United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

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

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

For the quarterly period ended ~~March~~September 3130, 2011

Commission File No: 000-53263

CHINA LITHIUM TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

NEVADA	41-1559888
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer ID No)

15 West 39th Street Suite 14B, New York, NY 10018

(Address of principal executive office) (Zip Code)

Registrant's telephone number: 212-391-2688

_______________________________________

Former name, former address and former fiscal year,

(if changed since last report)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

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

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

The number of shares of common stock, $0.001 par value per share, outstanding as of ~~May~~November 1611, 2011 was 2116,659,811.

	TABLE OF CONTENTS	Page

	PART I - FINANCIAL INFORMATION

Item 1:	Financial Statements	1

Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3:	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4:	Controls and Procedures	34

PART II - OTHER INFORMATION

Item 1:	Legal Proceedings	35

Item 1A:	Risk Factors	35

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3:	Defaults Upon Senior Securities	35

Item 4:	Removed and Reserved	35

Item 5:	Other Information	35

Item 6:	Exhibits	35

CHINA LITHIUM TECHNOLOGIES, INC

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011


		PAGE



CONSOLIDATED FINANCIAL STATEMENTS:

	CONSOLIDATED BALANCE SHEETS	2 & 3
	CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME	4
	CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY	5
	CONSOLIDATED STATEMENTS OF CASH FLOWS	6 & 7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		8 - 27

CHINA LITHIUM TECHNOLOGIES, INC.

FORM 10-Q

QUARTERLY PERIOD ENDED MARCH 31, 2011

INDEX

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
Item 1:	Financial Statements
Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4:	Controls and Procedures	31
	PART II - OTHER INFORMATION
Item 1:	Legal Proceedings	31
Item 1A:	Risk Factors	31
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3:	Defaults Upon Senior Securities	32
Item 4:	Removed and Reserved	32
Item 5:	Other Information	32
Item 6:	Exhibits	32

CHINA LITHIUM TECHNOLOGIES, INC

FOR THE NINE MONTHS ENDED MARCH 31, 2011

(UNAUDITED)

		PAGE
INTERIM REVIEW REPORT
UNAUDITED FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS		5 & 6
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME		7
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY		8
CONSOLIDATED STATEMENTS OF CASH FLOWS		9 & 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		11 - 26

CHINA LITHIUM TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS	~~March~~September 3130, 2011		June 30, ~~2010~~2011
	(Unaudited)
Current Assets:
Cash and Cash Equivalents	$	2,~~864~~605,~~970~~527	$	2,~~761~~649,~~427~~523
Accounts Receivable		45,~~596~~390,~~655~~179		45,~~054~~612,~~189~~622
Other Accounts Receivable		5554,~~489~~930		4854,~~621~~413
Advanced to Suppliers		30,011		12,297
Advances to Suppliers		31,030		29,180
Inventory		1,497,566		786,013
Inventories		1,683,577		972,867
Prepaid Expenses		61617,~~594~~064		68417,~~169~~133
Total Current Assets		910,~~106~~382,~~285~~307		79,~~730~~735,~~716~~739
Plant & Equipment, net		621,626		261,811
Property, Plant and Equipment, net		745,276		777,732
Patent and Other Intangibles, net		6966,~~393~~055		7268,~~907~~396
Total Assets		911,~~797~~193,~~304~~638		810,~~065~~581,~~434~~867

" Continued on next page"

" The accompanying notes are an integral part of these financial statements"

CHINA LITHIUM TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY	March 31, 2011		June 30, 2010
	September 30, 2011		June 30, 2011
	(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY	(Unaudited)
Current Liabilities:
Accounts Payable		1849,~~311,605~~363		1870,~~832,512~~204
Advance from Customers		3,~~440~~189		3,~~329~~159
Payroll Payable		63113,~~960~~592		5779,~~186~~878
Tax Payable		~~144~~300,~~016~~678		~~310~~438,~~989~~532
Other Accounts Payables		9,645		4,495
Other Accounts Payable		1,328		2,044
Accrued Expenses		4670,~~573~~106		4571,~~074~~089
Loan from Shareholders		193,407		83,492
Loans from Shareholders		283,638		283,638
Warranty Accrual		321,462		237,374
Short-term Loans		80,000		80,000
Total Current Liabilities		2,094,108		2,574,452
Warranty Accrual		223,211		198,611
Total Liabilities		2,094,108		2,574,452
Total Current Liabilities		1,925,106		2,027,155
Total Liabilities		1,925,106		2,027,155
Stockholders' Equity:
Preferred Stock, par value $0.001, 20,000,000 shares authorized, 0 share issued and outstanding as of June 30 and March 31, 2011		-		-
Preferred Stock, par value $0.001, 20,000,000 shares authorized;
Common Stock, par value $0.001, 783,000,000 shares authorized; 20,159,811 shares issued and outstanding as of June 30, 2010, 21,659,811 shares issued and outstanding, including 1,500,000 unvested restricted stock award as of March 31, 2011		21,659		20,159
0 share issued and outstanding as of September 30 and June 30, 2011		-		-
Additional Paid in Capital		1,387,117		252,771
Common Stock, par value $0.001, 780,000,000 shares authorized;
Reserved Funds		467,186		467,186
16,659,811 and 21,659,811 shares issued and outstanding, including
Accumulated Other Comprehensive Income		326,203		98,594
1,050,000 unvested restricted stock award, as of September 30 and
Retained Earnings		5,501,030		4,652,272
June 30, 2011, respectively		16,659		21,659
Total Stockholders' Equity		7,703,195		5,490,982
Additional Paid in Capital		1,640,146		1,532,021
Total Liabilities and Stockholders' Equity	$	9,797,304	$	8,065,434
Reserved Funds		1,043,916		1,043,916
Retained Earnings		5,908,276		5,369,454
Accumulated Other Comprehensive Income		659,535		587,661
Total Stockholders' Equity		9,268,532		8,554,712
Total Liabilities and Stockholders' Equity	$	11,193,638	$	10,581,867

" The accompanying notes are an integral part of these financial statements"

CHINA LITHIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended March 31						Nine Months Ended March 31
	For the Three Months Ended September 30,
	2011			2010			~~2011~~			~~2010~~
Revenues	$	3,~~361~~771,~~885~~232		$	23,~~631~~704,~~041~~678		$	~~11,334,652~~		$	~~10,059,560~~
Cost of Goods Sold		2,~~070~~206,~~107~~258			12,~~640~~400,~~307~~654			~~7,237,284~~			~~6,854,846~~
Gross Profit		1,~~291~~564,~~778~~975			~~990~~1,~~734~~304,024			~~4,097,368~~			~~3,204,715~~
Operating Expenses:
Manufacturing Expenses		64108,~~525~~202			5162,~~667~~485			~~181,359~~			~~144,925~~
R & D Expenses		28139,~~326~~760			4820,~~930~~320			~~68,321~~			~~80,260~~
Sales Expenses		~~278~~134,~~342~~764			~~154~~249,~~639~~855			~~663,079~~			~~289,182~~
General and Administrative Expenses		~~610~~422,~~516~~308			~~195~~845,~~907~~380			~~1,659,122~~			~~476,311~~
Total Operating Expenses		~~981~~805,~~709~~033			~~451~~1,~~143~~178,038			~~2,571,880~~			~~990,677~~
Income from Operations before Other Income and (Expenses)		310,069			539,592			1,525,488			2,214,037
Income from Operations		759,941			125,985
Other Expenses and (Income):
Other Income (Expenses):
Financial Expenses (Income)		(7,722	)		-			(19,352	)		229
Interest Income (Expense), net		5,184			3,504
Other Expenses (Income)		(5,942	)		15			(6,531	)		(1,237	)
Other Income (Expense)		62			(182	)
Total Other Expenses and (Income)		(13,663	)		15			(25,884	)		(1,008	)
Total Other Income (Expenses)		5,247			3,323
Income Before Income Taxes		323,732			539,577			1,551,371			2,215,046
Income before Income Taxes		765,188			129,308
Provision For Income Taxes		153,538			134,894			702,613			554,400
Provision for Income Taxes		226,366			216,048
Net Income		~~170~~538,~~194~~822			~~404~~(86,~~683~~740	)		~~848,758~~			~~1,660,646~~
Other Comprehensvie Income:
Other Comprehensive Income:
Unrealized Gain (loss) on
Unrealized Gain (Loss) on Foreign Currency Translation		71,874			98,685
Foreign Currency Translation		25,640			142			227,609			35,704
Comprehensive Income	$	610,696		$	11,945
Comprehensive Income	$	195,834		$	404,825		$	1,076,367		$	1,696,350
Earnings Per Common Share:
Earnings Per Common Share - Basic and Diluted	$	0.01		$	0.02		$	0.05		$	0.08
Basic	$	0.03		$	(0.004	)
Weighted Average Common Share - Basic and Diluted		20,159,811			20,159,811			20,159,811			20,159,811
Diluted	$	0.03		$	(0.004	)
Weighted Average Common Share:
Basic		16,443,144			20,159,811
Diluted		16,671,628			20,159,811

"The accompanying notes are an integral part of these financial ~~statement~~statements"

CHINA LITHIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

														Accumulated
											Additional			Other									Total
	Preferred Stock				Common Stock						Additional			Other									Total
	Preferred Stock				Common Stock						Paid in			Comprehensive		Retained			Reserved		Comprehensive		Stockholders'
											Paid in			Comprehensive		Retained			Reserved		Comprehensive		Stockholders'
	Shares		Amount		Shares			Amount			Capital			Income		Earnings			Funds A		Income		Equity
Balance- June 30, 2008		-	$	-		-		$	-		$	-		$	63,394	$	967,804		$	-			$	1,031,198
Balance - June 30, 2009 (Restated)		-	$	-		19,151,875		$	19,151		$	139,293		$	71,387	$	2,690,492		$	-			$	2,920,323
Issuance of common stock						1,007,936			1,008			157,436												158,444
Reverse acquisition equity adjustments						1,007,936			1,008			113,478												114,486
Net income																	12,~~722~~428,~~687~~966					12,~~722~~428,~~687~~966		12,~~722~~428,~~687~~966
Retained earning to reserved funds																	-(467,186	)		-467,186				-
Foreign currency translation gain															7,993							7,993		7,993
Comprehensive income																						1,730,680
Balance - June 30, 2009 (Restated)		-	$	-		1,007,936		$	1,008		$	157,436		$	71,387	$	2,690,491		$	-			$	2,920,323
Issue of common stock						19,151,875			19,151			95,335												114,486
Net income for the year																	2,428,966					2,428,966		2,428,966
Retained earning to reserved funds																	(467,186	)		467,186
Foreign currency translation gain															27,207							27,207		27,207
Comprehensive Income																						2,456,173
Balance - June 30, 2010 (Restated)		-	$	-		20,159,811		$	20,159		$	252,771		$	98,594	$	4,652,~~272~~271		$	467,186			$	5,490,982
Common stock compensation on September 2, 2010												717,000												717,000
Restricted common stock issued to employees						1,500,000			1,500			1,648,500												1,650,000
Deferred stock-based compensation expense												(1,~~231~~086,~~154~~250	)											(1,~~231~~086,~~154~~250	)
Net income for the six months																	848,758					848,758		848,758
Net income																	1,293,912					1,293,912		1,293,912
Foreign currency translation gain															227,609							227,609		227,609
Retained earning to reserved funds																	(576,730	)		576,730				-
Comprehensive Income																						1,076,367
Foreign currency translation gain															489,067							489,067		489,067
Balance - March 31, 2011 (Unaudited)		-	$	-		21,659,811		$	21,659		$	1,387,117		$	326,203	$	5,501,030		$	467,186			$	7,703,195
Comprehensive Income																						1,782,980
Footnote A (Reseved Funds):	Restrictived retained earnings for the benefit of empoyees
Balance - June 30, 2011		-	$	-		21,659,811		$	21,659		$	1,532,021		$	587,661	$	5,369,454		$	1,043,916			$	8,554,712
Stock cancellation						(5,000,000	)		(5,000	)		5,000												-
Amortization of stock-based compensation												103,125												103,125
Net income																	538,822					538,822		538,822
Foreign currency translation gain															71,874							71,874		71,874
Comprehensive Income																						610,696
Balance - September 30, 2011 (Unaudited)		-	$	-		16,659,811		$	16,659		$	1,640,146		$	659,535	$	5,908,276		$	1,043,916			$	9,268,532
Footnote A (Reserved Funds):	Restrictive retained earnings for the benefit of employees

"The accompanying notes are an integral part of these financial statements"

