Attached files
file | filename |
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EX-32.1 - Chisen Electric Corp | v212893_ex32-1.htm |
EX-32.2 - Chisen Electric Corp | v212893_ex32-2.htm |
EX-31.2 - Chisen Electric Corp | v212893_ex31-2.htm |
EX-31.1 - Chisen Electric Corp | v212893_ex31-1.htm |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM 10-Q
¨
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2010
OR
¨
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|
For the transition period from ______ to __________
COMMISSION FILE NUMBER: 333-128532
CHISEN ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
|
20-2190950
|
|
(State or other jurisdiction of
|
(IRS Employer
|
|
incorporation or organization)
|
Identification No.)
|
Jingyi Road, Changxing Economic Development Zone, Changxing, Zhejiang Province,
The People’s Republic of China
(Address of principal executive offices)
(86) 572-6267666
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes ¨ 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). Yes ¨ 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 filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer ¨
|
Accelerated Filer ¨
|
Non-Accelerated Filer ¨
|
Smaller Reporting Company ¨
|
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ¨ No ¨
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of August 13, 2010, the registrant had 50,000,000 shares of common stock, par value $0.001 per share, issued and outstanding.
EXPLANATORY NOTE
We are filing this Amendment No. 2 to our Quarterly Report on Form 10-Q to revise our Cost of Sales, Gross Income and Operating Expenses figures in our Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income section of our financial statements and corresponding sections in the notes to our financial statements and in our MD&A, as well as certain disclosures in Item 2 in order to conform to our disclosures made in our Registration Statement on Form S-1 (File No. 333-169850), including the Sections entitled “Competitive Business Conditions and Market Trends”, “Cooperative Partnership” and “Development Strategy of the Company”. All other Items in this Amendment No. 2 remain materially unchanged.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
|
3
|
|
ITEM 1. FINANCIAL STATEMENTS
|
3
|
|
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|
5
|
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
12
|
|
ITEM 4. CONTROLS AND PROCEDURES
|
13
|
|
PART II OTHER INFORMATION
|
13
|
|
ITEM 1. LEGAL PROCEEDINGS
|
13
|
|
ITEM 1A. RISK FACTORS
|
13
|
|
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
13
|
|
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
|
13
|
|
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
|
13
|
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ITEM 5. OTHER INFORMATION
|
13
|
|
ITEM 6. EXHIBITS
|
14
|
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SIGNATURES
|
17
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EXHIBIT 31.1
|
||
EXHIBIT 31.2
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||
EXHIBIT 32.1
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||
EXHIBIT 32.2
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2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page
|
||
Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income
|
F-2
|
|
Unaudited Condensed Consolidated Balance Sheets
|
F-3 – F-4
|
|
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
|
F-5
|
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
F-6 – F-7
|
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
F-8 – F-20
|
3
Unaudited Condensed Consolidated Financial Statements of
Chisen Electric Corporation
For the three months ended June 30, 2010
4
Chisen Electric Corporation
Index to Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010
|
Page
|
||
Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income
|
F-2
|
|
Unaudited Condensed Consolidated Balance Sheets
|
F-3 – F-4
|
|
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
|
F-5
|
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
F-6 – F-7
|
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
F-8 – F-20
|
F-1
Chisen Electric Corporation
Unaudited Condensed Consolidated Statements of Operations and
Other Comprehensive Income
For the three months ended June 30, 2010 and 2009
|
Three months ended June 30,
|
||||||||||
|
2010
|
2009
|
||||||||
|
Note
|
US$’000
|
US$’000
|
|||||||
As restated
|
||||||||||
Operating revenues:
|
||||||||||
50,429
|
29,475
|
|||||||||
Cost of sales
|
(45,392
|
)
|
(24,348
|
)
|
||||||
Gross income
|
5,037
|
5,127
|
||||||||
Operating expenses:
|
||||||||||
Sales, marketing and distribution
|
(2,512
|
)
|
(1,787
|
)
|
||||||
General and administrative
|
(684
|
)
|
(813
|
)
|
||||||
Operating income
|
1,841
|
2,527
|
||||||||
Other income, net
|
503
|
147
|
||||||||
Interest income
|
96
|
55
|
||||||||
Interest expense
|
(685
|
)
|
(369
|
)
|
||||||
Income before income taxes
|
1,755
|
2,360
|
||||||||
Income taxes expenses
|
4
|
(249
|
)
|
(355
|
)
|
|||||
Net income
|
1,506
|
2,005
|
||||||||
Other comprehensive income
|
||||||||||
Foreign currency translation adjustment
|
121
|
1
|
||||||||
Comprehensive income
|
1,627
|
2006
|
||||||||
Shares
|
Shares
|
|||||||||
Earnings per share
|
3
|
|||||||||
Weighted average number of common stock outstanding - basic and diluted
|
50,000,000
|
50,000,000
|
||||||||
US$
|
US$
|
|||||||||
Net income per share of common stock - basic and diluted
|
0.03
|
0.04
|
The financial statements should be read in conjunction with the accompanying notes.
F-2
Chisen Electric Corporation
Unaudited Condensed Consolidated Balance Sheets
As of June 30, 2010 and March 31, 2010
|
|
As of June
|
As of March
|
||||||||
|
30, 2010
|
31, 2010
|
||||||||
|
Note
|
US$’000
|
US$’000
|
|||||||
ASSETS
|
||||||||||
|
||||||||||
Current assets:
|
||||||||||
Cash and cash equivalents
|
2,996 | 6,019 | ||||||||
Restricted bank balances
|
5
|
22,611 | 21,420 | |||||||
Other financial assets
|
6
|
7,705 | 7,438 | |||||||
Trade receivables, net
|
55,489 | 50,440 | ||||||||
Other receivables
|
883 | 800 | ||||||||
Prepayments
|
2,699 | 4,933 | ||||||||
Due from related parties
|
14(b)
|
11 | 8 | |||||||
Inventories
|
7
|
35,118 | 30,038 | |||||||
Total current assets
|
127,512 | 121,096 | ||||||||
Available-for-sale financial assets
|
8
|
2,665 | 882 | |||||||
Long-term land lease prepayments, net
|
747 | 749 | ||||||||
Property, plant and equipment, net
|
9
|
11,117 | 10,474 | |||||||
Total assets
|
142,041 | 133,201 |
The financial statements should be read in conjunction with the accompanying notes.
F-3
Chisen Electric Corporation
Unaudited Condensed Consolidated Balance Sheets
As of June 30, 2010 and March 31, 2010
|
|
As of June
|
As of March
|
||||||||
|
30, 2010 | 31, 2010 | ||||||||
|
Note
|
US$’000
|
US$’000
|
|||||||
|
||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||||
Current liabilities:
|
||||||||||
Trade payables
|
18,683 | 14,923 | ||||||||
Notes payable
|
10
|
37,121 | 35,504 | |||||||
Accrued expenses and other accrued liabilities
|
5,148 | 5,087 | ||||||||
Due to related parties
|
14(b)
|
3,495 | 2,532 | |||||||
Income taxes payable
|
123 | 148 | ||||||||
Short-term bank borrowings
|
11
|
46,990 | 46,141 | |||||||
Total current liabilities
|
111,560 | 104,335 | ||||||||
Government subsidies
|
12
|
127 | 139 | |||||||
Deferred tax liabilities
|
4(c)
|
460 | 460 | |||||||
Total non-current liabilities
|
587 | 599 | ||||||||
Total liabilities
|
112,147 | 104,934 | ||||||||
Commitments and contingencies
|
15
|
- | - | |||||||
Shareholders’ equity:
|
||||||||||
Preferred stock, US$0.001 par value each:
10,000,000 shares authorized and no shares issued and outstanding
|
- | - | ||||||||
Common stock, US$0.001 par value each:
100,000,000 shares authorized 50,000,000 shares issued and outstanding
|
50 | 50 | ||||||||
Capital reserves
|
144 | 144 | ||||||||
Statutory reserves
|
2,423 | 2,239 | ||||||||
Accumulated other comprehensive income
|
1,175 | 1,054 | ||||||||
Retained earnings
|
26,102 | 24,780 | ||||||||
Total shareholders’ equity
|
29,894 | 28,267 | ||||||||
Total liabilities and shareholders’ equity
|
142,041 | 133,201 |
The financial statements should be read in conjunction with the accompanying notes.
