Universal Solar Technology, Inc. (the “Company”) was incorporated in the State of Nevada on July 24, 2007.  The Company operates through its wholly-owned subsidiaries, Kuong U Science & Technology (Group) Ltd. (“Kuong U”), a company incorporated in Macau, Peoples Republic of China (“PRC”) on May 10, 2007, and Nanyang Universal Solar Technology Co., Ltd. (“NUST”), a company incorporated in Nanyang, PRC on September 8, 2008.  The Company sells solar photovoltaic (“PV”) modules.

The financial statements have been prepared on a "going concern" basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At JuneSeptember 30, 2009, the Company had negative working capital of $848,849$2,209,623 and a stockholders’ deficiency of $169,639.$287,856. Further, the Company has incurred net losses of $617,734$792,390 since inception. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company plans to improve its financial condition by raising capital in a private placement of its securities. However, there is no assurance that the Company will be successful in accomplishing this objective. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

On December 1, 2008, NUST acquired the right to use a parcel of land approximating  71,280 square meters for forty (40) years for its office and production facilities from the local government in the PRC.  The cost of RMB 2,886,300 ($422,843 translated at the JuneSeptember 30, 2009 exchange rate) is being amortized using the straight line method over the 40 year term of the contract.

Due to related parties consistconsists of:

In the sixnine months ended JuneSeptember 30, 2009, Kuong U purchased solar PV modules from Yuemao Laser at a total cost of $589,460$619,449 and sold the modules to two customers for total sales of $660,051.$691,660 ($638,961 to one customer, $52,699 to the other customer.)

The companyKuong U rents its executive office space from the Company’s chairman and chief executive officer under a verbal monthfour-year contract, from May 1, 2007 to month agreement.April 30, 2011. In the first two years, May 1, 2007 to April 30, 2009, monthly rent is HKD 10,000 (approximately $1,290 translated at the September 30, 2009 exchange rate). In the second two years, May 1, 2009 to April 30, 2011, monthly rent is HKD 12,000 (approximately $1,548 translated at the September 30, 2009 exchange rate). Rent expense for the sixnine months ended JuneSeptember 30, 2009 and 2008 was $8,256$12,900 and $8,388,$11,610, respectively.

In the sixnine months ended JuneSeptember 30, 2009, one customer located in India accounted for approximately 97%92% of sales. Under the terms of these sales, the Company is obligated to replace nonworking modules for a period of one year from the date of deliveries.

On April 29, 2008, Kuong U entered into an agreement with Yuemao Laser whereby Yuemao Laser is to develop certain prototype solar energy products for Kuong U. Under the agreement, Kuong U is obligated to pay a royalty fee quarterly  to Yuemao Laser equal to 1% of Kuong U’s sales from the prototype products.

On February 19,As of September 30, 2009, and February 23, 2009, NUST has contracted to acquire certain undelivered production equipment forcosting a total of 10,600,000 RMB( $1,552,900approximately 18,191,300 RMB ($2,665,025 translated at the JuneSeptember 30, 2009 exchange rate). The agreements provide for NUST’s payment of certain deposits prior to the delivery of the equipment. As of JuneSeptember 30, 2009, a total of 1,620,0005,400,090 RMB ($237,330791,113 translated at the JuneSeptember 30, 2009 exchange rate) has been paid to the vendors.vendors as deposits.

The Company’s operations may be adversely affected by significant political, economic and social uncertainties in the PRC.  Although the PRC government has been pursuing economic reform policies for more than 20 years, there is no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective.

The PRC has adopted currency and capital transfer regulations.  These regulations require that the Company comply with complex regulations for the movement of capital. Because most of the Company’s future revenues will be in RMB, any inability to obtain the requisite approvals, or any future restrictions on currency exchanges, will limit the Company’s ability to fund its business activities outside China or to pay dividends to its shareholders.

The Company’s assets will be predominantly located inside China.  Under the laws governing foreign invested enterprises in China, dividend distribution and liquidation are allowed, but subject to special procedures under the relevant laws and rules. Any dividend payment will be subject to the decision of the board of directors and subject to foreign exchange rules governing such repatriation.  Any liquidation is subject to both the relevant government agency’s approval and supervision, as well as the foreign exchange control.

In addition, the results of business and prospects are subject, to a significant extent, to the economic, political and legal developments in China.

While China’s economy has experienced significant growth in the past twenty years, growth has been irregular, both geographically and among various sectors of the economy.  The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources.  Some of these measures benefit the overall economy of China, but may also have a negative effect on the Company.  The Company’s sales and financial condition may be adversely affected by the government control over capital investments or changes in tax regulations.