CHINA LITHIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended March 31,
Cash Flows From Operating Activities:	2011			2010
Net Income	$	~~848~~538,~~758~~822		$	1(86,~~705,916~~740	)
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities:
(Used) Provided by Operating Activities:
Depreciation and Amortization Expense		7065,~~180~~100			6120,~~076~~659
Stock-based Compensation Expense		~~717~~103,~~000~~125			-717,000
Amortization of Stock-based Compensation Expense		418,846			-
(Increase) or Decrease in Current Assets:
Accounts Receivable		~~(542~~222,~~466~~443	)		(1995,~~639,210~~650	)
Inventories		(~~711~~710,~~553~~710	)		1113,~~468,425~~601
Prepaid Expenses		6(199,~~575~~931	)		4222,~~117~~901
Advanced to Suppliers		(17,714	)		(13,519	)
Advances to Suppliers		(1,850	)		(9,407	)
Other Accounts Receivables		(6,868	)		(24,031	)
Other Accounts Receivable		(517	)		(8,202	)
Increase or (Decrease) in Current Liabilities:
Accounts Payable		(~~520~~20,~~907~~841	)		(~~639~~130,~~323~~477	)
Advance from Customers		~~111~~30			~~(1,110~~54	)
Taxes Payable		(~~166~~137,~~973~~853	)		(4463,~~527~~853	)
Payroll Payable		633,~~774~~714			14(1,~~829~~164	)
Interest Payable		-			(32,732	)
Warranty Accrual		24,600			38,375
Sales Guarantee Accrual		84,088			45,129
Other Accounts Payable		(717	)		(953	)
Other Account Payable		5,150			(117,904	)
Accrued Expenses		(982	)		734
Accrued Expenses and Other Payables		1,499			41
Net Cash (Used) Provided by Operating Activities		(85,568	)		(383,122	)
Net Cash (Used) Provided by Operating Activities		192,500			825,178
Cash Flows From Investing Activities:
Short Term Investment		-			(440,100	)
Purchases of Property, Plant and Equipment		(208	)		(11,178	)
Purchases of Property and Equipment		(413,293	)		(186,083	)
Purchases of Intangible Assets		-			(2,091	)
Purchases of Intangible Assets		(2,119	)		(2,963	)
Net Cash (Used) Provided by Investing Activities		(208	)		(13,269	)
Net Cash Used in Investing Activities		(415,413	)		(629,146	)

" Continued on next page"

" The accompanying notes are an integral part of ~~theses~~these financial statements"

CHINA LITHIUM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended March 31,
Cash Flows From Financing Activities:	2011			2010
Loan from Shareholder		109,915			-
Proceeds from (Payments to) Shareholders		-			40,146
Repayment to Shareholder		-			(281,334	)
Net Cash (Used) Provided by Financing Activities		-			40,146
Capital Contribution		-			114,486
Effect of Exchange Rate Changes on Cash and Cash Equivalents		41,779			93,664
Net Cash (Used) Provided by Financing Activities		109,915			(166,848	)
Increase in Cash and Cash Equivalents		(43,997	)		(262,581	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		216,541			2,676
Cash and Cash Equivalents - Beginning Balance		2,649,523			2,761,427
Increase in Cash and Cash Equivalents		103,543			31,860
Cash and Cash Equivalents - Ending Balance	$	2,605,527		$	2,498,846
Cash and Cash Equivalents - Beginning Balance		2,761,427			407,333
Cash and Cash Equivalents - Ending Balance	$	2,864,970		$	439,193
Supplemental Disclosures of Cash Flow Information:
Cash Paid During The Years for:
Cash Paid During the Three Months for:
Interest Paid	$	-		$	~~32,776~~-
Income Taxes Paid	$	~~768~~250,~~153~~140		$	~~671~~250,~~309~~981
Non-Cash Investing and Financing Activities:
Common stock transferred for stock-based compensation	$	717,000		$	-
Common Stock Issued for Services	$	-		$	717,000
Issued 1,500,000 restricted common stock to employees	$	1,650,000		$	-

" The accompanying notes are an integral part of these financial statements"

107

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION

The Company was incorporated as Sweet Little Deal, Inc. in 1986 under the laws of the State of Minnesota. On October 10, 1991, the Company changed its name to Physicians Insurance Services, Ltd. On July 23, 2008, the Company held a shareholder meeting approving a migratory merger to Nevada and changed its name to PI Services, Inc., which became effective January 12, 2009. On May 6, 2010, PI Services, Inc. changed its name to China Lithium Technologies, Inc. (the “Company”) to reflect the reverse merger of Sky Achieve Holdings, Inc. (“Sky Achieve") into the Company, which became effective on June 2, 2010.

On March 19, 2010 the Company acquired all of the outstanding capital stock of Sky Achieve, a British Virgin Islands limited liability corporation registered in November, 2009 (the “Share Exchange”). Pursuant to ASC 805-10-55-12 et seq., Sky Achieve is deemed to be the acquirer in the Share Exchange, as the prior owner of Sky Achieve obtained the largest portion of the voting rights in the combined entity, and the assets and earnings of Sky Achieve substantially exceeded those of PI Services. The effect of the Share Exchange is such that a reorganization of the entities has occurred for accounting purposes and is deemed to be a reverse merge recapitalization of Sky Achieve. The financial statements presented in this report are those of Sky Achieve and its subsidiaries, including their VIEs, as if the Share Exchange had been in effect retroactively for all periods presented.

Sky Achieve was organized on November 5, 2009 under the laws of British Virgin Islands. It had no business activity from its inception until January 5, 2010. On January 5, 2010, Sky Achieve obtained control over the business of Beijing Guoqiang Science and Technology Development Co., Ltd (“Beijing Guoqiang”) by entering into five agreements with and the equity owners of Beijing Guoqiang. The agreements are designed to transfer to Sky Achieve all of the responsibilities for management of the operations of Beijing Guoqiang, as well as all of the benefits and all of the risks that arise from the operations of Beijing Guoqiang. The relationship is purely contractual, however, so the rights and responsibilities of Sky Achieve with respect to Beijing Guoqiang are ultimately dependent on the willingness of the courts of the PRC to enforce the agreements. For accounting purposes, Beijing Guoqiang is deemed to be a variable interest entity with respect to Sky Achieve, and its balance sheet accounts and financial results are consolidated with the accounts and results of Sky Achieve for financial reporting purposes.

The Company issued 19,151,875 shares of its common stock to the shareholders of Sky Achieve. Those shares represented 95 % of the outstanding shares of the Company. Mr. Kun Liu, the Chairman of Beijing Guoqiang purchased additional 1% of the outstanding shares of the Company simultaneously with the share exchange. As a result of these transactions, persons associated with Beijing Guoqiang owned securities that represented 96% of the equity in the Company as of the completion of the Share Exchange.

Beijing Guoqiang designs, manufacturers and markets Polymer Lithium-ion Battery Modules, Lithium-ion Battery Chargers, Lithium-ion Battery Management Systems as well as other Lithium-ion Battery Management Devices essential to proper power utilization ("PLI Battery Products"). During December of 2009, the Company set up two manufacturing facilities in Hangzhou and Guangzhou to produce power and battery charger.

118

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

Reverse stock split

On June 2, 2010, the Company implemented a 1-for 2.2 reverse split of its common stock. All enumerations herein of numbers of common shares or per share amounts have been adjusted as needed to give retroactive effect to the reverse stock split.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The accompanying audited consolidated financial statements include China Lithium Technologies, Inc. and its wholly owned subsidiary, Sky Achieve Holdings, Inc., as well as its variable interest entity, Beijing Guoqiang Global Science and Technology Development Co, Ltd. All significant inter-company transactions and balances have been eliminated in the consolidation.

Variable interest entity

The accounts of Beijing Guoqiang have been consolidated with the accounts of the Company because Beijing Guoqiang is a variable interest entity with respect to Sky Achieve, which is a wholly-owned subsidiary of the Company. Sky Achieve is party to five agreements dated January 5, 2010 with the owners of the registered equity of Beijing Guoqiang and with Beijing Guoqiang. ~~The~~In ~~agreements transfer to Sky Achieve all of the benefits and all of the risk arising from the operations of Beijing Guoqiang~~summary, ~~as well as complete managerial authority over~~ the ~~operations~~five ~~of Beijing Guoqiang. Sky Achieve is the guarantor of all of the obligations of Beijing Guoqiang. By reason of the relationship describe in these~~ agreements, ~~Beijing~~contain ~~Guoqiang is a variable interest entity with respect to Sky Achieve because~~ the following ~~characteristics in ASC 810-10-15-14 are present~~terms:

● ~~The~~ ~~holders~~Consulting Services Agreement and Operating Agreement. These two agreements provide that Sky Achieve will be fully responsible for the management of Beijing Guoqiang, both financial and operational. Sky Achieve has assumed responsibility for the ~~equity~~debts ~~investment~~incurred by Beijing Guoqiang and for any shortfall in its registered capital. In exchange for these services and undertakings, Beijing Guoqiang ~~lack~~pays a fee to Sky Achieve equal to the ~~direct~~net orprofits ~~indirect~~of ~~ability~~Beijing Guoqiang. In addition, Beijing Guoqiang pledges all of its assets, including accounts receivable, to ~~make~~Sky ~~decisions~~Achieve. ~~about~~Meanwhile, ~~the~~Beijing ~~entity~~Guoqiang’s ~~activities~~shareholders ~~that~~pledged ~~have~~the aequity ~~significant~~interests ~~effect~~of onBeijing Guoqiang to Sky Achieve to secure the ~~success~~payment of the Fee. ● Proxy Agreement. In this agreement, the shareholders of Beijing Guoqiang, ~~having~~granted ~~assigned~~an ~~their~~irrevocable proxy to the person designated by Sky Achieve to exercise the voting rights and ~~all~~other ~~managerial~~rights ~~authority~~of shareholder. ● Option Agreement. In this agreement, the shareholders of Beijing Guoqiang granted to Sky Achieve the right to purchase all of their equity interest in the registered capital of Beijing Guoqiang or the assets of Beijing Guoqiang. ~~(ASC~~The ~~810~~option may be exercised whenever the transfer is permitted under the laws of the PRC. The purchase price shall be equal to the original paid-~~10-15-14(b)(1))~~in price of the Purchased Equity Interest by the Transferor, unless the applicable PRC laws and regulations require appraisal of the equity interests or stipulate other restrictions on the purchase price of equity interests. The agreement also contains covenants designed to prevent any material change occurring in the legal or financial condition of Beijing Guoqiang without the consent of Sky Achieve.

● The holders of the equity investment in Beijing Guoqiang lack the obligation to absorb the expected losses of Beijing Guoqiang, having assigned to Sky Achieve all revenue and responsibility for all payables. (ASC 810-10-15-14(b)(2)).9

● The holders of the equity investment in Beijing Guoqiang lack the right to receive the expected residual returns of Beijing Guoqiang, having granted to Sky Achieve all revenue as well as an option to purchase the equity interests at a fixed price. (ASC 810-10-15-14(b)(3)).

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

●

Equity Pledge Agreement. In this agreement, Beijing Guoqiang shareholders agree to pledge all the equity interest in Beijing Guoqiang to Sky Achieve as security for the performance of the obligation under the Consulting Services Agreement and the payment of Consulting Services Fees under each agreement.

Sky Achieve may terminate the agreements at will. Beijing Guoqiang may only terminate the agreements if (a) there is an unremedied breach by Sky Achieve, (b) the operations of Sky Achieve are terminated, (c) Beijing Guoqiang loses its business license, or (d) circumstances arise that materially and adversely affect the performance or objectives of the Agreement. The Consulting Services Agreement, under which all revenues are assigned from Beijing Guoqiang to Sky Achieve, and the Equity Pledge Agreement have no expiration date. The other three agreements terminate on January 5, 2020 unless extended by the parties.

In sum, the agreements transfer to Sky Achieve all of the benefits and all of the risk arising from the operations of Beijing Guoqiang, as well as complete managerial authority over the operations of Beijing Guoqiang. Sky Achieve is the guarantor of all of the obligations of Beijing Guoqiang. By reason of the relationship describe in these agreements, Beijing Guoqiang is a variable interest entity with respect to Sky Achieve because the following characteristics in ASC 810-10-15-14 are present:

	●	The holders of the equity investment in Beijing Guoqiang lack the direct or indirect ability to make decisions about the entity’s activities that have a significant effect on the success of Beijing Guoqiang, having assigned their voting rights and all managerial authority to Sky Achieve. (ASC 810-10-15-14(b)(1)).

	●	The holders of the equity investment in Beijing Guoqiang lack the obligation to absorb the expected losses of Beijing Guoqiang, having assigned to Sky Achieve all revenue and responsibility for all payables. (ASC 810-10-15-14(b)(2)).

	●	The holders of the equity investment in Beijing Guoqiang lack the right to receive the expected residual returns of Beijing Guoqiang, having granted to Sky Achieve all revenue as well as an option to purchase the equity interests at a fixed price. (ASC 810-10-15-14(b)(3)).

Because the relationship between Beijing Guoqiang and Sky Achieve is entirely contractual, the Company’s interest in Beijing Guoqiang depends on the enforceability of those agreements under the laws of the PRC. We are not aware of any judicial decision as to the enforceability of similar agreements under PRC law. However, as the owners of the registered equity of Beijing Guoqiang are our Chairman and one close associate, we do not believe that there is a significant risk that Beijing Guoqiang will seek to terminate the relationship or otherwise breach the agreements. Accordingly, we believe that consolidation of the financial statements of Beijing Guoqiang with those of the Company is appropriate.

The following table summarizes the effects of consolidating Beijing Guoqiang with China Lithium Technologies and its subsidiary:

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

	China Lithium Technologies and Subsidiaries			Beijing Guoqiang			Consolidation
Balance Sheet – September 30, 2011
Current Assets	$	104,931		$	10,376,301		$	10,382,307
Property, Plant and Equipment		-			745,276			745,276
Total Assets		377,861			11,187,632			11,193,638

Current Liabilities		534,562			1,489,469			1,925,106
Total Liabilities		534,562			1,489,469			1,925,106
Stockholders’ Equity		(156,701	)		9,698,164			9,268,532

Statement of Operations – Three Months Ended September 30, 2011
Revenue		-			3,771,232			3,771,232
Gross Profit		-			1,564,975			1,564,975
Operating Income (Loss)		(140,201	)		900,143			759,941
Net Income (Loss)		(140,276	)		679,098			538,822

Statement of Cash Flow – Three Month Ended September 30, 2011
Net Cash (Used) Provided by Operating Activities		(45,766	)		(48,777	)		(85,568	)
Net Cash (Used) Provided by Investing Activities		-			(208	)		(208	)
Net Cash (Used) Provided by Financing Activities		8,975			-			-

Reclassification

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported total assets, liabilities, stockholders’ equity or net income.