F-4
Chisen Electric Corporation
Consolidated Condensed Statements of Changes in Shareholders' Equity
For the three months ended June 30, 2010
|
Common stock issued
|
||||||||||||||||||||||||||||
|
Number
of shares
|
Amount
|
Capital
reserves
|
Statutory
reserves
|
Retained
earnings
|
Accumulated
other
comprehensive
income
|
Total
|
|||||||||||||||||||||
|
US$’000
|
US$’000
|
US$’000
|
US$’000
|
US$’000
|
US$’000
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance as of April 1, 2010
|
50,000,000
|
50
|
144
|
2,239
|
24,780
|
1,054
|
28,267
|
|||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
1,506
|
-
|
1,506
|
|||||||||||||||||||||
Transfer to statutory reserves
|
-
|
-
|
-
|
184
|
(184
|
)
|
-
|
-
|
||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
121
|
121
|
|||||||||||||||||||||
Balance as of June 30, 2010
|
50,000,000
|
50
|
144
|
2,423
|
26,102
|
1,175
|
29,894
|
The financial statements should be read in conjunction with the accompanying notes.
F-5
Chisen Electric Corporation
Consolidated Condensed Consolidated Statements of Cash Flows
For the three months ended June 30, 2010 and 2009
|
Three months ended June 30,
|
||||||||
|
2010
|
2009
|
||||||
|
US$’000
|
US$’000
|
||||||
Cash flows from operating activities
|
||||||||
Net income
|
1,506
|
2,005
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation of property, plant and equipment
|
252
|
132
|
||||||
Written-off of property, plant and equipment
|
-
|
6
|
||||||
Amortization of long-term land lease prepayments
|
4
|
3
|
||||||
Exchange differences
|
7
|
(1
|
)
|
|||||
Provision for warranty costs
|
325
|
25
|
||||||
Government grant recognized
|
(12
|
)
|
(12
|
)
|
||||
Due from related parties
|
(3
|
)
|
(378
|
)
|
||||
Changes in assets and liabilities:
|
||||||||
Other financial assets
|
(237
|
)
|
(822
|
)
|
||||
Accounts receivables, net
|
(4,845
|
)
|
89
|
|||||
Other receivables
|
(79
|
)
|
(206
|
)
|
||||
Prepayment
|
2,254
|
(1,289
|
)
|
|||||
Inventories
|
(4,957
|
)
|
(4,630
|
)
|
||||
Accounts payable
|
3,699
|
(2,482
|
)
|
|||||
Notes payable
|
1,473
|
4,675
|
||||||
Accrued expenses and other accrued liabilities
|
(108
|
)
|
2,846
|
|||||
Due to related parties
|
951
|
(320
|
)
|
|||||
Income taxes payable
|
-
|
22
|
||||||
Net cash provided by (used in) operating activities
|
230
|
(337
|
)
|
|||||
Cash flows from investing activities
|
||||||||
Purchase of property, plant and equipment
|
(1,056
|
)
|
(211
|
)
|
||||
Investment in restricted bank balances, net
|
(1,105
|
)
|
(4,675
|
)
|
||||
Acquisition of available-for-sale financial assets
|
(1,779
|
)
|
-
|
|||||
Net cash used in investing activities
|
(3,940
|
)
|
(4,886
|
)
|
The financial statements should be read in conjunction with the accompanying notes.
F-6
Chisen Electric Corporation
Consolidated Condensed Consolidated Statements of Cash Flows
For the three months ended June 30, 2010 and 2009
|
Three months ended June 30,
|
||||||||
|
2010
|
2009
|
||||||
|
US$’000
|
US$’000
|
||||||
Cash flows from financing activities
|
||||||||
Proceeds from bills financing
|
-
|
5,844
|
||||||
Proceeds from short-term bank loans
|
6,334
|
13,587
|
||||||
Repayment of short-term bank loans
|
(5,671
|
)
|
(7,743
|
)
|
||||
Net cash provided by financing activities
|
663
|
11,688
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(3,047
|
)
|
6,465
|
|||||
Cash and cash equivalents, beginning of period
|
6,019
|
2,620
|
||||||
Effect on exchange rate changes
|
24
|
-
|
||||||
Cash and cash equivalents, end of period
|
2,996
|
9,085
|
||||||
Supplemental disclosure of cash flow information
|
||||||||
Interest received
|
96
|
-
|
||||||
Interest paid
|
685
|
369
|
||||||
Tax paid
|
274
|
264
|
The financial statements should be read in conjunction with the accompanying notes.
F-7
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES
|
Chisen Electric Corporation (“Chisen Electric”), formerly known as World Trophy Oufitters, Inc., was formed as a Nevada corporation on January 13, 2005. Its common stocks are currently trading on the Over-The-Counter Bulletin Board under the symbol “CIEC.OB”.
Chisen Electric is an investment holding company with no operations. The principal activities of its subsidiaries (together with Chisen Electric, collectively referred as “the Company”) are the manufacture and sales of sealed lead-acid battery products and investment holding.
Details of Chisen Electric’s subsidiaries as of June 30, 2010 are as follows:
Name
|
Place and
date of
establishment /
incorporation
|
Percentage of
effective equity
interest / voting
right attributable
to the Company
|
Principal activities
|
||||
Fast More Limited (“Fast More”)
|
Hong Kong
December 17, 2007
|
100
|
%
|
Investment holding
|
|||
Changxing Chisen Battery Co., Limited (“Changxing Chisen”) *
|
Zhejiang,
the People’s Republic of
China (“PRC”)
February 25, 2002
|
100
|
%
|
Manufacture and sales of
sealed lead-acid battery
products
|
|||
Chisen Technology Holdings Corporation (“Chisen Technology”)
|
Nevada,
United States
May 18, 2009
|
100
|
%
|
Inactive
|
*
|
This is a direct translation of the name in Chinese for identification purpose only and is not the official name in English.
|
F-8
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
2.
|
PREPRATION OF INTERIM FINANCIAL STATEMENTS
|
Basis of presentations
The accompanying unaudited condensed consolidated financial statements as of June 30, 2010 have been prepared based upon Securities and Exchange Commission rules that permit reduced disclosure for interim periods and include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the financial position, results of operations and cash flows as of June 30, 2010 and for all periods presented.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“USGAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Chisen Electric's Form 10-K filed on June 28, 2010 for the year ended March 31, 2010. The results of operations for the three months ended June 30, 2010 and 2009 are not necessarily indicative of the operating results to be expected for the full year.
The condensed consolidated financial statements and accompanying notes are presented in United States dollars and prepared in conformity with USGAAP which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basis of consolidation
The consolidated financial statements include the financial information of Chisen Electric and its subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation.
Recent accounting pronouncements
In January 2010, FASB issued ASU No. 2010-02 regarding accounting and reporting for decreases in ownership of a subsidiary . Under this guidance, an entity is required to deconsolidate a subsidiary when the entity ceases to have a controlling financial interest in the subsidiary. Upon deconsolidation of a subsidiary, an entity recognizes a gain or loss on the transaction and measures any retained investment in the subsidiary at fair value. In contrast, an entity is required to account for a decrease in its ownership interest of a subsidiary that does not result in a change of control of the subsidiary as an equity transaction. This ASU clarifies the scope of the decrease in ownership provisions, and expands the disclosures about the deconsolidation of a subsidiary or de-recognition of a group of assets. This ASU is effective for the first interim or annual reporting period ending on or after December 31, 2009. The adoption of ASU No. 2010-02 did not have any affect on the Company’s consolidated financial statements.
F-9
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
2.
|
PREPRATION OF INTERIM FINANCIAL STATEMENTS (CONTINUED)
|
Recent accounting pronouncements (continued)
In January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair Value Measurements. This ASU amends FASB ASC 820 to require a number of additional disclosures regarding fair value measurements. Specifically, this ASU requires entities to disclose: (1) the amount of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers; (2) the reasons for any transfers in or out of Level 3; and (3) information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. Except for the requirement to disclose information about purchases, sales, issuances, and settlements in the reconciliation of recurring Level 3 measurements on a gross basis, which is effective for fiscal years beginning after December 15, 2010, all the amendments to FASB ASC 820 made by this ASU are effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this ASU did not have any effect on the Company’s consolidated financial statements.
3.
|
EARNINGS PER SHARE
|
Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common stocks outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common stocks that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no potentially dilutive securities for the three months ended June 30, 2010 and 2009.
4.
|
INCOME TAXES
|
Chisen Electric had a net operating loss carry-forward for income tax reporting purposes that might be offset against future taxable income. No tax benefit has been reported in the financial statements, because Chisen Electric believes that it is more likely than not that the carry-forwards will finally expire and therefore cannot be used. Accordingly, the potential tax benefits of the loss carry-forwards are offset by a valuation allowance of the same amount.
