	(154,440)	(1,265,620)	(55,602)	(280,776)	(1,756,438)
Depreciation and amortization	196,103	25,875	8,088	-	230,066
Capital expenditures	$      26,713	$  46,935	$   668	$      -	$    74,316

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Note10. Business Segments: Business Segment Schedule for the six months ended June 30, 2011 (Tables)

6 Months Ended

Jun. 30, 2011

Business Segment Schedule for the six months ended June 30, 2011:

Business Segment Schedule for the six months ended June 30, 2011

	Manufacturing	Refining	Mining	Corporate & Others	Consolidated Total
Revenue	$            -	$6,723,338	$       -	$           -	$ 6,723,338
Operating loss	(382,327)	130,921	(150,874)	(515,498)	(917,778)
Depreciation and amortization	352,987	117,272	15,776	-	486,035
Capital expenditures	$       15,434	$  22,590	$ 53,212	$           -	$    91,236

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Note10. Business Segments: Business Segment Schedule for the six months ended June 30, 2011 (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Sales	$ 988,346	$ 2,940,118	$ 2,860,380	$ 6,723,338
OPERATING LOSS	(1,756,438)	(268,979)	(2,553,046)	(917,778)
Depreciation and Amortization	230,066	245,020	468,597	486,035
Capital expenditures	74,316	22,431	87,815	91,236
Manufacturing
Sales	18,861		174,532
OPERATING LOSS	(154,440)	(177,630)	(571,237)	(382,327)
Depreciation and Amortization	196,103	148,601	356,092	352,987
Capital expenditures	26,713	4,917	28,220	15,434
Refining
Sales	969,485	2,940,118	2,685,848	6,723,338
OPERATING LOSS	(1,265,620)	267,662	(1,283,234)	130,921
Depreciation and Amortization	25,875	88,502	96,242	117,272
Capital expenditures	46,935	4,057	57,263	22,590
Mining
OPERATING LOSS	(55,602)	(49,184)	(113,228)	(150,874)
Depreciation and Amortization	8,088	7,917	16,263	15,776
Capital expenditures	668	13,457	2,332	53,212
Corporate and Other
OPERATING LOSS	$ (280,776)	$ (309,826)	$ (585,347)	$ (515,498)

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Note10. Business Segments: Business Segment Schedule for the three months ended June 30, 2011 (Tables)

3 Months Ended

Jun. 30, 2011

Business Segment Schedule for the three months ended June 30, 2011:

Business Segment Schedule for the three months ended June 30, 2011

	Manufacturing	Refining	Mining	Corporate & Others	Consolidated Total
Revenue	$           -	$2,940,118	$      -	$        -	$ 2,940,118
Operating loss	(177,630)	267,662	(49,184)	(309,826)	(268,979)
Depreciation and amortization	148,601	88,502	7,917	-	245,020
Capital expenditures	$     4,917	$  4,057	$13,457	$       -	$     22,431

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Note 1. Basis of Presentation: Going Concern (Details) (USD $)	Jun. 30, 2012
Negative working capital	$ 4,637,639

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Note 3. Prepaid Expenses and Other Current Assets

3 Months Ended

Jun. 30, 2012

Note 3. Prepaid Expenses and Other Current Assets:

Note 3. Prepaid Expenses and Other Current Assets

NOTE 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist following:

	June 30,2012	December 31,2011
Advances for purchases	$           1,608,044	$          908,760
Other receivable	153,968	92,900
Other prepaid expenses	6,182	-
Total	$           1,768,194	$       1,001,660

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Note 2. Inventories (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Inventory Write-down	$ 324,831	$ 0

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Note 8. Taxes (Details) (USD $)	3 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Deferred Tax Assets, Tax Credit Carryforwards, Foreign	$ 3,000,000
Operating Loss Carryforwards	8,000,000
Operating Loss Carryforwards, Expiration Dates	between 2012 and 2022.
Deferred Tax Assets, Net of Valuation Allowance, Current	4,000,000
Value Added Tax Receivable	66,413
Value Added Tax Payable		$ 62,511