Foreign companies conducting operations in the PRC face significant political, economic and legal risks.  The Communist regime in the PRC includes a stifling bureaucracy which may hinder Western investment. Any new government regulations or utility policies pertaining to the Company’s PV products may result in significant additional expenses to the Company, Company distributors and end users and, as a result, could cause a significant reduction in demand for the Company’s PV productsproducts.

Universal Solar Technology, Inc. was incorporated in the State of Nevada on July 24, 2007. It operates through its wholly owned subsidiary, Kuong U Science & Technology (Group) Ltd. (“Kuong U”), a company incorporated in Macau, Special Administrative Region of the People's Republic of China (Macau SARC) on May 10, 2007.

We are focusing on becoming a vertically integrated designer, manufacturer, and distributor of silicon ingots, wafers and high efficiency solar PV products. Currently we market high efficiency solar PV modules and sloar lighting systems while outsourcing the current production of these products to a related third party. We are developing our own vertically integrated manufacturing center based in Nanyang which is located in Henan Province in China. The manufacturing center is being built to allow for rapid integration and scalability across each production phase. The production departments will consist of silicon ingot production lines, silicon wafer production lines, PV modules and system production lines, and solar lighting assembly lines. The production departments are scheduled to be completed in phases. We expect all of the departments to be completed and operational by April 2010. As each production area completes testing and the initial launch of production, additional manufacturing lines, equipment and staffing will be added over time. We believe this vertically integrated manufacturing center, when completed, will enable us to compete aggressively with our competitors while avoiding potential disruptions to business and operations due to supply issues.

There is no historical financial information about us upon which to base an evaluation of our performance. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

To become profitable, we have to sell our products and generate revenue. In addition, because our new WFOE manufacturing setup in China will require additional investment, we are seeking both equity and debt financing to provide the capital required to implement our business plan in China.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations into China. Equity financing could result in additional dilution to existing shareholders.

As of JuneSeptember 30, 2009, we had total assets of $1,246,989$3,435,321 and total liabilities of $1,416,628$3,723,177 and we had cash of $491,140.$1,477,053.

Net cash used in operating activities for the sixnine months ended JuneSeptember 30, 2009 was $115,447$163,147 which is a decrease of $101,524$205,961 from net cash used in operating activities of $216,971$369,108 for the same period in 2008.  The reason for the $101,524$205,961 improvement was primarily to the $96,247$86,698 reduced net loss.loss and certain adjustments to reconcile net loss to net cash used.

Net cash used in investing activities for the quarternine months ended JuneSeptember 30, 2009 was $285,271,$1,531,339, an increase from $0 for the same period in 2008. This increase was due to deposits for future deliveries of equipment and acquisition of property and equipment.

Net cash provided by financing activities for the quarternine months ended March 31,September 30, 2009 was $612,685,$2,883,004, compared to $338,331$419,818 from the same period in 2008. This increase was due to an increase in loans from related parties.

We are actively seeking additional external funding, but to date we have not consummated any financing transactions other than our public offering and transactions with related parties.

Without additional funding, the Company will not be able to pursue its business model. If adequate funds are not available or are not available on acceptable terms when required, we would be required to significantly curtail our operations and would not be able to fund the development of the business envisioned by our business model.  These circumstances could have a material adverse effect on our business and result in our inability to continue to operate as a going concern.

The consolidated financial statements include the accounts of the Company and all of its subsidiaries.  All significant inter-company accounts and transactions have been eliminated. These financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.

Certain amounts included in the 2008 financial statement have been reclassified to conform to the 2009 financial statement presentation.

Property and equipment are recorded at cost.  Depreciation is provided in amounts sufficient to amortize the cost of the related assets over their useful lives using the straight line method for financial reporting purposes.

Nanyang UST obtained the right to use a parcel of land for its office and production facilities.  Pursuant to the contract from the local government of the PRC, the contract expires in 2048.  This land use right was recorded at cost and is being amortized over the life of the lease.

Maintenance, repairs and minor renewals are charged to expense when incurred.  Replacements and major renewals are capitalized.

Research and development costs are charged to expenses as incurred.

The reporting currency of the Company is the United States dollar. The functional currency of Kuong U is the Hong Kong dollar. The functional currency of NUST is the Chinese Yuan (”RMB”).  Revenue and expense accounts of our two subsidiaries are translated into United States dollars at the average rates during the period, and balance sheet items are translated at year-end rates.  Translation adjustments arising from the use of differing exchange rates from period to period are included as a separate component of shareholders’ equity.  Gains and losses from foreign currency transactions are recognized in current operations.

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by shareholders and distributions to shareholders.  Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income (loss) are required to be reported in a financial statement that is presented with the same prominence as other financial statements.  Comprehensive income includes net income (loss) and the foreign currency translation adjustment, net of tax.

Not required.