Chisen Electric’s subsidiaries are subject to income taxes on an entity basis on income arising in or derived from the tax jurisdictions in which each entity domiciles and operates.
Hong Kong Profits Tax has not been provided as Fast More had no assessable profit for the period.
Changxing Chisen is subject to state and local enterprise income taxes in the PRC at a standard rate of 25%. Changxing Chisen received official designation by the local tax authority as a foreign invested enterprise engaged in manufacturing activities and is confirmed by the local tax authority that it is exempted from enterprise income tax for two years commencing from the first profitable year in 2006, followed by a 50% reduction for the next three years.
Dividends payable by a foreign invested enterprise in the PRC to its foreign investors in Hong Kong are subject to a 5% withholding tax. No deferred tax expenses were charged to the statement of operations for the three months ended June 30, 2010 and 2009.
F-10
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
4.
|
INCOME TAXES (CONTINUED)
|
|
(a)
|
Income tax expenses are comprised of the following:
|
Three months ended June 30,
|
||||||||
|
2010
|
2009
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Current taxes arising in the PRC:
|
||||||||
For the period
|
249
|
355
|
The FASB ASC Topic 740 “Income Taxes” clarifies the accounting and disclosure for uncertainty in tax positions, as defined, and prescribes the measurement process and a minimum recognition threshold for a tax position, taken or expected to be taken in a tax return, that is required to be met before being recognized in the financial statements. Under ASC 740, the Company must recognize the tax benefit from an uncertain position only if it is more-likely-than-not the tax position will be sustained on examination by the tax authority, based on the technical merits of the position. The tax benefits recognized in the financial statements attributable to such position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate resolution of the position.
Subject to the provision of ASC 740, the Company has analyzed its filing positions in all of the domestic and foreign jurisdictions where it is required to file income tax returns. As of June 30, 2010 and 2009, the Company has identified the following jurisdictions as “major” tax jurisdictions, as defined, in which it is required to file income tax returns in United States, Hong Kong and the PRC. Based on the evaluations noted above, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its unaudited condensed consolidated financial statements.
As of March 31, 2010 and 2009, the Company had no unrecognized tax benefits or accruals for the potential payment of interest and penalties. The Company’s policy is to record interest and penalties in this connection as a component of the provision for income tax expense. For the three months ended June 30, 2010 and 2009, no interest or penalties were recorded.
F-11
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
4.
|
INCOME TAXES (CONTINUED)
|
|
(b)
|
Reconciliation from the expected income tax expenses calculated with reference to the statutory tax rate in the PRC of 25% (2009: 25%) is as follows:
|
Three months ended June 30,
|
||||||||
|
2010
|
2009
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Expected income tax expenses
|
571
|
590
|
||||||
Effect on tax incentives / holiday
|
(203
|
)
|
(332
|
)
|
||||
Non-deductible items
|
-
|
73
|
||||||
Non-taxable income
|
(165
|
)
|
-
|
|||||
Others
|
46
|
24
|
||||||
Income tax expenses
|
249
|
355
|
|
(c)
|
Components of net deferred tax liabilities were as follows:
|
|
As of June 30,
|
As of March 31,
|
||||||
|
2010
|
2010
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Withholding tax on undistributed earnings of a PRC subsidiary
|
460
|
460
|
5.
|
RESTRICTED BANK BALANCES
|
Restricted bank balances as of June 30, 2010 and March 31, 2010 represented time deposits with original maturity between three and twelve months. As of June 30, 2010 and March 31, 2010, all restricted bank balances were pledged for the issue of notes payable as disclosed in Note 10 below.
6.
|
OTHER FINANCIAL ASSETS
|
Other financial assets represented notes receivable from customers for the settlement of accounts receivable balances. As of June 30, 2010 and March 31, 2010, all notes receivable were guaranteed by established banks in the PRC and had maturities of 6 months or less from the date of issue. The fair value of the notes receivable approximated their carrying value.
F-12
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
7.
|
INVENTORIES
|
Inventories consisted of the following:
|
As of June 30,
|
As of March 31,
|
||||||
|
2010
|
2010
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Raw materials
|
3,529
|
7,186
|
||||||
Work-in-progress and semi-finished goods
|
19,990
|
13,482
|
||||||
Finished goods
|
11,599
|
9,370
|
||||||
35,118
|
30,038
|
8.
|
AVAILABLE-FOR-SALE FINANCIAL ASSETS
|
Available-for-sale financial assets as of June 30, 2010 and March 31, 2010 represented investment in unlisted equity securities and are recorded at cost. The management has estimated that the recoverable amount of the assets exceed their carrying value.
9.
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
Property, plant and equipment is summarized as follows:
|
As of June 30,
|
As of March 31,
|
||||||
|
2010
|
2010
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Buildings
|
5,491
|
5,468
|
||||||
Leasehold improvements
|
659
|
495
|
||||||
Plant and machinery
|
4,674
|
4,071
|
||||||
Motor vehicles
|
978
|
974
|
||||||
Furniture, fixtures and office equipment
|
1,529
|
1,419
|
||||||
Construction-in-progress
|
-
|
-
|
||||||
13,331
|
12,427
|
|||||||
Accumulated depreciation
|
(2,214
|
)
|
(1,953
|
)
|
||||
11,117
|
10,474
|
Depreciation expenses were approximately US$252,000 and US$132,000 for the three months ended June 30, 2010 and 2009, respectively.
The Company has pledged certain buildings as collaterals against general banking facilities granted to the Company. Details of which are disclosed in Note 11.
F-13
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
10.
|
NOTES PAYABLE
|
Notes payable were issued by the Company to creditors with the banker’s acceptance payable at the maturity date for the purpose of raw materials for production exclusively. The Company has to repay the notes within six months from date of issuance and service fees would be charged by banks for the issuance for the notes. The notes payable were collateralized by restricted bank balances as set out in Note 5 and certain land lease prepayments and buildings as set out in Note 11(i) below.
In addition, various parties have issued guarantee against these notes payable as follows:
|
As of June 30,
|
As of March 31,
|
||||||
|
2010
|
2010
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Corporate and personal guarantees issued by related parties (Note 14(d))
|
14,804
|
14,377
|
||||||
Corporate guarantees issued by third parties
|
1,473
|
1,467
|
11.
|
SHORT-TERM BANK BORROWINGS
|
Short-term bank borrowings comprise of the followings:
|
|
As of June 30,
|
As of March 31,
|
|||||||
|
Note
|
2010
|
2010
|
|||||||
|
|
US$’000
|
US$’000
|
|||||||
|
|
|||||||||
Short-term bank loans
|
(i)
|
43,307
|
42,473
|
|||||||
Bills financing
|
(ii)
|
3,683
|
3,668
|
|||||||
46,990
|
46,141
|
|
(i)
|
Short-term bank loans
|
Short-term bank loans represent amounts due to various banks which are due within 12 months, and these loans can normally be renewed with the banks upon expiry/maturity.
The loans and the notes payables as set out in Note 10 are collateralized by land lease prepayments and buildings of the Company with carrying values as follows:
|
As of June 30,
|
As of March 31,
|
||||||
|
2010
|
2010
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Land lease prepayments
|
597
|
598
|
||||||
Buildings
|
1,570
|
2,018
|
||||||
2,167
|
2,616
|
F-14
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
11.
|
SHORT-TERM BANK BORROWINGS (CONTINUED)
|
|
(i)
|
Short-term bank loans (continued)
|
Various parties have also issued guarantee against these short-term bank loans as follows:
|
As of June 30,
|
As of March 31,
|
||||||
|
2010
|
2009
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Corporate and personal guarantees issued by related parties (Note 14(d))
|
31,376
|
30,589
|
||||||
Corporate guarantees issued by third parties
|
1,473
|
1,467
|
||||||
Corporate and personal guarantees issued by related parties and a third party jointly (Note 14(d))
|
8,838
|
8,802
|
The weighted average annual interest rates of the short-term bank loans were 5.41% and 5.40% as of June 30, 2010 and March 31,2010 respectively.
|
(ii)
|
Bills financing
|
Bill financing represents amounts due to various banks which are repayable within six months from the date of issue. At June 30, 2010, the bills are secured by certain restricted bank balances of the Company with carrying value of US$1,768,000 and guaranteed by certain related parties to the extent of US$1,915,000.
The weighted average annual interest rates of the bills financing were 3.96% and 3.96% as of June 30, 2010 and March 31, 2010, respectively.