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CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2012	Dec. 31, 2011
Cash	$ 427,287	$ 363,771
Accounts receivable	841,754	804,577
Inventories	3,495,120	4,065,987
Prepaid expenses and other current assets	1,768,194	1,001,660
TOTAL CURRENT ASSETS	6,532,355	6,235,995
Property, machinery and mining assets, net	17,188,944	20,370,831
Assets held for sale	924,280	924,765
Non-marketable investment	55,477	55,506
Investment in and advances to Joint Venture	5,216,212	581,963
Total non-current assets	23,384,913	21,933,065
TOTAL ASSETS	29,917,268	28,169,060
Short-term loans	6,900,570	4,050,374
Account payable - trade	265,218	202,853
Account payable - construction vendors	1,425,454	1,493,155
Accrued expenses and other current liabilities	2,405,594	2,677,948
Due to stockholders and related parties	173,158	214,213
TOTAL CURRENT LIABILITIES	11,169,994	8,638,543
Preferred stock: $0.001 par value, 25,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2012 and December 31, 2011
Common stock: $0.001 par value, 100,000,000 shares authorized; 51,795,961 shares issued and outstanding as of June 30, 2012 and December 31, 2011	51,796	51,796
Additional paid-in capital	32,879,655	32,609,043
Treasury stock 2,418,923 shares at cost	(5,216,770)	(5,216,770)
Accumulated deficit	(11,940,865)	(10,897,576)
Accumulated other comprehensive income	2,973,458	2,984,024
TOTAL STOCKHOLDERS' EQUITY	18,747,274	19,530,518
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 29,917,268	$ 28,169,061

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Note10. Business Segments: Business Segment Schedule for the three months ended June 30, 2012 (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Sales	$ 988,346	$ 2,940,118	$ 2,860,380	$ 6,723,338
OPERATING LOSS	(1,756,438)	(268,979)	(2,553,046)	(917,778)
Depreciation and Amortization	230,066	245,020	468,597	486,035
Capital expenditures	74,316	22,431	87,815	91,236
Manufacturing
Sales	18,861		174,532
OPERATING LOSS	(154,440)	(177,630)	(571,237)	(382,327)
Depreciation and Amortization	196,103	148,601	356,092	352,987
Capital expenditures	26,713	4,917	28,220	15,434
Refining
Sales	969,485	2,940,118	2,685,848	6,723,338
OPERATING LOSS	(1,265,620)	267,662	(1,283,234)	130,921
Depreciation and Amortization	25,875	88,502	96,242	117,272
Capital expenditures	46,935	4,057	57,263	22,590
Mining
OPERATING LOSS	(55,602)	(49,184)	(113,228)	(150,874)
Depreciation and Amortization	8,088	7,917	16,263	15,776
Capital expenditures	668	13,457	2,332	53,212
Corporate and Other
OPERATING LOSS	$ (280,776)	$ (309,826)	$ (585,347)	$ (515,498)

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Note 1. Basis of Presentation

3 Months Ended

Jun. 30, 2012

Note 1. Basis of Presentation:

Note 1. Basis of Presentation

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Apollo Solar Energy, Inc. (the “Company) reflect all material adjustments consisting of only normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of results for the interim periods.  Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading.  These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 as filed with the Securities and Exchange Commission.

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 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 six months ended June 30, 2012 are not necessarily indicative of the results to be expected for the entire year or for any future period.

The Company’s functional currency is the Chinese Renminbi (“RMB”); however, the accompanying financial statements have been translated and presented in United States Dollars (“USD”).

Going concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has negative working capital of $4,637,639, did not generate cash from its operations, and has had operating losses during past two years. These circumstances, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Note 4. Related Parties Transactions and Balances: Schedule of Related Party Transactions (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Due from (to) Xinju	$ 38,063	$ (2,992)
Due to shareholders	(211,221)	(211,221)
Due to stockholders and related parties	$ (173,158)	$ (214,213)

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Note 5. Equity Method Investment in Joint Venture: Summarized financial information for our investment in the JV assuming a 100% ownership interest (Tables)

3 Months Ended

Jun. 30, 2012

Summarized financial information for our investment in the JV assuming a 100% ownership interest:

Summarized financial information for our investment in the JV assuming a 100% ownership interest

	June 30, 2012		June 30, 2011
Statement of operations
Revenues		$            -		$        3,141
Cost of sales		-		1,689
Gross profit		-		1,443
Operating Loss		(499,280)		(707,410)
Loss before income tax		(499,280)		(707,410)

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Note 5. Equity Method Investment in Joint Venture (Details) (USD $)	30 Months Ended
	Jun. 30, 2012	Nov. 09, 2009
Aggregate cash capital contribution by Bengbu and the Agency	$ 22,700,000	$ 22,000,000
Contribution by Sichuan Apollo's of assets consisting of land, a manufacturing plant, equipment and three patents net book value	4,700,000
Contribution by Sichuan Apollo's of assets consisting of land, a manufacturing plant, equipment and three patents fair market value		7,300,000
Debt Assinged to Joint Venture	5,900,000
Excess of the proportionate share of the JV's net assets at fair market value over the cost of the assets contributed	$ 7,100,000

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Note 7. Short-term Loan: Schedule of Short-term Debt (Tables)

3 Months Ended

Jun. 30, 2012

Schedule of Short-term Debt:

Schedule of Short-term Debt

	June 30,2012	December 31, 2011
1) Loan payable to Chengdu Xihang Gang Construction & Investment Co., Ltd. due on demand, without interest collateralized by certain plant equipment of Sichuan Apollo	$      654,631	$      654,974
2) Loan payable to Bank of Communication, Chengdu branch due on July 29, 2012, with interest at 8.53% per annum, collateralized by the buildings and land use right of Diye, which was paid in full on July 27, 2012	317,012	317,179
3) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on August 25, 2012, with interest at 7.74% per annum, collateralized  by the buildings of Sichuan Apollo	792,531	792,947
4) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on September 19, 2012, with interest at 7.74% per annum, collateralized by the buildings of Sichuan Apollo	697,427	697,794
5) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on December 25, 2012,with interest at 7.74% per annum, collateralized by the buildings of Sichuan Apollo	1,585,062	1,585,894
6) Loan payable to Bank of China, Xihanggang Branch, Chengdu, due on March 28, 2012, with interest of 6.73% per annum.  The loan was paid in full in March 2012.	-	1,586
7) Loan payable to Wuhan Economic Development Group through Industrial and Commercial Bank of China, Huangpu Branch, Wuhan due on October 31, 2012,with interest at 7.5% per annum, collateralized by Sichuan Xinlong's 100% ownership in Shimian	1,268,050	-
8) Loan payable to Bo Hai Bank, Chengdu Branch, due on August 23, 2012,with interest at 7.625% per annum, collateralized by the buildings of Sichuan Apollo	1,585,062	-
9) Loan payable to Bank of China, Xihanggang Branch, Chengdu, due on demand	795	-
`	$     6,900,570	$   4,050,374

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Note 2. Inventories

3 Months Ended

Jun. 30, 2012

Note 2. Inventories:

Note 2. Inventories

NOTE 2. INVENTORIES

Inventories are valued at the lower of cost or net realizable value with cost determined on the weighted-average method. Work in progress and finished goods are composed of direct material, direct labor and a portion of manufacturing overhead. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to complete and dispose.  The Company recorded an inventory mark-down of $324,831 and $0 for the six months ended June 30, 2012 and 2011, respectively.

Inventories consist of the following:

	As of
	June 30, 2012		December 31, 2011
Raw Materials	$	756,251	$	719,635
Work-in-progress		1,125,401		1,322,666
Finished goods		1,613,468		2,023,686
Total	$	3,495,120	$	4,065,987

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CONSOLIDATED BALANCE SHEETS PARENTHETICAL (USD $)	Jun. 30, 2012	Dec. 31, 2011
PreferredStockParOrStatedValuePerShare	$ 0.001	$ 0.001
PreferredStockSharesAuthorized	25,000,000	25,000,000
PreferredStockSharesIssued
PreferredStockSharesOutstanding
CommonStockParOrStatedValuePerShare	$ 0.001	$ 0.001
CommonStockSharesAuthorized	100,000,000	100,000,000
CommonStockSharesIssued	51,795,961	51,795,961
CommonStockSharesOutstanding	51,795,961	51,795,961
TreasuryStockNumberOfSharesHeld	2,418,923	2,418,923

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Note 12 Subsequent Events

3 Months Ended

Jun. 30, 2012

Note 12 Subsequent Events:

Note 12 Subsequent Events

 NOTE 12 SUBSEQUENT EVENTS

The Company has reviewed its subsequent events through the date these financial statements were issued and has determined that no additional material subsequent events have occurred through such date.