Cash and cash equivalent

For purposes of the statement of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Trade accounts receivable

Trade accounts receivable are stated at net realizable value, net of allowances for doubtful accounts and sales returns. The allowance for doubtful accounts is established based on the management’s assessment of the recoverability of accounts and other receivables.

The Company determines the allowance based on historical write-off experience, customer specific facts and current crisis on economic conditions. Bad debt expense is included in the general and administrative expenses.

Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventories

Inventories are initially stated at the level of the original cost. The cost of inventories is determined using first-in first-out cost method, and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In case of finished goods and work in progress, cost includes an appropriate share of production overhead based on normal operating capacity.

The Company regularly reviews the cost of inventories against their estimated fair market value and records a lower of cost or market write-down for inventories that have cost in excess of estimated market value.

Advances to suppliers

The Company makes advances to certain vendors for inventory purchases. The advances to suppliers were $3031,~~011~~030 and $1229,~~297~~180 as of ~~March~~September 3130, 2011 and June 30, ~~2010~~2011 respectively.

Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation. Maintenance, repairs and betterments, including replacement of minor items, are charged to expense; major additions to physical properties are capitalized. Depreciation and amortization are provided using the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the assets as follows:

Plant and equipments are depreciated using the straight-line method over 3-5 years estimated useful lives.

Buildings and improvements	20-42 years
Machinery and equipment	5-15 years
Motor vehicles	5-7 years

13Leasehold improvements are amortized using the straight-line method over the term of the leases or the estimated useful lives, whichever is shorter.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leasehold improvements are amortized using the straight-line method over the term of the leases or the estimated useful lives, whichever is shorter.

Construction in progress

Construction in progress represents direct costs of construction or acquisition and design fees incurred. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until it is completed and ready for intended use. The values of construction in progress were $0 and $0 as of March 31, 2011 and June 30, 2010 respectively.

Impairment of long-lived assets

The Company accounts for long-lived assets in accordance with ASC 360 “Accounting for the Impairment of Disposal of Long-Lived Assets”, which became effective January 1, 2002. Under ASC 360, the Company reviews long-term assets for impairment whenever events or circumstances indicate that the carrying amount of those assets may not be recoverable. The Company has not incurred any losses in connection with the adoption of this statement.

Revenue recognition

The Company recognizes revenue on product sales when each of the following conditions has been satisfied:

● Persuasive evidence of a sales arrangement exists in the form of a written contract or an order and acknowledge. ● The sales price has been fixed and made determinable by sales contract and/or invoice. ● The product has been delivered to the customer’s warehouse – unless other terms for delivery have been specified in the contract – at which time the customer takes ownership and the risk of loss passes to the customers. ● Payment has been received or the Company determines that collection of the related receivable is probable. Probability of collection is determined based on recurrent visits by the Company’s sales staff and accounting staff to the customer’s premises to assess the health of the customer’s business. ● The 15 day right of return that we afford to customers has expired.

● The sales price has been fixed and made determinable by sales contract and/or invoice.

● The product has been delivered to the customer’s warehouse – unless other terms for delivery have been specified in the contract – at which time the customer takes ownership and the risk of loss passes to the customers.

● Payment has been received or the Company determines that collection of the related receivable is probable. Probability of collection is determined based on recurrent visits by the Company’s sales staff and accounting staff to the customer’s premises to assess the health of the customer’s business.

● The 15 day right of return that we afford to customers has expired.

Net sales of products represent the invoiced value of goods, net of Value Added Taxes (“VAT”), sales returns, trade discounts and allowances. The Company is subject to VAT which is levied on the majority of the products of the Company at the rate of 17% on the invoiced value of sales. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales. Our standard contract allows customers, within 15 days after delivery, to return for cash or exchange products with which they are not satisfied. Shipping charges on the return are allocated between the customer and the Company based on relative fault. We do not recognize revenue until the 15 day right of return has expired. After the 15 days has expired, the Company provides customers with no additional post-delivery rights, except as set forth in its product warrant. We record a provision for warranty claims, which is based on historical warranty claims data and represents the Company’s best estimate of warranty claims it will experience.

14Cost of goods sold

Cost of goods sold consists primarily of material, and related expenses, which are directly attributable to the production of products. The Company presents cost of goods sold and manufacturing expenses separately in the income statement.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cost of goods sold

Use of estimates

In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting year. Significant estimates, required by management, include the recoverability of long-lived assets and valuation allowances for receivables. Actual results could differ from those estimates.

Concentration of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents and accounts and other receivables. As of ~~March~~September 3130, 2011 and June 30, ~~2010~~2011, substantially all of the Company’s cash and cash equivalents were held by major banks located in the PRC of which the Company’s management believes high credit quality banks. With respect to accounts receivable, the Company extends credit based on an evaluation of the customer’s financial condition and customer payment practices to minimize collection risk on account receivable.

Foreign currency translation

The functional currency of Beijing Guoqiang is Chinese Renminbi (“RMB”). For financial reporting purposes, RMB has been translated into United States Dollars ("USD") as the reporting currency. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates, and income and expenses items are translated using the average rate for the period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders' equity as "Accumulated other comprehensive income." Gains and losses resulting from foreign currency translation are included in accumulated other comprehensive income.

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC. Translation of amounts from RMB into US dollar has been made at the following exchange rates for the respective years:

15September 30, 2011

CHINA LITHIUM TE CHNOLOGIES, INC.

Balance sheet	RMB 6.4020 to US $1.00
Statement of income and other comprehensive income	RMB 6.4226 to US $1.00

June 30, 2011
Balance sheet	RMB 6.4634 to US $1.00
Statement of operations and comprehensive income	RMB 6.6254 to US $1.00

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

March 31, 2011
Balance sheet	RMB 6.5703 to US $1.00
Statement of income and other comprehensive income	RMB 6.5876 to US $1.00
June 30, 2010
Balance sheet	RMB 6.7889 to US $1.00
Statement of income and other comprehensive income	RMB 6.8180 to US $1.00

Income taxes

The Company accounts for income tax under the provisions of FASB ASC 740 "Accounting for Income Taxes", which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, whenever necessary, against net deferred tax assets when it is more likely than not that some portion or the entire deferred tax asset will not be realized. There are no deferred tax amounts as of ~~March~~September 3130, 2011 and June 30, ~~2010~~2011.

Fair value of financial instruments

The Company’s financial instruments include cash and cash equivalents, accounts receivable, advances to suppliers, other receivables, accounts payable, accrued expenses, taxes payable, payroll and other loans payable. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature.

Commitments and contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Intangible assets

Intangible assets mainly consist of patents. Patents have being amortized using the straight-line method over the 10 years. Other intangible assets have being amortized using the straight-line method over the 5 years. The Company also evaluates intangible assets for impairment, at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows.

Comprehensive income

Comprehensive income is defined to include changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, items that are required to be recognized under current accounting standards as components of comprehensive income 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 and the foreign currency translation gain, net of tax.

16Statement of cash flows

In accordance with Accounting Standards Codification, ASC 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Statement of cash flows

Reserved funds

~~Until~~In ~~June~~accordance ~~20,~~with ~~2006~~the PRC’s Company Laws, entities organized in the PRC ~~were~~must ~~required~~make toappropriations ~~transfer~~from ~~15% of~~ their ~~profit~~ after-tax ~~taxation,~~profits as ~~determined~~reported in ~~accordance~~their ~~with~~PRC ~~Chinese~~statutory ~~accounting~~accounts ~~standards~~to ~~and~~non-distributable ~~regulations~~reserves, tonamely ~~the~~statutory surplus reserve and statutory common welfare fund. ~~Subject~~The Company’s VIE, Beijing Guoqiang, is required to ~~certain~~allocate ~~restrictions~~at ~~set~~least ~~out~~10% inof ~~the~~its ~~Chinese~~after-tax ~~Companies~~profits ~~Law,~~to the statutory surplus reserve ~~fund~~until ~~may~~the bereserve ~~distributed~~reaches to50% ~~stockholders~~of inthe entity’s registered capital. Appropriation to the ~~form~~statutory common welfare fund is 5% to 10% of ~~share~~its ~~bonus~~after-tax ~~issues~~profits ~~and/or~~as ~~cash~~reported ~~dividends~~in the PRC statutory accounts. ~~After~~Effective ~~June~~from 30January 1, 2006, ~~such~~under ~~reserve~~the isrevised noPRC ~~longer~~Company ~~mandatory~~Laws, ~~under~~appropriation to the ~~Chinese~~statutory ~~Law~~surplus reserve and common welfare reserve is no longer mandatory. However the Company from time to time allocates funds to ~~its~~such ~~reserve~~reserves ~~fund~~ for its future development.

Stock-based compensation

The Company adopted the provisions of ASC 718, “stock compensation,” which establishes the accounting for employee stock-based awards. Under the ASC 718, stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (i.e. the vesting period of the grant). The fair value of shares granted is deemed to be the closing traded price of our common stock on the date of grant.

Generally shares issued to employees will be vested over a requisite service period. These shares will be amortized over the vesting period in accordance with ASC 718. The average vesting period for the shares issued to date has been 4.54 years, based on the terms of the employment agreements under which the stock was awarded. The stock-based compensation ~~was~~expenses were $1103,~~135,846~~125 and $0717,000 for the ~~nine~~three months ended ~~March~~September 3130, 2011 and ~~2009~~2010, respectively.

Research and development costs

Research and development costs are expensed as incurred. The salaries of engineers and technical staff in our research and development division are included in research and development expense. The expenses were $139,760 and $20,320 for the three months ended September 30, 2011 and 2010, respectively.

Basic and diluted earnings per share

Earnings per share are calculated in accordance with the ASC 260, “Earnings per share.” Basic net earnings per share are based upon the weighted average number of common shares outstanding, but excluding shares issued as compensation that have not yet vested. Diluted net earnings per share are based on the assumption that all unvested shares have vested. Dilution is computed by applying the treasury stock method. Under this method, awards of non-vested shares to be issued to employees under a share-based compensation arrangement are considered options for purposes of computing diluted EPS, which are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recently issued accounting standards

In ~~December~~June ~~2010~~2011, ~~the~~ FASB issued ~~amendments~~ASU to2011-05, ~~the~~Comprehensive ~~guidance~~Income on(ASC ~~goodwill~~Topic ~~impairment~~220): ~~testing~~Presentation of Comprehensive Income. ~~The~~Under the amendments ~~modify~~in ~~Step~~this 1update, an entity has the option to present the total of comprehensive income, the ~~goodwill~~components ~~impairment~~of ~~test~~net ~~for~~income ~~reporting~~and ~~units~~the ~~with~~components ~~zero~~of other comprehensive income either in a single continuous statement of comprehensive income or ~~negative~~in ~~carrying~~two ~~amounts.~~separate ~~For~~but ~~those~~consecutive ~~reporting~~statements. ~~units~~Under both options, an entity is required to ~~perform~~present ~~Step~~each 2component of ~~the~~net ~~goodwill~~income ~~impairment~~along ~~test~~with iftotal itnet isincome, ~~more~~each ~~likely~~component ~~than~~of ~~not~~other ~~that~~comprehensive income along with a ~~goodwill~~total ~~impairment~~for ~~exists~~other comprehensive income and a total amount for comprehensive income. In ~~making~~a single continuous statement, the entity is required to present the components of net income and total net income, the components of other comprehensive income and a total for other comprehensive income, along with the total of comprehensive income in that ~~determination~~statement. In the two-statement approach, an entity is required to present components of net income and total net income in the statement of net income. The statement of other comprehensive income should ~~consider~~immediately ~~whether~~follow ~~there~~the ~~are~~statement ~~any~~of ~~adverse~~net ~~qualitative~~income ~~factors~~and ~~indicating~~include the components of other comprehensive income and a total for other comprehensive income, along with a total for comprehensive income. In addition, the entity is required to present on the face of the financial statements reclassification adjustments for items that ~~impairment~~are ~~may~~reclassified ~~exist~~from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. The amendments ~~were~~in this update should be applied retrospectively and are effective ~~January~~for 1fiscal years, ~~2011~~ and ~~the~~interim ~~Company~~periods ~~adopted~~within ~~this~~those ~~guidance~~years, onbeginning ~~January~~after 1December 15, 2011. ~~which~~The ~~did~~Company ~~not~~is ~~have~~currently aassessing ~~material~~the impact inof adopting this statement on the ~~consolidated~~Company’s financial statements.

~~In April 2010, FASB issued an amendment to Stock Compensation~~3. The amendment clarifies that an employee stock-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity shares trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. Our adoption of this guidance does not have impact on the consolidated financial statements since our stock-based payment awards have an exercise price denominated in the same currency of the market in which our Company shares are traded.INVENTORIES

The components of inventories at September 30 and June 30, 2011 are as follows:

	September 30, 2011		June 30, 2011
Raw Materials	$	667,080	$	515,457
Work in Process		489,395		206,585
Finished Goods		525,250		248,991
Low Value Items		1,852		1,835
Total	$	1,683,577	$	972,867

As of September 30 and June 30, 2011, the Company has not recorded any reserve for inventory obsolescence.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

24. ~~SUMMARY~~PROPERTY, OFPLANT ~~SIGNIFICANT~~AND ~~ACCOUNTING POLICIES (continued)~~EQUIPMENT

In January 2010, FASB issued ASU No. 2010-06 - Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A ~~reporting~~summary ~~entity should disclose separately the amounts~~ of ~~significant~~property, ~~transfers~~plant in and ~~out~~equipment ofat ~~Level~~September 130 and ~~Level~~June 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3)30, a2011 ~~reporting~~are ~~entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than~~ as ~~one net number). This update provides amendments to Subtopic 820-10 that clarifies existing disclosures as~~ follows: 1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company is currently evaluating the impact of its ASU; however, the Company does not expect the adoption of this ASU to have a material impact on its financial statements.