12.
|
GOVERNMENT SUBSIDIES
|
During the year ended March 31, 2008, the Company received a government grant of approximately US$231,000 for the purpose of subsidising its acquisition of property, plant and equipment, of which approximately US$12,000 and US$12,000 was credited to the statement of operations for the three months ended June 30, 2010 and 2009, respectively.
F-15
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
13.
|
FAIR VALUE MEASUREMENT
|
The Company adopted ASC Topic 820 – Fair Value Measurements and Disclosures (“ASC 820”). The adoption of ASC 820 did not have a material impact on our consolidated financial statements. ASC 820 establishes a three-tier fair value hierarchy to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are defined as follows:
Level 1:
|
Observable inputs, such as unadjusted quoted market prices in active markets for the identical asset or liabilities.
|
Level 2:
|
Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
|
Level 3:
|
Unobservable inputs reflecting the entity’s own assumptions in measuring the asset or liability at fair value.
|
The Company’s financial instruments consist principally of cash and cash equivalents, restricted bank balances, other financial assets, trade receivables and payables, deposits, prepayment and other receivables, notes payable, accrued expenses and other liabilities, amount due from/to related parties and short-term borrowings which are carried at amounts that generally approximate their fair values because of the short-term maturity of these instruments.
14.
|
RELATED PARTY TRANSACTIONS
|
|
(a)
|
Names and relationship of related parties:
|
Name of related party
|
Existing relationships with the Company
|
|
Mr. Xu Kecheng
|
Director and controlling stockholder of Chisen Electric
|
|
Zhejiang Chisen Glass Company Limited (“Chisen Glass”)*
|
A company controlled by a close family member of Mr. Xu Kecheng
|
|
Mr. Xu Keyong
|
A close family member of Mr. Xu Kecheng
|
|
Ms. Zhou Fang Qin
|
Spouse of Mr. Xu Kecheng
|
|
Changxing Chisen Xinguangyuan Company Limited (“Xinguangyuan”)*
|
A company controlled by a close family member of Mr. Xu Kecheng
|
|
Zhejiang Ai Ge Organism Products Company Limited (“Ai Ge Organism”)*
|
A company controlled by Mr. Xu Kecheng
|
|
Zhejiang Changxing Nuo Wan Te Ke Glass Company Limited (“Nuo Wan Te Ke”)*
|
A company controlled by a close family member of Mr. Xu Kecheng
|
|
Zhejiang Changxing Ruilang Electronic Company Limited (“Ruilang Electronic”)
|
|
A company controlled by a close family member of Mr. Xu Kecheng
|
|
*
|
These are direct translations of the name in Chinese for identification purpose only and are not official names in English.
|
F-16
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
14.
|
RELATED PARTY TRANSACTIONS (CONTINUED)
|
|
(b)
|
Summary of balances with related parties:
|
|
As of June 30,
|
As of March 31,
|
||||||
|
2010
|
2010
|
||||||
|
US$’000
|
US$’000
|
||||||
Due from related parties:
|
||||||||
Ms. Zhou Fang Qin
|
11
|
8
|
||||||
Due to related parties:
|
||||||||
Mr. Xu Keyong
|
25
|
25
|
||||||
Chisen Glass
|
666
|
110
|
||||||
Ruilang Electronic
|
2,490
|
2,102
|
||||||
Ai Ge Organism
|
293
|
292
|
||||||
Nuo Wan Te Ke
|
3
|
3
|
||||||
Xinguangyuan
|
18
|
-
|
||||||
3,495
|
2,532
|
All amounts due from / to related parties represent unsecured advances which are interest-free and repayable on demand.
|
(c)
|
Summary of related party transactions:
|
Name of related
party |
Nature of transactions
|
Three months ended June 30,
|
||||||||
|
|
2010
|
2009
|
|||||||
|
|
US$’000
|
US$’000
|
|||||||
|
|
|||||||||
Ruilang Electronic
|
Purchase of raw materials
|
1,933
|
-
|
|||||||
Chisen Glass
|
Purchase of raw materials
|
660
|
-
|
F-17
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
14.
|
RELATED PARTY TRANSACTIONS (CONTINUED)
|
|
(d)
|
Other arrangements:
|
|
˙As of June 30, 2010, Chisen Glass provided guarantees, in aggregate, amounting to US$5,892,000, US$810,000 and US$442,000 to secure the short-term bank loans, notes payable and bill financing of the Company, respectively.
|
|
˙As of June 30, 2010, US$4,419,000 of the Company’s short-term bank loans was collateralized by land use rights owned by Ruilang Electronic and guaranteed by Mr. Xu Kecheng and Ms. Zhou Fang Qin.
|
|
˙As of June 30, 2010, Xinguangyuan, Mr. Xu Kecheng and a third party provided guarantees, in aggregate, amounting to US$8,838,000 to secure the short-term bank loans of the Company.
|
|
˙As of June 30, 2010, Xinguangyuan and Mr. Xu Kecheng provided guarantees, in aggregate, amounting to US$11,784,000 and US$5,892,000 to secure the short-term bank loans and notes payable of the Company, respectively.
|
|
˙As of June 30, 2010, Chisen Glass, Mr. Xu Kecheng and Ms. Zhou Fang Qin provided guarantees, in the aggregate, amounting to US$9,281,000, US$4,420,000 and US$1,473,000 to secure the short-term bank loans, notes payable and bills financing of the Company, respectively.
|
|
˙As of June 30, 2010, Xinguangyuan provided guarantees, in aggregate, amounting to US$3,682,000 to secure the notes payable of the Company.
|
F-18
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
15.
|
COMMITMENTS AND CONTINGENCIES
|
|
(a)
|
Operating lease commitments
|
The following table summarizes the approximate future minimum rental payments under non-cancelable operating leases in effect as of June 30, 2010 and March 31, 2010:
|
As of June 30,
|
As of March 31,
|
||||||
|
2010
|
2010
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Within one year
|
609
|
599
|
||||||
One to two years
|
640
|
630
|
||||||
Two to three years
|
672
|
661
|
||||||
Three to four years
|
362
|
489
|
||||||
Four to five years
|
72
|
115
|
||||||
Total
|
2,355
|
2,494
|
|
(b)
|
Capital commitments
|
As of June 30, 2010 and March 31, 2010, the Company had capital expenditure commitments for construction projects and purchase of machineries for an aggregate amount of approximately US$84,000 and US$84,000, respectively.
16.
|
PROVISION FOR WARRANTY
|
Estimated warranty costs are recognised at the time when the Company sells its products and are included in sale, marketing and distribution expenses. The Company uses historical failure rates and costs to repair product defects during the warranty period to estimate warranty costs while are reviewed periodically in light of actual experience. The reconciliation of the changes in the warranty obligation is as follows:
Three months ended June 30,
|
||||||||
|
2010
|
2009
|
||||||
|
US$’000
|
US$’000
|
||||||
|
||||||||
Balance as of April 1,
|
226
|
121
|
||||||
Exchange realignment
|
1
|
1
|
||||||
Accrual for warranties issued during the period
|
324
|
40
|
||||||
Settlement made during the period
|
(268
|
)
|
(15
|
)
|
||||
Balance as of June 30,
|
283
|
147
|
F-19
Chisen Electric Corporation
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
For the three months ended June 30, 2010 and 2009
|
17.
|
RETIREMENT PLAN COSTS
|
Contributions to defined contribution retirement schemes are charged to cost of sales, sales, marketing and distribution costs and general and administrative expenses in the consolidated statements of operations and other comprehensive income as and when the related employee services are provided. Retirement plan costs were US$129,000 and US$209,000 for the three months ended June 30, 2010 and 2009 respectively.
18.
|
SEGMENTAL INFORMATION
|
During the three months ended June 30, 2010 and 2009, all revenue of the Company represented income from sales of sealed lead-acid battery and therefore no financial information by business segment is presented. Furthermore, as all income is derived from the PRC, no geographical segment is presented.
19.
|
RESTATEMENT OF FINANCIAL STATEMENTS
|
Certain comparative figures in the 2009 consolidated statement of operations and other comprehensive income have been restated by the Company to conform to the current period’s presentation of financial statements. The table below shows the effect of restatements:
Three months ended
June 30, 2009
|
||||||||
As previously
reported
|
As
restated
|
|||||||
US$’000
|
US$’000
|
|||||||
Cost of sales
|
24,105 | 24,348 | ||||||
Gross income
|
5,370 | 5,127 | ||||||
General and administrative
|
(1,056 | ) | (813 | ) |
F-20
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward Looking Statements
The following discussion of our financial condition and results of operations of Chisen Electric Corporation (formerly known as World Trophy Outfitters, Inc., and the term “ World Trophy ” is used when discussing the operations of the Company prior to November 12, 2008 and the “ Registrant ” when discussing its operations after November 12, 2008) is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this report. This report contains forward-looking statements. Generally, the words “believes”, “anticipates”, “may”, “will”, “should”, “expect”, “intend”, “estimate”, “continue” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the SEC from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.