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Document and Entity Information	3 Months Ended
	Jun. 30, 2012	Aug. 14, 2012
Document and Entity Information
Entity Registrant Name	APOLLO SOLAR ENERGY, INC.
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Entity Central Index Key	0000726435
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		49,377,038
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

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Note 1. Basis of Presentation: Use of Estimates (Policies)

3 Months Ended

Jun. 30, 2012

Use of Estimates:

Use of Estimates

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 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.

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CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Sales	$ 988,346	$ 2,940,118	$ 2,860,380	$ 6,723,338
Cost of goods sold	(1,574,128)	(2,167,917)	(3,342,282)	(5,598,073)
Gross profit(loss)	(585,782)	772,201	(481,902)	1,125,265
General and administrative expenses	738,513	676,488	1,426,533	1,577,268
Selling expense	52,788	104,930	109,686	175,203
Research and development expenses	379,355	259,762	534,925	290,572
Total operating expenses:	1,170,656	1,041,180	2,071,144	2,043,043
OPERATING LOSS	(1,756,438)	(268,979)	(2,553,046)	(917,778)
Interest income(expense), net	(114,320)	(55,368)	(253,216)	687,802
Equity in loss of Joint Venture	(66,151)	(135,750)	(174,748)	(247,593)
Gain on investment in Joint Venture	2,040,651		2,040,651
Total other income (expense)	1,860,180	(191,118)	1,612,687	440,209
Income(loss) before provision for income taxes	103,742	(460,097)	(940,359)	(477,569)
Provision for income taxes(credit)	102,930	(28,712)	102,930	(125,778)
Net income(loss)	812	(431,385)	(1,043,288)	(351,791)
Foreign currency translation adjustment	(39,516)	313,399	(10,566)	499,538
COMPREHENSIVE INCOME (LOSS)	$ (38,704)	$ (117,986)	$ (1,053,855)	$ 147,747
Basic	0.00	(0.01)	(0.02)	(0.01)
Diluted	0.00	(0.01)	(0.02)	(0.01)
Basic	51,795,961	50,159,169	51,795,961	50,159,169
Diluted	51,795,961	50,159,169	51,795,961	50,159,169

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Note 7. Short-term Loan

3 Months Ended

Jun. 30, 2012

Note 7. Short-term Loan:

Note 7. Short-term Loan

 NOTE 7.  SHORT-TERM LOAN

   Short-term bank loans consist of the following loans collateralized by assets of the company:

	June 30,2012	December 31, 2011
1) Loan payable to Chengdu Xihang Gang Construction & Investment Co., Ltd. due on demand, without interest collateralized by certain plant equipment of Sichuan Apollo	$      654,631	$      654,974
2) Loan payable to Bank of Communication, Chengdu branch due on July 29, 2012, with interest at 8.53% per annum, collateralized by the buildings and land use right of Diye, which was paid in full on July 27, 2012	317,012	317,179
3) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on August 25, 2012, with interest at 7.74% per annum, collateralized  by the buildings of Sichuan Apollo	792,531	792,947
4) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on September 19, 2012, with interest at 7.74% per annum, collateralized by the buildings of Sichuan Apollo	697,427	697,794
5) Loan payable to Bank of China, Xihanggang Branch, Chengdu due on December 25, 2012,with interest at 7.74% per annum, collateralized by the buildings of Sichuan Apollo	1,585,062	1,585,894
6) Loan payable to Bank of China, Xihanggang Branch, Chengdu, due on March 28, 2012, with interest of 6.73% per annum.  The loan was paid in full in March 2012.	-	1,586
7) Loan payable to Wuhan Economic Development Group through Industrial and Commercial Bank of China, Huangpu Branch, Wuhan due on October 31, 2012,with interest at 7.5% per annum, collateralized by Sichuan Xinlong's 100% ownership in Shimian	1,268,050	-
8) Loan payable to Bo Hai Bank, Chengdu Branch, due on August 23, 2012,with interest at 7.625% per annum, collateralized by the buildings of Sichuan Apollo	1,585,062	-
9) Loan payable to Bank of China, Xihanggang Branch, Chengdu, due on demand	795	-
`	$     6,900,570	$   4,050,374