In January 2010, FASB issued ASU No. 2010-02 - Accounting and Reporting for Decreases in Ownership of a Subsidiary - a Scope Clarification. The amendments in this Update affect accounting and reporting by an entity that experiences a decrease in ownership in a subsidiary that is a business or nonprofit activity. The amendments also affect accounting and reporting by an entity that exchanges a group of assets that constitutes a business or nonprofit activity for an equity interest in another entity. The amendments in this update are effective beginning in the period that an entity adopts SFAS No. 160, "Non-controlling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51." If an entity has previously adopted SFAS No. 160 as of the date the amendments in this update are included in the Accounting Standards Codification, the amendments in this update are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity adopted SFAS No. 160. The Company does not expect the adoption of this ASU to have a material impact on its financial statements.

	September 30, 2011			June 30, 2011
Building and Improvement	$	138,108		$	136,796
Machinery and Equipment		799,634			791,836
Motor Vehicle		55,295			54,770
Less: Accumulated Depreciation		(247,760	)		(205,670	)
Total Property and Equipment, net	$	745,276		$	777,732

Depreciation expenses for the three months ended September 30, 2011 and 2010 were $62,113 and $18,140, respectively.

5. PATENT AND OTHER INTANGIBLES

The net book value of intangible assets as of September 30 and June 30, 2011 was comprised of the following:

	September 30, 2011			June 30, 2011
Intangible Assets	$	116,021		$	114,919
Less: Accumulated Amortization		(49,965	)		(46,523	)
Total Intangible Assets, net	$	66,055		$	68,396

Amortization expenses for the three months ended September 30, 2011 and 2010 were $2,987 and $2,519 respectively.

Based upon current assumptions, the Company expects that, during the next five years, its intangible assets will be amortized according to the following schedule:

Balance at June 30,	Amount
2012	$	11,985
2013		11,985
2014		11,985
2015		11,730
2016		11,219
Thereafter		7,151
Total	$	66,055

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

26. ~~SUMMARY~~ACCOUNTS ~~OF SIGNIFICANT ACCOUNTING POLICIES (continued)~~RECEIVABLE

InAccounts ~~January~~receivable ~~2010~~are uncollateralized, ~~FASB issued ASU No. 2010~~non-~~01-~~interest ~~Accounting~~bearing ~~for~~customer ~~Distributions~~obligations totypically ~~Shareholders~~due ~~with~~under ~~Components~~terms ofrequiring ~~Stock~~payment ~~and~~from ~~Cash. The amendments in this Update clarify that~~ the ~~stock~~invoice ~~portion~~date. Payments of aaccounts ~~distribution~~receivable toare ~~shareholders~~allocated ~~that allows them~~ to ~~elect~~the tospecific ~~receive~~invoices ~~cash~~identified ~~or stock with a potential limitation~~ on the ~~total~~customer’s ~~amount~~remittance ofadvice ~~cash~~or, ~~that~~if ~~all~~unspecified, ~~shareholders~~are ~~can~~applied ~~elect~~ to ~~receive in~~ the ~~aggregate~~oldest isunpaid ~~considered~~invoices. aAs ~~share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes~~ of ~~applying~~September ~~Topics~~30 ~~505~~ and ~~260~~June ~~(Equity and Earnings Per Share). The amendments in this update are effective for interim and annual periods ending on or after December 15~~30, ~~2009~~2011, ~~and~~accounts ~~should~~receivable beand ~~applied~~allowance onfor adoubtful ~~retrospective~~account ~~basis.~~as ~~The Company does not expect the adoption of this ASU to have a material impact on its financial statements.~~follow:

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, and 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 beginning in the first interim or annual reporting period ending on or after December 31, 2009. The Company is currently evaluating the impact of this ASU; however, the Company does not expect the adoption of this ASU to have a material impact on its financial statements.

	September 30, 2011			June 30, 2011
Accounts Receivable	$	5,482,585		$	5,639,078
Less: Allowance for Doubtful Accounts		(92,406	)		(26,456	)
Total Accounts Receivable, net		5,390,179		$	5,612,622

~~In December, 2009, FASB issued ASU No~~7. ~~2009-17,~~ACCOUNTS Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R). The amendments in this Accounting Standards Update replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. An approach that is expected to be primarily qualitative will be more effective for identifying which reporting entity has a controlling financial interest in a variable interest entity. The amendments in this Update also require additional disclosures about a reporting entity's involvement in variable interest entities, which will enhance the information provided to users of financial statements. The Company is currently evaluating the impact of this ASU; however, the Company does not expect the adoption of this ASU to have a material impact on its financial statements.PAYABLE

InThe ~~December~~Company ~~2009,~~has ~~FASB~~accounts ~~issued~~payable ~~ASU~~related ~~No.~~to ~~2009-16,~~the ~~Accounting~~purchase ~~for Transfers~~ of ~~Financial Assets~~inventory. ~~This~~The ~~Accounting~~amount ~~Standards Update amends the FASB Accounting Standards Codification for the issuance~~ of ~~FASB~~$849,363 ~~Statement~~and ~~No. 166~~$870,204 ~~Accounting~~as ~~for Transfers~~ of ~~Financial~~September ~~Assets-an~~30, ~~amendment~~2011 of FASB Statement No. 140. The amendments in this Accounting Standards Update improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance and ~~the~~June ~~exception~~30, ~~that~~2011 ~~permitted~~respectively, ~~sale~~represent ~~accounting for certain mortgage securitizations when a transferor has not surrendered control over~~ the ~~transferred~~accounts ~~financial~~payable ~~assets.~~by ~~In addition,~~ the ~~amendments~~Company ~~require enhanced disclosures about the risks that a transferor continues~~ to ~~be exposed to because of its continuing involvement in transferred financial assets. The Company does not expect~~ the ~~adoption of this ASU to have a material impact on its financial statements~~suppliers.

8. ACCRUED EXPENSES AND OTHER PAYABLE

Accrued expenses consist of audit fee and the payroll taxes for the current year. As of September 30, 2011 and June 30, 2011, the balance was $70,106 and $71,089, respectively. Other accounts payable consists of miscellaneous items. As of September 30, 2011 and June 30, 2011, the balances were $1,328 and $2,044, respectively.

9. WARRANTY ACCRUAL

The Company provides its customers a 2 years warranty on all products sold. In anticipation of warranty repairs, the Company accrues 1% of the sales amount as a “Warranty Accrual.” The Company believes that the accrual is adequate based on its historical warranty experience. If the goods sold have no quality problems within 2 years, the Company reverses the warranty accrual. As of September 30, 2011 and June 30, 2011, the warranty accrual was $223,211 and $198,611 respectively.

For three months ended September 30, 2011, the company paid $16,413 directly for warranty claims. Also, the company accrued $161,713 as the warranty accrual with respect to sales during the period.

For three months ended September 30, 2010, the company paid $2,337 directly for warranty claims. Also, the company accrued $36,844 as the warranty accrual with respect to sales during the period.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

310. ~~INVENTORIES~~ LOANS FROM SHAREHOLDERS

During the years ended June 30, 2011 and 2010, the Company borrowed funds from Kun Liu, its Chief Executive Offices, to pay expenses incurred in the United States office. The ~~components~~first loan of ~~inventories~~$45,459 atwas ~~March~~made 31on April 20, ~~2011~~2010, ~~and~~followed ~~June~~by additional $238,179 loans that brought the balance to $283,638, which was the amount due from the Company to Kun Liu as of September 30, ~~2010~~2011. No portion of the loans has been repaid. The loans are asinterest-free ~~follows:~~and due on demand. The Company expects to continue to borrow funds from Kun Liu to pay its U.S. expenses until it obtains Dollars from a financing transaction or secures approval for a conversion of Renminbi to Dollars.

	March 31, 2011		June 30, 2010
Raw Materials	$	663,139	$	440,027
Work in Process		538,938		90,428
Finished Goods		293,700		253,827
Low Value Items		1,789		1,731
Total	$	1,497,566	$	786,013

11. SHORT-TERM LOANS

AsIn ofFebruary ~~March~~and ~~31,~~April 2011, ~~and~~the ~~June~~Company 30borrowed two separate loans with $40,000 ~~2010~~each from a private party, to pay expenses incurred in the United States office. These loans are interest-free and due on demand. The Company ~~has~~expects ~~not~~to ~~recorded~~repay ~~any~~whole ~~reserve~~amount ~~for~~of ~~inventory~~these ~~obsolescence~~two loans within one year.

412. ~~PROPERTY~~ ~~AND~~STOCKHOLDERS’ ~~EQUIPMENT~~EQUITY

AOn ~~summary~~July 14, 2011, one of ~~property~~the Company’s directors and ~~equipment~~principal atshareholders, ~~March~~Mr. 31Qiang Fu, ~~2011~~resigned ~~and~~from ~~June~~his 30position as a member of the Company’s Board of Directors. In connection with his resignation, ~~2010~~Mr. ~~are~~Qiang asFu ~~follows:~~surrendered to the Company his five million (5,000,000) shares of the Company’s common stock, representing approximately 23% of the outstanding shares. The Company retired all these five million (5,000,000) shares immediately after Mr. Fu’s resignation.

	March 31, 2011			June 30, 2010
Building and Improvement	$	134,571		$	41,859
Machinery and Equipment		639,757			307,249
Motor Vehicle		30,544			29,460
Less: Accumulated Depreciation		(183,247	)		(116,757	)
Total Property and Equipment, net	$	621,626		$	261,811

As of September 30, 2011, 780,000,000 shares have been authorized and 16,659,811 shares are outstanding. The Company implemented a 1-for-2.2 reverse split on June 2, 2010. Retroactive effect is being given to the reverse split in these financial statements. Income statements have retroactively used the new outstanding shares to calculate the EPS. Stated capital in the stockholders’ equity section has been reduced accordingly.

~~Depreciation~~13. ~~expenses~~STOCK-BASED ~~for three quarters ended March 31, 2011 and year ended June 30, 2010 were $62,195 and $69,021 respectively.~~COMPENSATION

On September 2, 2010, a principal shareholder of the Company transferred 358,500 shares of common stock to the Company’s employees in recognition of prior years’ services. The Company has recorded the transfer as a contribution to the Company’s capital and a stock-based compensation expense, valued by the closing stock price of $2.00 at the date of transfer, since these shares were fully-vested and non-forfeitable. The contribution to capital and compensation cost recorded in related to this transfer during the year ended June 30, 2011 was $717,000.

On October 6, 2010, the Company adopted the 2010 Stock Award Plan (the “2010 Plan”). The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal interests of the participants of the Plan (the "Participants") to those of the Company's stockholders, and by providing the Participants with an incentive for outstanding performance. The Company has reserved 3,000,000 shares of common share for the options and awards under the 2010 Plan.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

513. ~~PATENT~~STOCK-BASED ~~AND~~COMPENSATION ~~OTHER INTANGIBLES~~(continued)

~~The~~Subject ~~net~~to ~~book~~the ~~value~~terms and provisions of ~~intangible~~the ~~assets~~2010 asPlan, ofthe ~~March~~Board 31of Directors, ~~2011~~at any time and ~~June~~from 30time to time, ~~2010~~may ~~was~~grant ~~comprised~~shares of stock to eligible persons in such amounts and upon such terms and conditions as the ~~following:~~Board of Directors shall determine.

	March 31, 2011			June 30, 2010
Intangible Assets	$	112,395		$	106,719
Less: Accumulated Amortization		(43,002	)		(33,811	)
Total Intangible Assets, net	$	69,393		$	72,907

The Board of Directors shall have the authority to determine all matters relating to the stock to be granted under the 2010 Plan, including selection of the individuals to be granted awards, the number of share, the date of termination of the stock awards, vesting schedules and all other terms and conditions thereof.

~~Amortization~~The ~~expenses~~Company ~~for~~issued 1,500,000 shares provided in the ~~three~~Plan ~~quarters~~in ~~ended~~the ~~March~~form ~~31,~~of ~~2011~~grants ~~and~~of ~~year~~restricted ~~ended~~common ~~June~~stock 30on October 18, 2010, ~~were~~valued ~~$7,984~~by ~~and~~using our closing stock price of $1.10 on that date. As of September 30,~~561~~ ~~respectively~~2011, 30% of those shares (450,000 shares) had been vested and no share had been cancelled. A summary of the status of the Company’s unearned stock compensation under the 2010 Plan is presented below:

Based upon current assumptions, the Company expects that, during the next five years, its intangible assets will be amortized according to the following schedule:

Unearned Stock Compensation as of June 30, 2011	$	1,086,250
Unearned Stock Compensation Granted		-
Compensation Expense Recognized in Earnings		(103,125	)
Unearned Stock Compensation as of September 30, 2011	$	983,125

Balance at June 30,	Amount
2011	$	10,733
2012		10,733
2013		10,733
2014		10,733
2015		10,733
Total 5 years	$	53,665

The following table shows amortization of unearned stock compensation relating to the 2010 Plan:

6. ACCOUNTS RECEIVABLE

As of June 30,	Amortization
2012		240,625
2013		330,000
2014		247,500
2015		165,000
Total Amortization	$	983,125

~~Accounts receivable are uncollateralized, non-interest bearing customer obligations typically due under terms requiring payment from the invoice date~~14. ~~Payments~~INCOME of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the oldest unpaid invoices. As of March 31, 2011 and June 30, 2010, accounts receivable and allowance for doubtful account as follow:TAXES

	March 31, 2011			June 30,2010
Accounts Receivable	$	4,631,485		$	4,201,211
Less: Allowance for Doubtful Accounts		(34,830	)		(147,022	)
Total Accounts Receivable, net	$	4,596,655		$	4,054,189

The Company has cumulative undistributed earnings of foreign subsidiaries of $8,765,623 as of September 30, 2011. These undistributed earnings are included in consolidated retained earnings and will continue to be indefinitely reinvested in international operations. Accordingly, no provision has been made for U.S. deferred taxes related to future repatriation of these earnings, nor is it practicable to estimate the amount of income taxes that would have to be provided if we concluded that such earnings will be remitted in the future.