Exchange Agreement
On November 12, 2008 (the “Closing Date”), World Trophy entered into a Share Exchange Agreement (the “ Exchange ”) with Fast More Limited, a Hong Kong investment holding company (“ Fast More ”), Cheer Gold Development Limited, a company organized under the laws of Samoa (“ Cheer Gold ”) and Floster Investment Limited, a company organized under the laws of Samoa (“ Floster ” and together with Cheer Gold, the “ Stockholders ”). As a result of the share exchange, World Trophy acquired all of the issued and outstanding securities of Fast More from the Stockholders in exchange for Thirty-Five Million (35,000,000) newly-issued shares of World Trophy’s common stock, par value $0.001 per share (“ Common Stock ”), of which Thirty-Two Million Nine Hundred Thousand (32,900,000) shares were issued to Cheer Gold and Two Million One Hundred Thousand (2,100,000) shares were issued to Floster. As of the Closing Date, the Stockholders collectively beneficially owned seventy percent (70%) of the voting capital stock of the Company, 65.8% of which is owned by Cheer Gold and 4.2% of which is owned by Floster. As a result of the Exchange, Fast More became a wholly-owned subsidiary of World Trophy.
Effective February 2, 2009, the Registrant amended its Articles of Incorporation to change its name from “World Trophy Outfitters, Inc.” to “Chisen Electric Corporation”. The following is disclosure regarding the Registrant, Fast More and Fast More’s wholly-owned and chief operating subsidiary, Changxing Chisen Electric Co., Ltd. (hereinafter referred to as “ CCEC ”, and together with Fast More and the Registrant, the “ Company ”), the principal business activities of which consist of the manufacture and sale of sealed lead-acid battery products primarily in the electric bicycle market.
Prior Operations of World Trophy
World Trophy was formed as a Nevada corporation on January 13, 2005, and had been in the business of selling big game hunting packages to high end clients who sought to hunt with the top tier big game outfitters. Its main product sold was hunting trips, which included the hunting license and guide fees. World Trophy purchased and resold several hunting trips, selling them at a profit or for a mark-up. World Trophy also provided incidental advisory services to purchasers of hunting trips by helping these clients select an appropriate hunt, with no additional fees charged for these services.
During the year ended March 31, 2008, World Trophy sold its entire inventory of big game hunts, but was unsuccessful in developing a profitable business. World Trophy ceased its operations and became a development stage company effective April 1, 2008. Prior to the Exchange, World Trophy focused its efforts on seeking a business opportunity and had been in the process of locating and negotiating with business entities for the merger of a target company into World Trophy.
The Registrant’s Common Stock is currently traded on the OTCQB under the symbol “CIEC”. Immediately prior to the Exchange, World Trophy was considered a “blank check” development stage company with US$51,039 in assets and a net loss of US$(27,977) for the three (3) months ended September 30, 2008. On the Closing Date, the Registrant did not have any liabilities.
Current Operations of the Company
Fast More is an investment holding company incorporated in Hong Kong on December 17, 2007 with limited liability. CCEC was founded in Huzhou, Zhejiang Province in China in 2002. On February 16, 2008, Fast More acquired the 51%, 9% and 40% equity interests in CCEC from Mr. Xu Kecheng, Mr. Xu Keyong and BEME International Co., Ltd., respectively, for RMB6,502,500 (approximately US$926,000), RMB1,147,500 (approximately US$164,000) and RMB 5,100,000 (approximately US$726,000), respectively. Upon the completion of these acquisition transactions, CCEC became the wholly-owned and chief operating subsidiary of Fast More. Since the ultimate beneficial owner of Fast More was, at all times, the substantial stockholder of CCEC (Mr. Xu Kecheng), the ownership transfer transaction was accounted for as a transfer of entities under common control in accordance with the FASB Accounting Standards Codification (“ASC”) Topic 805.
5
On May 18, 2009, the Registrant incorporated Chisen Technology Holdings Corporation in Nevada as its wholly-owned subsidiary. Chisen Technology Holdings Corporation is authorized to do business in the State of Washington and up to the filing date of this report, this entity has no operations.
Summary of the Company’s Current Business
The Company is a leading lead-acid motive battery producer in China's personal transportation device market. Our motive battery products are sold under our own brand name and are predominantly used in electric bicycles and distributed and sold in China. Electric bicycles become increasingly popular. Among all types of batteries for electric bicycles, the lead-acid motive battery is the preferred choice for electric bicycle manufacturers in China because of its cost efficiency.
Today, the Company manufactures over 15,000,000 batteries each year, has more than 2,500 employees and is one of China's largest manufacturers of lead-acid batteries for electric-powered bicycles (LABEBs). For each of the Company’s fiscal years ended March 31, 2010 and 2009, sales revenues were US$177,192,000 and US$109,020,000, respectively, and our net income during the same periods amounted to US$9,500,000 and US$8,880,000, respectively.
The Company is located at Changxing Economic Development Zone at the bank of the Taihu Lake in Zhejiang Province, in close proximity to major national transportation systems, including National Highways 104 and 318, the Shanghai – Jiangsu – Zhejiang – Anhui – Hangzhou – Nanjing Expressway, the Changxing – Huzhou – Shanghai Channel, the Xuancheng – Hangzhou Railway and the Xinyi – Changxing Railway. The Company’s corporate offices are located at Jingyi Road, Changxing Economic Development Zone, Changxing, Zhejiang Province, The People’s Republic of China.
The Company’s Products
Description of our Lead-Acid Motive Batteries
The key components of a lead-acid motive battery include electrode plates and fiberglass dividing plates. The electrode plates are coated with oxidized lead and alloy lead. Pairs of positively charged electrode plates and negatively charged electrode plates each separated by a fiberglass dividing plate are bound together by metal strip and installed into the plastic casing of a lead-acid motive battery. The battery is then filled with sulfuric acid and charged with electricity. The number and the size of electrode plates required to be installed in a lead-acid motive battery will depend on the required level of its storage capacity and the power output.
We produce and offer ten (10) models of lead-acid motive battery products for sale and are mainly engaged in the production of the following models of lead-acid motive battery products for electric bicycles:
Product
|
Dimentions (LxWxH)
|
Weight
(kg)
|
Power
Output
(w)
|
Estimated
Hours
Required
Per
Charging
(1)
|
Estimated
Minutes
of Use
Per
Charging
(min)(2)
|
Estimated
Travel
Distance Per
Charging (km)
|
||||||||||||||||
6-DZM-10Ah
|
151×99×98
|
4.2
|
60
|
10
|
h
|
135-145
|
45-50
|
|||||||||||||||
6-DZM-12Ah
|
151×99×102
|
4.3
|
72
|
10
|
h
|
120-130
|
45-50
|
|||||||||||||||
6-DZM-16Ah
|
151×99×118
|
5.6
|
96
|
10
|
h
|
120-130
|
50-60
|
|||||||||||||||
6-DZM-17Ah
|
181×76×166
|
6.3
|
102
|
10
|
h
|
120-130
|
50-60
|
|||||||||||||||
6-DZM-20Ah
|
181×76×170
|
7.0
|
120
|
10
|
h
|
120-130
|
60-70
|
|||||||||||||||
8-DZM-16Ah
|
200×100×118
|
7.4
|
128
|
10
|
h
|
120-130
|
60-70
|
|||||||||||||||
8-DZM-18Ah
|
250×100×128
|
9.0
|
144
|
10
|
h
|
120-130
|
60-70
|
|||||||||||||||
8-DZM-20Ah
|
250×100×128
|
9.05
|
160
|
10
|
h
|
120-130
|
60-70
|
|||||||||||||||
6-DZM-24Ah
|
175×165×125
|
9.5
|
144
|
10
|
h
|
120-130
|
70-80
|
|||||||||||||||
6-DZM-25Ah
|
250×78×118
|
8.85
|
150
|
10
|
h
|
120-130
|
70-80
|
6
(1) Estimated hours required per charging refers to the estimated number of hours required for charging the battery from nil to full storage capacity.
(2) Estimated hours of use per charging refer to the estimated maximum number of hours for which the battery is able to be used on each occasion when it is charged to its full storage capacity.