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Note 6. Accrued Expenses, Taxes and Other Current Liabilities

3 Months Ended

Jun. 30, 2012

Note 6. Accrued Expenses, Taxes and Other Current Liabilities:

Note 6. Accrued Expenses, Taxes and Other Current Liabilities

NOTE 6.  ACCRUED EXPENSES, TAXES AND OTHER CURRENT LIABILITIES

Accrued expenses, taxes and other current liabilities are listed as below:

		As of
	June 30, 2012		December 31,  2011
Accrued interest	$	823,840	$	819,418
Salaries and benefits		192,523		275,194
Other taxes		269,271		715,277
Professional fees		73,541		102,779
Accrued R&D expenses		625,000		375,000
Other payables		421,419		390,280
Total	$	2,405,594	$	$2,677,948

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Note 6. Accrued Expenses, Taxes and Other Current Liabilities: Schedule of Accrued Liabilities (Tables)

3 Months Ended

Jun. 30, 2012

Schedule of Accrued Liabilities:

Schedule of Accrued Liabilities

		As of
	June 30, 2012		December 31,  2011
Accrued interest	$	823,840	$	819,418
Salaries and benefits		192,523		275,194
Other taxes		269,271		715,277
Professional fees		73,541		102,779
Accrued R&D expenses		625,000		375,000
Other payables		421,419		390,280
Total	$	2,405,594	$	$2,677,948

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Note 1. Basis of Presentation: Going Concern (Policies)

3 Months Ended

Jun. 30, 2012

Going Concern:

Going Concern

Going concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has negative working capital of $4,637,639, did not generate cash from its operations, and has had operating losses during past two years. These circumstances, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Note10. Business Segments

3 Months Ended

Jun. 30, 2012

Note10. Business Segments:

Note10. Business Segments

NOTE10.  BUSINESS SEGMENTS

For the six months ended June 30, 2012,

`	Manufacturing	Refining	Mining	Corporate & Others	Consolidated Total
Revenue	$     174,532	$2,685,848	$       -	$           -	$ 2,860,380
Operating loss	(571,237)	(1,283,234)	(113,228)	(585,347)	(2,553,046)
Depreciation and amortization	356,092	96,242	16,263	-	468,597
Capital expenditures	$      28,220	$  57,263	$  2,332	$           -	$    87,815

For the six months ended June 30, 2011,

	Manufacturing	Refining	Mining	Corporate & Others	Consolidated Total
Revenue	$            -	$6,723,338	$       -	$           -	$ 6,723,338
Operating loss	(382,327)	130,921	(150,874)	(515,498)	(917,778)
Depreciation and amortization	352,987	117,272	15,776	-	486,035
Capital expenditures	$       15,434	$  22,590	$ 53,212	$           -	$    91,236

For the three months ended June 30, 2012,

	Manufacturing	Refining	Mining	Corporate & Others	Consolidated Total
Revenue	$      18,861	$ 969,485	$     -	$      -	$ 988,346
Operating loss	(154,440)	(1,265,620)	(55,602)	(280,776)	(1,756,438)
Depreciation and amortization	196,103	25,875	8,088	-	230,066
Capital expenditures	$      26,713	$  46,935	$   668	$      -	$    74,316

For the three months ended June 30, 2011,

	Manufacturing	Refining	Mining	Corporate & Others	Consolidated Total
Revenue	$           -	$2,940,118	$      -	$        -	$ 2,940,118
Operating loss	(177,630)	267,662	(49,184)	(309,826)	(268,979)
Depreciation and amortization	148,601	88,502	7,917	-	245,020
Capital expenditures	$     4,917	$  4,057	$13,457	$       -	$     22,431

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Note 8. Taxes

3 Months Ended

Jun. 30, 2012

Note 8. Taxes:

Note 8. Taxes

NOTE 8.  TAXES

Corporation income tax

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made, as the Company had no U.S. taxable income for the three and six months ended June 30, 2012 and 2011.