The Company’s VIE, Beijing Guoqiang, is registered and operates in Beijing, PRC. In accordance with the relevant tax laws and regulations of PRC, Beijing Guoqiang is subject to income tax at an effective rate of 25% from January 1, 2008 on income reported in the statutory financial statements after appropriated tax adjustments. Because there is no income tax in the British Virgin Islands, Sky Achieve is not subject to taxation in its domicile.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

714. ~~ACCOUNTS~~ ~~PAYABLE~~INCOME TAXES (continued)

The Company ~~has~~had ~~accounts~~no ~~payable~~uncertain ~~related~~tax topositions ~~the~~as ~~purchase~~ of ~~inventory~~September 30, 2011 and June 30, 2010. The ~~amount~~following oftable ~~$1,311,605~~sets ~~and~~forth ~~$1,832,512~~the ascomponents of ~~March~~the ~~31,~~Company’s ~~2011~~income before income tax expense and ~~June~~components ~~30,~~of ~~2010~~income ~~respectively,~~tax ~~represent~~expense for the ~~accounts~~three ~~payable~~months byended ~~the~~September ~~Company~~30, to2011 ~~the~~and ~~suppliers.~~2010:

8. ACCRUED EXPENSES AND OTHER PAYABLE

	September 30, 2011			September 30, 2010
China Pre-tax Income (Loss)	$	905,464		$	861,673
BVI Pre-tax Income (Loss)		(25	)		-
Domestic Pre-tax Income (Loss)		(140,251	)		(732,365	)
Total Pre-tax Income (Loss)	$	765,188		$	129,308

Accrued expenses consist of audit fee and the payroll taxes for the current year. As of March 31, 2011 and June 30, 2010, the balance was $46,573 and $45,074, respectively.

	September 30, 2011		September 30, 2010
China Income Tax Expense	$	226,366	$	216,048
Domestic Income Tax Expense		-		-
Total Current Income Tax Expense	$	226,366	$	216,048

~~Other~~A ~~accounts~~reconciliation ~~payable~~of ~~consists~~tax ofat ~~miscellaneous~~United ~~items.~~States Asfederal ofstatutory ~~March~~rate ~~31,~~to ~~2011~~provision ~~and~~for ~~June~~income ~~30,~~tax ~~2010,~~recorded in the ~~balances~~financial ~~were~~statements ~~$9,645~~is ~~and~~as ~~$4,495, respectively.~~follows:

9. WARRANTY ACCRUAL

	September 30, 2011			September 30, 2010
U.S. Statutory Income Tax Rate		34.0	%		34.0	%
Foreign Income not Recognized in the U.S.		(34.0	%)		(34.0	%)
China Statutory Income Tax Rate		25.0	%		25.0	%
Other Items (a)		4.58	%		142.08	%
Effective Consolidated Current Income Tax Rate		29.58	%		167.08	%

~~The Company provides its customers~~ (a). 2The ~~years~~4.58% ~~warranty~~and ~~on all products sold~~142.08% Inrepresents ~~anticipation~~$140,276 of(including ~~warranty repairs~~$103,125 ~~the~~stock-based ~~Company~~compensation ~~accrues~~expense) 1%and of$732,365 ~~the~~(including ~~sales~~$717,000 ~~amount~~stock-based ascompensation aexpense) ~~“Warranty~~of ~~Accrual.”~~corporate ~~The~~expenses ~~Company~~incurred ~~believes~~by ~~that~~ the ~~accrual~~Company’s isUS ~~adequate~~office ~~based~~that onare ~~its~~not ~~historical~~subject ~~warranty~~to ~~experience.~~PRC Ifincome ~~the~~tax ~~goods~~for ~~sold have no quality problems within 2 years,~~ the ~~Company~~three ~~reverses~~months ~~the~~ended ~~warranty~~September ~~accrual. As of March 31~~30, 2011 and ~~June 30,~~ 2010~~, the warranty accrual was $321,462 and $237,374 respectively~~.

~~For~~The Company was incorporated in the ~~nine~~United States. It incurred net operating losses for U.S. income tax purposes for the three months ended ~~March~~September 3130, 2011,. ~~the~~Net ~~company~~operating ~~paid~~loss carry forwards for United States income tax purposes amounted to $10429,~~586~~556 ~~directly~~as of September 30, 2011, which may be available to reduce future periods’ US taxable income. These carry forwards will expire, if not utilized, beginning in 2030 through 2031. Management believes that the realization of the benefits arising from this loss appear to be uncertain due to Company's limited operating history and continuing losses for ~~warranty~~United ~~claims~~States income tax purposes. ~~Also~~Accordingly, the ~~company~~Company ~~accrued~~has ~~$86~~provided a 100% valuation allowance at September 30,~~165~~ as2011 for the ~~warranty~~temporary ~~accrual~~difference ~~with~~related ~~respect~~ to ~~sales~~the ~~during~~loss ~~the~~carry-forwards. ~~period~~Management reviews this valuation allowance periodically and makes adjustments as warranted.

10. STOCKHOLDERS’ EQUITY

As of March 31, 2011, 783,000,000 shares have been authorized and 21,659,811 shares are issued and outstanding. The Company implemented a 1-for-2.2 reverse split on June 2, 2010. Retroactive effect is being given to the reverse split in these financial statements. Income statements have retroactively used the new outstanding shares to calculate the EPS. Stated capital in the stockholders’ equity section has been reduced accordingly.

11. STOCK-BASED COMPENSATION

On September 2, 2010, a principal shareholder of the Company transferred 358,500 shares of common stock to the Company’s employees in recognition of prior services. The Company has recorded the transfer as a contribution to the Company’s capital and a stock-based compensation expense, which was valued by the closing stock price of $2.00 at the date of transfer, since these shares were fully-vested and non-forfeitable. The contribution to capital and compensation cost recorded to in relation to this transfer during the period ended March 31, 2011 was $717,000.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

1114. ~~STOCK-BASED~~INCOME ~~COMPENSATION~~TAXES (continued)

~~Subject~~There tois ~~the~~also ~~terms~~a ~~and~~deferred ~~provisions~~tax asset of ~~the 2010 Plan~~$63,381 ~~the~~as ~~Board~~ of ~~Directors~~September 30, at2011 ~~any~~resulting ~~time~~from ~~and~~the ~~from~~temporary ~~time~~difference towith ~~time,~~respect ~~may~~to the grant ~~shares~~ of unvested common stock to ~~eligible~~employees ~~persons~~ in ~~such~~October ~~amounts and upon such terms and conditions as the Board of Directors shall determine~~2010.

~~The~~As ~~Board~~ of ~~Directors~~September ~~shall~~30 ~~have~~and ~~the~~June ~~authority to determine all matters relating to the stock to be granted under the 2010 Plan~~30, ~~including selection of the individuals to be granted awards~~2011, the ~~number~~deferred oftax ~~share,~~assets/ ~~the~~(liabilities) ~~date~~and ~~of termination of~~ the ~~stock~~related ~~awards,~~valuation ~~vesting~~allowance ~~schedules~~were ~~and~~as ~~all other terms and conditions thereof.~~ follows:

The Company issued 1,500,000 shares provided in the Plan in the form of grants of restricted common stock on October 18, 2010, valued by using our closing stock price of $1.10 on that date. As of March 31, 2011, none of those shares had vested and no share had been cancelled. A summary of the status of the Company’s unearned stock compensation under the 2010 Plan as of March 31, 2011, and changes for the period ended March 31, 2011, is presented below:

	September 30, 2011			June 30, 2011
U.S. Holding Company Net Operating Loss Carry-forward	$	209,430		$	359,094
China Other Deferred Tax Assets		-			-
Less: Valuation Allowance		(209,430	)		(359,094	)
Net		-			-

Unearned Stock Compensation as of October 18, 2010	$	1,650,000
Unearned Stock Compensation Granted		-
Amortization of Unearned Stock Compensation		(418,846	)
Unearned Stock Compensation as of March 31, 2011	$	1,231,154

15. EARNINGS PER SHARE

12Earnings per share is determined by dividing net income for the periods by the weighted average number of both basic and diluted shares of common stock and common stock equivalents outstanding pursuant to ASC 260, “Earnings Per Share.” The ~~INCOME~~following ~~TAXES~~are the calculations for earnings per share for the three months ended September 30, 2011 and 2010:

In accordance with the relevant tax laws and regulations of PRC, Beijing Guoqiang is subject to income tax at an effective rate of 25% from January 1, 2008 on income reported in the statutory financial statements after appropriated tax adjustments. Because there is no income tax in the British Virgin Islands, Sky Achieve is not subject to taxation in its domicile.

	For the Three Months Ended
	September 30, 2011		September 30, 2010
Basic Earnings per Share
Net Income	$	538,822	$	(86,740	)
Weighted Average Number of Common Share Outstanding - Basic		16,443,144		20,159,811
Earnings per Share – Basic	$	0.03	$	(0.004	)

The Company had no uncertain tax positions as of March 31, 2011 and June 30, 2010. The following table sets forth the components of the Company’s income before income tax expense and the components of income tax expense for the nine months ended March 31, 2011 and year ended June 30, 2010:

	March 31, 2011		June 30, 2010
China Pre-tax Income	$	1,551,371	$	3,266,452
Domestic Pre-tax Income		-		-
Total Pre-tax Income	$	1,551,371	$	3,266,452

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

1215. ~~INCOME~~EARNINGS ~~TAXES~~PER SHARE (continued)

	March 31, 2011		June 30, 2010
	For the Three Months Ended
China Income Tax Expense	$	702,613	$	837,486
	September 30, 2011		September 30, 2010
Domestic Income Tax Expense		-		-
Diluted Earnings per Share
Total Current Income Tax Expense	$	702,613	$	837,486
Net Income	$	538,822	$	(86,740	)
Weighted Average Number of Common Share Outstanding - Basic		16,443,144		20,159,811
Effect of Diluted Securities - Unvested Shares		228,484		-
Weighted Average Number of Common Share Outstanding - Diluted		16,671,628		20,159,811
Earnings per Share –Diluted	$	0.03	$	(0.004	)

A16. ~~reconciliation~~CURRENT ofVULNERABILITY ~~tax~~DUE atTO ~~United~~CERTAIN ~~States federal statutory rate to provision for income tax recorded in the financial statements is as follows:~~CONCENTRATIONS

	March 31, 2011			June 30, 2010
U.S. Statutory Income Tax Rate		34.0	%		34.0	%
Foreign Income not Recognized in the U.S.		(34.0	)%		(34.0	)%
China Statutory Income Tax Rate		25.0	%		25.0	%
Other Items (a)		20.29	%		0.64	%
Effective Consolidated Current Income Tax Rate		45.29	%		25.64	%

(a). The 20.29% and 0.64% represent $1,256,562 (including $1,135,846 stock-based compensation expense) and $83,492 of corporate expenses incurred by the Company’s US office that are not subject to PRC income tax for the nine months ended March 31, 2011 and year ended June 30, 2010.

13. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

The Company's operations are carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy.

The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

The future profitability of the Company is dependent upon the Company's abilities to secure service contracts and maintain the operating expense at a competitive level.

Concentration of credit risk

Financial instruments that potentially subject to significant concentrations of credit risk consist of cash and cash equivalents. As of ~~March~~September 3130, 2011 and June 30, ~~2010~~2011, substantially all of the Company’s cash and cash equivalents were held by major banks which located in the PRC. The Company’s management believes that there are remote chances the Company will loss money on those banks. With respect to accounts receivable, the Company extends credit based on an evaluation of the customer’s financial condition and customer payment practices to minimize collection risk on account receivables.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

1316. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS (continued)

The major customers which represented more than 5% of total Accounts Receivable as follows:

	March 31, 2011					June 30, 2010
	September 30, 2011					June 30, 2011
Customer Name	Amount		%			Amount		%
Shandong Motor Way Fujian Branch		412,066		8.90	%		-		0.00	%
Tianjin Aofeiya Bicycle Manufacturing Co., Ltd	$	464,176		8.47	%		*		*
Saiensi Resource Co., Ltd		297,049		6.41	%		149,554		3.56	%
Hebei Xinyuzhou Electronic Bicycle Co., Ltd		411,087		7.50	%		*		*
Tianjin Chenxing Electronic MV Co., Ltd		286,136		6.18	%		-		0.00	%
Beijing Zhongxinlian Digital Co., Ltd		342,234		6.24	%		*		*
Guangzhou Chuangxin Power Technology Co., Ltd		254,281		5.49	%		413,975		9.85	%
Beijing Anhualianhe Co., Ltd		330,144		6.02	%		*		*
Beijing Renyuxin Trading Co., Ltd		234,464		5.06	%		474,070		11.28	%
Hebei Aoguan Power Technology Co., Ltd		321,538		5.86	%		*		*
Beijing Fuerxuan Technology Co., Ltd		*		*			521,675		9.25	%
Beijing Lianneng Power Technology Co., Ltd		*		*			376,519		6.68	%
Beijing Meiyina Vehicle Manufacturing Co., Ltd		*		*			300,120		5.32	%
Shandong Expressway Co. Ltd (Fujian Branch)		*		*			286,288		5.08	%

* Less than 5% of total accounts receivable as of September 30, 2011 and June 30, 2011.