All the lead-acid motive battery products produced by us are re-chargeable and can be recharged approximately 500 times. They are standardized and can be used in electric bicycles, electric motorcycles and electric cars produced by different manufacturers.
Distribution Methods
We sell our lead-acid motive battery products principally to manufacturers of electric bicycles. However, with the growing retail market for replacement of battery products, i.e. our secondary market, we have also strengthened our efforts in the sales of battery products to sales representatives and exclusive distributors which are strategically located in 27 provinces, autonomous regions and directly-administered municipalities in China. The Company currently has exclusive sales agreements with distributors at the provincial and county level, and employs sales representatives in each province across China to help distributors to further distribute products from counties to towns. We have established and maintained long-term relationships with distributors who we believe have local business experience and established regional sales networks.
Our largest distributors are located in the cities of Yancheng and Haimen in Jiangsu Province and in Shanghai.
Market Share
Zhejiang is the main province of producing LABEBs, the output of which accounted for approximately half of the total domestic output of LABEBs in China. According to the China Battery Industry Association, in 2009, total output of the top five (5) enterprises operating in Zhejiang accounted for approximately 35 million LABEBs of the approximate 100 million sold across China in the personal transportation market.
According to market research results of China Battery Industry Association, for the year ended March 31, 2010, our sales of lead-acid battery products in China represented approximately 11.84% of the total market size (in terms of sales revenue) of the lead-acid motive battery products for electric bicycles in China.
The table below shows the three top manufacturers of LABEBs in China, and their revenues during fiscal year ended March 31, 2010:
Battery Manufacturer
|
Production Location
|
Revenues in 2010
(approximate)
US$(Million)
|
Market Share
|
|||||||
Chaowei Power Holdings Limited
|
Changxing, Zhejiang
|
338.31
|
22.6
|
%
|
||||||
Tianneng Power International Limited
|
Changxing, Zhejiang
|
330.83
|
22.1
|
%
|
||||||
CHISEN ELECTRIC CORPORATION
|
Changxing, Zhejiang
|
177.19
|
11.8
|
%
|
Revenues generated by the Company in China accounted for 100% of the Company’s revenues in the fiscal years ended March 31, 2010 and 2009.
The Company’s battery production reached 14.48 million units and 7.8 million units, respectively for the fiscal years ended March 31, 2010 and 2009.
7
Competitive Business Conditions and Market Trends
At the United Nations Climate Change Conference 2009, the Chinese Government announced that by 2020, greenhouse gas emissions will be reduced by approximately 40% to 45% from 2005’s basis. We believe that in the next several years, due to intensifying global environmental concerns, there will be increased development of the electric bicycle. At present, we believe that the development of electric vehicles has won the support of the Chinese government due to the fact that the use of electric bicycles is very much in line with the Chinese government’s energy-saving and environmental protection policies. The electric bicycle, as an environment-friendly and convenient personal transportation vehicle, bears the advantages of convenience, non-pollution, safety and less energy consumption. In accordance with the measured data of the electric bicycle market demand in China as reported in a recent article at www.chinanews.com.cn/cj/cj-cyzh/news/2010/03-31/2201616.shtml, it was estimated that 25,000,000 electric bicycles will have been sold in China by the end of 2010.
With respect to new product trends in the market, Europe, the United States and Japan now use primarily a lithium-ion battery. This reflects a trend not only in the electric bicycle industry, but also in the electric automobile and telecommunications industries. In contrast, 95% of all electric bicycles produced in 2009 in China were powered by lead-acid motive batteries, and less than 5% of electric bicycles produced in 2009 were powered by lithium-ion batteries. Governments in the United States, Japan, Europe and China are encouraging the development of motive battery products that are more environmentally friendly with increased power output and less weight. Although we expect the development of lithium-ion batteries to accelerate over the next few years, we do not believe that the lithium-ion battery will replace the usage of the lead-acid motive battery in the electric bicycle industry in the next 3 to 5 years unless there is significant improvement with the safety and cost of production of lithium-ion batteries.
In 2009, the top electric bicycle brand in terms of production was Taimei, followed by Xinri and Yadea, the only three companies with the sales volume exceeded 900,000 units in 2009 according to a research report issued by Tianjin Bicycle Association. We believe that continued industrial integration and brand concentration will continue to increase and that these famous brands in China will rapidly increase their market share. We also believe that brands will become more diversified by an increasing influence of well-known brands on the market. Xinri’s electric bicycle was utilized at the Beijing 2008 Olympic Games and at the Paralympic Games, which is a great honor in China, and the Company was chosen as the only manufacturer to supply environmentally friendly batteries to Xinri for its electric bicycle. The Company is also an alternative power source sponsor at the 2010 Shanghai World Expo, providing an eco-friendly solution to power the road signage at select Expo Park locations. Based on this, in the next several years, we will strive to create an international first-class brand and become the leader in providing “green” energy in the electric bicycle marketplace. Simultaneously, through constant research and development of new chemical energy technologies, we believe the Company will provide energy-savings and highly-effective energy solutions to our customers for the purpose of improving the quality of human life and a sustainable ecological environment.
Competition
Our chief competitors are Tianneng Power International Ltd. (“Tianneng”) and Chaowei Power Holdings Limited (“Chaowei”). The two companies were the first companies to enter the battery industry in China. For example, Chaowei and Tianneng are the leading companies in terms of production and sales volume, and both accompanies have many after-sales service stores and take an advantage in the secondary market by their continued business expansion. Tiannneng and Chaowei’s capital stocks are listed on The Hong Kong Stock Exchange. The most significant difference between the Company and its two competitors is that the Company focuses on the primary market, whereas Tianneng and Chaowei focus on the secondary market.
Cooperative Partnership
In April 2008, CCEC set up the Zhejiang Changxing Chisen Physical-Chemical Power Supply Research and Development Center at the College of Chemistry and Chemical Engineering at Xiamen University in order to research and develop new products. Xiamen University is a first class comprehensive University in China with 9 graduate schools, 120 research institutions and cooperative inter-university ties to over 100 institutions worldwide.
8
Development Strategy of the Company
With a leading position in the LABEB battery product market in China, our product research and development capability and our cooperative partnership, we believe we are well positioned to capture additional business opportunities in China's personal transportation device market. In light of those prevailing economic trends of developing alternative transportation devices, aiming to reduce the reliance on oil and gas and producing lesser emissions, we intend to explore the motive battery market for electric-powered motorcycles and electric cars. Leveraging our experience and expertise in producing lead-acid motive battery products for electric bicycles, our product mix will be expanded to include lead-acid back-up batteries, lithium iron motive batteries and lithium iron back-up battery products. It is our goal to become the largest battery developer and producer with a first-class sales and service network in China.
The top five lead-acid motive battery manufacturers in 2009 accounted for over 50% of the total market share with the Company, representing approximately 11.84% of the total market share, ranking third in the industry in terms of production. The Company has taken the following measures to set up its position as one of the leaders in the industry: (1) the Company invested in an automatic production line with the maximum daily production capacity increasing by 50% compared with that in 2009; (2) the Company is actively seeking an acquisition target to expand its market share and develop its production capacity.
Results of Operations for the Three Months Ended June 30, 2010 Compared with the Three Months Ended June 30, 2009
The following table sets forth a summary of certain key components of our results of operations for periods indicated, in dollars and as a percentage of revenues.
For The Three Months Ended June 30 (Unaudited)
|
||||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Revenues
|
$
|
50,429,000
|
$
|
29,475,000
|
100.00
|
%
|
100.00
|
%
|
||||||||
Cost of sales
|
$
|
45,392,000
|
$
|
24,348,000
|
90.01
|
%
|
82.61
|
%
|
||||||||
Gross income
|
$
|
5,037,000
|
$
|
5,127,000
|
9.99
|
%
|
18.22
|
%
|
||||||||
Sales, marketing and distribution
|
$
|
2,512,000
|
$
|
1,787,000
|
4.98
|
%
|
6.06
|
%
|
||||||||
General and administrative expenses
|
$
|
684,000
|
$
|
813,000
|
1.36
|
%
|
2.76
|
%
|
||||||||
Operating income
|
$
|
1,841,000
|
$
|
2,527,000
|
3.65
|
%
|
8.57
|
%
|
||||||||
Other income, net
|
$
|
503,000
|
$
|
147,000
|
1.00
|
%
|
0.50
|
%
|
||||||||
Interest income
|
$
|
96,000
|
$
|
55,000
|
0.19
|
%
|
0.19
|
%
|
||||||||
Net income from operations before interest and tax expenses
|
$
|
2,440,000
|
$
|
2,729,000
|
4.84
|
%
|
9.26
|
%
|
||||||||
Interest expenses
|
$
|
685,000
|
$
|
369,000
|
1.36
|
%
|
1.25
|
%
|
||||||||
Income before income taxes
|
$
|
1,755,000
|
$
|
2,360,000
|
3.48
|
%
|
8.01
|
%
|
||||||||
Income taxes expenses
|
$
|
249,000
|
$
|
355,000
|
0.49
|
%
|
1.20
|
%
|
||||||||
Net income
|
$
|
1,506,000
|
$
|
2,005,000
|
2.99
|
%
|
6.80
|
%
|
||||||||
Other comprehensive income
|
$
|
121,000
|
$
|
1,000
|
0.24
|
%
|
0.00
|
%
|
||||||||
Comprehensive income
|
$
|
1,627,000
|
$
|
2,006,000
|
3.23
|
%
|
6.81
|
%
|
Revenues
During the three month period ended June 30, 2010, we kept strong growth in our sales when compared to the same period in 2009. The Company successfully expanded its customer base and strengthened its customer relationships. Revenues for the three month period ended June 30, 2010 and 2009 were US$50,429,000 and US$29,475,000, respectively. The increase in revenues of 71% was mainly attributable to an increase in sales volume and an increase in the average unit selling price of our battery products.