The Company’s Chinese subsidiaries are governed by the Income Tax Law of the PRC concerning the privately run and foreign invested enterprises, which are generally subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.

On July 16, 2009, the Company’s subsidiary, Sichuan Xinlong, received government approval regarding the High-Tech Enterprise Certificate which allows the Company to enjoy a favorable tax rate of 15% effective January 1, 2009 through December 31, 2011. The Company is in the process of applying to renew this certificate for 2012 and the following years.

Based on management's present assessment, the Company has determined that it is more likely than not a deferred tax asset attributable to the future utilization of the net operating loss carry-forward as of June 30, 2012 will not be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements at June 30, 2012. The Company will continue to review this valuation allowance and make adjustments as appropriate.

The Company has net operating loss carry-forwards in China and United States of approximately $3 million and $8 million, respectively, which expire between 2012 and 2022. The Company has a deferred tax asset resulting from the tax loss carry-forwards of approximately $4 million for which the Company has provided a 100% valuation allowance.

The comparison of income tax expense at the U.S. statutory rate of 35% in 2012 and 2011, to the Company’s effective tax is as follows:

	Six months ended June 30
	2012	2011
U.S. Statutory rate of 35%	$       (329,126)	$     (167,148)
Tax rate difference between China and U.S.	184,940	159,885
Change in valuation allowance	144,186	(112,651)
Tax paid for prior year	102,930	-
Permanent difference	-	(5,864)
Effective tax	$         102,930	$     (125,778)

The provisions for income taxes are summarized as follows:

	Six months ended June 30
	2012	2011
Current	$         102,930	$       11,872
Deferred	-	(137,650)
Total	$         102,930	$    (125,778)

Value added tax (“VAT”) 

Enterprises or individuals who sell commodities, engage in repair and maintenance or import or export goods in the PRC are subject to a value added tax in accordance with the PRC laws. The value added tax standard rate is 17% of the gross sales price. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Company’s finished products can be used to offset the VAT due on the sales of the finished products.

As of June 30, 2012 and December 31, 2011, the Company had VAT tax receivable of $66,413 and payable of $62,511, respectively.

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Note 9. PRC Statutory Reserves

3 Months Ended

Jun. 30, 2012

Note 9. PRC Statutory Reserves:

Note 9. PRC Statutory Reserves

NOTE 9. PRC STATUTORY RESERVES

In accordance with the PRC Companies Law, the Company was required to transfer 10% of its profit after tax, as determined in accordance with accounting standards and regulations of the PRC, to the statutory surplus reserve. The statutory surplus reserve is non-distributable. As of June 30, 2012 and December 31, 2011, the Company did not accumulate any statutory reserve due to the accumulated deficit.

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Note 11. Concentrations

3 Months Ended

Jun. 30, 2012

Note 11. Concentrations:

Note 11. Concentrations

NOTE 11. CONCENTRATIONS

For the six months ended June 30, 2012, three major customers accounted for approximately 20%, 18% and 10% of total sales separately. Five vendors accounted for approximately 43%, 12%, 11%, 10% and 10% of total purchase separately.

For the six months ended June 30, 2011, three major customers accounted for approximately 25%, 17% and 12% of total sales separately. At June 30, 2011, two customers accounted for 24% and 22% of total accounts receivable separately.

For the six months ended June 30, 2012, 10% of sales were made to customers in North America and 88% of sales were made to customers in Asia.

For the six months ended June 30, 2011, 27% of sales were made to customers in North America and 73% of sales were made to customers in Asia.

For the three months ended June 30, 2012, two major customers accounted for approximately 27% and 13% of total sales separately. Five vendors accounted for approximately 23%, 20%, 19%, 18% and 12% of total purchase separately.