The major vendors which represented more than 5% of total Accounts Payable as follows:

	March 31, 2011					June 30, 2010
	September 30, 2011					June 30, 2011
Vendor Name	Amount		%			Amount		%
Heilongjiang Zhongqiang Power Tech Ltd	$	~~753~~679,~~314~~282		5779.4398	%	$	1649,~~593,055~~625		8674.9365	%
Guangzhou Fanyubaiyun Electronic Co., Ltd		~~101~~49,~~854~~860		75.7787	%		98103,~~574~~538		511.3890	%
Beijing Anhua Lianhe Power Tech Co., Ltd		74,927		5.71	%		12,913		0.70	%
Guangzhou Zengchen Electronic Co., Ltd		*		*			50,371		5.79	%

~~The~~* ~~major~~Less ~~customers which represented more~~ than 5% of ~~the~~ total ~~sales~~accounts ~~for~~payable ~~the~~as ~~nine~~of ~~months~~September ~~ended March 31~~30, 2011:.

	Nine Months Ended March 31, 2011
Customer Name	Amount		%
Shandong Motor Way Fujian Branch		914,987		8.04	%

There were no major clients whose sales larger than 5% of the total sales for the three months ended September 30, 2010. The major clients which represented 5% and more of the total sales for the three months ended September 30, 2011 are as follows:

The major vendors which represented more than 5% of the total purchases for the nine months ended March 31, 2011:

	For the Three Months Ended
Customer Name	September 30, 2011					September 30, 2010
Customer Name	Amount		%			Amount		%
Tianjin Aofeiya Bicycle Manufacturing Co., Ltd	$	380,025		10.08	%		*		*
Hebei Xinyuzhou Electronic Bicycle Co., Ltd		350,232		9.29	%		*		*
Beijing Zhongxinlian Digital Co., Ltd		280,393		7.44	%		*		*
Hebei Aoguan Power Technology Co., Ltd		273,939		7.26	%		*		*
Beijing Fuerxuan Technology Co., Ltd		223,636		5.93	%		*		*
Henan Xinge Electronic Bicycle Co., Ltd		193,880		5.14	%		*		*
Tianjin Taifeng Eclectronic Bicycle Co., Ltd		193,627		5.13	%		*		*

	Nine Months Ended March 31, 2011
Vendor Name	Amount		%
Heilongjiang Zhongqiang Power Tech Ltd		4,310,784		55.49	%
Beijing Anhua Lianhe Power Tech Co., Ltd		1,784,885		22.98	%
Guangzhou Fanyubaiyun Electronic Co., Ltd		558,168		7.19	%

* Less than 5% of total sales for the three months ended September 30, 2010.

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~FOR 31THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

1416. ~~RELATED~~CURRENT ~~PARTY~~VULNERABILITY ~~TRANSACTIONS~~DUE TO CERTAIN CONCENTRATIONS (continued)

AThe ~~significant~~major ~~portion~~vendors ~~of the Company’s raw materials were purchased from Heilongjiang Zhongqiang Power Tech Co., Ltd (Heilongjiang ZQPT),~~ which isrepresented amore ~~subsidiary~~than of Advanced Battery Technologies, Inc (ABAT). One of the Company’s directors, Mr. Qiang Fu, is an immediate family member of the CEO of ABAT, which has exclusive control over the business of Heilongjiang ZQPT. In the nine-month period ended March 31, 2011, purchases from Heilongjiang ZQPT totaled $4,310,784, or 55.495% of the total ~~purchase~~purchases for the ~~nine-month~~three ~~period.~~months Asended ofSeptember ~~March 31~~30, 2011, ~~the~~and ~~total amount due to Heilongjiang ZQPT was $753,314, or 57.43% of the total accounts payable. As of June 30,~~ 2010~~, the total amount due to Heilongjiang ZQPT was $1,593,055, or 86.93% of the total accounts payable.~~:

As of June 30, 2010, there are two supply contacts outstanding between the Company and Heilongjiang ZQPT, one dated February 24, 2010 and the other dated March 22, 2010. The February 24 contact contains the parties’ agreement to purchase and sell 3000 units of a specified 72 volt battery for 27,000 RMB per unit. Delivery will be scheduled by Beijing Guoqiang by notice not less than 25 days before delivery. Heilongjiang ZQPT shall pay transportation costs. Title transfers ex factory, and national testing standards will apply. The March 22 contract has identical terms, but contemplates the purchase and sale of 60,000 units of a 3.2 volt battery at 105 RMB per unit.

	For the Three Months Ended
Vendor Name	September 30, 2011					September 30, 2010
Vendor Name	Amount		%			Amount		%
Heilongjiang Zhongqiang Power Tech Ltd	$	1,457,192		51.01	%	$	1,353,854		61.10	%
Beijing Anhualianhe Co., Ltd		513,012		17.96	%		477,831		21.56	%
Guangzhou Fanyubaiyun Electronic Co., Ltd		408,843		14.31	%		*		*
Beijing Sangjie Electronic Technologies Co., Ltd		166,869		5.84	%		*		*

15* Less than 5% of total purchases for the three months ended September 30, 2010. ~~RESTATEMENT~~

~~We have restated the Consolidated Statements of Changes in Stockholders’ Equity for the years ended June 30, 2009 and June 30, 2010~~17. ~~The~~RELATED ~~reason~~PARTY for the restatement is that the Consolidated Statements of Changes in Stockholders’ Equity as originally issued failed to properly account for the reverse merger of Sky Achieve Holdings into the Company in March 2010. Pursuant to ASC 805-40-45-1, the Consolidated Statements of Changes in Stockholders’ Equity of the Company after the reverse merger should reflect the historic capital structure of Sky Achieve Holdings (the accounting acquirer) adjusted to reflect the legal capital of the Company prior to the reverse merger. As a result of the restatement, the capital associated with the shares issued in the reverse merger is shown as outstanding in the balance at June 30, 2008 and thereafter, and the effect of the reverse merger is a reclassification of $19,151 from additional paid-in capital to stated capital. The restatement did not have a material effect on the total stockholders’ equity at any period.TRANSACTIONS

A significant portion of the Company’s raw materials were purchased from Heilongjiang Zhongqiang Power Tech Co., Ltd (Heilongjiang ZQPT), which is a subsidiary of Advanced Battery Technologies, Inc (ABAT). Mr. Qiang Fu, who was one of the Company’s directors until July 14, 2011, is an immediate family member of the CEO of ABAT, who has exclusive control over the business of Heilongjiang ZQPT. For the three months ended September 30, 2011, purchases from Heilongjiang ZQPT totaled $1,457,192, or 51.01% of the total purchases for the quarter then ended. For the three months ended September 30, 2010, purchased from Heilongjiang ZQPT totaled $1,353,854, or 61.10% of the total purchases for the quarter then ended. As of September 30, 2011, the total amount due to Heilongjiang ZQPT was $679,282, or 79.98% of the total accounts payable. As of June 30, 2011, the total amount due to Heilongjiang ZQPT was $649,625, or 74.65% of the total accounts payable.

18. RESTATEMENT

We have restated the Consolidated Statements of Changes in Stockholders’ Equity for the year ended June 30, 2010. The reason for the restatement is that the Consolidated Statements of Changes in Stockholders’ Equity as originally issued failed to properly account for the reverse merger of Sky Achieve Holdings into the Company in March 2010. Pursuant to ASC 805-40-45-1, the Consolidated Statements of Changes in Stockholders’ Equity of the Company after the reverse merger should reflect the historic capital structure of Sky Achieve Holdings (the accounting acquirer) adjusted to reflect the legal capital of the Company prior to the reverse merger. As a result of the restatement, the shares issued to the prior owners of Sky Achieve Holdings in the reverse merger and the capital associated with the shares issued in the reverse merger are shown as outstanding in the balance at June 30, 2009 and thereafter, and the shares of the public company outstanding at the time of the reverse merger and the capital associated with those shares are shown as issued at the time of the reverse merger. The effect of the restatement on the Consolidated Statements of Changes in Stockholders’ Equity is shown below:

CHINA LITHIUM TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(UNAUDITED)

18. RESTATEMENT (continued)

		As Originally Reported		As Restated
6/30/2009 Balance	Common Stock - Shares		1,007,936		19,151,875
	Common Stock - Amount	$	1,008	$	19,151
	Additional Paid-in Capital	$	157,436	$	139,293
	Common Stock - Shares		19,151,875		1,007,936
	Common Stock - Amount	$	19,151	$	1,008
Issuance of Common Stock/Reverse Acquisition Adjustments*	Additional Paid-in Capital	$	72,352	$	113,478
6/30/2010 Balance	Additional Paid-in Capital	$	229,788	$	252,771
	Total Stockholders’ Equity	$	5,467,999	$	5,490,982

* The effects of the reverse merger on shareholders’ equity were identified as “issuance of common stock” in our original filing and are identified as “reverse acquisition equity adjustment” in the amended filing.

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

Forward Looking Statements

The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, the realization of which may cause the prediction implicit in the forward-looking statements to be unrealized. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. We disclaim any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements.

Overview

We are holding company incorporated in the State of Nevada. Through our operating entity in China, we design, manufacture and market polymer lithium-ion battery modules, lithium-ion battery chargers, lithium-ion battery management systems as well as other lithium-ion battery management devices essential to proper power utilization.

Our PLI battery products produce a relatively high average of 3.8 volts per cell, which makes them attractive in terms of both weight and volume. Additionally, they can be manufactured in very thin configurations and with large footprints. PLI cells can be configured in almost any prismatic shape, and can be made thinner than 0.0195 inches (0.5 mm) to fill virtually any shape efficiently. This combination of power and versatility makes rechargeable PLI batteries particularly attractive for use in consumer products such as portable computers, personal digital assistants (PDA's) and cellular telephones. However, one of the bottleneck problems in the existing lithium-ion battery industry is the battery capacity loss. Through years of efforts in research and development, we developed an efficient battery management system in a way to balance the process of charging and discharging of multiple lithium-ion battery cells and adjust the charging frequency to the change of temperature of the ambient environment. We also incorporated the battery management system in our design of lithium-ion battery module and battery pack.

~~Results~~RESULTS ofOF ~~Operations~~OPERATION

~~Our~~Quarter ~~revenue~~Ended ~~during~~September ~~the three months ended March 31~~30, 2011 ~~was~~compared ~~$3,361,885, an increase of $730,844 or 27.8% from the revenue we reported for the three months ended March 31, 2010. Our third quarter revenue tends~~ to ~~lag~~Quarter ~~the~~Ended ~~first~~September ~~and second quarters~~30, and did so in this fiscal year as well. The seasonality of battery sales primarily occurs because our customers try to reduce battery inventory during the winter, since battery capacity is adversely affected by cold weather.2010

~~Revenue~~ Total during the nine months ended March 31, 2011 was $11,334,652, an increase of 12.9% from the nine months ended March 31, 2010. The increase in our revenue during the three and nine months was primarily due to our success in refocusing our marketing on higher margin products, specifically replacing sales of low margin battery packs with sales of higher margin power supplies and battery chargers along with increased sales of our battery modules. This reorientation of our sales is evident in the following breakdown of per-product line revenues:Revenues

27The following table shows the revenues attributable to each of our product lines:

	3 months ended Mar 31,2011		3 months ended Mar 31,2010		Change		Percentage
	Quarter Ended September 30, 2011		Quarter Ended September 30, 2010
Battery Safety System		1,465,262		1,574,008		-108,746		-6.9	%
Battery Management Systems	$	1,659,924	$	2,114,790
Battery Module		856,827		444,187		412,640		92.90	%
Battery Modules	$	769,532	$	843,890
Battery Pack		0		94,006		-94,006		-100.00	%
Battery Packs	$	0	$	64,469
Electric Vehicle Battery		225,494		-		225,494		-
Electric Vehicle Batteries	$	61,482	$	269,759
Power		727,511		491,090		236,421		48.14	%
Power Supplies	$	1,197,774	$	326,821
Chargers	$	8682,~~791~~521	$	2784,~~751~~948		~~59,040~~		~~212.75~~	%
Total Revenue		3,361,885		2,631,042		730,843		27.78	%
Total Revenues	$	3,771,232	$	3,704,678

	9 months ended Mar 31,2011		9 months ended Mar 31,2010		Change		Percentage
Battery Safety System		5,746,841		6,064,683		-317,842		-5.2	%
Battery Module		2,638,274		834,545		1,803,729		216.13	%
Battery Pack		104,576		1,439,931		-1,335,355		-92.74	%
Electric Vehicle Battery		1,065,488		818,820		246,668		30.12	%
Power		1,515,713		864,534		651,179		75.32	%
Chargers		263,760		37,047		226,713		611.96	%
Total Revenue		11,334,652		10,059,560		1,275,092		12.68	%

There was no significant change in the efficiency of our manufacturing operations from the third quarter of fiscal year 2011 to the third quarter of fiscal year 2011. Our gross margin in each period was approximately 38%. Accordingly, our gross profit increased in proportion to the increase in our revenue from period to period. The comparison of nine month periods showed an improvement, however, as we achieved a 36% gross margin in the nine months ended March 31, 2011 and only a 32% gross margin in the nine months ended March 31, 2010. The improvement was primarily attributable to the fact that in the later part of fiscal year 2011 we reoriented our sales effort to reduce the sales of battery packs, which had a margin of 10%, and increase the sales of power supplies (49% profit margin) and battery chargers (25% profit margin). At the same time, we improved our production technique, which helped us lower the cost of goods sold. For the three months ended March 31, 2011, the cost of goods sold was 61.6% compared to 62.3% of the same period in 2010; while for the nine months ended March 31, 2011, the cost of goods sold was 63.8% compared to 68.1% during the nine months ended March 31,2010.