Sales volume increased by 61% from 2,498,000 units for the three month period ended June 30, 2009 to 4,017,000 units for the three month period ended June 30, 2010. The increase in sales volume was mainly attributable to strong sales volume of our battery products as a result of rapid growth in the electric bicycle market in the PRC and an increase in the Company’s sales to existing and new customers. For example, sales to Taimei, a major electric bicycle manufacturer and a famous brand name in China, increased by 98% for the three month ended June 30, 2010 as compared to the same period in 2009.
9
The average unit selling price of our battery products increased by 7% for the three month period ended June 30, 2010 in response to the increase in the average costs of our major raw materials.
Cost of Sales
Cost of sales for the three month periods ended June 30, 2010 and 2009 was US$45,392,000 and US$24,348,000, respectively, and cost rates were 90% and 83%, respectively. The increase in cost rate was mainly attributable to the Company’s promotional activities and sales discounts and rebates to customers which were made in order to maintain the Company’s market competitiveness. In addition, in response to the 18% increase in the average cost of raw materials and fierce market competition, the average unit selling price increased by less than 7% and therefore the cost rate increased by 8%.
Depreciation and Amortization
Depreciation and amortization expenses were US$256,000 and US$135,000 for the three month periods ended June 30, 2010 and 2009, respectively. The increase of US$121,000, or 89.63%, was mainly attributable to the acquisition of new plant and machinery and leasehold improvements during the three month period ended June 30, 2010 made in connection with the Company’s business expansion efforts.
Sales, Marketing and Distribution
Sales, marketing and distribution expenses were US$2,512,000 and US$1,787,000 for the three month periods ended June 30, 2010 and 2009, respectively. The increase of US$725,000, or 40.57%, was mainly driven by the increase in traveling expenses, after-sale related expenses and the provision for warranty costs by US$464,000, US$51,000 and US$284,000, respectively. The increase was partly offset by a decrease in sales commissions of US$190,000.
General and Administrative Expenses
General and administrative expenses were US$684,000 and US$813,000 for the three month periods ended June 30, 2010 and 2009, respectively, and mainly consisted of staff salaries and benefits, depreciation expenses, legal and professional fees, other taxes research and development expenses, and promotion and advertising expenses. The decrease of US$129,000, or 16%, was mainly attributable to the increase of research and development expenses of approximately US$173,000, offset by the decrease of social insurance expenses, consultancy fee and other expenses of approximately US$294,000.
Other Income, Net
Net other income was US$503,000 and US$147,000 for the three month periods ended June 30, 2010 and 2009, respectively. The increase of US$356,000, or 242.18%, was mainly attributable to the increase in net sales of lead to electric plate suppliers and government subsidies.
Net Income from Operations before Interest and Tax Expenses
Net income from operations before interest and tax expense was US$2,440,000 and US$2,729,000 for the three month periods ended June 30, 2010 and 2009, respectively. The decrease of US$289,000, or 10.59%, was mainly attributable to the decrease in operating income of US$686,000, which is attributable to the increase in cost rate of 8%.
Interest Expense
Interest expense was US$685,000 and US$369,000 for the three month periods ended June 30, 2010 and 2009, respectively. The increase of US$316,000, or 85.64%, was mainly attributable to the increase of US$17,269,000 in average short-term bank loans for the three month period ended June 30, 2010.
10
Net Income
Net income was US$1,506,000 and US$2,005,000 for the three month periods ended June 30, 2010 and 2009, respectively. The decrease in net income of US$499,000, or 24.89%, was mainly attributable to the decrease of US$0.9 in gross income per unit of sales.
Liquidity and Capital Resources
The Company generally finances its operations through profit generated from its operations and borrowings from banks. During the reporting period, the Company entered into a number of bank loans to satisfy its financing needs. As of the date of this report, we have not experienced any difficulty in raising funds by bank loans, and we have not experienced any liquidity problems in settling our payables in the normal course of business and repaying our bank loans when they fall due.
The following table sets forth the summary of our cash flows, in U.S. dollars, for the periods indicated:
Three Months Ended June 30
(Unaudited)
|
||||||||
2010
|
2009
|
|||||||
Net cash provided by (used in) operating activities
|
$
|
230,000
|
$
|
(337,000
|
)
|
|||
Net cash used in investing activities
|
$
|
(3,940,000
|
)
|
$
|
(4,886,000
|
)
|
||
Net cash provided by financing activities
|
$
|
663,000
|
$
|
11,688,000
|
||||
Net (decrease) increase in cash and cash equivalents
|
$
|
(3,047,000
|
)
|
$
|
6,465,000
|
|||
Effect of exchange rate changes on cash
|
$
|
24,000
|
$
|
-
|
||||
Cash and cash equivalents at beginning of period
|
$
|
6,019,000
|
$
|
2,620,000
|
||||
Cash and cash equivalents at end of period
|
$
|
2,996,000
|
$
|
9,085,000
|
Operating Activities
Net cash provided by operating activities was approximately US$230,000 for the three months ended June 30, 2010, as compared to net cash used in operating activities of approximately US$337,000 for the same period in 2009. This increase of US$567,000, or 168.24%, was mainly due to increase in accounts payable and notes payable and decrease in prepayments, offset by the increase in accounts receivable and the decrease in accrued expenses.
Investing Activities
Net cash used in investing activities was approximately US$3,940,000 for the three months ended June 30, 2010, as compared to approximately US$4,886,000 for the same period in 2009. The decrease of US$946,000, or 19.36%, was mainly attributable to the decrease of US$3,570,000 in additional funds invested in restricted bank balances for issuing bank acceptance bills, and was partly offset by the increase of US$1,779,000 and US$845,000 in funds used for acquiring available-for-sale financial assets and property, plant and equipment, respectively.
Financing Activities
Net cash provided by financing activities was approximately US$663,000 for the three months ended June 30, 2010, as compared to approximately US$11,688,000 for the same period in 2009. The decrease of US$11,025,000, or 94.33%, was mainly attributable to the decrease in additional bank borrowings and bills financing.
Working Capital
Our working capital decreased by approximately US$809,000 to approximately US$15,952,000 as of June 30, 2010, as compared to our working capital of approximately US$16,761,000 as of March 31, 2010. The decrease was mainly attributable to net effect of increase in current assets of US$6,416,000 and the increase in current liabilities of US$7,225,000. The increase in current assets was mainly attributable to the increase in restricted bank balances of US$1,191,000 and accounts receivable of US$5,049,000 while the increase in current liabilities was mainly due to the increase in accounts payable of US$3,760,000 and notes payable of US$1,617,000 and amounts due to related parties of US$963,000.
11
Off-Balance Sheet Arrangements
We do not have any outstanding derivative financial instruments, off-balance sheet guarantees or interest rate swap transactions of foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rates Risk
Our exposure to interest rate risk for changes in interest rates relates primarily to the interest-bearing bank loans and interest income generated by our bank deposits. We have not used any derivative financial instruments in our investment portfolio or for cash management purposes. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. Nevertheless, our future interest expense or interest income may expect to be decreased due to changes in interest rates in the PRC.