For the three months ended June 30, 2011, two major customers accounted for approximately 39% and 11% of total sales separately.

For the three months ended June 30, 2012, 98% of sales were made to customers in Asia.

For the three months ended June 30, 2011 11.5% of sales were made to customers in North America and 88.5% of sales were made to customers in Asia.

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Note 3. Prepaid Expenses and Other Current Assets (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Advances on Inventory Purchases	$ 1,608,044	$ 908,760
Other Receivables	153,968	92,900
Other Prepaid Expense, Current	6,182
Prepaid expenses and other current assets	$ 1,768,194	$ 1,001,660

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Note 4. Related Parties Transactions and Balances: Schedule of Related Party Transactions (Tables)

3 Months Ended

Jun. 30, 2012

Schedule of Related Party Transactions:

Schedule of Related Party Transactions

	As of
	June 30, 2012		December 31, 2011
Due from (to) Xinju	$	38,063	$	(2,992)
Due to shareholders		(211,221)		(211,221	)
Total	$	(173,158)	$	(214,213)

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Note 8. Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables)

3 Months Ended

Jun. 30, 2012

Schedule of Components of Income Tax Expense (Benefit):

Schedule of Components of Income Tax Expense (Benefit)

	Six months ended June 30
	2012	2011
Current	$         102,930	$       11,872
Deferred	-	(137,650)
Total	$         102,930	$    (125,778)

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Note 8. Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Tax Reconciliation, Income Tax Expense (Benefit), at Federal Statutory Income Tax Rate			$ (329,126)	$ (167,148)
Income Tax Reconciliation, Foreign Income Tax Rate Differential			184,940	159,885
Valuation Allowance, Amount	144,186	(112,651)	144,186	(112,651)
Income tax paid in cash			102,930	11,829
Permanent difference				(5,864)
Provision for income taxes(credit)	$ 102,930	$ (28,712)	$ 102,930	$ (125,778)

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Net Loss	$ (1,043,288)	$ (351,791)
Stock-based compensation	270,611	321,728
Interest income from related party loan		(837,359)
Gain on investment in Joint Venture	(2,040,651)
Loss in equity of Joint Venture	174,748	247,593
Deferred tax assets		(121,221)
Inventory allowance	324,831
Depreciation and amortization	468,598	486,035
Change in account receivable	(37,637)	(366,381)
Change in inventories	244,462	2,334,284
Change in prepaid expenses and other current assets	(767,814)	467,736
Change in account payable - trade	62,534	(203,428)
Change in accounts payable - construction	(66,983)	(1,090,806)
Change in accrued expenses and other current liabilities	(271,729)	1,010,440
Net cash provided by(used in) operating activities	(2,682,319)	1,896,830
Purchase of property and equipment	(87,815)	(91,236)
NET CASH USED IN INVESTING ACTIVITIES	(87,815)	(91,236)
Short-term bank loans	2,855,126	(380,069)
Payment to shareholders		(1,619,527)
Due to related parties	(20,748)	52,307
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	2,834,378	(1,947,289)
Effect of exchange rate changes on cash	(728)	64,707
Net increase (decrease) in cash	63,516	(76,988)
Cash at beginning of period	363,771	2,676,176
Cash at end of period	427,287	2,599,188
Income tax paid in cash	102,930	11,829
Interest expense	222,311	135,389
Treasury stock acquired in exchange for loans from related parites		5,273,253
Assets transferred to Joint Venture	$ 2,793,536

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Note 5. Equity Method Investment in Joint Venture

3 Months Ended

Jun. 30, 2012

Note 5. Equity Method Investment in Joint Venture:

Note 5. Equity Method Investment in Joint Venture

NOTE 5. EQUITY METHOD INVESTMENT IN JOINT VENTURE

On November 9, 2009, Sichuan Apollo Solar Science & Technology Co. Ltd. (“Sichuan Apollo”), a wholly-owned foreign enterprise of the Company, entered into a joint venture agreement (the “JV Agreement”) with Bengbu Design & Research Institute for Glass Industry (“Bengbu”) and a local Chinese government agency (the “Agency”). The Joint Venture (“JV”) was formed to conduct research and development related to glass used in the production of thin film solar cells and manufacture thin film solar cells. As of June 30, 2012 the JV had not commenced the production of thin film solar cells. The Company accounts for its 35% interest in JV under the equity method of accounting.