Our operating expenses increased significantly in both the three and nine month periods ended March 31, 2011. During the three months ended March 31, 2011, the primary increase was in general and administrative expenses, which showed a 212% ($441,609) increase in the three months ended March 31, 2011 and a 248% ($1,182,811) increase in the nine months ended March 31, 2011. The cause of the increases was stock compensation given to our employees to incentivize them. On September 2, 2010, our Chairman, Kun Liu, transferred 313,500 of his shares to our employees. He also transferred 25,000 shares to another member of our board of directors, and 20,000 shares to our U.S. securities attorneys. Because these transfers were made for the benefit of the Company, we account for them as if the Company had issued the shares. Accordingly, we recorded a compensation expense of $ 717,000, the market value of the shares, in the first quarter of fiscal 2011.

WeTotal ~~also~~revenues ~~issued~~for ~~1,500,000~~the ~~shares~~quarter toended ~~six~~September of30,2011were ~~our most important employees in October 2010. The shares vest over a five year period~~$3,771,232 ~~and~~as wecompared ~~will recognize the expense related~~ to ~~the~~total ~~shares~~revenues ~~over~~of ~~that~~$3,704,678 ~~period.~~for ~~During~~ the ~~second~~ quarter ofended ~~fiscal~~September ~~2011 we expensed $190~~30,~~385~~ ~~and expensed $228~~2010,~~462~~ ~~during~~an ~~the~~increase ~~third quarter as a result~~ of ~~the~~$66,554 ~~October~~or ~~grant~~approximately 1.77%.

~~Our~~The ~~sales~~increase ~~expenses~~in ~~also~~revenue ~~increased~~was ~~sharply,~~entirely ~~growing~~attributable byto ~~80%~~our ~~($123,703)~~success in ~~the~~developing ~~quarter~~additional ~~ended~~customers ~~March~~during ~~31, 2011 compared to~~ the quarter ended ~~March~~September 3130, 2010. Our ~~Sales~~new ~~expenses~~customers ~~also~~included ~~increased~~Shenzhen inTengshun ~~the~~Power ~~nine~~Supplies, ~~months~~Ltd, ~~ended~~Zhejiang ~~March~~Yongyuan 31Motocycle Manufactory, ~~2011~~Inc, Beijing ~~growing~~Lidehuafu ~~160%~~Electronic ~~($1~~Technologies,~~581,203)~~ ~~over~~Inc ~~sales~~. ~~expenses~~In inaggregate, the ~~nine~~revenues ~~months~~from ~~ended March 31, 2010. The primary reason for~~ these ~~sharp~~three ~~increases~~new ~~has~~customers ~~been~~contribute ~~our efforts to upgrade our selling effort~~9.68% ~~At the end~~ of the ~~June~~total ~~2011~~revenue ~~fiscal year, we signed a contract, to commence in July 2011, with a sales training company. The trainers are implementing a fully program~~ of ~~sales training for our marketing staff. As a result, we paid $39,000 for sales training in~~ the ~~three~~quarter ~~months~~ ended ~~March~~September 3130, 2011 ~~and $89,000 for sales training in the six months ended March 31, 2011~~.

~~The~~Cost ~~R & D expenses fell because~~ of aGoods capitalization of R & D expenses. Before the new product can be successfully produced, the cost of R & D for this product is recorded as an asset in work-in-progress in the inventory account. When the new product is released to the market, the cost is moved into intangible assets account. The R & D expenses were $28,326 and $48,930 respectively for three months ended March 31, 2011 and 2010Sold; ~~and~~Gross ~~were $68,321 and $80,260 respectively for nine months ended March 31, 2011 and 2010.~~Profit

AsGross aprofit ~~result~~for of the ~~increase~~quarter inended ~~our~~September ~~operating~~30, ~~expenses~~2011was ~~during~~$1,564,975, ~~the~~as ~~recent~~compared ~~periods~~to $1,304,024 ~~our~~for ~~operating~~the ~~income~~quarter ~~fell~~ended September 30, ~~despite~~2010. ~~the~~The increase in our ~~revenues. Operating~~gross ~~income~~margin ~~fell~~ratio from ~~$539,592~~35.2% into ~~the~~41.5% ~~three~~was ~~months~~primarily ~~ended~~attributable ~~March~~to ~~31,~~an ~~2010~~adjustment toin ~~$310,069~~our inproduct adjustment that we made during the three months ended ~~March~~September 3130, 2011,. Started ~~and~~ from $2the quarter ended September 30,~~214~~ 2011,~~037~~ inwe discontinued the ~~nine~~sales ~~months~~of ~~ended~~battery ~~March 31~~packs, ~~2010~~which tohad ~~$1,524,488~~a inmargin ~~the~~of10% ~~nine~~and ~~months~~reduced ~~ended~~sales ~~March~~of ~~31,~~battery ~~2011~~modules (39% profit margin). ~~Since~~In ~~the~~their ~~decline~~place ~~was~~we ~~attributable~~more tothan ~~the~~tripled ~~$717,000~~our ~~stock-based~~sales ~~compensation~~of ~~expense~~power insupplies (50% profit margin). At the ~~first~~same ~~quarter~~time, ~~and~~we ~~$418,847~~improved ~~stock~~our ~~award~~production ~~plan~~technique, ~~expense~~which inhelped ~~the~~us ~~second~~lower ~~and~~the ~~third~~cost of ~~quarter,~~goods ~~events~~sold. ~~that~~For wethe dothree ~~not~~months ~~plan~~ended toSeptember ~~replicate~~30, we2011, ~~expect~~the ~~that~~cost inof ~~the~~goods ~~future~~sold ~~our~~was ~~net~~58.5% ~~income~~of ~~will~~revenues ~~grow~~compared asto ~~our~~64.8% ~~revenues~~of ~~grow~~the same period in 2010.

WeOperating pay tax on our operating income in China at the national corporate rate of 25%. However, because the stock compensation expenses are not deductible in China, our effective tax rate for the current year is much higher. For the three months ended March 31, 2011 we recorded a provision of $153,538 for income tax, equal to 47% of our re-tax income. For the nine month period then ended, our provision for income tax equaled 45% of pre-tax income. During the comparable periods of fiscal year 2010, our income tax provisions had been approximately 25%. As a result, our net income for the three and nine month periods ended March 31, 2011 were 58% and 49% lower than net income for the three and nine month periods ended March 31, 2010, respectively.Expenses

~~The~~Total ~~functional currency of our subsidiaries and affiliate~~ operating inexpenses ~~the~~for ~~PRC is~~ the ~~RMB.~~quarter ~~The~~ended ~~financial~~September ~~statements~~30, of2011were ~~our~~$805,033, ~~subsidiaries~~a ~~and~~decrease ~~affiliate are translated into U.S. dollars using year-end rates~~ of ~~exchange~~$373,005 ~~for~~or ~~assets~~approximately ~~and liabilities~~32%, ~~and~~from ~~average~~total ~~rates~~operating ofexpenses ~~exchange~~in ~~(for~~ the ~~year)~~quarter ~~for~~ended ~~revenues,~~September ~~costs~~30, ~~and expenses~~2010. ~~Net~~The ~~gains~~decrease ~~and~~was ~~losses~~partially ~~resulting~~attributable ~~from~~to ~~foreign~~a ~~exchange~~$115,091 ~~transactions~~decrease ~~are included~~ in ~~the~~sales ~~consolidated~~expense, ~~statements~~due ofto ~~operations.~~the Ascompletion ain ~~result~~June 2011 of ~~these~~the ~~translations,~~salesman ~~which~~training ~~are~~program athat ~~non-cash adjustment,~~ we ~~reported~~started ~~foreign currency translation gains of $25,640 and $227,609~~ during the ~~three~~quarter ~~and nine months~~ ended ~~March~~September 3130, ~~2011,~~2010. asCurrently ~~compared~~we todon’t ~~$142~~have ~~and~~any ~~$35,704~~plan ~~during~~to ~~the~~commence ~~three~~a ~~and~~new ~~nine~~salesman ~~months~~training ~~ended March 31, 2010~~program.

The primary reason for the decrease in operating expenses, however, was the decrease in general and administrative expenses from $845,380 during the quarter ended September 2010 to $422,308 during the quarter ended September 2011. The decrease was due to the reduction in our stock-based compensation expenses. On September 2, 2010, our Chairman, Kun Liu, transferred 358,500 of his shares to our employees. Because these transfers were made for the benefit of the Company, we account for them as if the Company had issued the shares. Accordingly, we recorded a compensation expense of $ 717,000, the market value of the shares, in the first quarter of fiscal 2011. We also issued 1,500,000 shares to six of our most important employees in October 2010. The shares vest over a five year period, and we will recognize the expense related to the shares over that period. As a result of that transaction, we recognized a compensation expense of $103,125 in the first quarter of fiscal 2012. In sum, then, the stock-based compensation expenses were $103,125 and $717,000 for the three months ended September 30, 2011 and 2010, respectively.

~~Liquidity~~Our manufacturing expenses - which consist of factory overhead (utilities, depreciation, salaries and ~~Capital~~insurance ~~Resources~~of manufacturing personnel) and subcontracting expenses - increased by $45,717, and research and development expenses increased by $119,440. Both of these increases reflect our efforts to expand our presence in the Chinese battery market. We expect incremental increases in both of these categories to continue in the future.

~~During~~Income ~~the~~Before ~~first~~Income ~~nine months of fiscal 2011, our working capital increased by $1,855,913 to $7,012,177 at March 31, 2011. The two components of working capital that made the largest increases were:~~Taxes

•Due ~~Accounts~~to ~~receivable,~~the ~~net,~~decrease ~~which~~in ~~increased~~operating byexpenses ~~$542,466.~~- ~~The increase was~~ primarily, ~~attributable to~~ the ~~increase~~$613,875 reduction in ~~our~~stock-based ~~nine~~compensation ~~month sales volume. In addition, we re~~-~~evaluated~~ our ~~accounts~~income ~~receivable~~from atoperations ~~March~~of 31$759,941for ~~2011~~the ~~and~~quarter ~~determined~~ended ~~that~~September ~~the~~30,2011was $~~147~~633,~~022~~956 ~~allowance~~more ~~for~~than ~~doubtful~~income ~~accounts~~from ~~that~~operations wein ~~recorded~~the atquarter ~~June~~ended September 30, 2010. ~~could~~During bethe ~~reversed,~~quarter asended weSeptember ~~had no accounts that were older than 90 days at March 31~~30, 2011 ~~and~~we ~~all~~added ~~accounts appeared likely~~ to beincome ~~paid~~from onoperations ~~time.~~an Onadditional ~~March 31~~$5,184 ~~2011,~~in ~~there~~net ~~was~~interest $3income,~~668,131~~ ofand ~~account~~$62 ~~receivable~~other ~~within~~income. This 30gave ~~days,~~us ~~which~~pre-tax ~~was~~income ~~79.8%~~ of ~~the total account receivable; while~~ $~~928~~765,~~524~~188 ~~of account receivable~~ for ~~31-60 days, which was 20.1% of~~ the ~~total~~quarter ~~account~~ended ~~receivable.~~September It30, ~~should be noted that the program we had initiated in fiscal~~ 2011, ofcompared ~~allowing~~to ~~new~~$129,308 ~~customers~~for ~~extended~~the ~~payment~~quarter ~~terms~~ended ~~has~~September ~~resulted~~30, ~~in no accounts that are older than would be allowable under our customary payment terms~~2010.