Foreign Exchange Rates Risk
We do not hold any derivative instruments and do not engage in any hedging activities. Because most of our purchases and sales are made in RMB, any exchange rate change affecting the value of the RMB relative to the U.S. dollar could have an effect on our financial results as reported in U.S. dollars. If the RMB were to depreciate against the U.S. dollar, amounts reported in U.S. dollars would be correspondingly reduced. If the RMB were to appreciate against the U.S. dollar, amounts reported in U.S. dollars would be correspondingly increased.
Contractual Obligations
Payments Due By Period
|
||||||||||||||||||||
Contractual Obligations (US$)
|
Total
|
Less than
1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
|||||||||||||||
Bank Indebtedness
|
(SEE TABLE BELOW)
|
|||||||||||||||||||
Other Indebtedness
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Capital Lease Obligations
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Operating Lease Obligations
|
(SEE TABLE BELOW)
|
|||||||||||||||||||
Purchase Obligations
|
(SEE TABLE BELOW)
|
|||||||||||||||||||
Other Long-Term Liabilities Reflected on the Company’s Balance Sheet under US GAAP
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Total:
|
0 | 0 | 0 | 0 | 0 |
Bank indebtedness (US$)
|
June 30, 2010
|
March 31, 2010
|
||||||
Short-term bank borrowings
|
US$
|
46,990,000
|
US$
|
46,141,000
|
||||
Notes payable (within (1) year)
|
US$
|
37,121,000
|
US$
|
35,504,000
|
||||
Total
|
US$
|
84,111,000
|
US$
|
81,645,000
|
Purchase Obligations (US$)
|
June 30, 2010
|
March 31, 2010
|
||||||
Purchase of machinery (within one (1) year)
|
US$
|
84,000
|
US$
|
84,000
|
||||
Total
|
US$
|
84,000
|
US$
|
84,000
|
Operating Lease Obligations (US$)
|
June 30, 2010
|
March 31, 2010
|
||||||
Within one (1) year
|
US$
|
609,000
|
US$
|
599,000
|
||||
1-3 years
|
US$
|
1,312,000
|
US$
|
1,291,000
|
||||
3-5 years
|
US$
|
434,000
|
US$
|
604,000
|
||||
Over five (5) years
|
US$
|
0
|
US$
|
0
|
||||
Total
|
US$
|
2,355,000
|
US$
|
2,494,000
|
12
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act. Based on this evaluation, our management, including our principal executive officer and our principal financial officer, concluded that our disclosure controls and procedures were effective as of the fiscal quarter covered by this report, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act (i) is recorded, processed, summarized and reported within the time period specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow appropriate decisions on a timely basis regarding required disclosure.
Changes In Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have material affect, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, we are named as defendant in lawsuits in which claims are asserted against us. In our opinion, the liabilities, if any, which may ultimately result from such lawsuits, are not expected to have a material adverse effect on our financial position, results of operations or cash flows. As of June 30, 2010, there was no pending or outstanding material litigation with the Company.
ITEM 1A. RISK FACTORS
Not required for a "smaller reporting company".
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the quarter ended June 30, 2010, the Company had no unregistered sales of equity securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
13
ITEM 6. EXHIBITS
(a) Exhibits
EXHIBIT NO.
|
|
DESCRIPTION
|
|
LOCATION
|
2.1
|
Share Exchange Agreement, dated November 12, 2008, by and among World Trophy Outfitters, Inc., Fast More Limited, Cheer Gold Development Ltd. and Floster Investment Limited
|
Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
3.1
|
Articles of Incorporation of World Trophy Outfitters, Inc.
|
Incorporated by reference to Exhibit 3(i).1 to the Registrant’s Registration Statement on Form SB-2 as filed with the SEC on September 23, 2005
|
||
3.2
|
Certificate of Amendment to Articles of Incorporation of Chisen Electric Corporation (name change)
|
Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
|
||||
3.3
|
Amended and Restated Bylaws of Chisen Electric Corporation
|
Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
3.4
|
Certificate of Incorporation of Fast More Limited, dated December 17, 2007
|
Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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||
3.5
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Memorandum and Articles of Association of Fast More Limited, dated as of December 17, 2007
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Incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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||
3.6
|
Certificate of Incorporation of Changxing Chisen Electric Co., Ltd.
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Incorporated by reference to Exhibit 3.5 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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||
3.7
|
Articles of Associations of Changxing Chisen Electric Co., Ltd.
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Incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.1
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Agreement on Establishment of Changxing Chisen Physical Chemistry Power Research and Development Center, dated April 30, 2008
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Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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||
10.2
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Form of Labor Contract
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Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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||
10.3
|
Lease Agreement, dated March 30, 2008, by and between Changxing Chisen Electric Co., Ltd. and Changxing Xiangyi Industrial Park Investment Co., Ltd.
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Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.4
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Contract For Loan on Guarantee, by and among Zhejiang Changxing Agricultural Cooperative Bank, Changxing Chisen Electric Co., Ltd. and Zhejiang Chisen Glass Co., Ltd.
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Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.5
|
Renminbi Loan Contract, dated January 11, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Corporation (Changxing Branch)
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Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.6
|
Renminbi Loan Contract, dated April 11, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Corporation (Changxing Branch)
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Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.7
|
Renminbi Loan Contract, dated March 31, 2008, by and between Changxing Chisen Electric Co., Ltd. and Bank of China (Hong Kong) Limited Shanghan Branch
|
Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
14
10.8
|
Loan Contract (Short Term), dated August 15, 2008, by and between Changxing Chisen Electric Co., Ltd. and Bank of China Changxing Branch
|
Incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.9
|
Acceptance Agreement, dated August 25, 2008, by and between Changxing Chisen Electric Co., Ltd. and Industrial Bank Co., Ltd. Hangzhou Branch
|
Incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.10
|
Acceptance Agreement of Commercial Bill, dated September 18, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Bank Co., Ltd. Changxing Branch
|
Incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.11
|
Cooperation Agreement, dated April 20, 2008, by and between Changxing Chisen Electric Co., Ltd. and Xiamen University
|
Included by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K as filed with the SEC on June 28, 2010
|
||
10.11
|
Acceptance Agreement of Commercial Bill, dated July 29, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Changxing Branch Co., Ltd.
|
Incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.12
|
Acceptance Agreement of Commercial Bill, dated September 9, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Changxing Branch Co., Ltd.
|
Incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.13
|
Components Purchase Contract, effective as of January 1, 2008, by and between Changxing Chisen Electric Co., Ltd. and Jiansu Xinri Electric Bicycle Co., Ltd.
|
Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.14
|
Supply Contract, dated April 22, 2008, by and between Changxing Chisen Electric Co., Ltd. and Jiangsu Yadea Science & Technology Development Co., Ltd.
|
Incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.15
|
Sales Contract of Battery, dated November 10, 2007, by and between Changxing Chisen Electric Co., Ltd. and Hu Qinzhong, Yancheng Office
|
Incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.16
|
Sales Contract of Battery, dated February 17, 2008, by and between Changxing Chisen Electric Co., Ltd. and Song Chunwei
|
Incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
14.1
|
Code of Ethics
|
Incorporated by reference to Exhibit 14.1 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
17
|
Resignation of Mathew Evans, dated November 12, 2008
|
Incorporated by reference to Exhibit 17 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
21
|
List of Subsidiaries
|
Included by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K as filed with the SEC on June 28, 2010
|
||
31.1
|
Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Provided herewith
|
15
31.2
|
Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Provided herewith
|
||
32.1
|
Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002
|
Provided herewith
|
||
32.2
|
Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002
|
Provided herewith
|
||
99.1
|
Audited Consolidated Financial Statements of Fast More Limited and its Subsidiary for the Fiscal Years Ended March 31, 2008 and 2007
|
Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
99.2
|
Unaudited Condensed and Consolidated Financial Statements of Fast More Limited and its Subsidiary for the Three (3) Months Ended June 30, 2008 and 2007
|
Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
99.3
|
Unaudited Pro Forma Financial Statements of Fast More Limited for the three (3) month period ended June 30, 2008 and the two years ended March 31, 2008.
|
Incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
99.4
|
Audit Committee Charter, dated January 15, 2009
|
Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
99.5
|
Compensation Committee Charter, dated January 15, 2009
|
Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
99.6
|
Corporate Governance and Nominating Committee Charter, dated January 15, 2009
|
Incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Amendment No. 2 to the Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2011
|
By:
|
/s/ Xu Kecheng
|
|
Name: Xu Kecheng
|
|||
Its: President, Chief Executive Officer and Principal Executive Officer
|
Date: February 28, 2011
|
By:
|
/s/ Liu Chuanjie
|
|
Name: Liu Chuanjie
|
|||
Its: Chief Financial Officer, Principal Financial and Accounting Officer
|
17