Under the terms of the agreement, the JV was to be formed with an aggregate cash capital contribution of RMB 142,800,000 (approximately $22 million) by Bengbu and the Agency and the contribution by Sichuan Apollo’s of assets consisting of land, a manufacturing plant, equipment and three patents with a net book value of approximately $1.7 million with a fair market value of RMB 49,980,000 (approximately $7.3 million). Benghu and the Agency own an aggregate of 65% of the JV and Sichuan Apollo owns the remaining 35%. In addition, under the terms of the agreement, debt of Sichuan Apollo aggregating RMB 37,170,000 (approximately $5.4 million) owed to the Agency was assigned to the JV.  The value of the net assets contributed by Sichuan Apollo was equal to the proportionate value of the total capital contribution to be made to the JV taking into consideration the cash contribution by the other parties. The assets were valued by the Company’s management giving consideration to the valuation services provided by an independent third party. In accordance with ASC 805-40, Sichuan Apollo has reported a gain on the difference between the initial cost of the investment and the Company’s proportionate share of the fair value of the JV’s net equity, which, if treated as a consolidated subsidiary, would have resulted in negative goodwill to be recorded as a gain. From the year ended December 31, 2009 to June 30, 2012, the Company contributed net assets of approximately RMB 29 million (equivalent to $4.7 million) and a RMB 37,170,000 (equivalent to $5.9 million) loan payable to the Agency was assigned to the JV. This resulted in an excess of the proportionate share of the JV’s net assets at fair market value over the cost of the assets contributed of RMB 44.8 million (equivalent to $7.1 million). The Company’s equitable share of the excess was reported as income on the statement of operations for the six months ended June 30, 2012. As of June 30, 2012, all parties has finished the total capital contribution of RMB142,800,000 (approximately $22.7 million) to JV per agreement. All gain has been recognized as of June 30, 2012.

Summarized financial information for our investment in the JV assuming a 100% ownership interest is as follows:

	June 30, 2012		June 30, 2011
Statement of operations
Revenues		$            -		$        3,141
Cost of sales		-		1,689
Gross profit		-		1,443
Operating Loss		(499,280)		(707,410)
Loss before income tax		(499,280)		(707,410)

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Note10. Business Segments: Business Segment Schedule for the six months ended June 30, 2012 (Tables)

6 Months Ended

Jun. 30, 2012

Business Segment Schedule for the six months ended June 30, 2012:

Business Segment Schedule for the six months ended June 30, 2012

`	Manufacturing	Refining	Mining	Corporate & Others	Consolidated Total
Revenue	$     174,532	$2,685,848	$       -	$           -	$ 2,860,380
Operating loss	(571,237)	(1,283,234)	(113,228)	(585,347)	(2,553,046)
Depreciation and amortization	356,092	96,242	16,263	-	468,597
Capital expenditures	$      28,220	$  57,263	$  2,332	$           -	$    87,815

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Note 6. Accrued Expenses, Taxes and Other Current Liabilities: Schedule of Accrued Liabilities (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Interest Payable	$ 823,840	$ 819,418
Employee-related Liabilities	192,523	275,194
Accrual for Taxes Other than Income Taxes	269,271	715,277
Accrued Professional Fees	73,541	102,779
Accrued R&D expenses	625,000	375,000
Other payables	421,419	390,280
Accrued expenses and other current liabilities	$ 2,405,594	$ 2,677,948

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Note 2. Inventories: Schedule of Inventory, Current (Tables)

3 Months Ended

Jun. 30, 2012

Schedule of Inventory, Current:

Schedule of Inventory, Current

	As of
	June 30, 2012		December 31, 2011
Raw Materials	$	756,251	$	719,635
Work-in-progress		1,125,401		1,322,666
Finished goods		1,613,468		2,023,686
Total	$	3,495,120	$	4,065,987