•Income Inventory, which increased by $771,553. The increase reflects our higher level of operations, as only $223,112 of the increase occurred in raw materials, while $448,510 of the increase is attributable to work in progress and finished goods. Under the ABC inventory management system that we implemented during 2010, we keep low or no inventory of commonly available components and purchase them as needed. We purchase components with long delivery cycles when prices appeared low, and kept them in stock to assure availability. During the third period of fiscal year 2011, the prices of certain long delivery term components appeared to be lower, and we stocked some for our future manufactory use.Taxes

~~The~~Our ~~value~~operating ofcompany ~~our~~pays ~~property~~income ~~and~~tax ~~equipment~~at ~~has~~the ~~increased~~Chinese ~~during~~national ~~the~~rate ~~current~~of ~~fiscal year~~25%. During Onthe ~~March~~quarter 31ended September 30, 2011, ~~primarily attributable to the improvement of~~ our ~~Guangzhou~~operations ~~Plant~~in ~~and~~China ~~Hangzhou~~produced Rtaxable &income Dof ~~center.~~$905,464, Inas ~~order~~a toresult ~~increase~~of ~~the~~which ~~quality~~we ofaccrued ~~our products~~$226,366 wein ~~purchased~~income ~~battery~~tax. The ~~sorting~~effective ~~machines~~consolidated ~~and~~income ~~examining~~tax ~~machines~~rate ~~for~~was ~~our~~29.58%, ~~Beijing~~as ~~plant~~the ~~for~~ $~~153~~140,~~846,~~251 ~~and~~domestic ~~invested~~pre-tax ~~$72,308~~loss inand ~~new~~$25 ~~machines~~BVI ~~for~~pre-tax ~~the~~income ~~Guangzhou~~we ~~plant~~incurred, aswhich ~~well~~left asus $69765,~~231in~~188 ~~new~~of ~~machines~~total ~~for~~pre-tax ~~the~~income. By ~~Hangzhou~~comparison, Rour &effective Dtax ~~center.~~rate Asfor ~~a result,~~ the ~~book~~quarter ~~value~~ended ofSeptember ~~machinery~~30, ~~and~~2011was ~~equipment~~167.08%, ~~was~~as ~~$639,757~~we onhad ~~March~~a ~~31,~~large ~~2011,~~domestic anloss ~~increase~~from ofour ~~$332,508~~U.S. ~~from~~publicly-held ~~$307,249~~parent ascompany ofdue ~~June~~to ~~30,~~the ~~2010~~stock-based compensation.

~~Accounts~~Net payable decreased to $1,311,605 on March 31, 2011, as compared to $1,832,512 on June 30, 2010. We made a significant reduction in our payable to our primary components vendor, Heilongjiang Zhongqiang Power-Tech Co. Ltd, to whom we had owed $902,391 at June 30, 2010.Income

~~Despite~~As ~~net~~a ~~income~~result of ~~$848,758~~these ~~for the nine months ended March 31~~factors, ~~2011,~~we ~~our~~reported ~~operations~~net ~~provided~~income usof ~~only~~ $~~192~~538,~~500~~822 ~~in cash. The primary reasons~~ for the ~~discrepancy~~quarter ~~were~~ended ~~the~~September ~~increases in accounts receivable and inventory discussed above. In addition~~30,2011as wecompared ~~used $687,880 in cash~~ to ~~reduce~~net ~~our~~loss ~~accounts and taxes payable. In other words, this low cash yield from operations was a result~~ of ~~management allocation of resources~~$86,740 ~~and~~for ~~is not indicative of~~ the ~~liquidity~~quarter ~~of our operations. During the year~~ ended ~~June~~September 30, 2010,. ~~our~~This ~~operations~~translated ~~provided~~to usbasic ~~$2,728,015~~and indiluted ~~cash,~~net ~~including~~income ~~$825,178~~(loss) inper ~~the~~common ~~first~~share ~~nine months~~ of ~~that~~$0.03 ~~fiscal~~and ~~year~~($0.004) ~~We expect that~~ for the ~~forseeable~~quarters ~~future,~~ended ~~our~~September ~~operations~~30, ~~will~~2011 ~~provide~~and us2010, ~~significant cash yield~~respectively.

Other Comprehensive Income

The functional currency of our subsidiaries and affiliate operating in the PRC is the RMB. The financial statements of our subsidiaries and affiliate are translated into U.S. dollars using yearend rates of exchange for assets and liabilities, and average rates of exchange (for the year) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. As a result of these translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $71,874 for the quarter ended September 30,2011as compared to $98,685 for the fiscal year of 2010. This non-cash gain increased our reported comprehensive income.

~~Our~~LIQUIDITY ~~operations~~AND ~~are~~CAPITAL ~~cash-positive. With these resources, we expect that we will be able to fund the implementation of our business plan for the forseeable future.~~RESOURCES

After our shareholders made the initial contribution of our registered capital, the growth of our business has been funded, primarily, by the revenues resulted from our business operations. As a result, at September 30, 2011, we had no long term debts and our only short-term debt resulted from our need for U.S. Dollars with which to fund the operations of our office in the U.S.

Our working capital at September 30, 2011 totaled $8,457,201, an increase of $748,617 from our $7,708,584 in working capital as of June 30, 2011. The increase in working capital was approximately equal to our net income before taxes during the three months ended September 30, 2011, with the disparity of $209,795 primarily attributable to depreciation, amortization and stock-based compensation expense.

As of September 30, 2011, our accounts receivable, net of allowance for doubtful accounts, was $5,390,179 as compared to $5,612,622 as of June 30, 2011, a decrease of $222,443. Despite the reduction, our accounts receivable continue to represent over four months of sales. This high level has occurred, in part, because we have in recent periods provided new customers favorable payment terms as an incentive to initiate a relationship with us. Our standard payment terms are 0/60/90 days from delivery. To some of our significant new customers, however, we offered payment terms of 60/90/120 days, albeit on their initial orders only. Since we have had a number of new customers during the past two quarters, this promotion contributed to the increased level of our accounts receivable. In addition, after we examined our accounts receivable level, we decided to give some of our clients an extension of paying term. At September 30, 2011, $1,491,997 of our accounts receivable had been outstanding for more than 90 days, which is approximately 27.68% of the total account receivable. The chart below shows the breakdown of our accounts receivable according the age of the receivable at September 30, 2011:

Period	Amount		Percentage
Up to 30 days	$	1,458,891		27.07	%
“ 60 days	$	1,260,634		23.39	%
“ 90 days	$	1,178,657		21.87	%
“ 120 days	$	1,167,501		21.66	%
Over 120 days	$	324,496		6.02	%
Total	$	5,390,179		100	%

As of September 30, 2011, our inventories totaled $1,683,577, as compared to $972,867 as of June 30, 2010, an increase of $710,710. We continue to use the ABC inventory management system to control our inventory level. Under our “ABC inventory management” system, we classified the components used for our products by availability and price sensitivity. We maintained low or no inventories of commonly available components and purchased them as needed. On the other hand, we purchased components with long delivery cycles when prices appeared low, and kept them in stock to assure availability. As a result, our raw materials inventory grew by only $151,623 during this quarter, with the bulk of the increase in inventory being attributable to a higher level of work in process as of September 30, 2011. The increase of work in process occurred as a result of our current production strategy. We kept an amount of work in process in order to shorten the period before we can deliver finished goods, thereby shortening the period from receiving the order to delivering the goods to the customer and collecting the money. Because the raw material market environment has recently changed, some of our raw materials have become difficult to obtain, resulting in not only price increases, but shortage of supplies. In response to this market condition, we have tried to collect more raw materials while the price was low, and we increased the inventory stocking level of our work in process and finished goods. We expect our inventory will go back to its previous level in the near future.

As of September 30, 2011, our advances to suppliers were $31,030 as compared to $29,180 as of June 30, 2011, a slight increase of $1,850.

As of September 30, 2011, our prepaid expenses were $617,064 as compared to $417,133 as of June 30, 2011, an increase of $199,931. The increase primarily occurred as a result of additional 1.2 million RMB ($198,669) prepaid to Beijing Ruiqingzhihua Technologies, Inc., with which we are jointly developing the 24v/600Ah battery pack technology. The whole development project is estimated to cost 5 million RMB ($781,250).

During the quarter ended September 30, 2011, there were no significant changes in our property and equipment or intangible assets.

At September 30, 2011, we had a non-interest-bearing loan of $283,638 from Mr. Liu, our CEO. We incurred the loan over the past two years in order to obtain Dollars for the purpose of paying the expenses of our U.S. office. Since the process of converting Chinese Renminbi into Dollars is time and effort-consuming, we expect to continue to borrow U.S. Dollars from Mr. Liu for this purpose until we complete a financing in the U.S. that provides us Dollars.

Despite net income of $538,822 for the three months ended September 30, 2011, our operations used $85,568 in cash. The primary reasons for the discrepancy were the increases in inventory ($710,710) and prepaid expenses ($199,931), as discussed above. In addition, we used $158,694 in cash to reduce our accounts and taxes payable. Partially offsetting these cash uses, our accounts receivable, decreased by $222,443. In other words, this negative cash yield from operations was a result of management allocation of resources, and is not indicative of the liquidity of our operations. In the future, we expect to manage our resources better to make our operations cash positive.

Restrictions on Dividends and Other Cash Transfers

All of our business operations are carried out by Beijing GuoQiang, and all of our cash assets are held by that entity. To date, our U.S. parent corporation has paid its expenses by taking loans from Kun Liu, our Chief Executive Officer. In the future, in order for the U.S. parent corporation to continue its operations without depending on such loans or in order for it to pay dividends to our shareholders, we will have to transfer funds from Beijing GuoQiang through Sky Achieve and then to China Lithium Technologies, our U.S. parent corporation. Our ability to transfer funds in this manner will limited by two factors:

Statutory Reserves. The Company Law of the PRC applicable to Chinese companies with foreign ownership provides that net income can be distributed as dividends only after:

Cumulative prior years’ losses have been recouped;

10% of after tax income has been allocated to a statutory surplus reserve until the reserve amounts to 50% of the company’s registered capital;

10% of after tax income has been allocated to a statutory common welfare fund, which is established for the purpose of providing employee facilities and other collective benefits to the company’s employees; and

allocations have been made to the discretionary surplus reserve, if such a reserve is approved at the meeting of the equity owners.

Currency Conversion. The Yuan is not freely convertible into Dollars. The State Administration of Foreign Exchange (“SAFE”) administers foreign exchange dealings and requires that they be conducted though designated financial institutions. Foreign Investment Enterprises, such as Beijing GuoQiang, may purchase foreign currency from designated financial institutions in connection with current account transactions, including profit repatriation.

These factors will limit the amount of funds that we can transfer from Beijing GuoQiang to China Lithium Technologies and may delay any such transfer. In addition, upon repatriation of earnings of Beijing GuoQiang to the United States, those earnings may become subject to United States federal and state income taxes. We have not accrued any U.S. federal or state tax liability on the undistributed earnings of our foreign subsidiary because those funds are intended to be indefinitely reinvested in our international operations. Accordingly, taxes imposed upon repatriation of those earnings to the U.S. would reduce the net worth of the Company.

Effects of Consolidation

The financial statements presented in this Report consolidate the financial statements of China Lithium Technologies, Inc. with the financial statements of its subsidiary, Sky Achieve Holdings, Inc. Also consolidated are the financial statements of an entity, Beijing GuoQiang Global Science and Technology Development Co, Ltd., the legal owners of which are our Chairman, Kun Liu, and certain associates. The financial statements of Beijing GuoQiang are consolidated with our financial statements because Beijing GuoQiang is a variable interest entity with respect to Sky Achieve, which is a wholly-owned subsidiary of China Lithium Technologies. Sky Achieve is party to five agreements dated January 5, 2010 with the owners of the registered equity of Beijing GuoQiang and with Beijing GuoQiang. The agreements transfer to Sky Achieve all of the benefits and all of the risk arising from the operations of Beijing GuoQiang, as well as complete managerial authority over the operations of Beijing GuoQiang.

The following table summarizes the effects of consolidating Beijing GuoQiang with China Lithium Technologies and its subsidiary:

	China Lithium Technologies and Subsidiaries			Beijing Guoqiang			Consolidation
Balance Sheet – September 30, 2011
Current Assets	$	104,931		$	10,376,301		$	10,382,307
Property, Plant and Equipment		-			745,276			745,276
Total Assets		377,861			11,187,632			11,193,638

Current Liabilities		534,562			1,489,469			1,925,106
Total Liabilities		534,562			1,489,469			1,925,106
Stockholders’ Equity		(156,701	)		9,698,164			9,268,532

Statement of Operations – Quarter Ended September 30, 2011
Revenue		-			3,771,232			3,771,232
Gross Profit		-			1,564,975			1,564,975
Operating Income (Loss)		(140,201	)		900,143			759,941
Net Income (Loss)		(140,276	)		679,098			538,822

Statement of Cash Flow – Quarter Ended September 30, 2011
Net Cash (Used) Provided by Operating Activities		(45,766	)		(48,777	)		(85,568	)
Net Cash (Used) Provided by Investing Activities		-			(208	)		(208	)
Net Cash (Used) Provided by Financing Activities	$	8975			-		$	-

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer, Liu Kun, and Principal Financial Officer, Fang Chun Ping, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective. The weaknesses in the Company’s controls and procedures consisted of (a) a lack of expertise in identifying and addressing accounting issues under U.S. Generally Accepted Accounting Principles among the personnel in the Company’s accounting department, which has resulted in certain errors in accounting identified in Note 15 to the Consolidated Financial Statements, (b) a lack of expertise among Company personnel with regard to the disclosure requirements arising under the Rules of the Securities and Exchange Commission, and (c) inadequate review by management personnel of the Company’s reports prior to filing.

Changes in Internal Controls over Financial Reporting.

During the three months ended ~~March~~September 3130, 2011, there has been no change in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings to which the Company is a party.

Item 1A. Risk Factors

There have been no material changes from the risk factors included in our Annual Report on Form 10-K for the year ended June 30, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Removed and Reserved

Item 5. Other Information

None

Item 6. Exhibits

31.1	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101.ins	XBRL Instance
101.sch	XBRL Schema
101.cal	XBRL Calculation
101.def	XBRL Definition
101.lab	XBRL Label
101.pre	XBRL Presentation

3235

SIGNATURE

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

	CHINA LITHIUM TECHNOLOGIES, INC.
DATE: May 16, 2011	By:	/s/ Kun Liu
DATE: November 21, 2011	By:	/s/ Kun Liu
		Kun Liu, Chairman and Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Chunping Fang
		Chunping Fang, Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer)

3336

Filing Compare · China Lithium Technologies Inc.